I FABRICATION PLASTICS

INSTALLATION AND FABRICATION PLASTICSPIPE ASSOCIATION

1www.proplast ics .co.z w

ContentsCompany Profile 2

Proplastics Unique Proposition 3

Financial Highlights 4 - 5

Ratios and Statistics 6

Chairman’s Statement 7 - 8

Chief Executive Officer’s Report 9 - 10

Corporate Governance, Directorate and Executive Committees 11 - 13

Audit Committee 14

Sustainabilty 15 - 16

Report of the Directors 17 - 18

Report of the Independent Auditors 19 - 24

Consolidated Statement of Financial Position 25

Consolidated Statement of Profit or Loss and other Comprehensive income 26

Consolidated Statement of Changes in Equity 27

Consolidated Statement of Cash Flows 28

Company Statement of Financial Position 29

Company Statement of Profit or Loss and Other Comprehensive Income 30

Company Statement of Changes in Equity 31

Company Statement of Cash Flows 32

Accounting Policies 33 - 47

Notes to the Consolidated and Company Financial Statements 48 - 73

Shareholder Analysis - Consolidated Top 20 74

Shareholder Analysis - Company Statistics 75

Notice to Shareholders 76

Proxy Form 77 - 78

2 PROPLASTICS L IMITED | 2020 ANNUAL REPOR T

Company ProfileName of Company: Proplastics Limited

Address: 5 Spurn Road

Ardbennie

P.O. Box CY 1199

Causeway

Harare

Zimbabwe

Telephone: + 263 773 894 561/2

Cell: +263 773 888 926

E-mail: [email protected]

Web: www.proplastics.co.zw

Description of Company: Manufacturer of Polyvinyl

Chloride (PVC); High-

Density Polyethylene

(HDPE); Low Density

Polyethylene (LDPE) Pipes

and related fittings

Company Established: 1965

Chief Executive Officer: Kudakwashe Leo Chigiya

E-mail: [email protected]

Proplastics Limited Inimitable Offering

Proplastics Limited (formerly Murray & Roberts and Masimba Industries

(Private) Limited), is the only Zimbabwean plastic pipes and fittings

manufacturer listed on the Zimbabwe Stock Exchange.

Proplastics Limited is Zimbabwe’s leading plastic pipe manufacturer,

specialising in the production of Polyvinyl Chloride (PVC), High-Density

Polyethylene (HDPE), Low-Density Polyethylene (LDPE) pipes and related

fittings. The pipes are manufactured for various applications in irrigation,

water and sewer reticulation, mining, telecommunications and building

construction.

Proplastics Limited was established in 1965, Proplastics has over 50 years

of experience in manufacturing complete range of plastic pipes and

fittings in Zimbabwe with a significant market share in the SADC region.

Proplastics pipes and fittings are easy to install and are adapted to a

variety of conditions encountered during use. Our products are corrosion-

resistant, light in weight, have zero failure rates, are energy efficient which

ensures long-term performance.

We request that in your next project ‘’You should invest in pipe material

of choice, invest in Pipe Systems That Last; invest in Proplastics PVC and

HDPE pipes and fittings.’’

Please watch out for cheap imitations and products made from recycled

materials and always insist on a minimum of 50 years performance

guarantee on your next purchase……remember ‘’Cheap Always Cost a

Fold.’’


Proplastics Unique Proposition Proplastics Cause Top of Client’s Mind.

Proplastics Vision Unrivalled Leadership in Plastic Piping Systems.

Proplastics Mission To deliver World Class Plastic Piping Systems.

What makes us unique Game Changing Capabilities.

Scope of the Game Plastic Piping Systems.

Our Brand Expression Pipe Systems that Last.

Our Strategic Focus Areas Value | Growth | Innovation | Risk.

Our Behaviours Learning | Caring | Performance Driven | Excellence | Team Proplastics.

Our Values Integrity | Respect | Leadership | Communication | Teamwork.


Financial Highlights

Turnover, PBT and PAT - Inflation Adjusted

Inflation Adjusted Historical

Turnover p 4% to ZWL 1,095,912,509 p 612% to ZWL 813,367,863

EBT q 31% to ZWL173,785,062 p 344% to ZWL194,331,006

Sales volumes p 19% to 4,671 Tons p 19% to 4,671 Tons

Profit for the year p 0,415% to 83,581,407 p 395% to 161,386,391

Gross profit margins q 42% to 29% q 61% to 49%

Overheads p 36% to ZWL 279,977,166 p 655% to ZWL 190,710,370

Quick ratio p to 0.58 : 1 from 0.28:1 p to 0.56 :1 from 0.27:1

ROCE q to 15% from 23% q 15% from 25%

Current ratio p to 1.6: 1from 1.25:1 p to 1.4:1 from 0.7:1

ROA q to 63% from 75% p to 49% from 47%

Debt /Equity p to 3.6% from 3.3 % q to 3.9 % from 4%

EBITDAq

at 25% (prior year 30%) of revenue

qat 30% (Prior year 41%)revenue

Cash generated from operating activies to revenue q (4.49%)( Dec 2019 27%) q 5.31 (Dec 2019, 49%)

Dividend per share p

at ZWL 20.50 cents (Dec2019 ZWL 0.80 cents)

pat ZWL 20.50 cents (Dec2019 ZWL 0.80 cents )

Basic EPS p

at 32.59 cents (Dec 2019, ZWL 32.84 cents )

pat 62.93 cents (Dec 2019, ZWL12.87)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

622.08106376,279,67452,475.672

2018 2020

888,633.52666,629,56717,613,096

1,051,662,732252,126,769

83,236,261

1,095,912,509173,785,062

83,581,407

2017 2019


Financial Highlights (continued)

Turnover, PBT and PAT - Historical

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

16,103,9351,974,6671,358,448

2020201920182017

24,091,9894,834,7923,597876

114,300,45143,788,62932,627,403

813,367,893194,331,006161,386,391


Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 Audited Audited Unaudited Unaudited Earnings (ZWL cents) Basic earnings per share 32.59 32.84 62.93 12.87Diluted earnings per share 32.27 32.03 62.3 12.56

Profitability Profit before interest and tax on turnover (%) 19% 25% 25% 39%Return on capital employed (%) 15% 23% 15% 25%

Productivity Payroll cost on turnover (%) 9% 7% 9% 6%Total average assets (excluding bank balances and cash)(ZWL) 1,702,565,137 1,369,267,266 1,616,849,869 234,796,200

Finance Debt to Equity 3.6% 3.3% 3.9% 7%Current assets to current liabilities 1.6 1.25 1.4 0.7%Ordinary shares in Issue (millions) 259 260 259 260Share price at period end (ZWL-cents) 860.98 368 860.98 82Market Capitlisation (ZWL-millions) 2,230 956 2,230 213

Other Number of employees 216 235 216 235

Ratios and Statistics


INTRODUCTION

It is my pleasure to present to you the operational and financial results for the year ended 31 December 2020.

Zimbabwe is still classified as a hyperinflationary economy. The results, therefore, have been prepared in accordance with the provisions of IAS 29 “Financial Reporting in Hyperinflationary Economies” for both Group and Company. In the report “Group” refers to Proplastics Limited and its subsidiary companies, Promouldings (Private) Limited and Dudway Investments (Private) Limited.

OPERATING ENVIRONMENT

The operating environment remained extremely challenging in 2020 with persistent foreign currency shortages as well as the negative effects of the COVID-19 pandemic. Resultantly consumer purchasing power was heavily eroded, thus negatively affecting aggregate demand for the Group’s products.

The introduction of the foreign currency auction bidding system during the year resulted in some stability in the exchange rate and as a result, there was a welcome slowdown in inflation. We expect the authorities to continue with efforts to improve this system. The introduction of SI185, which allowed consumers with free funds to pay for their goods and services in United States Dollars, eased the foreign currency pressures in the economy and provided some relief in the acquisition of inputs for the Group.

Operationally, the year started on a slow note as the Group migrated to the new factory in the first two months. This resulted in anticipated delays in the resumption of production after the December annual shutdown. However, as soon as production started, the first COVID-19 induced lockdown was announced. This remained in place until May 2020. Although the Group and Company managed to secure a special waiver as an essential service provider to operate during the lockdown period, most sectors of the value chain were affected, resulting in significantly depressed demand. Moreover, consumer spending power was curtailed, and a number of key infrastructural projects were put on hold. The combination of these factors resulted in a poor first half of the year.

Despite the challenges, the Group managed to operate smoothly during the second half of the year, recording a decent performance, thus overturning the slump in the first half of the year.

The new factory together with the automated mixing plant is now fully functional with production in full swing in this new state of the art facility. The new mixing plant, whose commissioning had been delayed as the project Engineers from Italy could not travel due to COVID-19 restrictions, was finally commissioned in December 2020 and is running smoothly. The commissioning was completed without any challenges. This augurs well for the future as the Group is poised to benefit from this new investment, with the initial assessment showing that targets set at the onset of the project are being exceeded.

Overall, the Group managed to post a solid performance for the year, despite the challenges encountered. The fact that the new mixing plant is now available from the end of the year will foster overall equipment effectiveness in the new factory in the future, impacting positively on the unit cost of production.

Chairman’s Statement

G. SEBBORNCHAIRMAN


OUTLOOK

With the business environment improving, we foresee a strong rise in the demand of the Group’s products. This, coupled with the investment in the new plant, which is beginning to bear fruit, we forecast an improved performance going forward.

We expect demand to continue being underpinned by infrastructural development, mining, agriculture, and the borehole drilling segment.

The Group will focus on consolidating the capital investments made to date and ensure that requisite returns are realised. To this end, the only major investment in the coming year will be the acquisition of a new PVC 500mm extrusion production line as demand for large PVC diameter pipes continues to grow yet the current maximum capacity is limited to 400mm diameter pipes. This further investment will ensure maximum use of the new factory. The new machine is expected to be commissioned in the last quarter of the year.

The business continues to observe all COVID-19 protocols as enunciated by the Ministry of Health and Child Welfare as well as the World Health Organisation for the wellbeing of our employees and all our stakeholders.

DIVIDEND DECLARATION

In view of the performance for the year, the Board proposes a final dividend of ZWL20.50 cents per share. The dividend will have an option to be paid in United States Dollars converted at the ruling interbank rate at the closing date.

ACKNOWLEDGEMENTS

I wish to extend my appreciation to Management and Staff for their hard work during these challenging times, my fellow Board members for the wisdom and direction throughout the year as well as all our stakeholders for their continued support.

G. SEBBORN14 May 2021

FINANCIAL PERFORMANCE

The commentary is based on the inflation adjusted figures, which forms the primary reporting framework.

Turnover grew by 4% to ZWL1,096 billion. A significant amount of the revenue was received in United States Dollars after the introduction of SI 85 and was recorded at the interbank rate. Given the gap between the Interbank and the alternative market rate, the reporting does not necessarily reflect the true market conditions. Volumes were up 19% from prior year on the back of a strong second half performance.

Cost of sales increased given the slow start to the year and pressures in the economy. A Significant of improvement is expected in cost of sales going forward given the efficiencies that come along with the new factory and the mixing plant.

Despite the effects of the lockdown and relocation costs, which had a huge impact on Overheads, the Group posted an inflation adjusted profit before tax of ZWL174 million, and a profit after tax of ZWL 84 million after taking into account both current and deferred tax. Total comprehensive income for the year was ZWL 244 million. EBITDAR for the year was ZWL 275 million. This is a notable achievement considering that a fixed exchange rate was applied to foreign currency receipts prior to the introduction of the auction system. Thereafter, the gap between the interbank rate and market rate continued to widen yet the Group had a significant amount of its revenues receipts in United States Dollars during the year.The statement of financial position remained solid with total assets amounting to ZWL1.7 billion. Borrowing remained minimal with the debt equity ratio on 3.6%. The current ratio was solid at 1.6:1. This is particularly pleasing coming soon after the settlement of almost all expenditure relating to the new factory and the mixing plant.

The Group closed the year with cash and cash equivalents of ZWL28 million.

Chairman’s Statement (continued)


The introduction of the auction bidding system and SI185, which allowed for holders of free funds to trade in the United States Dollars, released pressures on foreign currency availability. This important pronouncement brought some stability in prices, inflation, and the exchange rate. Admittedly the system still requires some huge improvements to enhance its effectiveness and stakeholder confidence going forward.

FINANCIAL PERFORMANCE

The commentary is on inflation adjusted figures, which forms the primary reporting framework.

Turnover grew by 4% to ZWL 1,095,912,509 in the period under review, sales volumes were up by 19% compared with prior year. Due to depressed demand in the first half of the year, gross margin retreated to 29% from 42% from the previous year. Resultantly, EBITDA for the year declined by 13% to ZWL 275,220,047.

The statement of financial position remained strong with total assets growing by 24% to ZWL 1,730,830,608. Current ratio eased to 1.6:1 from 1.25:1 in prior year with current liabilities growing by 4% driven by internal utilization of cash resources, exposure on foreign creditors and customer advance payments. At the end of the period under review total foreign creditors in value amounted to US$1.5 million.

Trade and other receivables increased by 167% as a result of growth in revenue and increased customer and supplier prepayments.

Borrowings remained minimal at ZWL 41,326,583 with a debt equity ratio of 4% despite settlement of all new factory and mixing plant related expenditure from internal resources. The low gearing ratio gives the Group an option to finance expansion capital projects in the coming year. Cash generated from operations was negative at 4% from a positive of 27% in prior year due to a huge monetary gains reversal. Gain was mainly from increased value in freehold land and buildings after closing year end revaluations. The Group closed the year with a balance of ZWL 28,265,471 in cash and cash equivalents.

OPERATIONAL PERFORMANCE

Factory volumes, at 5,852 tones for the year, were 33% ahead of prior year. The volumes were largely affected in the first half by factory relocation and COVID-19 induced national lock downs. The strong demand in the second half of the year coupled with an efficient new ergonimic factory yoked with the state of the art automated mixing plant resulted in the Group overturning an apathetic first half performance.

Chief Executive Officer’s Report

K. CHIGIYACHIEF EXECUTIVE OFFICER

INTRODUCTION

It is my pleasure to present to you the report on the operational performance of Proplastics Limited, the Group, for the year ended 31 December 2020.

The trading environment was extremely challenging as the global impact of the COVID-19 pandemic continued to disrupt business operations adding to an already volatile operating environment. The negative effects of COVID-19 induced lockdowns resulted in depressed demand of the Group’s products in the first half of the year. Resultantly , value chains of targeted markets for the business were hugely affected.


Chief Executive Officer’s Report (continued)

SAFETY, HEALTH AND QUALITY MANAGEMENT SYSTEMS

The business recorded four lost time injuries, with a significant improvement of severity rate from 14.4 in 2019 to 4.4 in 2020. Proplastics Limited remain certified to the following key international compliance requirements for its processes:• ISO 9001:2015 (Quality Management System). • ZWS ISO 14001:2015 (Environmental). • OSHAS 18001:2007 (Health and Safety).

Transition from OSHAS 18001:2007 to the new standard ISO 45001:2018 has begun in earnest. Completion date for certification to the new standard is earmarked within the first half of 2021.

COVID -19 PANDEMIC

Proplastics Limited, like all other businesses across the globe, continues to be affected by the COVID-19 pandemic. The Group has, however, taken appropriate COVID-19 preventive measures, which include social distancing, temperature screening, washing of hands and disinfecting of public places, to ensure safety and health of all our employees and that of our customers.

CORPORATE SOCIAL RESPONSIBILITY

Proplastics Limited has a corporate and conscience social responsibility to the community as evidenced by the following:• School fees payment for 10 disadvantaged children at

Jairos Jiri. • Fighting crime through the local Police.• Availing employment opportunities to local residence.• Student attachment from various universities and

technical colleges supported by a sound integration process.

• Various forms of COVID-19 support donations in guidance with the Ministry of Health and Child Welfare for our own staff and targeted public health groups.

• Empowering local community women in waste recycling activities

The responsibility has had a positive impact to the economy, the community, and the nation at large.

OUTLOOK

The improvement in the business and economic environment augmented by the new factory and mixing plant and the expected demand in infrastructural development at private and public partnerships (PPE) is expected to spur growth in volumes and across the economy for the company. The Group is set to further increase capacity and product development through the introduction of a new extrusion production lines. The investment is in line with the Group’s market diversification, expansion, and consolidation strategy. The stability and availability of foreign currency through the auction system will remain key in the procurement of raw materials and acquisition of future capital investments strategies.

ACKNOWLEDGEMENTS

I take this opportunity to thank all our stakeholders for their support over the years. Without your support, Proplastics would not be where it is today.

