Untitled - Colcom Foods

Transcription

Contents
Vision and Mission
2
Group Structure
3
Financial Highlights
4
Directorate, Executive Management and Corporate Information
5
Chairman’s Statement
6
Corporate Governance
7
Corporate Social Responsibility
8
Financial review, Ratios and Statistics
9
Report of the Directors
12
Directors’ Responsibility for Financial Statements
13
Independent Auditors’ Report
14
Consolidated Statement of Comprehensive Income
15
Consolidated Statement of Financial Position
16
Consolidated Statement of Changes in Equity
17
Consolidated Statement of Cash Flows
18
Notes to the Consolidated Financial Statements
19
Company Statement of Financial Position
52
Shareholders’ Analysis
53
Notice to Shareholders
55
Shareholders’ Calendar
57
Proxy form
61
VISION
To improve the quality of life of our customers
and there by to create and unlock value.
MISSION
To manufacture, distribute and retail food to the mass
market through a vertically integrated business structure
which allows the Group to achieve scale and dominate
the supply chain and market in which it operates.
OUR VALUES
Communication
Family
Teamwork
Commitment
Integrity
2
COLCOM HOLDINGS LIMITED 2015 Annual Repor t
Group Structure
Associated Meat
Packers (Private)
Limited 50.1%
Triple C Pigs
Intercane (Private) Limited 51%
Freddy Hirsch
Group (Private)
Limited 49%
Gredal Enterprises
(Private) Limited
50.5%
Greatrift Delight
(Private) Limited 100%
Colcom Canning
Blumo Trading
Ballantyne Butchery
(Private) Limited t/a
Danmeats 100%
Food Distributors
3
Financial Highlights
for the year ended 30 June 2015
GROUP
2015
2014
USD
USD
64 585 846
66 567 295
5 855 019
5 197 228
44 274 681
42 858 262
Operating cashflow before interest and tax
9 236 068
10 935 637
Capital expenditure
5 219 144
3 874 486
3.39
2.89
Net assets per share - (cents)
20.77
19.61
Market price per share - year end - (cents)
22.00
22.00
2.72
4.32
Interest cover - (times)
89
53
Return on investment - (%)
17
15
Consolidated results
Revenue
Profit for the year
Total assets
Ordinary share performance
Basic earnings per share - (cents)
Financial ratios
Interest bearing debt to total shareholders' funds - (%)
4
Directorate, Executive Management and Corporate Information
BOARD OF DIRECTORS
BOARD COMMITTEES
NON - EXECUTIVE
John Koumides (Chairman)
Pauline Chapendama Audit Committee
Pauline Chapendama (Chairperson)
Brent Fairlie
Theophilus T. Kumalo
Antonio Fourie
Julian P. Schonken
David E. Long
Julian P. Schonken
EXECUTIVE
Remuneration Committee
Constantine Tumazos
Brent Fairlie
John Koumides (Chairman)
Antonio Fourie
SENIOR MANAGEMENT
Group Chief Executive Officer
Constantine Tumazos
Group Finance Director/ Chief Operating Officer
Norita Adams
Group Sales and Marketing Director
Jan Van As
Group Operations Director
Zvitendo Matsika
Group Human Resources Executive
Mandy Mutiro
Group Chief Financial Officer
Ian Kennaird
Chief Executive - Triple C Pigs
Lester Jones
Chief Executive - Associated Meat Packers (Private) Limited
SecretaryAuditors
Andrew Lorimer
Ernst & Young
Chartered Accountants (Zimbabwe)
Principal Bankers
Registered Public Auditors
Standard Chartered Bank Zimbabwe Limited
Registered office
1/3 Coventry Road
Transfer Secretaries
Workington
Corpserve (Private) Limited
(P O Box 2474)
4th Floor Intermarket Centre
Harare
Cnr First Street/Kwame Nkrumah Avenue
Zimbabwe
Harare
Fax No : 263-4-750723
Zimbabwe
Tel No : 263-4-751051/9
Tel No : 263-4-758193
Website: www.colcomfoods.com
5
Chairman’s Statement
FINANCIAL
The Group recorded revenue of USD64.59 million, 3% down on
the previous financial year. Where Associated Meat Packers (AMP)
maintained revenues at the same level as the comparative period,
Colcom Foods recorded a 10% decline. The decline is attributable
to the reduction of fresh pork sales and canned products, both of
which were expected in the period under review. In terms of volumes,
the Group recorded an overall decline of 5% over the prior year.
Despite the decline in volumes, the Group achieved growth of 2% at
trading profit level through increased efficiency. The Group recorded
increased depreciation charges of USD169 198 and a positive swing
in fair value adjustments of livestock of USD530 063 arising from the
growth in the pig herd. Freddy Hirsch contributed a 41% growth in
equity accounted earnings over the prior year. Net interest earned on
positive cash balances contributed USD373 740 to earnings in the
year, an increase of 39% on prior year. At the profit before tax (PBT)
level, the Group achieved an 11% growth over prior year.
The Group maintained a similar working capital position in relation to
prior year and generated USD7.84 million from operating activities. Of
this USD5.22 million was invested in fixed assets and USD415 655
was invested in long term biological assets in building an expanded
herd. Significant items of capital expenditure include the new pie
factory, phase one of upgrading the distribution fleet, expansion of
the AMP factory and investment into the new pig production facility.
After settling USD555 925 of borrowings and paying a dividend of
USD3.90 million, the Group retained USD8.27 million in cash at the
end of the financial year.
OPERATIONAL
The Group’s Triple C Farms delivered 56 530 pigs (F2014: 58 183),
yielding 4 365 (F2014: 4 554) tons of pork, and representing a 4%
decline on the prior year. The decline was a result of holding back
pigs that were transferred to a new production facility. During the
year an 840 sow herd was developed in the Shamva area to deliver
300 pigs per week. Initial deliveries were made in June 2015 and the
unit is expected to achieve the capacity stated above within the first
quarter of F2016. This will increase the group’s own production of
pigs by 27%. This project was completed on time and within budget.
The farm achieved growth in profitability over prior year through
savings in production costs made possible by reduced maize prices
and continuous improvements in production performance.
The new pie factory was near completion but had not been
commissioned by the year end as a result of delays from suppliers of
key equipment and a need to upgrade the electrical power supply. It
is expected that the factory will be on line before the end of August
2015. Despite this, the company still increased the production and
sale of pies by 9% over prior year.
The Group’s various programs to formalise food safety management
systems, performance management systems and staff training
initiatives remain on track. In addition, a software system designed
to assist with plant maintenance and production management was
implemented during the period. AMP opened two Texas retail outlets
during the year under review (Chinhoyi and Speke Ave, Harare) and
closed an underperforming unit in Julius Nyerere Way. As previously
reported, AMP completed its planned factory expansion project
in December 2014 which will allow the company to service the
additional retail outlets planned in its growth strategy.
6
FUTURE PROSPECTS
Colcom plans to continue to increase its pig production capacity;
initially by expanding existing facilities and thereafter to secure additional
facilities. Initial expansion at the new facility will deliver an additional 150
pigs per week. Stock-feed milling capacities are being reviewed to
assess the additional requirements of sustaining a larger herd. The 2015
regional maize harvest was disappointing and Zimbabwe’s production
was inadequate to meet demand. The expectation for local production
is again low and Colcom will rely on maize imports to secure supply
for the next season. The trend over the past year indicates declining
revenues and with no clarity on policy changes required to stimulate
economic growth, we again expect trading conditions to be difficult.
Colcom’s extensive range of products offers customers a selection of
quality products - from the select premium range to the more affordable
processed lines. The Group will continue to work on growing sales into
the informal market through expanded distribution networks which
will make product available and accessible to our customer base. The
commissioning of the new Colcom pie plant will ensure product is
available to service demand and reflect the growth the Group expects
in that product range. Investigations into modernising the Colcom
processing facility are ongoing. AMP has targeted to develop three
additional retail sites in the 2016 financial year.
DIVIDEND
Under normal trading circumstances, the Company would typically seek
to maintain a three times cover to achieve a sustainable level of dividends.
In the current year this would yield a final dividend per share of 0.63
US cents. The Board has reviewed the Company’s forecast position
and believes it appropriate to release surplus capital by approving an
additional extraordinary dividend of 1.17 US cents per share. The total
final dividend of 1.8 US cents per share will be payable on or about
10th November 2015 to shareholders registered in the books of the
Company at noon on 9th October 2015. The transfer books and register
of members will be closed from noon on 9th October 2015 up to and
including 11th October 2015.
DIRECTORATE
There were no changes to the Board of Directors during the year under
review. The Board wishes to advise that Mr Theophilus T Kumalo retires
as Chief Executive Officer and Executive Director with effect from 30
September 2015. Theo has served the company since August 1997,
initially in a technical capacity, and as Chief Executive since January
2011. The Board thanks him for 18 years of dedicated service and we
wish him well in his future endeavours. Mr C Tumazos who joined the
Group as Financial Director in January 2013 and has held the position of
Chief Operating Officer since January 2014, has been appointed Chief
Executive Officer with effect from 1 October 2015.
By order of the Board
J Koumides
Chairman
19 August 2015
Corporate Governance
FINANCIAL STATEMENTS
As recorded in the financial statements the Directors
recognise that they are responsible for the preparation
and integrity of the Company’s financial and non-financial
reporting.
In order to fulfil this responsibility, a system of internal
accounting controls has been developed and continues
to be maintained. There are limits inherent in all systems
of internal control based on the recognition that the costs
of such systems should be related to the benefits to be
derived. We believe the Group’s systems provide this
appropriate balance.
The annual financial statements have been examined
by the Group’s external auditors and their report is
presented on page 14.
The Directors, after reviewing the Company’s financial
projections, have no reason to believe that the Company
will not continue as a going concern in the year ahead.
AUDIT COMMITTEE
The Company has an audit committee comprising
representation by non-executive Directors and is chaired
by a non-executive Director. The external auditors have
unrestricted access to the committee and in addition,
a representative attends all audit committee meetings.
The audit committee meets three times a year. The
committee reviews the effectiveness of internal controls
in the Group with reference to the findings of internal and
external auditors. Other areas covered include the review
of important accounting issues, specific disclosures in
the financial statements, financial reports and major audit
recommendations.
monitoring the performance of executive management.
All Directors have access to the advice and services of the
Company Secretary and in appropriate circumstances,
at the Company’s expense, may seek independent
professional advice concerning its affairs.
REMUNERATION COMMITTEE
The Company has a remuneration committee which
consists
mainly
of
non-executive
Directors.
The
committee is responsible for the review and approval
of remuneration and terms of employment of executive
Directors and executive management.
MANAGEMENT REPORTING
There
are
comprehensive
management
reporting
disciplines in place which include the preparation of
annual targets. Monthly results are reported against
approved targets and compared to the previous year.
Profit forecasts are updated regularly and working
capital requirements and borrowings are monitored on
an ongoing basis.
ETHICS
Directors and employees are required to conduct all
business affairs in accordance with the highest ethical
standards. In this regard, the Company has implemented
a formal Code of Ethics.
EQUAL OPPORTUNITY
The Group is committed to providing equal opportunities
for its employees regardless of their ethnic origin or
gender.
EMPLOYEE PARTICIPATION
The Group employs a variety of participative structures
to deal with issues which affect employees directly
DIRECTORATE AND EXECUTIVE MANAGEMENT
The Board of Directors includes non-executive Directors
who are chosen for their business skills and acumen
and whose number is sufficient for their views to carry
weight in the Board’s decision. The Chairman is a nonexecutive member of the Board.
The Board meets regularly to review strategy, operational
and materially which includes collective bargaining
mechanisms
and
a
Workers’
Committee.
These
structures are there to drive productivity improvements.
They are designed to achieve good employer/employee
relations through effective sharing of relevant information,
consultation and the identification and resolution of
conflict.
performance, acquisition and disposal of assets, pig
producer and other stakeholder issues as well as any
material matters relating to the achievement of the
Company’s objectives. The Board is also responsible for
7
Corporate Social Responsibility
Colcom provides regular assistance to registered organisations that are caring for the elderly, the infirm and orphans, and
that are working on animal welfare. It also assists various registered organisations in their efforts to raise funds for charity.
During the year under review, significant donations in the form of meat products as well as cash have been made to
Emerald Hill Children’s Home, St Joseph and St Marcelene Homes, Chinyaradzo Children’s Home, Athol Evans, Tiki
Hywood Trust, Makumbe Children’s Home, Shearly Cripps and Jairos Jiri among others.
The company also runs a scheme, that has been in operation for the last 4 years, whereby 5% of the proceeds of Colcom
ham sales are donated to charity. In 2014/15 the proceeds went to three organisations. These were all cash donations
to Ekuphumuleni Geriatrics Home in Bulawayo, Cancer Association of Zimbabwe and The Veterinary Services for Animal
Welfare.
In a separate scheme, over the past three years Colcom has supported the executive interaction initiative of the Zimbabwe
National Army, which is an annual event designed to facilitate dialogue between senior corporate executives and senior
army officers.
ENVIRONMENT
Colcom is a corporate member of the Business Council for Sustainable Development Zimbabwe (BCSDZ).
Colcom Holdings Limited has been involved
in both environment and community-based
projects that benefit the country and its
people
8
Financial Review, Ratios and Statistics
June June June June June
2015 2014 2013 2012 2011
USD USD USD USD USD
STATEMENT OF COMPREHENSIVE INCOME
Revenue 64 585 846 66 567 295 60 782 481 52 847 772 46 200 305
Operating profit Net finance income/(costs) Share of profit from associate
7 088 277 6 538 901 2 032 260 5 968 462 5 638 320
373 740 269 759 (16 104)
88 033 169 559
7 462 017 6 808 660 2 016 156 6 056 495 5 807 879
333 174 236 294 232 898 382 603 248 290
6 439 098 6 056 169
Profit before taxation 7 795 191 7 044 954 2 249 054 Taxation (1 940 172)
(1 847 726)
(620 639)
Profit for the year 5 855 019 5 197 228 1 628 415 (1 619 257) (1 399 755)
4 819 841 4 656 414
STATEMENT OF FINANCIAL POSITION Share capital Reserves 1 590 409 1 590 409 1 590 409 1 590 409 1 590 409
29 774 497 28 185 646 24 232 794 23 808 257 20 951 912
Equity attributable to equity holders
of the parent 31 364 906 29 776 055 25 823 203 25 398 666 22 542 321
Non-controlling interest 1 674 964 1 416 673 909 176 587 517 600 597
Non-current liabilities 3 955 925 4 127 293 2 917 213 3 534 505 3 647 229
Current liabilities 7 278 886 7 538 241 7 608 714 6 275 813 5 899 414
Total equities and liabilities 44 274 681 42 858 262 37 258 306 35 796 501 32 689 561
Non-current assets 24 015 341 20 529 919 18 418 979 19 120 802 15 477 665
Current assets 20 259 340 22 328 343 18 839 327 16 675 699 17 211 896
Total assets 44 274 681 42 858 262 37 258 306 35 796 501 32 689 561
9
Financial Review, Ratios and Statistics - (cont’d)
June June June June June
2015 2014 2013 2012 2011
PROFITABILITY Operating margin (%) 11
10
3
11
12
Return on investment (%) 17 15 5
18 22
Return on net worth (%) 18.67 17.45 6.31 18.98 20.66
Effective tax rate (%) 24.89 26.23 27.60 25.15 23.22
SOLVENCY Financing ratio (%) 71 69 69 71 69
Total liabilities/total assets (%) 25 27 28 27 29
Interest-bearing debt (USD) 898 892 1 347 817 1 440 000 863 592 2 429 406
Gearing ratio (%) 2.9 4.5 5.6 3.4 10.8
Interest cover (times) 89 53 12 48 55
LIQUIDITY Current ratio (times) Acid test ratio (times) 1.7 1.8 1.3 1.3 1.4
(USD) 9 284 440 10 935 637 4 689 006 7 079 094 5 098 508
Operating cash inflow 2.8 3.0 2.5 2.7 2.9
ACTIVITY Net asset turnover (times) 0.57 0.53 0.49 0.56 0.57
Net current asset turn (excluding short term loans) (times) 0.58 0.54 0.51 0.57
0.61
Total asset turnover (times) 0.69 0.64 0.61 0.68 0.71
PRODUCTIVITY Turnover per employee (USD) 54 228 56 750 50 821 44 003 41 177
ORDINARY SHARE PERFORMANCE Number of ordinary shares in issue 159 040 884 159 040 884 159 040 884 159 040 884 159 040 884
Weighted average shares in issue 159 040 884 159 040 884 Basic and diluted earnings per share Earnings yield (Cents) 3.39 159 040 884 159 040 884 159 040 884
2.89 0.87 2.87 3.12
(%) 649 762 3 563 871 1 346
Dividend per share (Cents) 2.30 2.29 -
1.25 1.04
Dividend cover (times) 1.47
1.26
-
2.30 3.00
(%) 10
10
- 5.0 2.5
Dividend yield Price earnings ratio (times) 6.5 7.6 35.6 8.7 13.5
Net asset value per share (USD) 0.20 0.19 0.16 0.16 0.14
Net operating cash flow per share (USD) 0.06 0.07 0.03 0.04 0.03
Market capitalisation (USD) 34 988 994 34 988 994 49 302 674 39 760 221 66 797 171
(Cents) 22 22 31 25 42
Market value per share OTHER 10
Number of employees 1 191 1 173 1 196 1 201 1 122
Number of shareholders 2 225 2 246 2 276 2 336 2 336
Definitions
Operating margin Net current asset turn Income from operations as a percentage of turnover.
Total assets less current liabilities other than borrowings
divided by turnover.
Return on investment
Profit for the year attributable to equity holders of the
Turnover per employee
parent as a percentage of equity attributable to equity
Turnover divided by number of employees.
holders of the parent.
Earnings yield
Return on networth
Market price at year end as a percentage of earnings
Profit for the year as a percentage of equity attributable
per share.
to holders of the parent.
Dividend cover Financing ratio
Earnings per share divided by dividends per share.
Equity attributable to equity holders of the parent as a
percentage of total assets.
Dividend yield
Dividend per share as a percentage of market price per
Gearing ratio
share at year end.
Interest-bearing debt as a percentage of equity attributable
to equity holders of the parent.
Price earnings ratio Market price at year end divided by earnings per share.
Interest cover
Profit before tax and interest payable, divided by interest
Net asset value per share
payable.
Equity attributable to equity holders of the parent divided
by number of shares in issue at year end.
Current Ratio
Current assets divided by current liabilities.
Net operating cash flow per share
Net operating cash flow divided by the number of ordinary
Acid test ratio
shares in issue.
Current assets less stock and biological assets, divided
by current liabilities.
Market capitalisation
Market value per share times number of shares in issue.
Operating cash flow
Net cash from operating activities before interest and tax.
Net asset turnover Total assets less current liabilities divided by turnover.
11
Report of the Directors
The Directors have pleasure in presenting their report, together with the audited financial statements for the year ended
30 June 2015.
Nature of business
The Company is listed on the Zimbabwe Stock Exchange and is engaged in the production, processing and marketing
of pork and other protein based food products including beef and chicken.
Share capital
The authorised share capital of the Company is 200 000 000 ordinary shares. The issued share capital is 159 040 884
ordinary shares.
Reserves
The current year movement in the reserves of the Group are shown in the Consolidated Statement of Changes in
Equity and in the Notes to the Consolidated Financial Statements.
Group results
2015
2014
USD
USD
Profit before taxation
7 795 191
7 044 954
Taxation
(1 940 172)
(1 847 726)
Profit for the year
5 855 019
5 197 228
(465 091)
(608 212)
5 389 928
4 589 016
Non-controlling Interest
Profit attributable to equity holders of the parent
Dividends
Under normal trading circumstances, the Company would typically seek to maintain a three times cover to achieve
a sustainable level of dividends. In the current year this would yield a final dividend per share of 0.63 US cents. The
Board has reviewed the Company’s forecast position and believes it appropriate to release surplus capital by approving
an additional extraordinary dividend of 1.17 US cents per share. The total final dividend of 1.8 US cents per share will
be payable on or about 10th November 2015 to shareholders registered in the books of the Company at noon on 9th
October 2015. The transfer books and register of members will be closed from noon on 9th October 2015 up to and
including 11th October 2015.
Directors
There were no changes to the Board of Directors during the year under review. The Board wishes to advise that Mr
Theo T Kumalo retires as Chief Executive Officer and Executive Director with effect from 30 September 2015. Theo has
served the company since August 1997, initially in a technical capacity, and as Chief Executive since January 2011.
The Board thanks him for 18 years of dedicated service and we wish him well in his future endeavours. Mr C Tumazos
who joined the Group as Financial Director in January 2013 and has held the position of Chief Operating Officer since
January 2014, has been appointed Chief Executive Officer with effect from 1 October 2015.
Directors’ Fees
Members will be asked to approve the payment of Directors’ fees in respect of the year ended 30 June 2015.
Auditors
Members will be asked to approve the remuneration of the Auditors for the financial year ended 30 June 2015 and to
re-appoint Ernst and Young as Auditors of the Group to hold office for the ensuing year.
For and on behalf of the Board.
J Koumides
Chairman
30 September 2015
12
Directors’ Responsibility for Financial Statements
The Directors of Colcom Holdings Limited are required by the Companies Act to maintain adequate accounting records
and to prepare financial statements for each financial year that present a true and fair view of the state of affairs of the
Company and the Group at the end of each financial year and of the profit and cashflows for the period in line with
International Financial Reporting Standards. In preparing the accompanying financial statements, generally accepted
accounting practices have been followed, suitable accounting policies have been used and consistently applied, and
reasonable and prudent judgments and estimates have been made.
The principal accounting policies of the Group are consistent with those applied in the previous year and conform to
International Financial Reporting Standards.
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, they are satisfied that it is appropriate to adopt
the going concern basis in preparing the financial statements.
The Board recognises and acknowledges its responsibility for the Group’s systems of internal financial control. Colcom
maintains internal controls and systems that are designed to safeguard the assets of the Group, prevent and detect
errors and fraud and ensure the completeness and accuracy of the Group’s records. The Group’s Audit Committee
has met the external auditors to discuss their reports on the results of their work, which includes assessments of the
relevant strengths and weaknesses of key control areas. In a growing Group of the size, complexity and diversity of
Colcom it may be expected that occasional breakdowns in established control procedures may occur. However, no
breakdowns involving material loss have been reported to the Directors in respect of the period under review. The
financial statements for the year ended 30 June 2015, which appear on pages 15 to 52, were approved by the Board
of Directors and are signed on its behalf by:
J KoumidesT T Kumalo
Chairman
Group Chief Executive Officer
Harare
30 September 2015
13
Ernst & Young
Chartered Accountants (Zimbabwe)
Angwa City
Cnr Julius Nyerere Way /
Kwame Nkrumah Avenue
P.O. Box 62 or 702
Harare
Zimbabwe
Tel: +263 4 750905 - 14 or 750979 - 83
Fax: +263 4 750707 or 773842
Email: admin@zw.ey.com
www.ey.com
Independent Auditor’s Report
To The Members of Colcom Holdings Limited
Report on the financial statements
We have audited the accompanying Consolidated and Company Financial Statements of Colcom Holdings Limited set out on pages
15 to 52, which comprise the Consolidated and Company Statement of Financial Position as at 30 June 2015, the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash
Flows for the year then ended, the notes to the financial statements which include a summary of significant accounting policies and
other explanatory information.