May I also thank the Proplastics employees, who are the real force driving this business, for their unwavering resilience throughout the year given the circumstances.

I wish to conclude by thanking the Board, for the wise counsel and support throughout a very difficult and challenging year.

KUDAKWASHE CHIGIYA14 May 2021


Corporate Governance, Directorate And Executive Committees

Mark has over 25 years’ experience with companies listed on the Johannesburg Stock Exchange and is the former Chief Executive Officer of Beige Holding Limited. He is a director of several other companies in Mauritius and the SADC region including Kotso Holdings Limited and the Reinforcing Steel Contractors Group.

Paddy holds a Bachelor of Commerce in Accounting Science from the University of South Africa and completed his Articles of Clerkship with Deloitte & Touche. Paddy is a Director of a number of companies including Aurora Agricultural Ventures & Processors (Private) Limited.

Herbert is a former mining executive and until recently was an Executive Director for Mimosa Mines in Zimbabwe. Prior to that, Herbert held several senior positions with Union Carbide and Zimasco. Herbert holds a Bachelor of Science in Chemistry and a Masters of Philosophy in Process Research from the University of Zimbabwe. He also holds a Master of Science in Process Engineering Design from the University of London.

Kudakwashe is a holder of a Diploma in Rubber & Plastics Technology and an MBA. Kudakwashe started his career at Proplastics in 1993 as a Graduate Trainee in Plastics Technology rising through the ranks of Quality Controller, Quality Assurance Manager and Technical Manager. During the period, he superintended pioneering of manufacturing projects. Kudakwashe left Proplastics for South Africa in 2003 to advance his career in Plastics Technology. Up to his appointment, he was employed at DPI Plastics as Process Engineer for Quality and Technical management functions. He was appointed Chief Executive Officer of the company on 29 May 2015.

Paschal is a qualified Chartered Accountant (Zimbabwe) and is a holder of a Masters Degree in Business Leadership (MBL) from the University of South Africa (UNISA). He served his articles with Deloitte & Touche. Paschal has previously worked for Cairns Foods where he was Finance Manager, and Rainbow Tourism Group, where he joined as Finance Manager and became Finance Director in 2004 until 2013. Prior to joining Proplastics, he was Director - Finance & Administration with ZimTrade.

Sandra is a proven Agribusiness Specialist and Project Manager with over twenty years of experience in commercial crop production, donor funded agricultural initiatives and horticultural research. Sandra holds a Master of Science Agriculture (Horticulture) (Cum Laude) and a Bachelor of Science Agriculture (Horticulture) (Cum Laude), Dux student from the University of Natal Pietermariztburg, South Africa. In addition, Sandi holds the following membership: Crops life International formerly Agricultural Chemical Industry Association (ACIA); Women’s University in Africa Council; African Women in Agriculture; Zimbabwean chapter of the Graca Machel Trust; Facilitator of investment in Excellence Program with the Pacific Institute and Chair of Market Linkage Association (MLA) Zimbabwe.

Gregory served as Managing Director of the Zimbabwe and Southern African operations of the Rennies Group of Companies. He is also a founding Director and former Group Managing Director of Zimplats Holdings Limited and Managing Director of Zimbabwe Platinum Mines. He served as a Partner at Renaissance Partners, a Russian based Investment Bank. Gregory is currently a consultant for special mining projects and developments in Africa and serves as a non-executive Director of several companies including Stanbic Bank Zimbabwe.

Mr. Gregory Sebborn(Non – Executive Board Chairman)

Mr. Kudakwashe Chigiya(Chief Executive Officer)

Mr. Herbert S. Mashanyare(Non – Executive Director)

Mrs. Sandra Robert(Non – Executive Director)

Mr. Paddy Tongai Zhanda (Jnr)(Non – Executive Director)

Mr. Paschal ChangundaFinance Director

Mr. Mark Mario Di Nicola (Non – Executive Director)


Corporate Governance

The Board of Proplastics Limited is committed to adherence to the principles of good corporate governance in order to attain the goal of responsible corporate behaviour and full accountability to its shareholders and stakeholders.

THE BOARD OF DIRECTORS

Composition and appointment

The Board comprises of 7 Directors: 5 Non-executive and 2 Executive. The Board is chaired by a non- executive director, thus ensuring a separation of powers and authority.

The election of non-executive Directors is subject to confirmation by shareholders. In terms of the Company’s Articles of Association and the Companies and Other Business Entities Act (Chapter 24:31), at least one third of the Directors must retire at every Annual General Meeting and, if eligible, can stand for re-election. Also, a Director appointed during the course of the year must retire at the annual general meeting and, if eligible, stand for re-election.

Accountability and delegated functions

The Board meets formally at least once every quarter to review the Group’s and Company’s performance. There is an agenda of matters which are brought to its consideration and review and where appropriate, for decision so that it maintains full and effective control over strategic, financial, operational and compliance issues. There are procedures, which allow Directors to avail themselves for independent professional advice in the furtherance of their duties and to select non-executive Directors.

Composition of the Board

Mr. Gregory Sebborn Non –Executive Board Chairman.Mr. Kudakwashe Chigiya Chief Executive Officer.Mr. Paschal Changunda Finance Director.Mr. Paddy Tongai Zhanda Non-Executive Director.Mrs. Sandra Roberts Non-Executive Director.Mr. Herbert Stanley Mashanyare Non-Executive Director.Mr Mark Di Nicola (Alt. Mr. Malcolm McCulloch) Non-Executive Director.

Record of Attendence Director’s Meetings for the Financial year 2020.

Board member Position Board AGM*Audit

Committee Number of meetings 4 1 4

Mr. Gregory Sebborn Non –Executive Board Chairman. 4 1 -Mr. Kudakwashe Chigiya Chief Executive Officer. 4 1 4Mr. Paschal Changunda Finance Director. 4 1 4Mr. Paddy Tongai Zhanda Non-Executive Director. 4 1 4Mrs. Sandra Roberts Non-Executive Director. 4 1 4Mr. Herbert Stanley Mashanyare Non- Executive Director 4 1 4Mr Mark Di Nicola (Alt. Mr. Malcolm McCulloch) Non-Executive Director. 2 - -

AGM * refers to Annual General Meeting

Corporate Governance, Directorate And Executive Committees (Continued)


Board Committees

The Board has established and mandated a number of committees to perform work on its behalf in various key areas affecting the business of the Group. The committees are chaired by non-executive Directors. They submit reports to the main Board on the Committee’s deliberation and findings.

The Remuneration Committee

The Committee is chaired by a non-executive director and Chairman of the Board, Mr. Gregory Sebborn. Its mandate is to set the remuneration of executive Directors and considers appointment of new Directors and senior executives before the final approval by the Board. The remuneration policies of the Committee are as follows: -• To ensure that individual rewards and incentives relate directly to the performance of the individuals, the operations, and

functions for which they are responsible and the Group as a whole.• To maintain competitive rewards that enables the Group to attract and retain executives of the highest quality.

In order to determine the competitiveness of executive remuneration, the Committee receives independent professional advice on remuneration packages and practices of comparable organisations within the region.

Corporate Governance, Directorate And Executive Committees (Continued)


Mrs. Sandra Roberts, an independent non-executive director, chairs this Committee which deals with compliance, internal controls, and risk management.The Committee: -• Considers changes to the Group’s and Company’s

accounting policies and reviews its interim and annual financial statements before the Board, with whom ultimate responsibility remains, approves them.

• Reviews the effectiveness of the system of internal controls during the period and reports thereon to the Board. The Board is responsible for establishing systems of internal control, which provide reasonable assurance that the Group’s assets are safeguarded, that proper accounting records are maintained, and the financial information used in the business and for publication is reliable. They attach great importance to maintaining a strong control environment. However, any system of internal financial control can provide only reasonable, not absolute, assurance against material misstatement or loss.

Performance management reporting

The Group and Company operates in Zimbabwe in a regulated environment. Business is conducted within a well-developed control framework, underpinned by procedures and control manuals. The Board has established a management structure which clearly defines roles, responsibilities, and reporting lines.

The business performance of the Group and Company is reported regularly by management to the Executive Committee and the Board. Performance trends and performance against budgets and prior periods are closely monitored. Financial information is prepared using appropriate accounting policies which are consistently applied, in all material respects, from year to year. Where a change in accounting policy occurs, the change is specifically noted in the financial statements.

The system of internal financial control is monitored regularly by Management, the Executive Committee, and the Board.

Internal Audit reports regularly to the Audit and Risk Committee of the Board. They also report to management for actioning. The scope of the Internal Audit department includes an assessment of the risks and controls and findings are reported to management. All adverse findings are reported to the Chief Executive Officer for immediate management action.

The external auditors review the system of internal financial controls to the extent necessary for them to form the opinion

they express on the financial statements. They also report to the Audit and Risk Committee on matters arising from this review.

Code of Conduct

The Board has approved a Code of Conduct for the Group and Company, which sets out the Group’s and Company’s core values relating to lawful and ethical conduct of business. All employees have a copy of the Code and are expected to observe high standards of integrity and fair dealing in relation to customers, staff, and regulators in the communities in which the entity operates. Policies exist for monitoring compliance with the Code.

Going Concern

The Board confirms that the Group and Company has adequate resources to continue in business in the aftermath of COVID-19 and in the foreseeable future. Accordingly, the financial statements have been prepared on the basis that the Group and Company are going concerns.

Audited Annual Financial Statements

The Committee oversees the preparation of the audited Annual Financial Statements for the Group. The audited Annual Financial Statements for the for the year ended 31 December 2020 will be tabled at the Annual General meeting and will be for the Group and Company. In the prior year, the Group Annual Financial Statements were presented with the Company Financial Statements, on which no audit opinion was expressed, presented as supplementary information to the Consolidated Financial Statements.

Auditors

As per the Resolution carried at the last Annual General Meeting, the board put the audit to tender, and KPMG Chartered Accountants (Zimbabwe) were selected to carry out the audit of the Group and Company for the year ended 31 December 2020. A resolution will be proposed at the Annual General Meeting to reappoint KPMG Chartered Accountants (Zimbabwe) as Auditors of the Group and Company for the ensuing year.

__________________________________Sandra RobertsChairman - Audit and Risk Committee

14 May 2021

Audit Committee


Introduction

The Group, being a responsible Corporate citizen, remains committed to the achievement of Sustainable Development Goals (SDGs) through imbedding and monitoring of sustainability issues in all its operations. Protection of the people and the environment remains one of our anchors. Year 2020 was marred due to the COVID -19 pandemic, but the business managed to ensure that sustainability issues remain core.

Approach

Sustainability activities anchor the value of our business and as such, the organisation firmed up and improved its commitment to environmental and social issues that were of material effect to our operations. The Board of Directors mainstreamed sustainability in the strategic direction of the organisation leading to prioritization at Board level and delegation of the role to the Chief Executive Officer in a manner that facilitates attainment of tangible results throughout the organisation.

To further enhance this process, the business has maintained its certification to the following systems:

• ISO 9001:2015 (Quality Management)• ZWS ISO 14001:2015 (Environmental) and • OSHAS 18001:2007 (Health and Safety).

During the year under review, the organisation took a bold step in transitioning OSHAS 18001:2007 to the new standard ISO 45001:2018. Target date of certification is 30 June 2021 with an initial certification audit carried out in October 2020 despite the COVID-19 pandemic restriction challenges. The systems are key to our sustainability reporting as they make it easier to manage the organization’s material issues.

Over and above the systems that support sustainability, Proplastics products are registered under specific Product Mark Schemes from both South African Bureau of Standards (SABS) and Standards Association of Zimbabwe (SAZ). Thus, the pipes and fittings manufactured meets respective product specifications and have a design life span of at least fifty years under specified conditions.

The organization also prides itself in being the only plastic company in Zimbabwe with a Southern African Plastic Pipe Manufacturers Association (SAPPMA) and Installation and Fabrication Plastics Pipe Association (IFPA) membership. Its membership has helped in facilitating high standards of ethics, product quality and sharing technical developments within the region and internationally, thereby ensuring long term sustainability and dynamic growth.

Responsibility

During the year under review, the Board continued to ensure that all initiatives in support of the goal for attaining sustainable development were adequately resourced in terms of human capital (skills development), technical and financial needs. The Board mandated the Chief Executive Officer as the driver of this thrust to ensure that issues of sustainability continued to get the attention and support they required. Engagements of experts in the field of sustainability were maintained in continual evaluation of issues of materiality. Incorporation of sustainability issues in our budgets was done and this brought efficient resource allocation and utilisation to all the initiatives.

Stakeholder engagement

In order to align business strategy and stakeholder expectations, the Group maintained a Stakeholder Management Strategy (SMS) which is inclusive and requires continuous engagement with all key stakeholders. This process helped to continuously identify issues from all our stakeholders and enabled the Group to deliver both stakeholder and business values alike.

Performance

We recorded four lost time injuries, but with a significant improvement of severity rate from 14.4 in 2019 to 4.4 in 2020 and we are geared to change this course through:• Occupational Health and Safety (OHS) training and

awareness.• Rigorous incident review and follow up of corrective

actions.• Further enforcement of pre-task risk assessments and

continuous improvement projects. • responsible initiatives that ensure that OHS and

environmental risks are managed throughout the value chain.

Key Result Areas

We are pleased to report that we recorded no significant environmental incidences. The organisation uses the 3R (Reduce, Reuse, Recycle) waste management principle which enabled us to achieve 15% recycling rate of waste in 2020 which is slightly down from the 2019 performance due to the COVID-19 restrictions that affected the informal sector recycling business. We remain focused in achieving the year 2023 90% recycling target through more robust waste management initiatives and improved operational efficiencies inclusive of the commissioning of our new mixing plant which will vastly improve material handling thereby significantly reducing material waste.

Sustainability


Compliance with legal and other requirements remains our key focus with zero penalties recorded in the business. Greenhouse gas emissions from our operations remained in the green band. Our philosophy is anchored on being a law-abiding corporate, which is focused on enhancing productivity.

The Group remains responsive to the needs of communities around us through investment of approximately ZWL 1,214,417 in the following corporate social responsibility activities:

• Engagement of student of attachment from various institutions.

• Wellness programmes.• School fees payment for the disadvantaged.• Covid-19 support donations.• Empowering local community women in waste recycling

activities.

COVID-19

Three positive cases involving our employees were confirmed. They all emanated from contact with cases at home They were immediately advised to proceed with quarantine to manage the risk of workplace transmission.

To further manage the COVID-19 pandemic, the organization implemented the following robust measures:

• Provision of PPE. • Provision of transport to staff.• Isolation and screening of all suspected cases.• Provision of sanitizers to our staff.• Temperature checks at entrances. • Employee quarantine on paid leave and workplace

support. • Frequent fumigation of offices and public spaces.• COVID-19 specific induction.

Key Focus Areas

Focus areas remain on stakeholder satisfaction and continuously improving our sustainability performance in line with Global Reporting Initiatives (GRI). Our outlook into the future points to greater commitment to the attainment of the Sustainable Development Goals (SDGs).

The next few years present new frontiers in scaling up sustainability within our business.

Sustainability (continued)


The Directors have pleasure in presenting their Annual Report together with the Audited Financial Statements of the Group and Company for the year ended 31 December 2020.

Period’s Results

Inflation Adjusted Historical

Profit attributable to Shareholders ZWL 83,581,407 ZWL 161,386,391

Final Dividend (cents)

20.50 20.50

Capital Expenditure Capital expenditure for the year ending 31 December 2020 amounted to ZWL 57,206,902 in inflation adjusted terms and ZWL 48,611,160 in historical terms. The budgeted capital expenditure for the year to 31 December 2020 is ZWL 439,733,040. The expenditure was financed from internal resources and existing facilities.

The factory owned by Dudway Investments (Private) Limited, a Company which is 100% owned by Proplastics Limited was commissioned and brought into use on 3 January 2020.

Share Capital

The authorized share capital of the Company is ZWL 87,500, comprising of 875,000,000 ordinary shares of a nominal value of ZWL0.0001 each in historical terms and ZWL 2,902,868 comprising 875,000,000 ordinary shares of a nominal value of ZWL0.0007 each in inflation adjusted terms.

The issued share capital of the Company is ZWL 25,643 divided into 256,435,628 ordinary shares of ZWL0.0001 each in historical terms and ZWL 959,137 divided into 256,435,628 ordinary shares of ZWL0.0008 each in inflation adjusted terms.

Auditors The auditors of the Group and Company are KPMG Chartered Accountants (Zimbabwe). Shareholders will be asked at the forthcoming Annual General Meeting to approve their remuneration in respect of the past audit and reappoint them as auditors for the coming year. The Auditors remuneration for the past year was ZWL 9,071,120.

Reserves

The movement in the Reserves of the Group and Company is disclosed in the Consolidated and Company Statement of Changes in Equity.

DividendThe Directors have recommended a final dividend of ZWL20.50 cents per share for the year ended 31 December 2020 payable in respect of all the ordinary shares of the Company. The Dividend will have an option to be paid in United States

dollars converted at the ruling interbank rate on the closing date. Shareholders will be requested to confirm payment of this dividend.

Borrowing PowersIn terms of the Articles of Association, the Company is authorized to borrow funds amounting to three (3) times of:1) The total of the nominal amount of the issued and paid-

up share capital of the Company, and

2) The aggregate of the amounts standing to the credit of all capital and revenue reserve accounts and share premium account and profit and loss account as set out in the latest consolidated and company audited statement of financial position of the Company and its subsidiaries which has been drawn up to be laid before the members of the Company in general meeting at the relevant time.

3) The Directors confirm that during the year under review, the Company’s borrowings are within the above limits.

Directorate

The following are the Directors of the Company and they held office for the year under review: -

Mr. Gregory Sebborn Non –Executive Board Chairman.Mr. Kudakwashe Chigiya Chief Executive Officer.Mr. Paschal Changunda Finance Director.Mr. Paddy Tongai Zhanda Non-Executive Director.Mrs. Sandra Roberts Non-Executive Director.Mr. Herbert Stanley Mashanyare Non- Executive DirectorMr Mark Di Nicola (Alt. Mr. Malcolm McCulloch) Non-Executive Director.

Mr. Kudakwashe Chigiya and I will retire at the conclusion of this Annual General Meeting. Being eligible, we have offered ourselves for re-election and Shareholders will be asked to approve the re-appointments.

Directors’ Fees

Shareholders will be asked to approve the remuneration of the Directors for their services as Directors during the past year. Your board recommends that an amount of ZWL7, 709,125 be approved.

The Proplastics Limited Senior Executive Share Option Scheme 2015

The scheme was approved by shareholders in 2015, the purpose of which is to promote the retention of senior executives responsible for the management of the Group and Company. The details of the movement in the outstanding option during the year to 31 December 2020 are shown in note 10 of the financial statements.

Compliance with International Financial Reporting StandardsThe Directors are responsible for the maintenance of adequate

REPORT OF THE DIRECTORS


accounting records and the preparation and integrity of the financial statements. These audited annual financial statements have been prepared in accordance with International Financial Reporting Standards and in a manner required by the Companies and Other Business Entities Act (Chapter 24:31) (COBEA) and the Zimbabwe Stock Exchange (ZSE) Listing Requirements for Audited Annual Financial Statements, except for non-compliance with (IAS) 8 (Accounting Policies, Changes in Accounting Estimates and Errors), (IAS) 21 (Effects of changes in Foreign Exchange Rates) and (IAS) 29 (Financial Reporting in Hyperinflationary Economies). Due to the requirements of Statutory Instrument 33 of 2019 (SI33/19), issued by the Government, which directed that all assets and liabilities that were in United States Dollars (US$) before 22 February 2019 be deemed to have become RTGS dollars (and subsequently ZWL as of 24 June 2020) at a rate of 1:1 to the US$, it was not practical to comply with requirements of IAS21: The Effects of Changes in Foreign Exchange Rates in prior year as well as non-compliance with IAS 21 in respect of an appropriate exchange rate for the first half of the current year. The principal accounting policies applied in the preparation of these annual financial statements are however consistent with those applied in the previous annual financial statements.

On 29 March 2020, the Government of Zimbabwe issued statutory “SI” 85 of 2020 which permitted use of US$ free funds for domestic transactions. As a result, the Directors noted a mix of USD and ZWL sales affecting the determination of the functional currency of the Company. The Directors have applied their judgement and believe that the functional currency for the year ended 31 December 2020 remains ZWL. However, the Directors will continue to monitor this area going forward.

Statement of ComplianceThe Directors are responsible for the maintenance of adequate accounting records and the preparation and integrity of the financial statements.

The Group’s and Company’s independent external auditors, KPMG Chartered Accountants (Zimbabwe), have audited the financial statements and their report appears on pages 19-24.

REPORT OF THE DIRECTORS (continued)

The Directors are also responsible for the systems of internal control. These are designed to provide reasonable, but not absolute, assurance as to the reliability of the financial statements and to adequately safeguard, verify and maintain accountability of assets and to prevent and detect material misstatement and loss.

The systems are implemented and monitored by suitably trained personnel with an appropriate segregation of authority and duties. Nothing has come to the attention of the Directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review.

After a comprehensive assessment of the impact on the business of the lockdown measures imposed in the Country at the beginning of the year due to the surge in COVID-19 cases, the Directors came up with a raft of measures to mitigate the impact of both the lockdown and the pandemic.

The Directors are, therefore, of the view that preparing these set of accounts on a going concern basis is still appropriate. Nothing has come to the attention of the Directors to indicate that the Group and Company will not remain a going concern for the foreseeable future.

________________G SebbornChairman

14 May 2021

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KPMGMutual Gardens100 The Chase (West)Emerald HillP O Box 6 HarareZimbabweTel: +263 (4) 303700, 302600Fax: +263 (4) 303699

Independent Auditors’ Report

To the shareholders of Proplastics Limited___________________________________________________________________________________

Report on the audit of the inflation adjusted consolidated and separate financial statements

Adverse opinion

We have audited the inflation adjusted consolidated and separate financial statements of Proplastics Limited (Group and Company) set out on pages 25 to 73, which comprise the inflation adjusted consolidated and company statements of financial position as at 31 December 2020, and the inflation adjusted consolidated and company statements of profit or loss and other comprehensive income, the inflation adjusted consolidated and company statements of changes in equity, the inflation adjusted consolidated and company statements of cash flows for the year then ended, accounting policies and notes to the inflation adjusted consolidated and company financial statements.

In our opinion, because of the significance of the matters described in the Basis for adverse opinion section of our report, the inflation adjusted consolidated and separate financial statements do not present fairly the inflation adjusted consolidated and separate financial position of Proplastics Limited as at 31 December 2020, and its inflation adjusted consolidated and separate financial performance and inflation adjusted consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”) and in the manner required by the Companies and Other Business Entities Act [Chapter 24:31].

Basis for adverse opinion

Non-compliance with International Financial Reporting Standards IAS 21 - The Effects of Changes in Foreign Exchange Rates (IAS 21) in the prior financial year and inappropriate application of IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors (IAS 8)

As disclosed in accounting policy note 1.3 to the inflation adjusted consolidated and separate financial statements, for the period 1 October 2018 to 22 February 2019, the Group and Company applied the United States dollar (US$) as its functional currency in order to comply with Statutory Instrument 33 (SI 33), issued on 22 February 2019. The Group and Company changed its functional currency to the Zimbabwe dollar (ZWL) with effect from 23 February 2019. SI 33 precluded the use of any other currency other than US$ as functional currency prior to 22 February 2019 and this resulted in material misstatements in the financial statements as at 31 December 2018 and as at 31 December 2019.

The directors, based on their interpretation of IAS 21, acknowledged that there was a functional currency change from the US$ to RTGS dollar, with effect from 1 October 2018, and that the market exchange rate between the US$ and RTGS dollar was no longer 1:1 after 1 October 2018. However, the Group and Company only accounted for the change in functional currency prospectively from 23 February 2019, in compliance with SI 33. This constitutes a departure from the requirements of IAS 21, due to the need to comply with local regulations as enunciated under SI 33. Had the Group and Company applied the requirements of IAS 21, many elements of the inflation adjusted consolidated and separate financial statements as at 31 December 2019 would have been materially impacted. This departure from IAS 21 led to an adverse opinion being issued on the comparative information during the prior year. The financial effects of this departure on the prior year inflation adjusted consolidated and separate financial statements, whilst considered to be material, have not been determined.

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The Group and Company have not restated the inflation adjusted consolidated and separate financial statements, as required by IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, to resolve the matters which resulted in the adverse opinion in the prior years relating to the non-compliance with IAS 21.

Our opinion on the current year’s inflation adjusted consolidated and separate financial statements are modified because of the possible effects of the matter on the comparability of the current year’s inflation adjusted consolidated and separate financial statements with that of the prior year.

Non-compliance with International Financial Reporting Standards IAS 21 – The Effects of Changes in Foreign Exchange Rates (IAS 21) in the current financial year

As described in accounting policy notes 1.3 and 3.18, during the period 1 January 2020 to 23 June 2020, the Group and Company translated foreign denominated transactions and balances using the interbank rate. During this period, due to the lack of access to foreign currency for immediate delivery through the interbank foreign currency market. The interbank rate did not satisfy the requirements to be considered an appropriate exchange rate in accordance with IAS 21. The impact of this departure from IAS 21 affects the inflation adjusted consolidated and separate financial statements for the year ended 31 December 2020, and whilst considered to be material it was impractical to quantify the misstatement, due to the lack of an appropriate alternate rate that would satisfy the requirements of IAS 21.

Non-compliance with International Financial Reporting Standards IAS 29 - Financial Reporting in Hyperinflation Economies (IAS 29)

In addition, as described in note 1.4 to the inflation adjusted consolidated and separate financial statements, Zimbabwe became a hyperinflationary economy with effect from 1 July 2019. IAS 29 Financial Reporting in Hyperinflationary Economies (IAS 29) has been applied to incorrect balances due to the non-compliance with IAS 21 in the current and prior years, as commented on above.

The effects of the above departures from International Financial Reporting Standards are material and pervasive to the inflation adjusted consolidated and separate financial statements.

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors’ responsibilities for the audit of the inflation adjusted consolidated and separate financial statements section of our report. We are independent of the Group and Company in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of the inflation adjusted consolidated and separate financial statements in Zimbabwe, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our adverse opinion.

Emphasis of matter - comparative information

We draw attention to note 27 to the inflation adjusted consolidated and separate financial statements which indicates that the comparative information presented as at and for the year ended 31 December 2020 has been restated. Our opinion is not modified in respect of this matter.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the inflation adjusted consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the inflation adjusted consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matters described in the basis for adverse opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report.

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Valuation of property, plant and equipment

(This key audit matter is applicable to both the inflation adjusted consolidated and separate financial statements)

Refer to accounting policy note 3.6 on property, plant and equipment, note 3.17 in respect of significant estimates in applying the Group’s and Company’s accounting policies and property, plant and equipment note 4.•

Key audit matter How the matter was addressed in our audit

As disclosed in note 4, the directors made use of an independent external valuer in determining the fair values and depreciated replacement cost of the Group’s and Company’s property, plant and equipment. Valuations by their nature involve the use of judgement and estimates which involve significant unobservable inputs such as:

• Market rentals; and• Capitalisation rates.

Valuers rely on historic market evidence for calculation inputs such as transactions processed for comparable property rentals and capitalisation rates. The current economic environment is extremely volatile hence the valuation intricacies impacting property, specifically land and specialised buildings, in the Zimbabwean market since the change in currency laws and regulations, from US$ to ZWL. We identified the valuation of property, plant and equipment as representing a key audit matter due to the significance of the balance to the inflation adjusted consolidated and separate financial statements as a whole, combined with the level of judgement associated with determining the fair values.

Our audit procedures included the following:

• Holding discussions with the independent property valuer to understand the assumptions and methodologies applied in valuing the properties, plant and equipment and the market evidence supporting the valuation assumptions;

• Evaluating the appropriateness of the inputs to the valuations by reviewing supporting market transactions used for the valuations;

• Assessing the competency, capability and objectivity of the qualified, independent valuer and inquiring about interests and relationships that may pose a threat to the valuer’s objectivity, as well as validating their professional memberships;

• Evaluating the appropriateness of the methodology applied for translation of the US$ valuations to ZWL in line with the requirements of the applicable financial reporting standards;

• Assessing the adequacy of the disclosures in respect of the revaluation model and assumptions adopted as per the requirements of IAS 16, Property, plant and equipment and IFRS 13, Fair value measurement.

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Functional currency assessment (This key audit matter is applicable to both the consolidated and separate inflation adjusted financial statements)

Refer to accounting policy note 3.18, critical judgements in applying the Group and Company’s accounting policies in the determination of the Company’s functional currency.

Key audit matter How the matter was addressed in our audit

As disclosed in accounting policy note 3.18, the directors have concluded that ZWL remains the functional currency for the Company for the year ended 31 December 2020. With the introduction of Statutory Instrument 85 of 2020, which permitted the use of US$ free funds for the settlement of domestic transactions with effect from 29 March 2020 in response to the COVID-19 pandemic, the directors have applied their judgement in determining the functional currency with reference to the requirements of IAS 21 paragraph 12 particularly given the mix of foreign and local currencies used. We identified the assessment of the functional currency of Proplastics Limited as representing a key audit matter due to the judgement applied and the significance that the functional currency has on the inflation adjusted consolidated and separate financial statements, as a whole.

Our audit procedures included the following:

• With the assistance of our technical accounting specialists, we evaluated the functional currency assessment prepared by management considering the primary and secondary indicators as set out in IAS 21 The Effects of Changes in Foreign Exchange Rates;

• Inspecting and evaluating the underlying data that was used in the quantitative analysis of the functional currency assessment, against source documents;

• Evaluating the nature and extent of disclosures made in respect of this critical judgement made in respect of the determination of the functional currency.

Other matter - comparative information

The inflation adjusted consolidated financial statements of Proplastics Limited as at and for the year ended 31 December 2019, excluding the adjustments described in note 27 to the inflation adjusted consolidated financial statements, were audited by another auditor who expressed an adverse opinion on those inflation adjusted consolidated financial statements on 18 May 2020 as a result of non-compliance with the requirements of IAS 21.

No separate audit opinion was issued on the inflation adjusted separate financial statements by the predecessor auditor as at 31 December 2019, which were presented as supplementary information to the inflation adjusted consolidated financial statements for the year ended 31 December 2019. Accordingly, we draw attention to the fact that we have not audited the inflation adjusted accompanying company statement of financial position as at 31 December 2019, the inflation adjusted company statements of profit or loss and other comprehensive income, changes in equity and cash flows for the year then ended, or any of the related notes and accordingly, we do not express an opinion on them.

As part of our audit of the inflation adjusted consolidated and separate financial statements as at and for the year ended 31 December 2020, we audited the adjustments described in note 27 that were applied to restate the comparative information presented as at and for the year ended 31 December 2019. We were not engaged to audit, review, or apply any procedures to the inflation adjusted consolidated and separate financial statements for the year ended 31 December 2019, other than with respect to the adjustments described in note 27 to the inflation adjusted consolidated and separate financial statements. Accordingly, we do not express an opinion or any other form of assurance on those respective inflation adjusted consolidated and separate financial statements taken as a whole. However, in our opinion, the adjustments described in note 27 are appropriate and have been properly applied.

Other information

The directors are responsible for the other information. The other information comprises the Chairman’s Statement; the Corporate Governance, Directorate and Executive Committees’ report; the Report of the Directors, and the unaudited financial information in the inflation adjusted consolidated and separate financial statements titled “Historical Unaudited”, which we obtained prior to the date of this auditors’

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report and the Annual Report which is expected to be made available to us after that date, but does not include the inflation adjusted consolidated and separate financial statements.

Our opinion on the inflation adjusted consolidated and separate financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the inflation adjusted consolidated and separate financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the inflation adjusted consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information obtained prior to the date of this auditors’ report, we conclude that there is a material misstatement of this other information, we are required to report that fact.

As described in the basis for adverse opinion section above, the Group and Company should have translated local currency transactions and balances to ZWL$ using a rate determined in accordance with IAS 21. We have, therefore, concluded that the other information is materially misstated for the same reason with respect to the amounts or other items in the Chairman’s Statement; the Report of the Directors and the unaudited financial information in the inflation adjusted consolidated and separate financial statements titled “Historical Unaudited”.