Directors’ responsibility for the financial statements
Directors’ responsibility for the financial statements The Company’s Directors are responsible for the preparation and fair presentation
of these consolidated financial statements in accordance with International Financial Reporting Standards 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.
Auditors’ responsibility
Our responsibility is to express an opinion on these consolidated 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 consolidated and company 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 judgment, 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 controls 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 controls. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated and company financial statements present fairly, in all material respects, the financial position of
Colcom Holdings Limited as at 30 June 2015, and its financial performance and its cash flows for the year then ended in accordance
with International Financial Reporting Standards.
Report on other legal and regulatory requirements
In our opinion, the consolidated and company financial statements have, in all material respects, been properly prepared in compliance
with the disclosure requirements of the Companies Act (Chapter 24:03).
ERNST & YOUNG
CHARTERED ACCOUNTANTS (ZIMBABWE)
HARARE
12 October 2015
14
A member firm of Ernst & Young Global Limited
Consolidated Statement of Comprehensive Income
20152014
USDUSD
Notes Revenue 3
64 585 846 66 567 295
Cost of sales (34 499 699)
(37 417 073)
Gross profit 30 086 147 29 150 222
Other income 528 003 725 868
Distribution and selling costs (621 162)
(697 544)
Administration expenses (13 716 902)
(13 554 751)
Other operating expenses (9 187 809)
(9 084 894)
Operating profit 4
7 088 277 6 538 901
Interest income 4.9
461 982 406 538
Interest expense 4.10
(88 242)
(136 779)
9
333 174 236 294
Profit before taxation 7 795 191 7 044 954
Taxation 5
(1 940 172)
(1 847 726)
Profit for the year 5 855 019 5 197 228
Share of profit of associate 4.6
Other comprehensive income - -
Total comprehensive income 5 855 019 5 197 228
Attributable to: Equity holders of the parent 5 389 928 4 589 016
Non-controlling interest 465 091 608 212
5 855 019 5 197 228
Earnings per share: Basic and diluted earnings per share - cents 6
3.39 2.89
Headline earnings per share - cents 6
3.40 2.84
15
Consolidated Statement of Financial Position
as at 30 June 2015
2015
USDUSD
Notes 2014
ASSETS Non-current assets Property, plant and equipment 8
20 594 783 17 491 868
Investment in associate 9
1 627 224 1 294 050
Investments 10
Other non-current financial assets 11
181 373 181 373
Biological assets 12
1 611 960 1 374 701
Deferred tax asset 19
- - 24 015 340 183 546
4 381
20 529 919
Current assets Biological assets 12
1 678 683 1 729 544
Inventories 13
6 517 043 6 765 529
Accounts receivable 14
3 779 970 3 797 006
Current tax asset Cash and bank 15
13 314 -
8 270 331 10 036 264
20 259 341 22 328 343
44 274 681 42 858 262
Total assets EQUITY AND LIABILITIES Capital and reserves Share capital 1 590 409 1 590 409
Distributable reserves 16
29 774 497 28 185 646
Equity attributable to equity holders of the parent 31 364 906 29 776 055
Non-controlling interest 1 674 964 1 416 673
Total Equity 33 039 870 31 192 728
Non-current liabilities Deferred taxation 19
3 503 700 3 226 143
Interest bearing borrowings 20
452 225 901 150
3 955 925 4 127 293
Current liabilities Accounts payable 21
6 189 458 6 268 728
Provisions 22
642 761 671 303
Interest bearing borrowings 20
446 667 446 667
Taxation -
151 543
7 278 886 7 538 241
11 234 811 11 665 534
44 274 681 42 858 262
Total liabilities Total equity and liabilities DIRECTORS
J Koumides T T Kumalo Harare 30 September 2015
16
Consolidated Statement of Changes in Equity
Attributable to owners of the parent
Balance at 30 June 2013
Share
capital
Nondistributable
reserves
Distributable
Reserves
USD
USD
USD
1 590 409 8 972 075 Total
Noncontrolling
Interest
Total
USD
USD
USD
15 260 719 25 823 203 909 176 26 732 379
Transactions with owners in their
capacity as owners
-
-
-
-
(50 815)
(50 815)
Transfer of reserves
-
(8 972 075)
8 972 075 -
-
-
Profit for the year
-
-
4 589 016 4 589 016 608 212 5 197 228
Dividends (Note 17)
-
-
(636 164)
(636 164)
(49 900)
(686 064)
1 590 409 -
28 185 646 29 776 055 1 416 673 31 192 728
Transactions with owners in their
capacity as owners
-
-
-
-
(107 000)
(107 000)
Profit for the year
-
-
5 389 928 5 389 928 465 091 5 855 019
Dividends (Note 17)
-
-
(3 801 077)
(3 801 077)
(99 800)
(3 900 877)
1 590 409 -
29 774 497 31 364 906 1 674 964 33 039 870
17
Consolidated Statement of Cash flows
For the year ended 30 June 2015
20152014
Notes USDUSD
OPERATING ACTIVITIES Cash generated from operations before interest and tax 23
Interest income Interest expense Taxation paid 24
Net cashflows from operating activities 9 236 068 10 935 637
461 982 406 538
(88 242)
(136 779)
(1 823 091)
(1 427 665)
7 786 717 9 777 731
INVESTING ACTIVITIES Purchase of property, plant and equipment - replacement (1 448 146)
(1 526 619)
- expansion (3 770 998)
(2 347 867)
Proceeds on disposal of property, plant and equipment 128 864 163 280
Purchase of biological assets (165 244)
(160 810)
Proceeds on disposal of investments 159 676 Dividends received from associate 9
- 60 627
Net cashflows used in investing activities (5 095 848)
(3 811 389)
Net cash flow before financing activities 2 690 869 5 966 342
FINANCING ACTIVITIES Proceeds from borrowings - 1 347 817
Repayment of borrowings (448 925)
(1 440 000)
Dividends paid (3 900 877)
(686 064)
Loan repaid to non-controlling interests (107 000)
(50 815)
Net cashflows used in financing activities (4 456 802)
(829 062)
Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 18
15
(1 765 933)
5 137 280
8 270 331 10 036 264
10 036 264 4 898 984
Notes to the Consolidated Financial Statements
1.
CORPORATE INFORMATION The Company and its subsidiaries are incorporated in Zimbabwe. The Group’s main activity is the production, processing
and marketing of pork and other protein based food products including beef and chicken. The consolidated financial
statements of Colcom Holdings Limited for the year ended 30 June 2015 were authorised for issue in accordance with
a resolution of the Directors on 30 September 2015. Colcom Holdings Limited is a limited liability company incorporated
and domiciled in Zimbabwe whose shares are publicly traded through the Zimbabwe Stock Exchange. 2.
Statement of compliance
The consolidated financial statements of the Group have been prepared in accordance with International Financial
Reporting Standards (IFRS) and the International Financial Reporting Interpretations Committee (IFRIC) interpretations,
promulgated by the International Accounting Standards Board (IASB).
2.1 Basis of preparation
The consolidated financial statements have been prepared on a historical cost basis except for biological assets which
are stated at fair value.
Basis of Consolidation
The consolidated financial statements comprise the financial statements of the Colcom Holdings Limited and its
subsidiaries as at 30 June 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 statement of comprehensive income and
the statement of financial position 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 loss 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 interests
●
Derecognises the cumulative translation differences recorded in equity
19
Notes to the Consolidated Financial Statements - (cont’d)
●
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 recognised in OCI 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
2.2 Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the previous financial year. New standards and amendments
to standards that became effective for the Group in the current year did not have an effect on the Group’s financial
statements.
2.3 Standards and Interpretations in issue but not yet effective
Standards issued but not yet effective up to the date of issuance of the consolidated financial statements are listed
below. This listing is of standards and interpretations issued, which the Group reasonably expects to be applicable at a
future date. The Group intends to adopt those standards when they become effective. The Group expects that adoption
of these standards, amendments and interpretations in most cases not to have any significant impact on the Group’s
financial position or performance in the period of initial application but additional disclosures will be required. In cases
where it will have an impact the Group is still assessing the possible impact.
IFRS 9 Financial Instruments – classification and measurement On 24 July 2014, the International Accounting Standards Board (IASB) issued the final version of IFRS 9-Financial
Instruments bringing together the classification and measurement, impairment and hedge accounting phases of the
IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS
9. The classification and measurement requirements address specific application issues arising in IFRS 9 (2009) that
were raised by preparers, mainly from the financial services industry. The expected credit loss model addresses concerns
expressed following the financial crisis that entities recorded losses too late under IAS 39. IFRS 9 stipulates that financial
assets are measured at amortised cost, fair value through profit or loss, or fair value through other comprehensive income,
based on both the entity’s business model for managing the financial assets and the financial asset’s contractual cash
flow characteristics. Apart from the ‘own credit risk’ requirements, classification and measurement of financial liabilities
is unchanged from existing requirements. IFRS 9 is applicable for annual periods beginning on or after 1 January 2018,
but early adoption is permitted. The Group is currently assessing the impact of IFRS 9. 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 other comprehensive income. The standard requires disclosures on 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 Revenue from Contracts with Customers, replaces all existing IFRS revenue requirements. The core principle of
IFRS 15 is that revenue is recognised to depict the transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
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
20
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 judgements and estimates.
The standard is effective for annual periods beginning on or after 1 January 2018, but early adoption is permitted. The
Group is still assessing the impact of the standard on its contracts with customers.
IAS 16 and IAS 38 Clarification of Acceptable Methods of Depreciation and Amortisation
The IASB issued amendments to IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets prohibiting the use
of revenue-based depreciation methods for fixed assets and limiting the use of revenue-based amortisation methods for
intangible assets. The amendments are effective prospectively. The amendment becomes effective for annual periods
beginning on or after 1 January 2016 and will not have any impact on the Group as depreciation is not based on revenue
methods.
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.
IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture – Amendments
to IFRS 10 and IAS 28
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 Business Combinations, 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. The amendments are effective for annual periods beginning on or after 1 January 2016 and must be applied prospectively.
The Group will consider the amendments where applicable when they become effective
IFRS 11 Accounting for Acquisitions of Interests in Joint Operations – Amendments to IFRS 11
The amendments require an entity acquiring an interest in a joint operation in which the activity of the joint operation
constitutes a business to apply, to the extent of its share, all of the principles in IFRS 3, and other IFRSs, that do not
conflict with the requirements of IFRS 11. Furthermore, entities are required to disclose the information required in those
IFRSs in relation to business combinations.
The amendments also apply to an entity on the formation of a joint operation if, and only if, an existing business
is contributed by the entity to the joint operation on its formation. Furthermore, the amendments clarify that for the
acquisition of an additional interest in a joint operation in which the activity of the joint operation constitutes a business;
previously held interests in the joint operation must not be remeasured if the joint operator retains joint control.
21
The amendments are applied prospectively and are effective for annual periods beginning on or after 1 January 2016.
The Group will consider the amendments when it enters into transactions where the amendments are applicable.
Applying the Consolidation Exception - Amendments to IFRS 10, IFRS 12 and IAS 28
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.