Responsibilities of the directors for the inflation adjusted consolidated and separate financial statementsThe directors are responsible for the preparation and fair presentation of the inflation adjusted consolidated and separate financial statements in accordance with International Financial Reporting Standards and the manner required by the Companies and Other Business Entities Act [Chapter 24:31], and for such internal control as the directors determine is necessary to enable the preparation of inflation adjusted consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the inflation adjusted consolidated and separate financial statements, the directors are responsible for assessing the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and/or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the inflation adjusted consolidated and separate financial statementsOur objectives are to obtain reasonable assurance about whether the inflation adjusted consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these inflation adjusted consolidated and separate financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the inflation adjusted consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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 Group and Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

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• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group and/or Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the inflation adjusted consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group and Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the inflation adjusted consolidated and separate financial statements, including the disclosures, and whether the inflation adjusted consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated inflation adjusted financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the inflation adjusted inflation adjusted consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Vinay RamabhaiChartered Accountant (Zimbabwe)Registered AuditorPAAB Practicing Certificate Number 056914 May 2021

For and on behalf of, KPMG Chartered Accountants (Zimbabwe), Reporting Auditors

Mutual Gardens100 The Chase (West)Emerald HillP.O Box 6, HarareZimbabwe


Consolidated Statement of Financial Positionas at 31 December 2020

Inflation adjusted Historical Notes 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 *Restated Restated ZWL ZWL ZWL ZWL Audited Audited Unaudited UnauditedAssets Non-current assets Property, plant & equipment 4 1,224,946,011 1,025,485,142 1,220,648,915 197,398,299Right of use assets 5 13,806,195 7,795,782 4,650,527 483,039Total non- current assets 1,238,752,206 1,033,280,924 1,225,299,442 197,881,338Current assets Inventories 7 317,882,267 281,281,420 250,792,776 26,034,898Trade and other receivables 8 145,930,664 54,704,922 140,757,651 10,879,964Cash and cash equivalents 9 28,265,471 25,135,595 28,265,471 5,603,045Total current assets 492,078,402 361,121,937 419,815,898 42,517,907Total assets 1,730,830,608 1,394,402,861 1,645,115,340 240,399,245Equity and liabilities Equity Share capital 10 959,137 958,837 25,643 25,343Reserves* 866,782,086 707,493,820 875,272,300 110,703,279Retained earnings* 278,468,756 194,887,349 194,648,690 33,262,299Total equity 1,146,209,979 903,340,006 1,069,946,633 143,990,921

Non-current liabilities Long term borrowings 11 31,326,583 17,525,543 31,326,583 3,906,667Long term lease liability 14 4,347,937 930,460 4,347,937 207,413Deferred taxation* 12.1 247,094,575 182,581,251 239,200,496 31,531,885Total non-current liabilities 282,769,095 201,037,254 274,875,016 35,645,965 Current liabilities Trade and other payables 13 230,877,775 206,211,715 229,319,932 42,079,175Short-term borrowings 11 10,000,000 28,925,568 10,000,000 6,447,879Current tax payable 19 58,173,630 54,056,422 58,173,630 12,049,866Short term ease liability 14 2,800,129 831,896 2,800,129 185,439Total current liabilities 301,851,534 290,025,601 300,293,691 60,762.359 Total liabilities 584,620,629 491,062,855 575,168,707 96,408,324 Total equity and liabilities 1,730,830,608 1,394,402,861 1,645,115,340 240,399,245 * Refer to Prior period error - Note 27.

________________________ _______________________G. Sebborn K. Chigiya Chairman Chief Executive Officer14 May 2021 14 May 2021


Consolidated Statement of Profit or Loss and Other Comprehensive Incomefor the year ended 31 December 2020

Inflation adjusted Historical Notes 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 *Restated ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Revenue 15 1,095,912,509 1,051,662,732 813,367,893 114,300,451Cost of sales (775,269,730) (605,994,385) (418,694,893) (44,282,489)Gross profit 320,642,779 445,668,347 394,673,000 70,017,962Net monetary gain* 166,891,028 17,088,088 - -Other income 16 1,351,395 983,080 986,186 80,350Distribution costs (37,411,190) (45,524,513) (27,366,773) (4,975,614)Administrative expenses 17 (242,565,976) (160,250,789) (163,343,597) (20,284,167)Profit before interest and tax 18 208,908,036 257,964,213 204,948,816 44,838,531Finance costs (35,122,974) (5,837,444) (10,617,810) (1,049,902)

Profit before tax 173,785,062 252,126,769 194,331,006 43,788,629Income tax expense* 18.1 (90,203,655) (168,890,508) (32,944,615) (11,161,226)Profit for the period 83,581,407 83,236,261 161,386,391 32,627,403 Other comprehensive incomeItems that will not be reclassified to profit and loss Revaluation surplus 204,030,203 467,933,421 1,009,725,228 131,613,986Related tax (43,855,823) (115,510,645) (244,270,093) (32,116,999)Items that maybe reclassified to Profit and loss - - - -Other comprehensive income net of tax 160,174,380 352,422,776 765,455,135 99,496,987Total comprehensive income for the period 243,755,787 435,659,037 926,841,526 132,124,390 Basic earnings per share (cents) 20 32.59 32.84 62.93 12.87Diluted earnings per share (cents) 20 32.27 32.03 62.30 12.56Headline earnings per share (cents) 20 32.50 32.78 62.88 12.87

*Refer to Prior period error - Note 27.


Consolidated Statement of Changes in Equityfor the year ended 31 December 2020

Audited Inflation adjusted Share Retained capital *Reserves earnings Total equity ZWL ZWL ZWL ZWL ** Restated ** Restated **Balance as of 31 December 2018 as previously presented 951,610 343,964,526 140,643,816 485,559,952Impact of correction of error- 331,076 (331,076) - Restated Balance as of 31 December 2018 951,610 344,295,602 140,312,740 485,559,952Dividend paid - - (22,157,067) (22,157,067)Revaluation surplus (net of tax) 352,422,776 - 352,422,776Impact of adopting IFRS 16 - - (1,389,871) (1,389,871)Share capital Issued 5,666 - 5,666Share premium on share options - 961,286 961,286Share based payments - 5,114,714 (5,114,714) -Share options exercised 1,561 - - 1,561Share premium on scrip dividend - 4,699,442 - 4,699,442Profit for the year - - 83,236,261 83,236,261

Balance as of 31 December 2019 958,837 707,493,820 194,887,349 903,340,006 Revaluation surplus (net of tax) - 160,174,380 - 160,174,380Share capital Issued 300 68,700 - 69,000Share based payments - (954,814) - (954,814)Profit for the year - 83,581,407 83,581,407

Balance on 31 December 2020 959,137 866,782,086 278,468,756 1,146,209,979

* The reserves comprise of the revaluation surplus reserve (non-distributable reserves), share based payment reserve, capital reserve and foreign translation reserve.

** Refer to Prior period error - Note 27.

Historical Unaudited Share Retained capital *Reserves earnings Total equity ZWL ZWL ZWL ZWLBalance as of 31 December 2018 24,649 8,984,242 4,103,255 13,112,146Dividend paid - - (2,278,344) (2,278,344)Revaluation surplus (net of tax) - 99,496,987 - 99,496,987Impact of adopting IFRS 16 - - (49,880) (49,880)Share based payments - 1,047,565 - 1,047,565Share capital Issued 544 - - 544Share options exercised 150 - - 150Share premium on scrip dividend - 1,140,135 (1,140,135) -Share premium on share options - 34,350 - 34,350Profit for the year* - - 32,627,403 32,627,403

Balance as of 31 December 2019 25,343 110,703,279 33,262,299 143,990,921Revaluation surplus (net of tax) - 765,455,135 - 765,455,135 Share based payments - (954,814) - (954,814)Share options exercised 300 68,700 - 69,000Profit for the year - - 161,386,391 161,386,391

Balance as of 31 December 2020 25,643 875,272,300 194,648,690 1,069,946,633



Consolidated Statement of Cash Flows

for the year ended 31 December 2020

Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 *Restated Restated Audited Audited Unaudited Unaudited ZWL ZWL ZWL ZWLCash flows from operating activities Profit for the year before interest and tax 208,908,036 257,964,213 204,948,816 44,838,531Adjustments for: Depreciation of Plant, Property and Equipment 4 61,764,911 58,213,746 35,067,329 1,299,697Depreciation of right of use Asset 5 4,547,101 1,440,117 3,872,120 310,979Expense recognized in respect of equity-settled share-based payments 26 (954,814) 4,699,377 (954,814) 1,047,565Profit on disposal of property, plant, and equipment (81,307) (21,847) (80,880) (5,150)Monetary gain or loss (166,891,028) (17,088,088) - -Net cash from operations before working capital changes 107,292,899 305,207,518 242,852,571 47,491,622(Increase)/decrease in trade and other receivables (91,225,744) 86,718,350 (129,877,687) (7,096,014)Increase in inventories (36,600,847) (62,773,509) (224,757,878) (19,191,387)Increase in payables 24,512,706 37,976,660 187,240,757 36,397,986Cash generated from operations 3,979,014 367,129,019 75,457,763 57,602,207Interest paid (20,855,641) (4,537,596) (8,780,472) (858,808)Income tax paid 19 (36,623,024) (68,863,854) (23,422,331) (795,550)Net cash generated from operating activities (53,499,651) 293,727,569 43,254,960 55,947,849Cash flow from investing activities Purchase of property, plant, and equipment 4 (57,206,902) (298,082,999) (48,612,011) (57,722,521)Proceeds from disposal of property, plant, and equipment 113,547 28,711 99,854 6,400Net cash utilized in investing activities (57,093,355) (298,054,288) (48,512,155) (57,716,121)Cash flow from financing activities Increase in borrowings 30,972,038 11,033,094 30,972,038 9,083,455Dividend paid - (22,157,066) - (2,278,344)Share options exercised 428,580 961,286 69,000 34,500Repayment of lease liability (11,321,497) (3,002,753) (3,121,415) (641,598)Net cash utilized in financing activities 20,079,121 (13,165,439) 27,919,623 6,198,013Net(decrease )/ increase in cash and cash equivalents (90,513,885) (17,492,158) 22,662,426 4,429,741Cash and cash equivalents at the beginning of the year 25,135,595 32,693,381 5,603,045 1,173,304Effect of inflation and foreign currency movement on cash and cash equivalents 93,643,761 9,934,372 - -Cash and cash equivalents at the end of the year 28,265,471 25,135,595 28,265,471 5,603,045

* Refer to Prior period error - Note 27.


Company Statement of Financial Position

as at 31 December 2020

Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 Restated Restated Audited Unaudited Unaudited Unaudited ZWL ZWL ZWL ZWLAssets Non-current assets Property, plant & equipment 4 606,690,175 879,815,543 602,393,393 164,926,683Right of use asset 5 74,256,786 8,488,384 69,213,300 637,430Investment in subsidiary- Promouldings 6 43,391,672 43,391,672 1,123,289 1,123,289Investment in subsidiary-Dudway 6 322,753,145 - 60,707,903 1,047,091,778 931,695,599 733,437,885 166,687,402Current assets Inventories 7 317,882,267 281,281,420 250,792,776 26,034,898Trade and other receivables 8 137,529,073 54,704,922 132,356,058 10,879,964Cash and cash equivalents 9 28,252,782 25,115,818 28,252,782 5,598,636Inter-company balances in debit - 143,281 - 31,939Total current assets 483,664,122 361,245,441 411,401,616 42,545,437Total assets 1,530,755,900 1,292,941,040 1,144,839,501 209,232,839Equity and liabilities Equity Share capital 10 959,137 958,837 25,643 25,343Reserves* 670,101,180 631,157,103 449,257,497 85,774,001Retained earnings* 339,761,380 197,135,499 195,815,763 33,218,606Total equity 1,010,821,697 829,251,439 645,098,903 119,017,950 Non-current liabilities Long-term borrowings 11 31,326,583 17,525,543 31,326,583 3,906,667Long-term ease Liability 14 48,656,380 967,480 48,656,380 215,660Deferred tax* 12.2 111,304,593 153,917,353 92,502,976 25,050,750Total non-current liabilities 191,287,556 172,410,376 172,485,939 29,173,077 Current liabilities Trade and other payables 13 255,003,165 206,826,288 253,611,177 42,216,171Short-term borrowings 11 10,000,000 28,925,568 10,000,000 6,447,879Current tax payable 19 57,666,872 54,039,883 57,666,872 12,046,180Short-term lease Liability 14 5,976,610 1,487,487 5,976,610 331,583Total current liabilities 328,646,647 291,279,225 327,254.658 60,014,813Total liabilities 519,934,203 463,689,601 499,740,598 90,214,889Total equity and liabilities 1,530,755,900 1,292,941,040 1,144,839,501 209,232,839


__________________________ _________________________ G. Sebborn K. ChigiyaChairman Chief Executive Officer14 May 2021 14 May 2021


Company Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2020 Inflation Adjusted Historical Notes 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 Restated Audited Unaudited Unaudited Unaudited ZWL ZWL ZWL ZWLRevenue 15 1,095,912,509 1,051,662,732 813,367,893 114,300,451Cost of sales (775,269,730) (605,994,385) (418,694,893) (44,282,489)Gross profit 320,642,779 445,668,348 394,673,000 70,017,962Net monetary gain* 166,809,786 20,787,828 - -Other income 16 1,351,395 983,080 986,186 80,350Distribution expenses (37,411,192) (46,260,958) (27,366,773) (5,025,646)Administrative expenses 17 (243,691,828) (158,800,691) (161,630,703) (20,199,976)Profit before interest and tax 18 207,700,940 262,377,607 206,661,710 44,872,690Finance costs (52,762,169) (7,669,803) (28,257,005) (1,099,240)Profit before tax 154,938,771 254,707,803 178,404,705 43,773,450Income tax expense* 18.1 (12,312,890) (150,825,259) (15,807,548) (11,167,689)Profit for the year 142,625,881 103,882,544 162,597,157 32,605,761

Other comprehensive incomeItems that maybe reclassified to profit and loss Revaluation surplus 52,909,396 381,286,284 484,019,142 100,768,724Related tax (13,079,204) (98,181,215) (119,649,532) (25,947,946)Items that maybe not be reclassified to Profit and loss - - - -Other comprehensive income net of tax 39,830,192 283,105,069 364,369,610 74,820,778

Total other comprehensive income for the year 182,456,073 386,987,613 526,966,767 107,426,539 Basic earnings per share (cents) 20 55.62 40.99 63.41 12.87Diluted earnings per share (cents) 20 55.06 39.98 62.77 12.55Headline earnings per share (cents) 20 55.53 40.99 64.10 12.87 * Refer to Prior period error - Note 27.


Company Statement of Changes in Equityfor the year ended 31 December 2020

Inflation Adjusted Audited Share Retained Total Capital *Reserves earnings equity Restated Restated Restated ZWL ZWL ZWL ZWL ** Balance as at 31 December 2018 as previously presented. 951,610 336,945,520 120,855,812 458,752,942

Impact of correction of error 331,076 (331.076) - Restated balance as at 31 December 2018 951,610 337,276,596 120,524,736 458,752,94Dividend paid - - (22,157,067) (22,157,067)Revaluation surplus (net of tax) - 283,105,069 - 283,105,063Share capital issued 5,666 - 5,666Share options exercised 1,561 - - 1,561Share based payments - , 4,699,439 - 4,699,439Share premium on scrip dividend - 5,114,714 (5,114,714) -Share premium on share options - 961,286 - 961,309Profit for the year - - 103,882,544 103,882,544Balance as at 31 December 2019 958,837 631,157,103 197,135,499 829,251,439Revaluation surplus (net of tax) - 39,830,192 - 39,830,543Share options exercised 300 68,700 69,000Share Based payments - (954,814) - (954,814)Share capital issued - - 142,625,881 142,625,835Balance as at 31 December 2020 959,137 670,101,180 339,761,380 1,010,821,697



*Historical Unaudited Share Retained Total Capital Reserves earnings Equity ZWL ZWL ZWL ZWLBalance as at 31 December 2018 24,649 8,731,173 4,031,868 12,787,690Revaluation surplus (net of tax) - 74,820,778 - 74,820,778Dividend paid - - (2,278,344) (2,278,344)Share based payments - 1,047,565 - 1,047,565Share options exercised 150 34,350 - 34,500Share capital issued 544 - (544) -Scrip dividend - 1,140,135 (1,140,135) -Profit for the period - - 32,605,761 32,605,761Balance as at 31 December 2019 25,343 85,774,001 33,218,606 119,017,950Revaluation surplus (net of tax) - 364,369,610 - 364,369,610Share options exercised (net of tax ) 300 68,700 - 69,000Share based payments - (954,814) - (954,814)Profit for the year - - 162,597,157 162,597,157Balance as at 31 December 2020 25,643 449,257,497 195,815,763 645,098,903