The amendments are effective for annual periods beginning on or after 1 January 2016 and are not expected to affect
the Group as no Companies within the Group meet the definition of an investment entity.
IAS 27 Equity Method in Separate Financial Statements – Amendments to IAS 27
Amendments to IAS 27 Separate Financial Statements allow an entity to use the equity method as described in IAS 28 to
account for its investments in subsidiaries, joint ventures and associates in its separate financial statements. Therefore,
an entity must account for these investments either:
•
At cost
•
In accordance with IAS 39 or
•
Using the equity method
The entity must apply the same accounting for each category of investments.
The amendments must be applied retrospectively and are effective for year ends beginning on or after 1 January 2016.
The parent entity will consider the amendment when it becomes effective.
IAS 1 Disclosure Initiative – Amendments to IAS 1
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 other comprehensive
income.
The amendments are effective for annual periods beginning on or after 1 January 2016 and early application is
encouraged.
22
2012 – 2014 Annual improvement cycle (issued September 2014)
In September 2014, the IASB issued Annual Improvements to IFRSs 2012-2014 Cycle, which contains five amendments
to four standards, excluding consequential amendments. The amendments are effective for annual periods beginning on
or after 1 January 2016. Below is a list of those amendments;
IFRS 7 – Servicing Contracts
Paragraphs 42A - H of IFRS 7 require an entity to provide disclosures for any continuing involvement in a transferred asset
that is derecognised in its entirety. The Board was asked whether servicing contracts constitute continuing involvement
for the purposes of applying these disclosure requirements. 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
arrangement against the guidance for continuing involvement in paragraphs IFRS 7.B30 and IFRS 7.42C in order to
assess whether the disclosures are required.
The Group will consider the amendment, where applicable, when it becomes effective.
IFRS 7 – Applicability of the offsetting disclosures to condensed interim financial statements
In December 2011, IFRS 7 was amended to add guidance on offsetting of financial assets and financial liabilities. In
the effective date and transition for that amendment, paragraph 44R of IFRS 7 states that “[A]n entity shall apply those
amendments for annual periods beginning on or after 1 January 2013 and interim periods within those annual periods”.
The interim disclosure standard, IAS 34, does not reflect this requirement, however, and it is not clear whether those
disclosures are required in the condensed interim financial report. The amendment removes the phrase ‘and interim periods within those annual periods’ from paragraph 44R, clarifying
that these IFRS 7 disclosures are not required in the condensed interim financial report. However, the Board noted that
IAS 34 requires an entity to disclose ‘an explanation of events and transactions that are significant to an understanding
of the changes in financial position and performance of the entity since the end of the last annual reporting period’.
Therefore, if the IFRS 7 disclosures provide a significant update to the information reported in the most recent annual
report, the Board would expect the disclosures to be included in the entity’s condensed interim financial report.
The Group will consider the amendments in preparing its interim financial statements when they become effective.
IAS 34 Disclosure of information ‘elsewhere in the interim financial report
IAS 34 requires entities to disclose information in the notes to the interim financial statements ‘if not disclosed elsewhere
in the interim financial report’. However, it is unclear what the Board means by ‘elsewhere in the interim financial
report’. The amendment states 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
greater interim financial report (e.g. in the management commentary or risk report).
The Board specified that 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. If users do not have access to the other information in
this manner, then the interim financial report is incomplete.
The Group will consider the amendment, when it becomes effective, when preparing its interim financial report.
IAS 19 – Discount rate Regional market rates
IAS 19 requires an entity to recognise a post-employment benefit obligation for its defined benefit plans. This obligation
must be discounted using market rates on high quality corporate bonds or using government bond rates if a deep
market for high quality corporate bonds does not exist. Some entities thought that the assessment of a deep market
was based at a country level (e.g. Greece) while others thought it was based at a currency level (e.g. the Euro). The
23
amendment to IAS 19 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.
The amendment must be applied for annual periods beginning on or after 1 January 2016, with earlier application
permitted. The amendment will not affect the Group as the Group does not have defined benefit pension schemes.
IFRS 5 – Changes in methods of disposal
Assets (or disposal groups) are generally disposed of either through sale or through distribution to owners. The
amendment to IFRS 5 clarifies that changing from one of these disposal methods to the other should not be considered
to be 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. The amendment must be applied prospectively to changes in methods of
disposal that occur in annual periods beginning on or after 1 January 2016, with earlier application permitted.
The Group will consider the amendment, if applicable, when it becomes effective.
2.4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue 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, excluding discounts,
rebates, and other value added taxes or duty. The following specific recognition criteria must always be met before
revenue is recognised: Sale of goods Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer. Other income: Interest income Revenue is recognised as interest accrues (using the effective interest method that is the rate that exactly discounts
estimated future cash receipts through the expected life of the financial instrument to the net carrying amount of the
financial asset).
Rental income Rental income arising from operating leases is accounted for on a straight line basis over the lease term. Dividends Revenue is recognised when the Group’s right to receive the payment is established. Investments in associates The Group’s investment in the associate is accounted for using the equity method of accounting. The associate is an
entity in which the Group exercises significant influence and which is neither a subsidiary nor a joint venture. Under the
equity method, the investment in the associate is initially carried at cost. Subsequently, the investment in associate
is carried at cost plus post-acquisition changes in the Group’s share of the reserves of the associate less dividends
received from the associate. Goodwill relating to an associate is included in the carrying amount of the investment.
The profit or loss reflects the share of the results of operations of the associate attributable to the Group. The results of
operations is the profit after tax and non-controlling interests in the subsidiaries of the associate. After application of the equity method, the Group determines whether it is necessary to recognise an additional
impairment loss on the Group’s investment in its associates. The Group determines at each reporting date whether
24
there is any objective evidence that the investment in the associate is impaired. If this is the case the Group calculates
the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and
recognises the “share of profit of associate” amount in profit or loss.
Upon loss of significant influence over the associate, the Group measures and recognises any retained investment at
its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair
value of the retained investment and proceeds from disposal is recognised in profit or loss.
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 current when it is:
●
Expected to be realised or intended to 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.
Fair value measurement
The Group measures financial instruments and non-financial assets such as biological assets at fair value at each 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 are 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 value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement
25
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
●
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
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 re-assessing 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.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
Borrowing costs
Borrowing costs that are 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 the Group incurs in connection with the borrowing of funds. Foreign currency translation The Group’s financial statements are presented in United Stated dollars, which is the Group’s functional and, presentation
currency. Transactions in foreign currencies are initially recorded at the functional currency rate of exchange ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the
functional currency rate of exchange ruling at the reporting date. All differences arising on settlement or translation of
monetary items are taken to profit or loss. Non-monetary items that are measured in terms of historic cost in a foreign
currency are translated using the exchange rates as at the dates of initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the exchange rates as at the dates when the fair value was
determined. Taxes Current Income Tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that
are enacted or substantively enacted by the reporting date. 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 Deferred Tax Deferred income 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. Deferred income tax liabilities are recognised for all taxable temporary differences, except:
•
where the deferred income 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, associates and interests
in joint ventures, 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.
26
Deferred income 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 income 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; and
•
in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests
in joint ventures, deferred income 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 income 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 income tax asset to
be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the
extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to 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 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. Deferred income tax assets and deferred income tax
liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities
and the deferred income taxes relate to the same taxable entity and the same taxation authority.
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; and •
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. Property, plant and equipment Plant and equipment is stated at cost, excluding the costs of day to day servicing, less accumulated depreciation
and accumulated impairment losses. Such cost include the cost of replacing part of the plant and equipment and
borrowing costs for long-term construction projects if the recognition criteria are met. 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 repair and maintenance costs are recognised in profit or loss as incurred. The present value
of the expected cost for the decommissioning of the asset after its use is included in the cost of the respective asset if
the recognition criteria for a provision are met.
Land is carried at cost whereas buildings are carried at cost less accumulated depreciation and accumulated, impairment
losses. Depreciation is calculated on a straight line basis over the expected useful lives of the assets such that the cost
is brought to the residual values of the assets.
27
The various rates of depreciation are listed below: Furniture, fittings and equipment Plant and machinery Buildings and improvements 2.5%-20%
Motor vehicles 10%-30%
20%
3%-20%
The carrying values of property, plant and equipment are reviewed for impairment annually, or earlier where, indications
are that the carrying value may be irrecoverable. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from, its use or disposal. 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 residual values, useful lives and depreciation methods of property, plant and equipment are reviewed by the Group,
and prospectively adjusted if necessary, on an annual basis.
Impairment of non-financial assets The Group assesses impairment of assets at each reporting date, or whenever there, are indications that impairment
exists. This entails estimating the asset’s recoverable amount, which is the higher of the asset’s fair value less cost of
disposal and value in use. Where the assets carrying amount exceeds its recoverable amount, the asset is considered
impaired and its carrying amount is written down to its recoverable amount. In assessing the value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflect current market
assessments of time value of money and the risks peculiar to the asset. Impairment losses are recognised in profit or
loss in those expense categories consistent with the function of the impaired asset. At each reporting date, the Group assesses whether previously recognised impairment losses may no longer exist
or have decreased. If such indication exists, the recoverable amount is estimated in order to reverse the previously
recognised impairment losses. A previously recognised impairment loss is reversed only to the extent that there has
been a change in the estimates used in determining the asset’s recoverable amount since the last impairment loss was
recognised. If that is the case the asset’s carrying amount is increased to its recoverable amount. However, the increased
carrying value of the asset is limited to the carrying value determinable, net of depreciation, had the impairment not
occurred. Such reversal is taken to profit or loss. After the reversal, the depreciation charged is adjusted in future periods
to allocate the revised carrying amount, less any residual value, on a systematic basis over the remaining useful life.
Biological assets
Biological assets are living animals that are managed by the Group. Agricultural produce is the harvested product of the
biological asset. Biological assets of the Group are cattle and pigs. At initial recognition, all biological assets are valued
at fair value with the exception of imported breeders that are valued at cost. Subsequent to initial recognition, biological assets are measured at fair value less estimated point of sale costs or cost
less accumulated depreciation. Subsequent costs are capitalised.
Depreciation is calculated on a straight line basis over the expected useful lives of the biological assets.
28
The various rates of depreciation are listed below:
Sows
33%
Boars50%
Fair value is determined with reference to the average theoretical life spans for the various categories of biological assets
and available market prices. For each category, the biological assets are split in terms of their life spans at reporting date
and the different saleable products derived from each biological asset. On that basis, an indicative value is computed
with reference to market prices.
Fair value movements on biological assets are recognised in profit or loss.
Financial assets
Financial assets include trade and other accounts receivable, cash and cash equivalents and investments.
Financial assets in the scope of IAS 39 are classified as either financial assets at fair value through profit and loss, loans
and receivables, held-to-maturity investments, and available-for-sale financial assets, as appropriate. When inancial
assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through
profit and loss, directly attributable transaction costs. The Group determines the classification of its financial assets on
initial recognition and, where allowed and appropriate, re-evaluates this designation at each financial year-end. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group
commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets that require
delivery of assets within the period generally established by regulation or convention in the marketplace. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. Such assets are carried at amortised cost using the effective interest rate method. Gains and losses
are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the,
amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and
fee or costs that are an integral part of the effective interest rate. Trade and other receivables, investments, other non
current financial assets and cash and cash equivalents investments are classified as loans and receivables.
Trade and other accounts receivable
Trade and other accounts receivable are initially measured at fair value. After initial measurement, such financial,
assets are subsequently measured at amortised cost using the effective interest rate method less an allowance for any
uncollectible amounts. Allowances for credit losses are made when there is objective evidence that the Group will most
probably not recover the debts. Bad debts are written off when identified.