Company Statement of Cash Flows

for the year ended 31 December 2020 Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 Restated Audited Unaudited Unaudited Unaudited ZWL ZWL ZWL ZWLCash flows from operating activities *Profit for the year before interest and tax 207,700,940 262,377,607 206,661,710 44,872,690Adjustments for: Depreciation of non-current assets 4 60,476,246 56,906,168 34,437,561 1,269,676Depreciation of right of use Asset 5 7,009,932 2,066,942 3,872,120 321,048Expense recognized in respect of equity –settled share-based payments 26 (954,814) 4,699,377 (954,814) 1,047,565Monetary gain (166,809,786) (20,787,828) -Profit on disposal of property, plant, and equipment (81,307) (21,847) (80,880) (5,150)Net cash from operations before working capital changes 107,341,214 305,240,420 243,935,697 47,505,830(Increase)/decrease in trade and other receivables (82,680,871) 86,701,074 (121,444,154) (7,122,954)Increase in inventories (36,600,846) (62,773,507) (224,757,880) (19,191,387)Increase in payables 48,176,881 35,308,072 211,395,007 36,417,155Cash generated from operations 36,236,378 364,476,059 109,128,670 57,608,644Interest paid (38,494,835) (6,369,873) (26,419,663) (809,470)Income tax paid (35,256,683) (68,724,414) (22,384,162) (791,399)Net cash generated from operating activities (37,515,140) 289,381,772 60,324,845 56,007,775Cash flow from investing activities Purchase of property, plant, and equipment 4 (57,206,902) (298,084,946) (48,611,160) (57,722,521)Proceeds from disposal of property, plant, and equipment 109,781 28,711 99,005 6,401Net cash utilized in investing activities (57,206,902) (298,056,235) (48,512,155) (57,716,120)Cash flow from financing activities Increase in borrowings 30,972,037 11,032,944 30,972,037 9,083,455Dividend paid - (22,157,066) - (2,278,344)Movement in lease liabilities (28,399,662) (3,408,149) (20,199,581) ( 701,005)Share options exercised 428,580 961,273 69,000 34,500Net cash utilized in financing activities 3,000,955 (13,570,998) 10,841,456 6,138,606Net (decrease) / increase in cash and cash equivalents (91,611,306) (22,245,461) 22,654,146 4,430,261 Cash and cash equivalents at the beginning of the year 25,115,818 32,555,915 5,598,636 1,168,375Effect of inflation and foreign exchange movement on cash and cash equivalent 94,748,270 14,805,364 - -Cash and cash equivalents at the end of the year 28,252,782 25,115,818 28,252,782 5,598,636



Consolidated and Company Financial Statements

Accounting Policiesfor the year ended 31 December 2020

1. GENERAL INFORMATION

Proplastics Limited is a limited Company incorporated in the Republic of Zimbabwe. The address of its registered office is 5 Spurn Road, Ardbennie, Harare. The Group consists of Proplastics Limited and its wholly owned subsidiaries, Promouldings (Private) Limited and Dudway Investments (Private) Limited.

1.1 Nature of Business The principal activities of the Group and Company are manufacturing and distribution of PVC and HDPE sewer and water reticulation

pipes.

1.2 Reporting period The statutory reporting period for the Group and Company is 1 January 2020 to 31 December 2020.

1.3 Statement of compliance The Group and Company’s financial results, where practicable, have been prepared in accordance with the accounting policies

consistent with International Financial Reporting Standards (IFRS), and in the manner required by the Companies and Other Business Entities Act (Chapter 24:31) and the Zimbabwe Stock Exchange Listing Requirements.

While full compliance has been achieved in the past, due to the requirements of Statutory Instrument 33 of 201 (SI33/19) issued by the Government, which directed that all assets and liabilities that were in United States Dollars (US$) before 22 February 2019 be deemed to have become RTGS dollars (and subsequently ZWL as of 24 June 2019) at a rate of 1:1 to the US$, it was not practical to comply with requirements of IAS21: The Effects of Changes in Foreign Exchange Rates, in the current and prior periods.

The Group and Company also adopted the use of the official interbank exchange rate during the period from 1 January 2020 through to 23 June 2020 in accordance with local legislation, to record foreign currency transactions and have not estimated a more appropriate rate in accordance with IAS 21, where there is a temporary lack of exchangeability.

The Group and Company’s annual financial statements have been prepared under the supervision of P. Changunda CA (Z), Group Finance Director of Proplastics Limited, Registered Public Accountant, PAAB Number 2847 on 30 April 2001 and were approved by the Board on 14 May 2021.

1.4 Basis of preparation Adoption of IAS 29: Financial Reporting in Hyperinflationary Economies

The Group and Company adopted IAS 29 “Financial Reporting in Hyper-Inflationary Economies” as per the guidance issued by the Public Accountants and Auditors Board (PAAB) through pronouncement 1/2020.

The Group and Company adopted the Zimbabwe Consumer Price Index (CPI) to restate the transactions and balances. The conversion

factors have been computed from the consumer price index (CPI) data prepared by the Zimbabwe Central Statistics Office as reported on the Reserve Bank of Zimbabwe website.

The following All Items CPI indices were used to prepare the financial statements.

Dates All Items CPI Indices Conversion Factors 31 December 2020 2,474.51 1 31 December 2019 551.60 4.49 Average CPI 2020 1 579.09 Average CPI 2019 240.29

Monetary assets and liabilities are not restated while non-monetary assets and liabilities that are not carried at amounts current at the financial reporting date and components of shareholders’ equity are restated by the relevant monthly conversion factors from the date of the respective transactions to the reporting date. All items in the Statement of Profit and Loss are restated by applying the relevant monthly, yearly average or year-end conversion factors. The effect of inflation on the net monetary position of the Group Company is included in the Statement of Profit and Loss as a monetary gain/loss adjustment. All corresponding figures as of, and for the prior period year ended, are restated by applying the change in the index from the end of the prior year to the end of the current year.



Accounting Policies (continued)for the year ended 31 December 2020

1.4 Basis of preparation (continued)

Calculation of the monetary gain or loss

One of the objectives of IAS 29 is to account for the financial gain or loss that arises from holding monetary assets or liabilities during a reporting period (the monetary gain or loss). The monetary gain or loss is calculated as the difference between the historical cost amounts and the result from the restatement of non-monetary items, shareholders’ equity, items in the statement of comprehensive income and the adjustment of index-linked items to year end purchasing power. The gain or loss on the net monetary position is included in profit or loss. The adjustment to those assets and liabilities linked by agreement to changes in prices made in accordance with IAS 29 para 13 is offset against the gain or loss on net monetary position.

2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS’s)

2.1. New and amended IFRS Standards that are effective for the current year.

The following new standards, amendments and interpretations are effective for accounting periods beginning on or after 1 January 2020 and are relevant to the Group and Company. The application of these standards, amendments and interpretations has had no material effect on the disclosures of amounts in these financial statements.

APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS’s)

Standard Effective Date Executive Summary

IFRS 16 amendment - COVID-19 Related Rent Concessions

1 June 2020 The amendments introduce an optional practical expedient that simplifies how a lessee accounts for rent concessions that are a direct consequence of COVID-19.

IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Amendments - Interest Rate Benchmark Reform – Phase 2

1 January 2021 Amendments to IFRS 9, IAS 39 and IFRS 7 have now been issued to address uncertainties related to the ongoing reform of interbank offered rates (IBOR).

IAS 37 amendment - Onerous Contracts: Cost of Fulfilling a Contract

1 January 2022 Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets clarify that the ‘costs of fulfilling a contract’ when assessing whether a contract is onerous comprise both: — the incremental costs – e.g., direct labour and materials; and — an allocation of other direct costs – e.g., an allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract.

Annual Improvements to IFRS Standards (2018 – 2020)IFRS 1, IFRS 9, IFRS 16 and IAS 41 amendments

1 January 2022 IFRS 1 (First time Adoption of International Financial Reporting Standards) - The amendment permits a subsidiary (as a first-time adopter of IFRS that applies IFRS later than its parent) that applies IFRS 1.D16(a) to measure cumulative translation differences using the amounts reported by its parent, based on the parent’s date of transition to IFRSs.

IFRS 9 Financial Instruments - The amendment clarifies that for the purpose of performing the ‘’10 per cent test” for derecognition of financial liabilities – in determining those fees paid net of fees received, a borrower includes only fees paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other’s behalf.

IFRS 16 Leases - The amendment removes the illustration of payments from the lessor relating to leasehold improvements.

IAS 41 Agriculture - The amendment removes the requirement to exclude cash flows for taxation when measuring fair value, thereby aligning the fair value measurement requirements in IAS 41 with those in IFRS 13 Fair Value Measurement.




2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS’s) (continued)

2.1. New and amended IFRS Standards that are effective for the current year. (continued)

APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS’s) (continued)

Standard Effective Date Executive Summary

IAS 16 amendment - Property, Plant and Equipment: Proceeds before Intended Use.

1 January 2022 The amendment prohibits deducting from the cost of an item of property, plant, and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.

IFRS 3 amendment - Reference to the Conceptual Framework

1 January 2022 The amendment has: — updated IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework; — added to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination and — added to IFRS 3 an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.

IFRS 17 amendments - Insurance Contracts

1 January 2023 IFRS 17 supersedes IFRS 4 Insurance Contracts and aims to increase comparability and transparency about profitability. The new standard introduces a new comprehensive model (“general model”) for the recognition and measurement of liabilities arising from insurance contracts

IAS 1 amendment - Classification of liabilities as current or non-current

1 January 2023 The clarification is on the classification of liabilities as current or non-current based solely on a Company’s right to defer settlements at the reporting date. The right needs to be unconditional and must have substance. The amendment also clarifies that the transfer of a Group’s own equity instruments is regarded as settlement of a liability, unless it results from the exercise of a conversion option meeting the definition of an equity instrument.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of preparation The financial statements have been prepared on the historical cost basis except for certain elements of property, plant and equipment

and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting policies below as well as under the current cost basis as per the provision of IAS 29 “Financial Reporting in Hyperinflationary Economies”. The Group and Company adopted IAS 29 effective 1 July 2019 as per guidance issued by the local accounting regulatory board, the Public Accountants and Auditors Board “PAAB” which relates to financial reporting on or after 1 July 2019. The Group and Company used the price indices provided by Zimbabwe Statistical Office as reported on the Reserve Bank of Zimbabwe website.

Historical cost is generally based on the consideration given in exchange for goods and services.

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, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group and Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share- based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IFRS 16, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:




3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.1 Basis of preparation (continued)

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access. • At the measurement date.• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either

directly or indirectly: and• Level 3 inputs are unobservable inputs for the asset or liability.

The functional currency for the Company is ZWL, with the presentation currency for the Group also ZWL.

3.2 Basis of consolidation

The consolidated and company financial statements incorporate the financial statements of the Company and its subsidiaries. Control is achieved when the Company: • has power over the investee.• is exposed, or has rights, to variable returns from its involvement with the investee and• has the ability to use its power to affect its returns.

The Company reassesses 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 listed above.

When the Company has more than a majority of voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s voting rights in an investee are sufficient to give it power including:• the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders.• potential voting rights held by the Company, other vote holders or other parties.• rights arising from other contractual arrangements; and • any additional facts and circumstances that indicate that the Company has or does not have the current ability to direct the

relevant activities at the time that the decisions need to be made, including voting patterns at previous shareholders’ meetings.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated and company statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributable to the owners of the Company and to the non- controlling interests even if this results in the non-controlling interests having a deficient balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s and Company’s accounting policies.

All intergroup assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Investment in Subsidiaries The subsidiary’s accounting policies conform to those used by the Group for like transactions and events in similar circumstances. In the

Company’s financial statements, the investment in subsidiary’s accounted for at cost.

3.3 Revenue recognition

Revenue from contracts with customers Revenue for the Group and Company is defined as income arising during an entity’s ordinary activities as per IFRS 15. Revenue is

recognized as per the five-step model as follows:• Identify the contract with a customer.• Identify the performance obligations in the contract.• Determine the transaction price.• Allocate the transaction price to the performance obligations in the contracts.





3.3 Revenue recognition (continued)

• Recognize revenue when (or as) the entity satisfies a performance obligation.

The Company earns revenue primarily from the sale of PVC and HDPE sewer and water reticulation pipes. Revenue comprises of amounts received or receivable from the sale of the aforementioned products during the course of the year.

Revenue is recognized at a point in time thus when the Company satisfies its performance obligations (when it transfers control of goods or service to the customer).

3.4 Other Income

Dividend and interest revenue Dividend revenue from investments is recognized when the shareholder’s right to receive payment has been established (provided that

it is probable that the economic benefits will flow to the Group and Company and the amount of income can be measured reliably).

Interest income from financial assets is recognized when it is probable that the economic benefits will flow to the Group and Company the amount of income can be measured reliably. Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.

3.5 Contract balances

The contract liabilities primarily relate to the advance consideration received from customers for sale of PVC and HDPE sewer and water reticulation pipes.

The following table provides information about contract liabilities from contracts with customers.

Contract liabilities

Description 31 December 2020 31 December 2019

Contract liabilities ZWL 33,405,093 ZWL 7,059,239

The company recognizes contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in the statement of financial position, Refer to Note 13. The amount of ZWL 7,059,239 included in contract liabilities as 31 December 2019 has been recognized as revenue in 2020. The entity does not have any refund liability due to the nature of the products offered (pipes) which is recyclable, and the insignificant portion of returns in the year and in the past based on historical data.

3.6 Property, plant, and Equipment

Property, plant, and equipment are tangible assets that the Group and Company holds for its own use or for rental to others and which the Group and Company expects to use for more than one period. The consumption of property, plant and equipment is reflected through a depreciation charge designed to reduce the asset to its residual value over its useful life.

Measurement Property, plant, and equipment is measured using the revaluation model with the exception of leasehold improvements and capital

work in progress which are measured at cost. It is the policy of the Group and Company to revalue its PPE frequently enough to ensure that the fair value of a revalued asset does not differ materially from it carrying amount. Any revaluation increase arising is recognised in other comprehensive income, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously expensed. A decrease in the carrying amount arising on revaluation is recognised in profit or loss to the extent that it exceeds the balance, if any, held in the revaluation reserve of that asset.

On 31 December 2020, the Directors approved revaluation of the owned land and buildings as well as plant and equipment of the Group and Company, by independent external valuer, Edinview Property Group (EPG Global).





3.6 Property, plant, and Equipment (continued)

The Property, plant and equipment valuation was based on reference to market-based evidence of open market values after considering the intrinsic value of the assets and net potential returns. Due to the limited market evidence of the ZWL transactions in this transition period, the valuations were prepared in United States Dollars (US$) and converted at the auction rate to ZWL.

For specialised property, the depreciated replacement cost plus land value basis was used for valuation. A specialised property is a property due to its specialised nature, is rarely if ever, sold on the open market for single occupation for a continuation of its existing use, except as part of a sale of the business in occupation. Their specialised nature may arise from the construction, arrangement, size or location of the property, or a combination of these factors, or may be due to the nature the plant and machinery an item of equipment which, the buildings are designed to house, or the function, or the purpose of which the buildings are provided.

Any revaluation surplus is credited to the asset revaluation reserve in equity, except to the extent that it reverses a revaluation decrease of the same asset previously recognised in the income statement, in which case the increase is recognised in the income statement. A revaluation deficit is recognised in the income statement, except to the extent that it offsets an existing surplus on the same asset recognised in the asset revaluation reserve.

Subsequent costs Subsequent costs are included in an asset’s carrying value only when it is probable that future economic benefits associated with the

item will flow to the Group and Company and the cost of the item can be measured reliably.

Components The amount initially recognised in respect of an item of property, plant and equipment is allocated to its significant components and

where they have different useful lives, are recorded, and depreciated separately. The remainder of the cost, being the parts of the item that are individually not significant or have similar useful lives, are compiled together, and depreciated as one component.

Depreciation Depreciation is recognised in the profit or loss so as to write off the cost or valuation of assets (other than freehold land and properties

under construction) less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation methods are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Accumulated depreciation as at the revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset. The Company’s policy is to depreciate property, plant, and equipment evenly over the expected life of each asset, with the exception that no depreciation is charged on land and assets under construction and not yet in use. The expected useful lives of the property, plant and equipment are as follows:

Land and work in progress is not depreciated Buildings 40 years on a straight – line basis Plant and equipment 8 years on a straight – line basis Motor vehicles 5 years on a straight – line basis Furniture & Office 3-10 years on a straight – line basis Leasehold improvement is amortised over ten (10) years. Useful lives and residual values The property, plant and equipment’s residual values, depreciation methods and useful lives are reviewed, and adjusted if appropriate, at

each financial year-end. The estimated useful life is based on expected usage of the asset and expected physical wear and tear, which depends on operational factors such as number of shifts for which the asset is to be used and the repair and maintenance program and technological obsolescence arising from changes and residual values

3. 7 Impairment of non-financial asset

At each financial statement reporting date, the Group and Company assesses whether there is any indication that an asset may be impaired. If any such indication exists, the asset is tested for impairment by estimating the recoverable amount of the related asset. Irrespective of whether there is any indication of impairment, an intangible asset with an indefinite useful life, intangible assets not yet available for use and goodwill acquired in a business combination, are tested for impairment on an annual basis.