Cash and cash equivalents
Cash and cash equivalents comprise cash at banks and on hand and short-term deposits with an original maturity of
three months or less.
Impairment of financial assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a 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 has occurred after the initial recognition
of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the
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,
29
the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that
there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions
that correlate with defaults.
In determining the amount to be impaired, the Group estimates the asset’s recoverable amount, which is the higher of
the asset’s net selling price and value in use. Where the assets carrying amount exceeds it’s recoverable amount, the
asset is considered impaired and it’s carrying amount is written down to it’s recoverable amount. In assessing the value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of time value of money and the risks peculiar to the asset. Impairment losses are ecognised
in profit or loss in those expense categories consistent with the function of the impaired asset. Derecognition of financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of 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
•
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass through
control of the asset. arrangement, and has neither transferred nor retained substantially all 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 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
reply. Financial liabilities Financial liabilities include trade and other accounts payable and interest bearing loans, and these are initially measured
at fair value including transaction costs and subsequently measured at amortised cost using the effective interest rate
method. Gains or losses are recognised in profit or loss when the liabilities are derecognised as well as through the
amortisation process. Derecognition
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 the derecognition of the original
liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in profit or
loss.
Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments, such as forward currency contracts to hedge its foreign currency risks.
Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is
entered into and are subsequently remeasured at fair value. Derivatives are carried as, financial assets when the fair value
is positive and as financial liabilities when the fair value is negative. Any gains or losses arising from changes in the fair
30
value of derivatives are taken directly to profit or loss.
For the purpose of hedge accounting, hedges are classified as: •
Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which
the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.
The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the
risk being hedged and how the entity will assess the effectiveness of changes, in the hedging instrument’s fair value in
offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such
hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed
on an on-going basis to determine that they actually have been highly effective throughout the financial reporting periods
for which they were designated.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that 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. The expense relating to any provision is presented in profit or loss
net of any reimbursement.
Retirement benefits
Retirement benefits are provided for Group employees through various independently administered defined contribution
pension schemes, including the National Social Security Authority. The group’s contributions to the defined contribution
plan are charged to profit or loss in the year in which they relate. The cost of retirement benefits applicable to the National Social Security Authority is determined by the systematic
recognition of legislated contributions. Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is determined using the weighted average cost formula. Cost represents the cost of materials and where appropriate,
direct labour and manufacturing overheads related to stage of manufacture. Net realisable value is the estimated selling price in the ordinary course of business less the estimated selling costs of
completion and the estimated costs necessary to make the sale. Agricultural produce harvested from biological assets is measured at fair value less cost to sell at the point of harvest.
The fair value less cost to sell determined becomes the cost of the agricultural produce for subsequent measurement. Investments in Subsidiaries
Investments in subsidiaries in the company statement of financial position are stated at cost. Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement
at inception date, 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, even if that right is not explicitly specified in an arrangement.
31
Operating lease commitments - 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. Operating lease commitments- Group as lessor
The Group has commercial property lease on its owner occupied property. The Group has determined, based on
an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and rewards
of ownership of the property, and so accounts for the contract as operating lease. Income from operating lease is
recognised on a straight line basis over the lease term. 2.5 Significant accounting judgments, estimates and assumptions
The following are 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
(1)
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 are
reassessed each year and adjustments for depreciation are done in future periods if there is indication of impairment
in value. Refer to accounting policy note for property, plant and equipment for the depreciation rates and note 4.3
for the impact of the change in depreciation rates and useful lives of motor vehicles.
(2)
Fair valuation of biological assets
The Group estimates the slaughter weights of the pig grower herd for a 21 week profile based on observed
average physical weights. Pigs aged between 0 - 5 weeks are valued at cost at the reporting date. The Group also
estimates average slaughter weights for the breeding herd. The average live weight of cattle is used in determining
fair value. Biological assets are valued at a price determined on the local market. Refer to note 12 for more detail.
(3)
Provision for obsolete stock The provision for obsolescence is based on an assessment of quality of stock through sampling and laboratory
evaluation. Inventory that no longer meets minimum quality standards as a result of damage or exceeding standard
shelf life is classified as obsolete. Inventory relating to discontinued products is also classified as obsolete. Refer
to note 13 for more detail.
(4)
Provision for impairment of accounts receivable Provision for impairment of receivables is a specific provision made for trade receivables which is reviewed on a
monthly basis. In determining the recoverability of a trade receivable the Group considers any change in the credit
quality of the trade receivable from the date the credit was initially granted up to the end of the reporting period as
well as the value of security held over that receivable. Refer to note 14 for more detail.
32
20152014
USD
USD
3REVENUE In respect of sale of goods: Local Export 64 585 846 - 64 585 846 66 562 290
5 005
66 567 295
4
OPERATING PROFIT Operating profit is arrived at after taking into account the following: 4.1
Auditors remuneration Current year 155 058 135 000
4.2
Depreciation on property, plant and equipment
Depreciation - current year 4.3
Change in accounting estimate At 1 July 2014, the Group reassessed the useful lives of its motor vehicles to 7 - 8 years
1 963 330 1 794 132
(previously 4-5 years) from the date of acquisition and reduced the residual values in
line with the extended useful lives. This had the effect of decreasing the depreciation
expense for the year ended 30 June 2015 by USD145 245. Depreciation for each of the
remaining years is expected to be similarly affected by this change in useful lives and
residual values.
4.4 Depreciation on biological assets Depreciation - current year 198 297 122 851
4.5 Staff costs
Salaries and wages 10 786 576
Social security costs Pension costs 134 570 143 494
485 556 470 548
11 393 572 11 400 618
10 773 446 4.6
OTHER TRADING INCOME Exchange gain - realised Exchange gain - unrealised 38 616 19 105
Rental income 253 948 431 000
Fair value gain: Biological assets 106 645 -
Sundry income 66 361 140 415
528 003 725 868
24 035 (77 131)
23 870 -
62 433 135 348
4.7
Loss/(profit) on sale of plant and equipment 4.8
Loss on disposal of investment Disposal of USD183 546 worth of treasury bills at a discount COLCOM HOLDINGS LIMITED 2015 Annual Repor t
33
20152014
USD
USD
4.9
Interest Income Interest income from investments with Innscor Africa Limited. 457 255 403 245
Interest from staff loans and demand deposits with Banks 4 727 3 293
461 982 406 538
4.10 Interest Expense
Interest on debts and borrowings 88 242 136 779
5TAXATION
Current income tax charge
1 658 234 1 507 100
Deferred tax charge
281 938 340 626
1 940 172 1 847 726
5.1
Reconciliation of tax charge on current profits Notional tax at statutory rates 25.75%
25.75%
Tax on associates income (1.10%)
(0.86%)
Non-taxable income (1.07%)
(0.47%)
Non-deductible expenses 1.31%
1.81%
Effective tax rate 24.89%
26.23%
6
EARNINGS PER SHARE 6.1
Profit for the year attributable to equity holders of the parent 6.2
Number of shares used in calculating earnings per share 5 389 928 4 589 016
Shares in issue 159 040 884 (2014: 159 040 884) Weighted average shares in issue 159 040 884 (2014: 159 040 884) 6.3
Basic earnings per share Basic earnings per share is calculated by dividing the profit for the year attributable
to ordinary equity holders of the parent by the weighted average number of ordinary
shares in issue during the year.
6.4
Headline earnings per share Headline earnings per share is calculated by dividing the headline earnings for the year
attributable to ordinary equity holders of the parent by the weighted average number of
ordinary shares in issue during the year. 34
The headline earnings are calculated as follows:
Profit for the year attributable to ordinary equity holders of the parent Tax on adjustments Headline earnings 5 389 928 4 589 016
Loss/(profit) on disposal of property, plant and equipment 5 944 (77 131)
Loss on disposal of investments 12 054 -
- 5 407 926 444
4 512 329
USD
USD
20152014
6.5
Diluted earnings per share There are no potential ordinary shares with a dilutive effect as at year end and as a
result, diluted earnings per share have been calculated in the same way as basic
earnings per share.
7
DIRECTORS’ REMUNERATION For services as directors 47 687 50 625
Otherwise in connection with management 550 729 576 574
598 416 627 199
8
PROPERTY, PLANT AND EQUIPMENT
Buildings Plant, fittings
and
and
Motor
Land
Improvements
Equipment
Vehicles
Total
USD USD
USD USD
USD
Carrying amount at 30 June 2013
808 281 5 021 143 8 611 267 1 056 971 15 497 662
Gross Carrying amount
808 281 6 081 820 13 579 631 2 686 624 23 156 356
Accumulated depreciation
(1 060 677)
(4 968 364)
(1 629 653)
(7 658 694)
- Additions
- 48 632 3 539 695 286 159 3 874 486
Disposals at cost
- - (61 531)
(231 845)
(293 376)
on disposals
- - 11 436 195 792 207 228
Depreciation charge
- (266 012)
(1 266 612)
(261 508)
(1 794 132)
808 281 Gross Carrying amount
808 281 Accumulated depreciation
- 4 803 763 10 834 255 1 045 569 17 491 868
6 130 452 (1 326 689)
17 057 795 2 740 938 26 737 466
(6 223 540)
(1 695 369)
(9 245 598)
Additions
- 241 340 3 790 464 1 187 340 5 219 144
Disposals at cost
- - (264 781)
(126 817)
(391 598)
on disposals
- - 144 189 94 510 238 699
Depreciation charge
- (163 747)
(1 605 187)
(194 396)
(1 963 330)
808 281 4 881 356 12 898 940 2 006 206 20 594 783
Gross Carrying amount 808 281 6 371 792 20 583 478 3 801 461 31 565 012
Accumulated depreciation (1 490 436)
(7 684 538)
(1 795 255)
(10 970 229)
- COLCOM HOLDINGS LIMITED 2015 Annual Repor t
35
20152014
USD
USD
9
INVESTMENT IN ASSOCIATE
The Group has a 49% interest in Freddy Hirsch Group (Private) Limited
an entity involved in the manufacture and selling of spices and packaging. Freddy Hirsch Group (Private) Limited
- Unlisted shares at cost 148 700
148 700
- Post-acquisition distributable reserve 1 478 524
1 205 977
- Dividends received
-
(60 627)
1 627 224
1 294 050
Associate’s statement of financial position: Non-current assets 936 984
231 340
Current assets 3 082 364
3 071 516
Current liabilities (603 387)
(567 259)
Non-current liabilities (95 094)
(94 679)
Equity 3 320 867
2 640 918
Proportion of Group’s ownership 49%
49%
Carrying amount of the investment 1 627 224
1 294 050
Associates revenue and profit Revenue
7 121 346
6 771 337
Cost of sales (4 900 071)
(4 745 091)
Other income 266 546
197 772
Administrative expenses (1 645 818)
(1 649 194)
Net finance income 109 612
41 430
Profit before tax 951 615
616 254
Income tax expense (271 667)
(134 021)
Profit for the year 679 948
482 233
Group’s share of profit for the year 333 174
236 294
-
183 546
The associate had no contingent liabilities or capital commitments
as at 30 June 2015 or 2014.
10INVESTMENTS
Unquoted investments at cost 36
The investment related to a receivable from the Reserve Bank Of Zimbabwe
and was interest free. This investment was realised during the year. COLCOM HOLDINGS LIMITED 2015 Annual Repor t
20152014
USD
USD
11
OTHER NON-CURRENT FINANCIAL ASSETS
Goodcome (Private) Limited 181 373
181 373
The amount receivable from Goodcome (Private) Limited is unsecured,
non interest bearing and is due by 30 June 2018.
12
BIOLOGICAL ASSETS 20152014
USD USD
12.1 NON-CURRENT At Cost: Opening balance 300 341 262 382
Increase due to purchases 165 244 160 810
Depreciation (198 297)
(122 851)
Closing balance 267 288 300 341
At Fair Value: Opening balance 1 074 360 996 456
Fair value gain 270 312 77 904
Closing balance 1 344 672 1 074 360
Total 1 611 960 1 374 701
Head Count 20152014
Pigs - At cost 318 269
Pigs - At fair value 4 303 3 369
Total 4 621 3 638
Depreciation is calculated on a straight line basis over the expected useful life. COLCOM HOLDINGS LIMITED 2015 Annual Repor t
37
12.2 CURRENT
Cattle Pigs Total
USD USD USD
Fair value at 30 June 2013 40 259 1 586 584 1 626 843
Purchases 318 415 -
318 415
Feed costs 54 290 7 320 017 7 374 307
Slaughter (85 991)
(7 002 709)
(7 088 700)
Fair value adjustment 42 920 (544 241)
(501 321)
Purchases 148 855 -
148 855
Feed costs -
6 488 722 6 488 722
Slaughter (428 928)
(6 095 843)
(6 524 771)
Fair value adjustment (41 090)
(122 577)
(163 667)
2015 2014
Tons Tons
Pig carcasses produced 4 365
4 554
Head count 2015 2014
Cattle 138 142
Pigs 28 724 23 136
No biological assets have been pledged as collateral for borrowings. 12.3 FAIR VALUE ADJUSTMENT 20152014
38
USD USD
Fair value gain on non-current biological assets - pigs
270 312 77 904
Fair value loss on current biological assets - pigs
(122 577)
(544 241)
147 735 (466 337)
Fair value (loss)/gain on current biological assets - cattle
(41 090)
42 920
Total 106 645 (423 417)
12.4 MEASUREMENT OF FAIR VALUES Valuation Process
The group engages independent consultants (veterinary doctors) to determine the estimated cold dressed mass (CDM) of live
pigs at each age. The finance department then determine the fair value of the pigs by applying the market price per kg to the
CDM. The Group Finance Director reviews the fair value calculated for reasonableness.
Valuation Technique
Type
Valuation Technique
Pigs - Comprising of
weaners, growers, gilts,
sows and boars
Market comparison
Technique. The valuation
model is based on the price
per kg of pork multipled by
the CDM.
Cattle - Comprising of
cows, weaner heifers,
weaner steers, bulling
heifers, steers and calves
and bulls
Significant Unobservable
Inputs
Range
Price per kg
USD1.55 - USD2.55
Cold dressed mass
discounting factor
62% - 76%
Age of pigs
4 weeks - 21 weeks
Weight of pigs
7kgs - 150kgs
Market comparison
Technique. The valuation
model is based on the
market price of cattle of
similar age, weight and
genetic make up.
Fair Value Hierarchy
Fair value gain
or (loss)
Level 1
Level 2
Level 3
Total
Pigs
-
-
2 974 625
2 974 625
147 735
Cattle
-
48 730
-
48 730
(41 090)
Total
-
48 730
2 974 625
3 023 355
106 645
Sensitivity
Significant increases/(decreases) in price per kg in isolation would result in a significantly higher or lower fair value measurement.
Significant increases/(decreases) in weight of pigs in isolation would result in a significantly higher or lower fair value measurement.
12.5 COMMITMENTS FOR THE DEVELOPMENT OR ACQUISITION OF BIOLOGICAL ASSETS
The Group had not committed itself to acquiring any biological assets.
39
20152014
USDUSD
13
INVENTORIES Fresh meat 2 694 261 2 995 237
Manufactured products 2 217 122 2 106 660
Engineering spares and tools 149 039 194 714
Other raw materials and packaging 1 456 621 1 468 918
Total inventories at the lower of cost and net realisable value 6 517 043 6 765 529
The amount of inventories recognised as an expense for the period was USD33 516 612 (2014: USD36 725 535).
The amount of inventories written off and recognised as an expense is
USD250 726 (2014: USD252 782) which is recognised in cost of sales. 14
ACCOUNTS RECEIVABLE Trade receivables - third party 2 175 900 1 958 353
Trade receivables - related parties 754 024 410 470
2 929 924 2 368 823
Other receivables 1 112 521 1 690 633
4 042 445 4 059 456
Allowance for credit losses (262 475)
(262 450)
3 779 970 3 797 006
Other receivables mainly comprise prepayments.
As at 30 June 2015 the ageing analysis of trade receivables was as follows:
Past due but not impaired
Total
Neither past due
nor impaired
30 - 60 days
60 - 90 days
More than 90
days
USD
USD
USD
USD
USD
2015
2 929 924
2 366 354
140 755
63 235
359 580
2014
2 368 823
1 997 325
62 310
45 304
263 884
Trade debtors are non-interest bearing and generally on up to 30 days credit.
See Note 31.3 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.
20152014
USDUSD
Reconciliation for allowance for credit losses on trade and other receivables is as follows: Opening balance 262 450 236 171
Charge for the year 19 030 108 038
Utilised during the year (19 005)
(81 759)
40
15
CASH AND BANK Cash at banks and on hand Cash at banks earns interest at floating rates based on daily bank deposit rates. COLCOM HOLDINGS LIMITED 2015 Annual Repor t
8 270 331 10 036 264
16
20152014
USDUSD
SHARE CAPITAL 16.1Authorised 200 000 000 ordinary shares of USD0.01 each 2 000 000 2 000 000
16.2 Issued and fully paid 159 040 884 ordinary shares of USD0.01 each 1 590 409 1 590 409
16.3 Unissued shares 40 959 116 ordinary shares of USD0.01 each In terms of the Articles of Association but subject to the limitations imposed by
409 591 409 591
the Companies Act (Chapter 24:03), and in terms of a special resolution of the
company in general meeting, the unissued shares comprising 40 959 116 (2014:
40 959 116) ordinary shares have been placed at the disposal of the directors for
an indefinite period.
17
DIVIDENDS PAID AND PROPOSED Paid during the year: Dividends on ordinary shares: Final dividend for 2014: 1.89 cents per share 3 005 873 -
Interim dividend 2015: 0.50 cents per share (2014: 0.40 cents per share) 795 204 636 164
3 801 077 636 164
Proposed for approval at the annual general meeting (not recognised as a liability
as at 30 June 2015) Dividends on ordinary shares: Final dividend for 2015: 1.80 cents per share (2014: 1.89 cents per share ) 18
MATERIAL PARTLY-OWNED SUBSIDIARIES Financial information of a subsidiary that has material non-controlling
interests is provided below:
Proportion of equity interest held by non-controlling interests:
Associated Meat Packers (Private) Limited - 49.9%
2 862 736 3 005 873
1 496 582 1 155 313
441 070 541 798
Accumulated balances of material non-controlling interest:
Profit allocated to material non-controlling interest:
The summarised financial information of this subsidiary is provided below.
This information is based on amounts before inter-company eliminations.
41
20152014
USDUSD
Summarised statement of profit or loss:
Revenue
25 266 994 25 145 381
Cost of sales
(20 019 953)
(20 278 624)
Gross profit
5 247 041
4 866 757
Other income
2 852
155 273
Administration expenses
(4 035 409)
(3 543 052)
Interest expense
(21 373)
(20 027)
Profit before tax
1 193 111 1 458 951
Income tax
(309 203)
(373 183)
Profit for the year
883 908 1 085 768
Attributable to non-controlling interests
478 115
608 275
Dividends paid to non-controlling interests
(99 800)
(49 900)
Summarised statement of financial position:
Inventories, trade and other receivables and cash and bank balances (current)
Property, plant and equipment and other non-current financial assets
2 181 731 1 905 813
Trade and other payables (current)
(1 401 952)
(1 335 207)
Interest-bearing loans and borrowing and deferred tax liablilities (non current)
(252 229)
(466 168)
Total equity
2 999 662 2 315 754
2 472 112 2 211 316
Attributable to equity holders of parent
1 380 295 1 074 702
Non-controlling interest
1 619 367 1 241 052
2 999 662
2 315 754
Summarised cash flow information
Operating
1 435 007 524 221
Investing
(589 884)
(801 923)
Financing
(492 928)
(187 511)
Net increase/(decrease) in cash and cash equivalents
352 195 (465 213)
19
NET DEFERRED TAX LIABILITIES 19.1Reconciliation Opening balance 3 221 762 2 881 136
Charge for the year 281 938 340 626
Closing balance 3 503 700 3 221 762
19.2 Analysis of net deferred tax liabilities Accelerated depreciation for tax purposes 3 337 747 3 021 395
Fair value adjustments on biological assets 80 292 93 103
Unrealised exchange differences 9 944 8 053
Prepayments 70 977 129 027
Allowance for credit losses (88 667)
(29 816)
Conversion costs included in carrying amount of inventory 93 407 3 503 700 3 221 762 The net deferred tax liabilities are made up as follows: 42
Deferred tax assets Deferred tax liabilities 3 503 700 3 226 143
3 503 700 3 221 762
- (4 381)
20152014
USDUSD
20
INTEREST-BEARING BORROWINGS Long term portion 452 225 901 150
Short term portion 446 667 446 667
898 892 1 347 817
The bank loan is from Standard Chartered Bank accrues interest at 9% per annum
and is secured by guarantee by the parent company. The loan is repayable biannually over 3 years up to January 2017.
20.1 Borrowing powers Maximum permitted borrowings in terms of the Articles of Association 62 729 812 59 552 110
Total borrowings (898 892) (1 347 817)
Unutilised borrowing capacity 61 830 920 58 204 293
The maximum permitted borrowing is twice the equity attributable to equity holders of the parent Banking Facilities As at 30 June 2015, total banking facilities in place amounted to USD5 900 000 of which USD893 333 had been utilised. Security Facilities are secured by guarantee by the parent company. 21
ACCOUNTS PAYABLE Trade payables - third party Trade payables - related parties 311 635 181 015
Other payables 2 344 304
2 415 588
6 819 458 6 268 728
671 303 736 113
3 533 519 3 672 125
Other payables mainly comprise payroll accruals, value added tax and accruals for
utilities.
Trade and other creditors are non-interest bearing and are normally settled on 30
day terms.
22PROVISIONS Leave pay Opening balance Charge for the year 223 348 248 712
Utilised during the year (251 890)
(313 522)
43
20152014
USDUSD
23
CASH GENERATED FROM OPERATING ACTIVITIES BEFORE INTEREST AND TAX Profit before interest and tax 7 088 277 6 538 901
Depreciation on property, plant and equipment 1 963 330 1 794 132
Depreciation of biological assets 198 297
122 851
Fair value adjustment on biological assets (106 645)
423 417
Loss/(profit) on sale of plant and equipment 24 035 (77 132)
Loss on disposal of investments 23 870 -
Leave pay provision charged to profit or loss 223 348 248 712
Stock write offs 250 726 252 782
Unrealised exchange gain (38 616)
(19 105)
Allowances for credit losses 19 030 108 038
Bad debts written off 69 315 -
Provision for obsolete stock 30 732 -
Increase in biological assets (112 806)
(604 022)
(Increase)/decrease in inventories (32 972)
223 193
(Increase)/decrease in accounts receivable (71 309)
1 310 052
(Decrease)/increase in accounts payable (40 654)
927 341
Decrease in provision in leave pay
(251 890)
(313 523)
9 236 068 10 935 637
24
TAXATION PAID Opening balance 151 543 72 108
Income tax charge 1 658 234 1 507 100
Closing balance 13 314 (151 543)
Cash amount paid 1 823 091 1 427 665
25
CONTINGENT LIABILITIES There are no contingent liabilities as at 30 June 2015.