3. 7 Impairment of non-financial asset (continued)

The impairment loss is recorded in the statement of profit and loss for assets. Any impairment loss recognised in prior periods for an asset other than goodwill is required to be reversed if there has been a change in the estimates used to determine the asset’s recoverable amount. Where the asset is to be disposed of, the costs associated with the disposal are added back into the net of the future net value less the carrying value.

When performing impairment tests, the recoverable amount is determined for the individual asset for which an objective indication of impairment exists. If the asset does not generate cash flows from continuing use that are largely independent from other assets or group of assets, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing 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 the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If due to any event the impaired asset regains its value, the gain is recorded in statement of profit and loss and other comprehensive income to the extent of original impairment loss and any excess is considered a revaluation and is credited to revaluation surplus.

3.8 Taxation and deferred taxation Income tax expense represents the sum of the tax currently payable and deferred tax.

Current taxation

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the statement of profit and loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The liability for current tax is calculated using rates that have been enacted or substantively enacted at the financial reporting date.

Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences, and deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associates, and interest in joint ventures, except where the Group and Company is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each financial reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates (and tax laws) that have been enacted or substantively enacted in the period in which the liability is settled, or the assets realised at the statement of financial reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group and Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group and Company intends to settle its current tax assets and liabilities on a net basis.

Deferred taxation

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to items that are recognised outside the profit or loss statement (whether in other comprehensive income or directly in equity), in which case the tax is also recognised outside the profit or loss statement, or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in the accounting for the business combination.





3.8 Taxation and deferred taxation (continued)

Value added tax

Revenues, expenses, and assets are recognised net of the amount of value added tax except where the goods supplied are exempted or zero-rated. The net amount of VAT recoverable from or payable to the taxation authority is included as part of receivables or payables in the statement of financial position.

3.9 Advance payments received

Advance payments received are assessed on initial recognition to determine whether it is probable that they will be repaid in cash or another financial asset. If it is probable that the advance payments will be repaid with goods or services, the liability is carried at restated cost.

3.10 Inventories

Inventories comprise raw materials, work in progress, finished goods and manufactured components. They are valued at the lower of restated cost or net realisable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale. Weighted average cost method is used to determine the cost of inventories.

3.11 Foreign currency translation

The functional currency for the Company is ZWL, with the presentation currency for the Group also ZWL. In preparing the financial statements of the individual Company’s transactions in currencies other than the Company’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the dates of the transactions.

The interbank rate was used for the period 1 January 2020 to 23 June 2020, with the auction rate being used subsequently and up to the year ended 31 December 2020. At each financial reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing at the financial reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in foreign currency are not retranslated. Exchange differences are recognised in profit or loss in the period in which they arise except for:

• those which are included in the cost of those assets where they are regarded as an adjustment to interest costs on foreign currency borrowings.

• exchange differences on transactions entered into in order to hedge certain foreign currency risks, and• exchange differences on monetary items receivable from or payable to a foreign operation for which settlement is neither

planned nor likely to occur, which form part of the net investment in a foreign operation, and which are recognised in the foreign currency translation reserve and recognised in profit or loss on disposal of the net investment.

For the purpose of presenting consolidated and company separate Financial Statements, the assets and liabilities of the Group and Company are expressed in Zimbabwe Dollars using exchange rates prevailing for the Zimbabwe Dollar to other currencies at the financial reporting date. Income and expense items are translated using the exchange rates prevailing thus interbank rate from January to June and auction rate thereafter from July to December at the dates of the transactions.

3.12 Financial instruments

3.12.1 Financial assets

The Group and Company has cash and cash equivalents, loans to Directors and trade receivables forming part of its financial assets. Trade receivables without a significant financing component are measured at transaction price, in terms of IFRS 15. The carrying amount of the financial assets noted above, approximate the fair value.




3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.12 Financial instruments (continued)

3.12.1 Financial assets (continued)

When an entity first recognises a financial asset, it classifies it based on the entity’s business model for managing the asset and the asset’s contractual cash flow characteristics, as follows:

Amortised cost—a financial asset is measured at amortised cost if both of the following conditions are met: the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows. and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and

interest on the principal amount outstanding.

Under this model the amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Impairment of financial assets

The Group and Company recognise a loss allowance for expected credit losses (ECL) on trade receivables, the amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instruments.

Trade receivables that do not contain a significant financing component such as is the case for the Group and Company, the loss allowance should be measured at initial recognition and through the life of the receivable at an amount equal to lifetime ECL.

For trade and other receivables, the Group and Company apply the simplified approach permitted by IFRS 9 which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group and Company compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition. In making this assessment the Group and Company considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Given the nature of the Company’s credit terms, no forward-looking adjustments are required in the expected credit loss model. This is also supported by customer advance payments which are quite substantial and are also a basis for the non-inclusion.

In particular, the following information is considered when assessing whether credit risk has increased significantly since initial recognition.

• An actual or expected significant deterioration in the financial instrument’s external or internal credit rating.• Significant deterioration in external market indications of credit risk for a particular financial instrument.• Existing or forecast changes in business, financial or economic conditions that are expected to cause a significant decrease in the

debtor’s ability to meet its obligations.• An actual or expected significant deterioration in the operating results of the debtor.• Significant increases in credit risk on other financial instruments of the same debtor.• An actual or expected significant adverse change in the regulatory, economic, or technological environments of the debtors that

results in a significant decrease in the debtor’s ability to meets it obligations.

Irrespective of the above, the Group and Company presumes that the credit risk on a financial asset has increased significantly since initial recognition when the contractual payments are more than 60 days past due unless the Group and Company has reasonable and supportable information that demonstrates otherwise.

Despite the foregoing, the Group and Company assumes that the credit risk on financial instrument has not increased significantly since initial recognition if the financial instrument is considered to have low credit risk at the reporting date. A financial asset is determined to have low credit risk if:






• The financial instrument has a low risk of default.• The debtor has a strong capacity to meet its contractual cash flow obligations in the near future.• Adverse changes in economic and business conditions in the longer term may but will not necessarily reduce the debtor’s ability

to fulfil its contractual cash flow obligations.• When the financial asset has external low credit rating in accordance with the globally understood definition or if the asset has an

internal rate of ‘performing’.

Definition of default The Group and Company considers the following as constituting an event of default for internal credit risk management purposes as

historical experience indicates that financial assets that meet either of the following criteria are generally not recoverable:

• When there is a breach of financial covenants by the debtor; or• Information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors,

including the Group and Company, in full (without taking into account any collateral held by the Group and Company)

Irrespective of the above analysis, the Group and Company considers that default has occurred when a financial asset is more than 90 days past due unless the Group and Company has reasonable and supportable information to demonstrate.

Credit-impaired financial assets A financial asset is credit impaired when one or more events that have a detrimental impact on the estimated future cash flow of that

financial asset have occurred. Evidence that a financial asset is credit –impaired includes observable data about the following events:• Significant financial difficulty of the debtor.• A default of contract such as a default or past due event.• It is becoming probable that the debtor will enter into bankruptcy or another financial reorganisation; or• The disappearance of an active market for that financial asset because of financial difficulties

Write –off policy The Group and Company writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty

and there is no realistic prospect of recovery. Financial assets written off may still be subject to enforcement activities under the Group’s and Company ‘credit control procedures, taking into account legal advice where appropriate. Any credit loss recovered are recognised in profit or loss.

De-recognition of financial assets The Group and Company derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or

when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group and Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group and Company recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group and Company continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On de-recognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity is recognised in profit or loss.

On de-recognition of a financial asset other than in its entirety (e.g., when the Group and Company retains an option to repurchase part of a transferred asset), the Group allocates the previous carrying amount of the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amounts allocated to the part that is no longer recognised, the sum of the consideration received for the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised in profit or loss.

A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part that continues to be

recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.






3.12.2 Financial liabilities

The Group’s and Company’s financial liabilities comprise of borrowings and trade and other payables and are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received

that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

De-recognition of financial liabilities The Group and Company derecognises financial liabilities when, and only when, the Group’s and Company’s obligations are discharged,

cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

3.13 Leases

The Group and Company assesses whether a contract is a lease in scope of IFRS 16: Leases, by determining whether the contract gives it the right to use a specified underlying physical asset for a lease term greater than twelve months, unless the underlying asset is of low value.

All leases are accounted for by recognising a right-of-use asset and a lease liability except for leases of low-value assets and leases with a duration of twelve months or less.

The Group and Company recognises a liability equal to the present value of lease payments over the lease term, discounted using the incremental borrowing rate applicable in the economic environment of the lease. The lease liability is disclosed on the face of the Statement of Financial Position in the separate financial statements.

A corresponding right-of-use asset equal to the liability, adjusted for any lease payments made at or before the commencement date, is recognised. The lease term includes any extension options contained in the contract that the Company is reasonably certain it will exercise.

Subsequent to initial measurement lease liabilities increase because of interest charged at a constant rate on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset.

When the Company revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount rate that applied on lease commencement. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent on a rate or index is revised. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term.

3.14 Share based payments

Senior executives of the Group and Company receive remuneration in the form of share-based payments, whereby they receive equity instruments as consideration for rendering services. The cost of equity settled transactions with employees is measured by reference to the fair value at the date on which they are granted. In valuing equity settled transactions, no account is taken of any performance conditions, other than linked to the price of the shares of the Group and Company. The cost of equity settled transactions is recognised, together with corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘the vesting date’).

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. Details regarding the determination of the fair value of equity settled share-based transactions are set out in note 8.





3.15 Employee benefits

3.15.1 Defined contribution plans

The Group operates pension schemes in terms of the Pension and Provident Funds Act and current contributions to defined contribution schemes are charged against income as incurred. The Group also participates in the National Social Security Authority scheme. Under defined contribution plans the Group’s legal or constructive obligation is limited to the amount that it agrees to contribute to the fund. Consequently, the actuarial risk that benefits will be less than expected and the investment risk that assets invested will be insufficient to meet expected benefits is borne by the employee.

3.15.2 Short term employee benefits

Wages, salaries, paid annual leave; bonuses and non-monetary benefits are recognised as employee benefit expenses and accrued when the associated services are rendered by the employees of the Group and Company.

3.15.3 Termination benefits

Termination benefits are payable when employment is terminated by the Group and Company before retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without the possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy.

Benefits falling due more than 12 months after the statement of financial reporting date are discounted to present value.

3.15.4 Retirement benefit costs

Payments to defined contribution retirement benefit plans are recognised as an expense when employees have rendered service entitling them to the contributions.

3.16 Related parties

Related parties are considered to be related if one party has the ability to control or jointly control the other party or exercise significant influence over the other party in making financial and operating decisions. Key management personnel are also regarded as related parties. Key management personnel are those persons having authority and responsibility for planning, directing, and controlling the activities of the Group and Company, directly or indirectly, including all executive and non- executive Directors.

Related party transactions are those where a transfer of resources or obligations between related parties occur, regardless of whether a price is charged.

3.17 Significant estimates in applying the Group’s and Company’s accounting policies The following are the critical estimate that the Directors have made in the process of applying the Group’s and Company.

Inventory assumptions 2020 inventory balances for the purposes of the hyper financial statements were based on a period aging of current, 180 days, 360

days, and 721 days rather than monthly aging due to accounting system configuration. As a result, average period conversion factors were used to restate balances. The Directors have assessed this and noted that this is representative of the aging of their inventories and therefore no material variations are expected.

Calculation of loss allowance When measuring expected credit losses, the Group and Company uses reasonable and supportable forward-looking information,

which is based on assumptions for the future movement of different economic drivers and how these drivers will affect each other.

Loss given default is an estimate of the loss arising on default. It is based on the difference between the contractual cash flows due and those that the lender would expect to receive, taking into account cash flows from collateral and integral credit enhancements. Probability of default constitutes a key input in measuring ECL. Probability of default is an estimate of the likelihood of default over a given time horizon, the calculation of which includes historical data, assumptions, and expectations of future conditions.





3.17 Significant estimates in applying the Group’s and Company’s accounting policies (continued)

We have considered the following macro-economic factors in our incorporation of forward-looking information for the determination of ECL allowance. Zimbabwe’s economy is set to rebound in 2021 through recovery of agriculture emanating from an expected bumper harvest.

The Group and Company’s set to benefit from increase sale (irrigation pipe) secured against credit loss.

If the ECL rates on trade receivables above 91days past due had been 10 per cent higher as of December 2020, the loss allowance on trade receivables would have been ZWL $383,124 (2019: ZWL 383,124) higher (lower). If the ECL rates on trade receivables between 61 and 90 and 60 days past due had been 10% per cent higher as of December 2020, the loss allowance on trade receivables would have been ZWL637 417 (2019: ZWL17,655,112 6 higher (lower).

Fair value measurements and valuation processes

Some of the Group’s and Company’s assets and liabilities are measured at fair value for financial reporting purposes. The board of Directors of the Company has set up a valuation committee, which is headed by the Finance Director of the Company, to determine the appropriate valuation techniques and inputs for fair value measurements.

Property valuations rely on historical market evidence for calculation of inputs such as- Rates of return on comparable properties.- Risk.- Obsolescence.- Inflation (perceptions).- Gross market rental growth rates.- Rates of return on alternative investments; and - Property expenditure.

The Group’s and Company’s independent valuers adopted the approach of converting US$ valuation inputs at the interbank foreign exchange rate on 31 December 2020.

Determining residual values and useful lives The Group and Company is required to assess the remaining useful lives of its property, plant, and equipment on an annual basis. This

affects the amount of depreciation that is recognisable in the financial statements.

The Group and Company assessed the residual values for the revalued equipment taking into account the state of the equipment and the expected remaining economic useful lives.

Uncertain tax provisions The Group’s and Company current tax provision relates to management’s assessment of the amount of tax payable on open tax

positions where the liabilities remain to be agreed with Zimbabwe Revenue Authority (ZIMRA). There is a possibility that, on conclusion of open tax matters at a future date, the final outcome may differ. The accounting has currently been based on the most likely outcome.

Valuation of share options Share-based payments Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity

instruments at the grant date. The fair value excludes the effect of non-market-based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in note 10.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s and Company’s estimate of the number of equity instruments that will eventually vest. At each reporting date, the Group and Company revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to reserves.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.





3.18 Critical Judgement in applying the Group’s and Company’s accounting policies

Determination of the Company’s functional currency The functional currency in the prior year (2019) of the Company’s was ZWL, with our assessment of the current year functional currency

of the Company’s is being influenced by both US$ and ZWL currencies.

The proportion of US$ revenue is one of the most important determinants of the functional currency is showing a downward trajectory from 60% (after retention) composition in 2020 to 51 % (after retention) in the 1st 3 months of 2021. In our view as management, due to the volatility of the economic environment, it would not be consistent to have a ZWL functional currency in one year (2019), US$ currency in another year (2020) and reverting to ZWL functional currency in the subsequent year (2021) for the Company’s.

In such a scenario, and considering the mixed indicators in 2020, management, in accordance with Paragraph 12 of IAS 21 has applied “its judgement to determine the functional currency that most faithfully represents the economic effects of the underlying transactions, events and conditions,”

In light of the above, management are therefore of the opinion that the functional currency of the Company’s is ZWL, and the presentation currency of the Group is ZWL.

The following pronouncements have been taken into account in the determination of the functional currency.

Statutory Instrument (SI 33) of 2019 The SI 33 of 2019 which deemed all assets and liabilities to be valued at par with the US $ and other currencies has introduced

uncertainties into the future which may have a significant risk of resulting in material adjustments to the carrying amounts of assets and liabilities within the next financial year. Refer to note 1.3: Determination of functional currency.

Statutory Instrument 85 of 2020[2] In terms of section 6 of SI 85 of 2020, pronounced on [29 March 2020], (payment of goods and services using free funds), any person

could use free funds for the purchase of goods and services in Zimbabwe. It must be highlighted that it remains that goods and services must be chargeable in local currency, and payment may be made in foreign currency using an official exchange rate on the date of payment.

Statutory Instrument 185 of 2020 SI 85 of 2020 was followed by SI 185 of 2020 which sought to compel all providers of goods and services to implement dual pricing in

both the local currency and foreign currency. This SI is an acceptance that the economy is effectively operating in one currency (local ZWL) and trading in another (USD).

Exchange rates used for translation of foreign currency transactions.