26
CAPITAL COMMITMENTS Contracts and orders placed 673 065 950 651
Approved by the Directors but not yet contracted for 7 718 875 6 004 972
8 391 940 6 955 623
Expenditure will be funded from internal resources. 27
FUTURE LEASE COMMITMENTS - GROUP AS LESSEE The Group has entered into operating leases on certain properties. These leases have an average life of between six and ten
years with renewal options included in some of the contracts. There are no restrictions placed upon the Group by entering into
these leases. Future minimum rentals payable under non-cancellable operating leases at 30 June are as follows:
20152014
USDUSD
44
Payable within one year
690 369 642 151
Payable between one and five years
961 328 1 212 140
Payable between six and ten years
545 274 395 930
2 196 971 2 250 221
28
FUTURE LEASE COMMITMENTS - GROUP AS LESSOR The Group has entered into commercial property leases on its property consisting of Group surplus office buildings. These noncancellable leases have remaining terms of between one to three years. All lease include a clause to enable upward revision of
the rental charge on an annual basis according to prevailing market conditions.
Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows:
20152014
USDUSD
Within one year After one year but no more than five years -
79 588
82 941 331 053
29
82 941 251 465
RELATED PARTY TRANSACTIONS 29.1 The consolidated financial statements include the financial statements of Colcom Holdings Limited and its subsidiaries and
associates listed below: Nature of % equity
relationship interest
Colcom Foods Limited Subsidiary 100%
Greatrift Delight (Private) Limited Subsidiary 100%
Associated Meat Packers (Private) Limited Subsidiary 50.1%
Gredal Enterprises (Private) Limited Subsidiary 50.5%
Freddy Hirsch Group (Private) Limited Associate 49.0%
29.2 Innscor Africa Limited is the parent entity of Colcom Holdings Limited. 29.3 Related party transactions exist between Colcom Holdings Limited
and the following companies: Hardwhite Trading (Private) Limited t/a Fast Foods Southern Region
Innscor Africa Limited t/a Fast Foods(Northern) Harare
Fellow subsidiary
Innscor Africa t/a IFZ Central Kitchen
Fellow subsidiary
Fellow subsidiary
Innscor Africa Bread Company Zimbabwe (Private) Limited
t/a Innscor Bread Harare
Fellow subsidiary
Irvines Zimbabwe (Private) Limited
Fellow subsidiary
Katrice Investments Private Limited
Fellow subsidiary
National Foods Holdings Limited
Fellow subsidiary
Scopeserve Investments (Private) Limited t/a Groombridge SPAR
Fellow subsidiary
Spearhead Sales (Private) Limited t/a SPAR Mutare
Fellow subsidiary
Swissmart Investment (Private) Limited t/a Borrowdale Village SPAR
Fellow subsidiary
Bedra Enterprises (Private) Limited
Fellow subsidiary
SPAR Harare (Private) Limited t/a SPAR Eastern Region
Fellow subsidiary
New Style Pork (Proprietary) Ltd (SA) t/a Lynca Meats
Controlled by key
management
personnel
45
Sales to related parties 2015
USD
Parent Company Freddy Hirsch Group (Private) Limited - 2014
USD
Purchases from related parties
2015
USD
2014
USD
-
360 000 360 000
97 195 122 1 149 568 1 679 627
560 170 639 576 1 110 732 925 860 651 629 481 301 1 159 132 94 Hardwhite Trading (Private) Limited t/a
Fast Foods Southern Region - Innscor Africa Limited t/a Fast Foods
(Northern) Harare Innscor Africa t/a IFZ Central Kitchen - 1 958 Innscor Africa Bread Company Zimbabwe
Private Limited t/a Innscor Bread Harare Irvines Zimbabwe (Private) Limited Katrice Investments (Private) Limited - -
- 3 078 316 227 454 334 984 39 390 23 053 726 238 766 363 - 323 059 349 389 - Borrowdale Village SPAR 465 201 388 078 - Bedra Enterprises (Private) Limited 202 512 -
- 52 411 -
- National Foods Holdings Limited 21 090
53 727
- 638 376 394 050
Scopeserve Investments (Private) Limited
t/a Groombridge SPAR Spearhead Sales (Private) Limited t/a
SPAR Mutare Swissmart Investment (Private) Limited t/a
SPAR Harare (Private) Limited t/a
SPAR Eastern Region New Style Pork (Proprietary) Ltd (SA)
t/a Lynca Meats - 5 615 123 -
1 902 965 3 908 820 7 131 183 Amounts owed by related parties 2 508 494
Amounts owed to related parties
2015
2014
3 002 3 815 41 570 22 650 - -
92 412 51 630 - -
85 311 92 706 - -
131 072 132 870 USD
Freddy Hirsch Group (Private) Limited USD
2015
USD
82 898 2014
USD
134 771
Hardwhite Trading (Private) Limited t/a
Fast Foods Southern Region Innscor Africa Limited t/a Fast Food
(Northern) Harare Innscor Africa t/a IFZ Central Kitchen Innscor Africa Bread Company Zimbabwe
Private Limited t/a Innscor Bread Harare
Irvines Zimbabwe (Private) Limited 226 125 - 8 270 - - 1 702
9 042
Katrice Investments (Private) Limited 8 055 12 724 National Foods Holdings Limited 4 754 3 247 33 337 20 751 - -
10 344 16 816 - -
Borrowdale Village SPAR 26 615 16 989 - -
Bedra Enterprises (Private) Limited 31 155 - - -
60 273 - - -
28 548 35 500
Scopeserve Investments (Private) Limited
t/a Groombridge SPAR Spearhead Sales (Private) Limited t/a
SPAR Mutare Swissmart Investment (Private) Limited t/a
SPAR Harare (Private) Limited t/a
SPAR Eastern Region New Style Pork (Proprietary) Ltd (SA)
t/a Lynca Meats - 754 025 - 374 198 191 919 -
311 635 181 015
NOTES: Related party relationships exist between Directors, key management personnel and associates, subsidiary companies and
joint ventures. All transactions are conducted at terms equivalent to those that prevail in arms length transactions.
46
2015 2014
USD USD
29.4 Compensation to key management:
Short term benefits:
Executive directors 550 729 576 574
Other key management 1 275 714 1 458 253
Post-employment pension benefits 192 778 141 737
2 019 221 2 176 564
Other key management are as outlined on page 6 of the annual report under Senior Management.
30
PENSION AND RETIREMENT PLAN
30.1 Colcom Pension Scheme
This is a self-administered defined contribution scheme where all permanent employees are eligible to become members.
Contributions are at a rate of 22.5% of pensionable emoluments less NSSA for all those who joined the fund prior to 1 June
2012 and 15% for new entrants after 1 June 2012. In both cases members contribute 7.5%.
30.2 National Social Security Authority Scheme The scheme was established and is administered in terms of Statutory Instrument 393 of 1993. Introduced in 1994 the Pension
and Other Benefits Scheme is based on a 50/50 contribution from the employers and employees and are limited to specific
contributions legislated from time to time. These are presently 7% of pensionable emoluments of which the maximum monthly
pensionable salary is USD700. A total monthly contribution of USD49 is therefore the maximum per employee.
31
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s principal financial instruments comprise bank loans and overdrafts, forward cover contracts, cash and short-term
deposits. The main purpose of these financial instruments is to raise finance for the Group’s operations or the management
of foreign currency risk or to achieve a return on surplus short term funds. The Group has various other financial assets and
financial liabilities such as trade receivables and trade payables, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit
risk. The Board reviews and agrees policies for managing each of these risks which are summarised below.
31.1 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 long term loan
and variable short term overdraft rates. The Group’s policy is to manage its interest cost by limiting exposure to overdrafts and
where borrowings are required to borrow at favourable and fixed rates of interest.
The following table demonstrates the sensitivity to a reasonably possible change in the interest rate, with all other variables held
constant, of the Group’s profit before tax.
47
Change in
interest rate 20152014
USD USD
+5%
(3 596)
(5 391)
-5%
3 596 5 391
Effect on profit before tax
31.2 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. Such exposure arises from the sale or purchase by an operating unit in currencies other than the unit’s
functional currency. 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. As at 30 June 2015 the Group’s exposure to foreign exchange rate was as follows:
30 Jun 15
Liabilities Assets Net exposure
South African Rand 997 946 British Pound 30 Jun 14
- 1 638 952 (641 006)
78 (78)
South African Rand British Pound 964 404 - 521 882 442 522
30 (30)
The following table demonstrates the sensitivity to a reasonably possible change in the Rand exchange rate with all other
variables held constant of the Group’s profit before tax Change in 20152014
Rand rate
Effect on profit before tax
USD USD
+10%
5 242 (4 170)
-10%
(5 242)
4 170
The effect on equity is immaterial.
31.3 Credit risk
Credit risk is the risk that a counterparty 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 and from its financing activities including
deposits with banks and financial institutions foreign exchange transactions and other financial instruments. The Group trades only with recognised creditworthy third parties. It is the Group’s policy that all customers who wish to trade
on credit terms are subject to credit verification procedures. In addition, receivable balances are monitored on an ongoing basis
with the result that the Group’s exposure to bad debts is not significant. For export sales and prepayments credit terms are
specified contractually within the regulations laid down by the Reserve Bank of Zimbabwe. With respect to credit risk arising from the other financial assets of the Group which comprise cash and cash equivalents, the
Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount
of these instruments less the market value of any security held.
48
Trade receivables
Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating
to customer credit risk management. Credit quality of the customer is assessed based on an extensive credit rating scorecard
and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly
monitored.
The requirement for an impairment is analysed at each reporting date on an individual basis for major clients. Additionally a large
number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation
is based on actually incurred historical data. The maximum exposure to credit risk at the reporting date is the carrying value of
each class of financial assets.
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance
with the Group’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits
assigned to each counterparty. Counterparty credit limits are reviewed by the Group’s Board of Directors on an annual basis,
and may be updated throughout the year subject to approval of the Group’s Audit Committee. The limits are set to minimise the
concentration of risks and therefore mitigate financial loss through potential counterparty’s failure.
31.4 Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are
settled by delivering cash or another financial asset. The Group’s objective is to maintain a balance between continuity of funding
through a well managed portfolio of short-term investments and/or flexibility through the use of bank overdrafts, bank loans and
finance leases.
The table below summarises the maturity profile of the Group’s financial liabilities at 30 June 2015 based on contractual
undiscounted payments.
Year ended 30 June 2015 Within
Between
More than
3 months 4 to 12 months
12 months Total
USD USD USD USD
247 844 251 126 454 223 953 193
Interest bearing borrowings Trade and other accounts payable 5 963 436 217 752 -
6 181 188
TOTAL 6 211 280 468 878 454 223 7 134 381
Year ended 30 June 2014 Interest bearing borrowings
254 383 Trade and other accounts payable 6 268 728 TOTAL 6 523 111 294 465 1 034 033 1 582 881
-
-
6 268 728
294 465 1 034 033 7 851 609
31.5 Biological assets risk management policy
Biological assets are living animals that are managed by the Group. Agricultural produce is the harvested product of the
biological asset. Biological assets of the Group include pigs and cattle.
These biological assets are exposed to various risks, which include, disease/infection outbreaks, theft of livestock and price
fluctuations. The Group has put in place measures and controls to safeguard losses due to the above risks. These measures
and controls, include among other things, bio-security, vaccination to prevent infections and regular evaluation of prices. The fair value of biological assets has been determined in accordance with IFRS 13. In arriving at their estimates of fair value,
the Directors have used their market knowledge, professional judgment and historical transactional comparables.