The stagnation of the official interbank exchange rate during the first half of the 2020 financial year and the disparity between the official exchange rate and parallel rates were indications of the legal exchange market not being a “perfect” market with the lack of exchangeability as the Group and Company were unable to access foreign currency from the inter-bank exchange market. IAS 21 The Effects of Changes in Foreign Exchange Rates requires an entity to estimate the exchange rate where there is long-term lack of exchangeability. During the period between 1 January to 23 June 2020, the Group and Company applied the inter-bank exchange rates as required by law and could not estimate any other suitable rate due to non-availability of an alternative rate.

The Reserve Bank of Zimbabwe, through the Monetary Policy Committee introduced a Foreign Exchange Auction Trading System from 23 June 2020. Following the introduction of the foreign exchange auction system, the exchange rate increased and large volumes of bids were allocated as the auction system progressed which indicated greater exchangeability of the rate. The Group and Company participated in the foreign exchange auction and were also able to generate foreign currency through domestic and export sales following the pronouncement of SI 85 of 2020. With effect from 23 June 2020, the Group and Company applied auction rates to translate foreign currency transactions and balances into ZW$

3.18 Critical Judgement in applying the Group’s and Company’s accounting policies

IAS 29- “Financial reporting in hyperinflationary economies” • The standard is applied as if the economy had always been hyper-inflationary.• The standard also requires that financial statements for all entities that report in the currency of a hyper-inflationary economy

apply the standard at the same date.





3.18 Critical Judgement in applying the Group’s and Company’s accounting policies (continued)

IAS 29- “Financial reporting in hyperinflationary economies”

• The conversion factors have been computed from the consumer price index (CPI) data prepared by the Zimbabwe Central Statistics Office as reported on the Reserve Bank of Zimbabwe website.

3.19 New factory valuation method

New factory, Dudway was revalued at the depreciation replacement cost plus land value because it is a specialised building thus its intrinsic value is relatively unaffected by market conditions and it also provides a fair comparison between specialised and/or different properties in different location, Refer to Note 4.6.


4.1 Property, plant, and equipment

Freehold Furniture Group Land & Capital Work Leasehold Plant & Motor & Office Inflation adjusted Buildings in Progress Improvements Equipment Vehicles Equipment TOTAL Cost ZWL ZWL ZWL ZWL ZWL ZWL ZWL Balance at 31 December 2018 64,183,485 145,933,981 3,813,088 275,269,249 29,606,465 13,242,386 532,048,654 Additions - 153,697,973 - 137,293,130 3,744,815 3,347,081 298,082,999 Revaluation 86,647,143 - - 342,956,831 26,106,334 12,223,113 467,933,421 Disposal (15,323) (15,323) Balance at 31 December 2019 150,830,628 299,631,954 3,813,088 755,519,210 59,457,614 28,797,257 1,298,049,751 Additions - 40,590,885 - 369,061 14,148,961 2,097,995 57,206,902 Revaluation / impairment 144,672,065 - - (234,943,230) (27,429,305) (11,972,991) (129,673,461) Transfer in/out 322,753,145 (331,674,051) - 3,755,736 5,165,170 - - Disposals - - - - (57,636) (177,752) (235,388) Balance at 31 December 2020 618,255,838 8,548,788 3,813,088 524,700,777 1,284,804 18,744,509 1,225,347,804 Accumulated Depreciation Balance at 31 December 2018 (3,853,431) - (332,417) (189,752,033) (12,970,093) (7,451,341) (214,359,315) Depreciation for the year (1,307,588) - (50,800) (46,946,060) (5,968,250) (3,941,048) (58,213,746) Disposals - - - - - 8,452 8,452 Balance at 31 December 2019 (5,161,019) - (383,217) (236,698,093) (18,938,343) (11,383,937) (272,564,609) Depreciation for the year (1,287,717) - (18,576) (50,790,980) (5,970,549) (3,697,089) (61,764,911) Disposals - - - - 61,384 162,679 224,063 Reversal of Accumulated Depreciation 6,448,736 - - 287,489,073 24,847,508 14,918,347 333,703,664 Balance at 31 December 2020 - - (401,793) - - - (401,793) Carrying Amount Balance at 31 December 2019 145,669,609 299,631,954 3,429,871 518,821,117 40,519,270 17,413,320 1,025,485,142 Balance at 31 December 2020 618,255,838 8,548,788 3,411,295 524,700,777 51,284,804 18,744,510 1,224,946,011

Notes to the Consolidated and Company Financial Statementsfor the year ended 31 December 2020



4.2 Property, plant, and equipment

Freehold Furniture Group Land & Capital Work Leasehold Plant & Motor & Office Historical Unaudited Buildings in Progress Improvements Equipment Vehicles Equipment TOTAL Cost ZWL ZWL ZWL ZWL ZWL ZWL ZWL Balance at 31 December 2018 1,746,041 4,729,751 98,710 7,182,300 787,620 334,314 14,878,736 Additions - 34,261,240 - 22,599,592 573,007 288,682 57,722,521 Revaluation 30,845,262 - - 89,709,957 7,724,850 3,333,917 131,613,986 Disposals - - - - - (2,643) (2,643) Balance at 31 December 2019 32,591,303 38,990,991 98,710 119,491,849 9,085,477 3,954,270 204,212,601 Additions - 32,699,407 - 300,095 13,723,093 1,889,415 48,612,011 Revaluation 524,955,464 402,715,338 27,307,281 13,074,370 968,052,453 Transfer in/(out) 60,707,903 (64,097,702) 2,193,496 1,196,304 - - Disposals - - - - (27,351) (173,544) (200,895) Balance at 31 December 2020 618,254,670 7,592,696 98,710 524,700,778 51,284,804 18,744,511 1,220,676,169 Accumulated Depreciation Balance at 31 December 2018 (89,667) - (9,085) (4,887,681) (342,510) (187,054) (5,515,997) Depreciation for the year (30,021) - (9,085) (1,046,008) (125,747) (88,836) (1,299,697) Disposals - - 1,393 1,393 Balance at 31 December 2019 (119,688) - (18,170) (5,933,689) (468,257) (274,497) (6,814,301) Depreciation for the year (629,766) - (9,084) (28,623,655) (3,761,415) (2,043,409) (35,067,329) Disposals - 28,015 153,586 181,601 Reversal of Accumulated depreciation 749,454 34,557,344 4,201,657 2,164,320 41,672,775 Balance at 31 December 2020 - - (27,254) - - - (27,254) Carrying Amount Balance at 31 December 2019 32,471,615 38,990,991 80,540 113,558,160 8,617,220 3,679,773 197,398,299 Balance at 31 December 2020 618,254,670 7,592,696 71,456 524,700,778 51,284,804 18,744,511 1,220,648,915



4.3. PROPERTY, PLANT AND EQUIPMENT

Furniture Company Leasehold Capital Work Plant & Motor & Office TOTAL Inflation adjusted Improvements in Progress Equipment Vehicles Equipment Cost ZWL ZWL ZWL ZWL ZWL ZWL

Balance at 31 December 2018 3,813,088 145,932,034 275,269,249 29,606,465 13,242,382 467,863,218 Additions - 153,699,920 137,293,130 3,744,815 3,347,081 298,084,946 Revaluation - - 342,956,831 26,106,335 12,223,118 381,286,284 Disposals - - - - (15,326) (15,326)

Balance at 31 December 2019 3,813,088 299,631,954 755,519,210 59,457,615 28,797,255 1,147,219,122 Additions - 40,590,885 369,061 14,148,961 2,097,995 57,206,902 Disposals - (322,753,145) - (57,639) (177,746) (322,988,530) Impairment - - (234,943,230) (27,429,305) (11,972,991) (274,345,526) Transfer (out)/ in - - (8,920,906) 3,755,736 5,165,170 - Balance at 31 December 2020 3,813,088 8,548,787 524,700,777 51,284,804 18,744,512 607,091,968

Accumulated Depreciation Balance at 31 December 2018 (332,413) - (189,752,033) (12,970,092) (7,451,341) (210,505,879) Depreciation for the year (50,804) - (46,946,060) (5,968,250) (3,941,054) (56,906,168) Disposals - - - 8,468 8,468

Balance at 31 December 2019 (383,217) - (236,698,093) (18,938,342) (11,383,927) (267,403,579) Depreciation for the year (18,576) - (50,790,980) (5,970,549) (3,695,961) (60,476,246) Disposals - - 61,384 161,547 222,931 Accumulated depreciation reversal 287,489,073 24,847,507 14,918,341 327,254,922 Balance at 31 December 2020 (401,793) - - - - (401,793) Carrying Amount

Balance at 31 December 2019 3,429,871 299,631,954 538,821,117 40,519,273 17,413,328 879,815,543 Balance at 31 December 2020 3,411,295 8,548,787 524,700,777 51,284,804 18,744,512 606,690.175



4.4 Company Furniture Leasehold Capital Work Plant & Motor & Office TOTAL Historical unaudited Improvements in Progress Equipment Vehicles Equipment Cost ZWL ZWL ZWL ZWL ZWL ZWL

Balance at 31 December 2018 98,710 4,729,751 7,182,300 787,620 334,314 13,132,695 Additions - 34,261,240 22,599,592 573,007 288,682 57,722,521 Revaluation - - 89,709,957 7,724,850 3,333,917 100,768,724 Disposals - - - - (2,643) (2,643)

Balance at 31 December 2019 98,710 38,990,991 119,491,849 9,085,477 3,954,270 171,621,297 Additions - 32,698,557 300,095 13,723,093 1,889,415 48,611,160 Revaluation - 402,715,338 27,307,281 13,074,372 443,096,991 Disposals - (60,707,903) - (27,352) (173,546) (60,908,801)

Transfer (out ) / in - (3,389,800) 2,193,496 1,196,304 - -

Balance at 31 December 2020 98,710 7,591,845 524,700,778 51,284,803 18,744,511 602,420,647

Accumulated Depreciation Balance at 31 December 2018 (9,085) - (4,887,681) (342,510) (187,054) (5,426,330) Depreciation for the year (9,085) - (1,046,008) (125,747) (88,836) (1,269,676) Disposals - - - - 1,392 1,392 Balance at 31 December 2019 (18,170) - (5,933,689) (468,257) (274,498) (6,694,614) Depreciation for the year (9,084) (28,623,655) (3,761,414) (2,045,408) (34,437,561) Disposal - - - 28,015 154,755 182,770 Accumulated depreciation reversal - - 34,557,344 4,201,656 2,163,151 40,922,151

Balance at 31 December 2020 (27,254) - - - - (27,254)

Carrying Amount Balance at 31 December 2019 80,540 38,990,991 113,558,160 8,617,220 3,679,772 164,926,683 Balance at 31 December 2020 71,456 7,591,845 524,700,778 51,284,803 18,744,511 602,392,393



4.5 Encumbrances on property, plant, and equipment Freehold land and buildings with a carrying amount of $618 million has been pledged to secure borrowings for the Group. This was

done by way of a Deed of Hypothecation over The Remaining Extent of Lot 5 Block Y Ardbennie Township of Ardbenne. The Group’s and Company property, plant and equipment are insured at full replacement cost

4.6 Revaluation

The Directors engaged an independent professional valuer, Edinview Property Group (EPG Global), to do a valuation of all classes of property, plant, and equipment. The valuation conforms to International Valuation Standards.

Property, plant, and equipment valuations rely on historical market evidence for calculation of inputs. The Group’s independent professional valuer adopted the approach of converting US$ valuation inputs at the interbank foreign exchange rate on 31 December 2020.

The fair value measurement for all the property, plant and equipment has been categorised as a Level 2 fair value based on the inputs to the valuation technique used.• Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.• Level 2: Valuation techniques based on observable inputs, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

This category includes instruments valued using quoted market prices in active markets for similar instruments; quoted prices for identical or similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

• Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

Inflation Adjusted The value produced by a model or other valuation technique may be adjusted to allow for a number of factors as appropriate, because

valuation techniques cannot appropriately reflect all factors market participants take into account when entering into a transaction. Directors believe that these valuation adjustments are necessary and appropriate to fairly state financial instruments carried at fair value on the statement of financial position.

Carrying amounts before revaluation If the assets were held at cost as of 31 December 2020, the carrying amount of Property, plant and equipment would have been:

Group • Freehold land and buildings ZWL 94,050,994• Plant and Equipment ZWL 87,428,009• Furniture and office equipment ZWL 3,512,745• Motor Vehicle ZWL 19,774,449

Company • Plant and Equipment ZWL 87,428,009• Furniture and office equipment ZWL 3,512,745• Motor Vehicle ZWL 19,774,449



4.6 Revaluation (continued)

Valuation Analysis of Properties (US$)

Market value (US$)

Market rent per month

US$

Potential Income p.a

US$

Rental Rates Applied per

m2 US$

CAP Rate Value per m2

Property

The Remaining Extent of Lot 5 Block Y Ardbennie Township of Ardbennie situated along Spurn Road, Ardbennie, Harare

1,190,000 9,927 119,124 W/house /Factory - 2,0-2.50 Offices-3.0Basement

-0,50

10% 213

Stand 1842 Ardbennie Township situated along Finneran Road, Ardbennie, Harare, Zimbabwe

2,000,000 13,694 164,328 W/H/Factory Mixing Sheds /

Building 1,50-2.50

8.2% 389

The following are the inputs provided by EPG independent valuers :

Valuation summary as at 31 December 2020

Property GRC (US$) DRC(US$) Land value (US$)

LV Plus DRC(US$)

Market value (US$)

The Remaining Extent of Lot 5 Block Y Ardbennie Township of Ardbennie situated along Spurn Road, Ardbennie, Harare

3,733,000 1,396,000 101,000 1,497,000 1,190,000

Stand 1842 Ardbennie Township situated along Finneran Road, Ardbennie, Harare, Zimbabwe

6,016,000 5,878,000 307,000 6,185,000 2,000,000

9,749,000 7,274,000 408,000 7,682,000 3,190,000

5. Right of use asset

The Group leases several assets including buildings. The average lease term with external parties is 5 years (2019: 5 years). Lease terms with subsidiaries is 20 years.

Group Inflation Inflation Adjusted Adjusted Historical Historical Audited Audited Unaudited Unaudited 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Balance at 1 January 7,795,782 - 483,038 - Additions to right of use 10,557,514 9,235,899 8,039,609 794,018 Depreciation charge for the year (4,547,101) (1,440,117) (3,872,120) (310,979)

Balance as 31 December 13,806,195 7,795,782 4,650,527 483,039

Company Inflation Inflation Adjusted Adjusted Historical Historical Unaudited Unaudited Unaudited Unaudited 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Balance at 1 January 8,488,384 - 637,430 - Additions to right of use 72,778,334 10,555,326 72,447,990 958,478 Depreciation charge for the year (7,009,932) (2,066,942) (3,872,120) (321,048) Balance as 31 December 74,256,786 8,488,384 69,213,300 637,430



6. INVESTMENT IN SUBSIDIARIES

Company Inflation adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

At Cost Balance at beginning of the year 43,391,672 43,391,672 1,123,289 1,123,289 Disposal from Promouldings (Private) Limited - - - - Investment in Promouldings - - - - Investment in Dudway Investments (Private) Limited 322,753,145 - 60,707,903 -

Balance at end of year 366,144,817 43,391,672 61,831,192 1,123,289 Group & Company Inflation Adjusted Historical7. INVENTORIES 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 Audited Audited Unaudited Unaudited

Raw materials 134,518,290 69,064,556 108,841,635 6,995,551 Work in progress 58,047,438 79,855,338 52,007,736 8,519,576 Finished goods 152,951,376 120,910,264 88,167,769 10,762,308. Spares and consumables 28,425,050 27,286,042 4,835,951 1,523,932 Provision for slow moving inventories (56,059,887) (15,834,780) (3 060,315) (1,766,469)

Total inventories 317,882,267 281,281,420 250,792,776 26,034,898

There were no inventories written down to net realisable value during the year. (2019: ZWL nil) The cost of inventories recognised as an expense as a result of provision for slow moving inventories amounts to ZWL 40,225,110 (2019:

ZWL 2,379,335). No inventories have been pledged as security for certain of the Group’s and Company’s bank overdrafts. (2019- ZWL nil).