49
Pigs
2015 2014
Live weight estimates - kg
1 720 895 1 445 439
Cattle
Live weight estimates - kg
30 611 223 296
The analysis below presents the sensitivity of profit/(loss) before tax due to changes in the live weight. The sensitivities presented
are favourable movements. If the sensitivity variables were unfavourable, the negative impact on profit would be of a similar
magnitude:
2015 2014
PigsUSDUSD
Live weight 3%
106 677 88 333
Cattle
Live weight
5%
2 437 32
EXCHANGE CONTROL Remittance of dividends is subject to Exchange Control approval. 18 495
33
FAIR VALUE OF FINANCIAL INSTRUMENTS The estimated net fair values of all financial instruments, approximate the carrying amounts shown in the financial statements.
34
CAPITAL MANAGEMENT The primary objective of the Group’s capital management is to ensure that all its companies maintain healthy capital ratios in
order to support the business and maximise shareholder value. For the purpose of the Group’s capital management, capital
includes issued capital, and all other equity reserves attributable to the equity holders of the parent The Group manages its capital structure and makes adjustment to it in light of changes in the economic environment. To
maintain or adjust the capital structure the Group may adjust the dividend payment to shareholders, return capital to
shareholders, or issue new shares. The Group monitors capital using a gearing ratio, which is interest-bearing debt as a
percentage of equity attributable to equity holders of the parent. No changes were made to the objectives, policies or processes during the years ended 30 June 2014 and 30 June 2015.
20152014
Analysis of Capital Ratios: USD USD
Interest bearing borrowings 898 892 1 347 817
Total equity attributable to equity holders of the parent 31 364 906 29 776 055
Gearing 2.9%
4.5%
35
SEGMENT INFORMATION
For management purposes, the group is organised into business units based on their products and services and has three
reportable operating segments as follows: The pork business involves the production of pigs and pig based products.
The beef and chicken business involves the processing and marketing of beef products and trading of chicken products. 50
The other business segment includes share of profit of associate company and sales of ostrich skins, now effectively dormant.
Management monitors the operating results of its business units separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is evaluated based on operating profit or loss which is measured
differently from operating profit or loss in the consolidated financial statements in that it excludes depreciation and fair value
adjustments. Group financing is managed on a group basis and is not allocated to operating segments. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.
30 June 2015
Business Segments Beef &
Pork Chicken Other Eliminations Group
USD USD USD USD USD
Revenue Inter - segment sales External Sales 1 700 271 2 620 082 -
39 898 612 24 679 994 7 240 (4 320 353)
- 64 585 846
-
41 598 883 27 300 076 7 240 (4 320 353) 64 585 846
Operating profit/(loss) before depreciation 8 903 085 1 527 080 (26 310)
(1 458 894)
8 944 962
Depreciation on property, plant & equipment
1 680 609 282 720 -
-
1 963 330
Depreciation on biological assets 198 297 -
-
-
198 297
Equity accounted earnings -
-
333 174 -
333 174
Profit/(loss) before taxation 8 087 284 1 193 111 (26 310)
(1 458 894)
7 795 191
Segment assets 40 003 911 4 653 843 130 264 (513 337) 44 274 681
Segment liabilities 10 083 370 1 654 181 17 564 (520 304) 11 234 811
Capital expenditure 4 594 941 624 203 -
30 June 2014
-
5 219 144
Revenue Inter - segment sales External Sales 1 555 717 807 476 -
42 229 390 24 337 905 -
(2 363 193)
- 66 567 295
-
43 785 107 25 145 381 -
(2 363 193) 66 567 295
Operating profit/(loss) before depreciation 7 130 709 1 675 962 (120)
(50 100)
8 756 451
Depreciation on property, plant & equipment 1 573 911 220 221 -
-
1 794 132
Depreciation on biological assets 122 851 -
-
-
122 851
Equity accounted earnings -
-
236 294 -
236 294
Profit/(loss) before taxation 5 636 223 1 458 951 (120)
(50 100)
7 044 954
Segment assets 38 890 858 4 103 974 313 465 (450 035) 42 858 262
Segment liabilities 10 266 862 1 788 219 174 455 (564 002) 11 665 534
Capital expenditure 3 022 466 852 020 -
-
3 874 486
36
EVENTS AFTER REPORTING DATE There have been no significant events after reporting date which affect these financial statements.
51
Company Statement of Financial Position
As at 30 June 2015
COMPANY
2015
2014
Notes
USD
USD
A
1 575 959
1 575 959
B
14 450
14 450
1 590 409
1 590 409
1 590 409
1 590 409
1 590 409
1 590 409
ASSETS
Non-current assets
Investment in subsidiary
Current assets
Accounts receivable
Total assets
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Total equity
DIRECTORS J Koumides T T Kumalo
Harare
3 October 2015
Notes
A. INVESTMENT IN SUBSIDIARY
This represents a 100% Shareholding in Colcom Foods Limited.
B. ACCOUNTS RECEIVABLE
52
The amount is receivable from Colcom Foods Limited.
16
Shareholders’ Analysis
As at 30 June 2015
Shareholding Distribution
Range
Shares
%
Holders
%
1-5000
1 771 604
1.11
1 905
85.62
5001 - 10000
1 022 500
0.64
144
6.47
10001 - 25000
1 451 624
0.91
92
4.13
25001 - 50000
1 166 255
0.73
34
1.53
50001 - 100000
1 312 704
0.83
18
0.81
100001 - 500000
1 924 408
1.21
13
0.58
200001- 500000
2 644 090
1.66
9
0.40
500001 - 1000000
2 413 892
1.52
4
0.18
1 000 001 and over
145 333 807
91.39
6
0.28
TOTAL
159 040 884
100.00
2 225
100.00
June 2015
CATEGORY
June 2014
No. of shares
%
No. of shares
%
3 233 752
2.0
3 329 024
2.1
128 901 641
81.0
128 964 359
81.2
Banks and nominees
3 005 696
1.9
2 907 311
1.8
Insurance companies
15 528 824
9.8
15 551 032
9.8
Pension funds
5 259 361
3.3
5 213 765
3.2
Non-residents
3 111 610
2.0
3 075 393
1.9
159 040 884
100.0
159 040 884
100.0
Individuals
Companies
Included in the category of “ 500 001 shares and over” is Colcom Employees Investment Company (Private) Limited which holds
617 877 shares for the beneficial participation of 638 employees in the Company’s profits.
TOP TEN SHAREHOLDERS
June 2015
June 2014
No. of shares
%
%
126 071 739
79.27
79.27
13 447 260
8.46
8.45
Old Mutual Zimbabwe Limited
2 000 000
1.26
1.26
Zesa Staff Pension Fund
1 485 000
0.93
0.93
The Industrial Fund For Developing Countries
1 238 390
0.78
0.78
Norsad Finance Limited Nnr
1 107 451
0.70
0.70
Communication And Allied Industries Pension Fund
704 410
0.44
0.38
Colcom Employee Investments Company (Private) Limited
619 381
0.39
0.38
National Social Security Authority (Nps)
617 877
0.39
0.39
Stanbic Nominees (Private) Limited - Nnr
594 736
0.37
0.27
11 154 640
7.01
7.19
159 040 884
100.00
100.00
Name
Innscor Africa Limited
Old Mutual Life Assurance Company Zimbabwe Limited
Other
53
Shareholders’ Analysis - (cont’d)
Directors' shareholding
At 30 June 2015 the Directors held directly or indirectly the following shares in the Company:
2015
2014
-
-
128
128
B. Fairlie
200 000
100 000
A. Fourie
-
-
40 550
40 550
D. Long
-
-
J. P. Schonken
-
-
207 230
220 738
J. Koumides
P. Chapendama
T. T. Kumalo
C. Tumazos
There have not been any changes in the Directors’ interests in shares of the Company between 30 June 2015 and the date of this
report.
54
Notice is hereby given that the Seventy-fourth Annual General Meeting of the members of Colcom Holdings Limited will be held at
the Registered Office of the Company at 1/3 Coventry Road, Workington, Harare on Friday 13 November 2015 at 9.00 am for the
following purposes:
ORDINARY BUSINESS
1. To receive and consider the annual financial statements for the year ended 30 June 2015, together with the report of the Directors
and the Auditors thereon.
2. To re-elect retiring Directors: Mr J Koumidies and Mrs P Chapendama who retire by rotation and being eligible they offer themselves
for re-election.
3. To approve Directors fees for the financial year ended 30 June 2015.
4. To approve the remuneration of the auditors’ for the financial year ended 30 June 2015 and reappoint Ernst & Young of Harare
as auditors of the Company until the conclusion on the next Annual General Meeting.
SPECIAL BUSINESS
5. To consider and, if deemed fit, to pass with or without modification, the following ordinary resolution: “That the Company
authorises in advance, in terms of section 79 of the Companies Act (Chapter 24:03) and the Zimbabwe Stock Exchange (ZSE)
Listing Requirements, the purchase by the Company of its own shares upon such terms and conditions and in such amounts as
the Directors of the Company may from time to time determine and such authority hereby specifies that:
i)
the authority in terms of this resolution shall expire on the date of the Company’s next Annual General Meeting; and
ii) acquisitions shall be of ordinary shares which, in the aggregate in any one financial year, shall not exceed 10% (ten percent) of
the Company’s issued ordinary share capital; and
iii) the maximum and minimum prices, respectively, at which such ordinary shares may be acquired will be the weighted average
of the market price at which such ordinary shares are traded on the ZSE, as determined over the 5 (five) business days
immediately preceding the date of purchase of such ordinary shares by the Company; and
iv) a press announcement will be published as soon as the Company has acquired ordinary shares constituting, on a cumulative
basis in the period between annual general meetings, 3% (three percent) of the number of ordinary shares in issue prior to the
acquisition; and
v) if during the subsistence of this resolution the Company is unable to declare and pay a cash dividend then this resolution shall
be of no force and effect.”
Note:
In terms of this resolution, the Directors are seeking authority to allow use of the Company’s available cash resources to purchase its
own shares in the market in terms of the Companies Act and the regulations of the ZSE, for treasury purposes. The Directors will only
exercise the authority if they believe that to do so would be in the best interests of shareholders generally. In exercising this authority,
the Directors will duly take into account following such repurchase, the ability of the Company to pay its debts in the ordinary course
of business, the maintenance of an excess of assets over liabilities, and for the Company and Group, the adequacy of ordinary capital
and reserves as well as working capital.
6. To resolve as an ordinary resolution, with or without amendments: “That the Company be and is hereby authorised to make any
loan to any Executive Director or to enter into any guarantee or provide any security in connection with a loan to such Executive
Director for the purpose of enabling him to properly perform his duty as an officer of the Company, as may be determined by the
Remuneration Committee of the Board of Directors, provided that the amount of the loan or the extent of the guarantee or security
shall not exceed the annual remuneration of that Director.”
Any Other Business
7. To transact any other business competent to be dealt with at the Annual General Meeting.
55
Proxies
Members are entitled to appoint one or more proxies to act in the alternative and to attend and vote and speak in their place. A proxy
need not be a member of the Company.
Proxy forms must reach the Company’s registered office not less than 48 hours before the meeting.
BY ORDER OF THE BOARD
A. Lorimer
Company Secretary30 September 2015
56
Shareholders’ Calendar
Seventy-fourth Annual General Meeting
ANTICIPATED DATES
13 November 2015
Interim reports
- 6 months to 31 December 2015
- 12 months to 30 June 2016
March 2016
Annual Report published
October 2016
Seventy-fifth Annual General Meeting
November 2016
September 2016
57

Untitled - Colcom Foods

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