8. TRADE AND OTHER RECEIVABLES-GROUP Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19

ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Trade receivables 32,371,405 24,655,555 32,371,405 5,491,215 Prepayments 67,326,904 22,590,964 62,303,469 3,685,365

Deposits and other receivables 46,864,772 15,120,341 46,715,194 3,409,829

146,563,081 62,366,860 141,390,069 12,586,409 Less: Expected credit losses (632,417) (7,661,938) (632,417) (1,706,445)

Total trade and other receivables at end of the year 145,930,664 54,704,922 140,757,651 10,879,964

8. TRADE AND OTHER RECEIVABLES-COMPANY Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Unaudited Unaudited Unaudited

Trade receivables 32,371,405 24,655,555 32,371,405 5,491,215 Prepayments 67,326,904 22,590,964 62,303,469 3,685,365

Deposits and other receivables 38,463,181 15,120,341 38,313,601 3,409,829 138,161,490 62,366,860 132,988,475 12,586,409 Less: Expected credit losses (632,417) (7,661,938) (632,417) (1,706,445)

Total trade and other receivables at end of the year 137,529,073 54,704,922 132,356,058 10,879,964



8. TRADE AND OTHER RECEIVABLES (continued)

Write offs during the year inflation adjusted amounted to ZWL 268,745 (historical ZWL 245,491) (2019- Inflation adjusted nil, Historical nil).The average credit period on sales of goods is 11 days. No interest is charged on outstanding trade receivables.

The Group and Company has always measured the loss allowance for trade receivables at an amount equal to lifetime ECL. In prior years, the expected credit losses on trade receivables were estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the debtor’s current financial position, adjusted for factors that are specific to the debtors, general economic conditions of the industry in which the debtors operate and an assessment of both the current as well as the forecast direction of conditions at the reporting date.

The Group has recognized a loss allowance of ZWL 632,417 compared to ZWL 7,655,112 in 2019.

The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. None of the trade receivables that have been written off are subject to enforcement activities. The following table details the risk profile of trade receivables based on the Group’s provision matrix and also the risk profile for the current year assuming we had used the same provision matrix. As the Group’s historical credit loss experience does not show significantly different loss patterns for different customer segments, the provision for loss allowance based on past due status is not furth-er distinguished between the Group’s different customer bases.

Trade receivables-days past due

31 December 2020 Not past due 1-30 days 31-60 days 61-90 days *91> days Total Past due past due past due past due Inflation adjusted audited Group and Company ZWL ZWL ZWL ZWL ZWL ZWL Expected credit loss rate (A) 0.53% 1.00% 2.00% 10.00% 50.00% 14.5

Estimated total gross carrying 16,088,267 12,932,991 2,113,077 860,346 579,045 32,573,726 amount at default (B) Lifetime expected credit loss 85,268 129,330 42,261 86,035 289,523 632,417 (ECL) AXB Trade receivables-days past due

31 December 2019 Not past due 1-30 days 31-60 61-90 *91> Total Past due past due past due past due credit impaired Inflation adjusted Audited Group and Company ZWL ZWL ZWL ZWL ZWL ZWL Expected credit loss rate(A) 0.53% 1.00% 2.00% 10.00% 100% 14.58% Estimated total gross carrying amount at default (B) 7,350,028 14,157,120 1534 - 7,474,257 28,982,939 Lifetime expected credit loss (ECL) AXB 39,131 141,571 153 - 7,474,257 7,655,112


31 December 2020 Not past due 1-30 days 31-60 days 61-90 days *91> days Total Past due past due past due past due Historical unaudited Group and Company ZWL ZWL ZWL ZWL ZWL ZWL Expected credit loss rate(A) 0.53% 1.00% 2.00% 10.00% 50.00% 14.5

Estimated total gross carrying 16,088,267 12,932,991 2,113,077 860,346 579,045 32,573,726 amount at default (B) Lifetime expected credit loss 85,268 129,330 42,261 86,035 289,523 632,417 (ECL) AXB



8. TRADE AND OTHER RECEIVABLES (continued)


31 December 2019 Not past due 1-30 days 31-60 days 61-90 days *91> Total Past due past due past due past due Historical unaudited Group and Company ZWL ZWL ZWL ZWL ZWL ZWL Expected credit loss rate(A) 0.53% 1.00% 2.00% 10.00% 100% 14.58% Estimated total gross carrying amount at default (B) 7,350,028 14,157,120 1534 - 7,474,257 28,982,939 Lifetime expected credit loss (ECL) AXB 39,131 141,571 153 - 7,474,257 7,655,112

Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19

Days Days Days Days Debtor days 11 22 11 22

* For credit impaired customers (ageing of 90 days past due), the Group provided for 50%, from 100% in the prior year, as a result of approximately 50% of the balance emanating from regular customers who do not have a history of default. This expected credit loss allowance is also supported by the subsequent analysis done on the trade receivables ageing where the regular customers have significantly reduced the balance owing in 2021.

Reconciliation of Excepted Credit Losses The following table shows the movement in lifetime ECL that has been recognised for trade receivables in accordance with the

simplified approach set out in IFRS 9. Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited Balance at the beginning of the year 7,655,112 617,489 1,706,445 137,648 Net movement in provision for the year including monetary gain (7,022,695) 7,037,623 (1,074,028) 1.568,767 632,417 7,655,112 632,417 1,706,445

Book debtors are encumbered as shown in note 8. In determining recoverability of trade receivables, the Group and Company considers any changes in the credit quality of trade

receivables from the date credit was initially granted up to the reporting date. The concentration risk is limited due to the customer base being large and unrelated. Five of the Group’s trade receivables constitute 75% of the total receivable balance.

Credit impaired trade receivables are those that are past due more than 90 days.

9. CASH AND CASH EQUIVALENTS-GROUP Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited Cash Balance 76,847 140,241 76,847 31,262 Bank Balance 28,188,624 24,995,354 28,188,624 5,571,783

Balance at end of year 28,265,471 25,135,595 28,265,471 5,603,045

CASH AND CASH EQUIVALENTS-COMPANY Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Unaudited Unaudited Unaudited Cash Balance 76,847 140,241 76,847 31,262 Bank Balance 28,175,935 24,975,577 28,175,935 5,567,374




9.1 Effect of inflation and foreign exchange movement on cash and cash equivalent

9.1.1 Nature and reason of reclassification

The Group and Company reclassified amounts previously recognized as non-cash adjustment in the prior year to “effect of inflation and foreign exchange on cash and cash equivalent in the current year”. The amounts were reclassified in total.

The Group and Company reclassified non cash adjustment to “effect of inflation and foreign exchange movement on cash and cash equivalent in the current year” as a result of the inappropriate use of the term “non-cash adjustment” in the prior year.

9.1.2 Amounts reclassified. Group Company Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Audited Unaudited

Effect of inflation and foreign exchange movement on cash and cash equivalent 93,643,761 9,934,372 94,748,270 14,805,364

10. SHARE CAPITAL AND RESERVES- Group & Company Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Unaudited Unaudited Unaudited

Authorized and issued share capital. Authorized 875,000,000 ordinary shares of ZWL0.0001 each 2,902,868 2,902,868 87,500 87,500 Issued 256,435,628 ordinary shares of ZWL0.0001 each 959,137 958,837 25,643 25 343

Of the total shares in issue, some 7,476 shares are held in treasury.

Unissued share capital

This is the share capital which Directors may allot, grant options over or deal with at their discretion (in terms of the articles of Association) subject to the limitations of the Companies and other business Act (Chapter 24:31) and the Zimbabwe Stock Exchange without further restrictions.

Unissued share capital 1,943,731 433,358 61,917 62,157

Shares under options

The Directors are empowered to grant share options to senior executives of the Group and Company up to a maximum of 20,000,000 share options. The options are granted for a period of 5 years at a price determined by the middle market price ruling on the Zimbabwe Stock Exchange on the dealing date immediately preceding the day on which the options are granted. Details of share options outstanding as of 31 December 2020 were as follows:



10. SHARE CAPITAL AND RESERVES- Group & Company (continued)

Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 shares shares shares shares Audited Audited Unaudited Unaudited

Balance at the beginning of year 6,400,000 7,900,000 6,400,000 7,900,000 Granted during the year - - - - Forfeited during the year (800,000) - (800,000) - Exercised during the year (3,000,000) (1,500,000) (3,000,000) (1,500,000)


Proplastics Directors carried out a valuation as of 31 December 2018 the estimated fair values of options granted were determined using Black Scholes model in accordance with IFRS 2 with the following inputs and assumptions:

Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL

Grant date share price ($) 0.1205 0.1205 0.1205 0.1205 Exercise price ($) 0.1205 0.1205 0.1205 0.1205 Expected volatility 497% 497% 497% 497% Dividend yield 1.03% 1.03% 1.03% 1.03% Risk-free interest rate 25% 7% 25% 7%

Valuation Inputs

Exercise price The scheme rules state that the price for the shares comprised in an option shall be the middle market price ruling on the Zimbabwe

Stock Exchange on the dealing day immediately preceding the day on which the options are granted.

Expected Volatility Expected volatility is a measure of the amount by which the price is expected to fluctuate during a period, for example between grant

date and the exercise date.

Volatility was calculated as the standard deviation of lognormal daily returns for the period starting 10 October 2018 to 04 March 2020.

Expected dividends When estimating the fair value of options, the projected valuation of shares is reduced by the present value of dividend expected to be

paid during the vesting period. This is because the payment of dividends reduces the value of the Company.

Risk free rate of return A risk-free rate of return is the interest rate an investor would expect to earn on an investment with no risk, which is usually taken to be a

government issued security. It is the interest rate earned on a riskless security over a specified time horizon. The risk-free rate was based on long-term bonds being issued in the market.

All options expire, if not exercised, 5 years after the date of grant.

11. BORROWINGS-GROUP & COMPANY Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Long term loan 31,326,583 17,525,543 31,326,583 3,906,667

Short term loan 10,000,000 28,925,568 10,000,000 6,447,879

Total borrowings 41,326,583 46,451,111 41,326,583 10,354,546



11. BORROWINGS-GROUP & COMPANY (continued)

The loan is secured by Notarial General Covering Bond (NGCB) over Land and Buildings assets including cession of book debts and First Ranking Deed of Hypothecation over immovable assets. It is payable over 3 years at an effective interest rate of 45% per annum. The borrowings are measured at amortised cost.

12 DEFERRED TAX

12.1 DEFFERED TAX GROUP Group Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Balance at beginning of the year 182,581,251 13,186,800 31,531,885 815,516 Charge to income statement 20,657,561 53,884,806 (36,601,481) (1,400,630) Charge to Equity 43,855,763 115,510,645 244,270,092 32,116,999


Comprising of : Property , Plant and Equipment 241,718,187 216,534,220 251,644,300 33,846,046 Inventory 16,584,522 - - - Supplier prepayments 1,241,793 - - - Revenue received in advance (162,455) - - - Unrealized exchange gains (8,457,282) (28,095,957) (8,457,282) (1,008,540) Provision for bad debts - (1,971,191) (156,332) (439,410) Provision for obsolete stock - (2,040,528) - (454,866) Other Payables (3,830,190) (1,845,293) (3,830,190) (411,345)

247,094,575 182,581,251 239,200,496 31,531,885* Refer to Prior period error - Note 27.

12.2 DEFFERED TAX (COMPANY)

Company Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Balance at beginning of the year 153,917,353 19,760,599 25,050,750 488,654 Charge to income statement (55,691,967) 35,975,539 (52,197,306) (1,385,850) Charge to Equity 13,079,203 98,181,215 119,649,532 25,947,946


Plant ,Property and Equipment 105,928,205 187,870,323 104,946,781 27,380,626 Inventory 16,584,522 - - - Supplier prepayments 1,241,793 - - - Revenue received in advance (162,455) - - - Unrealized exchange gains (8,457,282) (28,095,957) (8,457,282) (1,025,079) Provision for bad debts - (1,971,191) (156,332) (439,410) Provision for obsolete stock - (2,040,528) - (454,866) Other payables (3,830,190) (1,845,293) ( 3,830,190) (410,521) 111,304,593 153,917,353 92,502,976 25,050,750

Deferred tax assets and liabilities are measured at the tax rates (and tax laws) that have been enacted. Critical judgements and estimates are made when determining deferred tax and these may change within the next year.



13. TRADE AND OTHER PAYABLES (GROUP) Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Trade payables 155,297,968 65,965,213 155,297,968 14,704,488 Accruals and other payables 76,579,807 140,246,502 74,021,964 27,374,987

230,877,775 206,211,715 229,319,932 42,079,175

TRADE AND OTHER PAYABLES (COMPANY) Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Trade payables 155,297,968 66,023,151 155,297,968 14,704,488 Accruals and other payables 99,705,197 140,803,137 98,313,209 27,374,683 255,003,165 206,826,288 253,611,177 42,079,171

The average credit period on purchases of goods and services from suppliers is 129 days. No interest is charged on trade payables. The Group has financial risk management policies in place to ensure that all payables are paid within pre-agreed credit terms. Included in other payables is revenue received in advance of ZWL 32,543,045 inflation adjusted, ZWL 31,885,863 historical (2019- ZWL 10,974,289 –inflation adjusted, ZWL 7 059 237 historical).

The Directors consider that the carrying amount of trade payables approximates to their fair value.

14. LEASE LIABILITY

Maturity analysis-contractual undiscounted cash flow - Group

Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Less than one year 4,807,510 6,865,974 4,807,510 1,530,530 One to 3 years 7,907,019 7,707,383 7,907,019 1,718,093 More than 3 years 1,332,207 3,139,382 1,332,207 699,816

Total undiscounted lease liabilities at 31 December 2020 14,046,736 17,712,739 14,046,736 3,948,439

Lease liabilities included in the statement of financial position at 31 December 2020 7,148,066 1,762,356 7,148,066 392,852 Current 2,800,129 831,896 2,800,129 185,439 Non-current 4,347,937 930,460 4,347,937 207,413 Amounts recognised in profit or loss - Interest on lease liabilities 1,426,104 4,838,521 1,426,104 1,078,580 Amounts recognised in the statement of cash flows - Total cash outflow for leases 11,321,497 13,470,201 11,321,497 3,002,713



14. LEASE LIABILITY (continued)

Maturity analysis-contractual undiscounted cash flow- Company Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Less than one year 34,063,938 8,539,608 34,063,938 1,903,609 One to 3 years 185,208,192 10,276,541 185,208,192 2,290,798 More than 3 years 412,936,626 3,139,382 412,936,626 699,816

Total undiscounted lease liabilities at 31 December 2020 632,208,757 21,955,530 632,208,757 4,894,222

Lease liabilities included in the statement of financial position at 31 December 2020 54,632,990 2,454,967 54,632,990 547,243 Current 5,976,610 1,487,487 5,976,610 331,583 Non-current 48,656,380 967,480 48,656,380 215,660 Amounts recognized in profit or loss Interest on lease liabilities 19,065,298 4,838,521 19,065,298 1,078,580 Amounts recognized in the statement of cash flows

Total cash outflow for leases 26,419,666 13,470,201 26,419,666 3,002,713

15. REVENUE GROUP AND COMPANY Market Segment Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Civils 219,340,624 237,533,016 151,979,298 25,816,386 Merchants 377,340,601 291,658,196 282,311,374 31,699,006 Irrigation 299,319,217 278,007,992 225,826,878 30,215,362 Mining 61,559,337 78,981,566 48,715,992 8,584,148 Local authorities 37,830,885 85,122,126 25,561,202 9,251,538 Borehole drillers 100,521,845 80,360,436 78,973,149 8,734,011

Total 1,095,912,509 1,051,662,732 813,367,893 114,300,451

16 OTHER INCOME GROUP AND COMPANY Market Segment Group Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Insurance claim 157,667 143,881 68,677 5,717 Profit on disposal of property, plant and equipment 81,307 21,843 80,880 5,150

Other deposits - 502 - 20 Zimdef/NSSA refunds - 163,189 - 6,486 Export incentive - (1,041,469) - (52,451) Interest on staff loans 2,416 813,446 2,416 31,958, Handling charges (33,428) 23,858 (31,821) 1,806 Scrap sales 1,143,433 857,830 866,034 81,664

Total other income 1,351,395 983,080 986,186 80,350



17 ADMINISTRATIVE EXPENSES Group Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Net exchange losses 61,594,770 9,851,280 40,231,588 3,980,888 Audit fees 9,071,120 10,734,553 6,624,230 1,101,898 Increase in allowance for credit losses (1,994,567) 14,025,285 (828,537) 1,568,767 Bank charges 8,633,878 3,344,439 6,637,503 537,123 2%(IMT) Government Tax 15,200,965 10,032,104 11,243,314 1,735,145 Communication 1,089,459 1,071,511 718,110 123,096 Computer printing and stationery expenses 2,057,411 1,448,272 1,175,997 176,906 Consultancy /technical fees 1,944,854 181,174 1,635,066 17,965 Donations 901,747 1,395,411 400,000 76,465 Depreciation 19,475,302 6,002,133 8,581,714 566,824 Directors Fees 7,709,125 8,586,903 5,644,743 647,659 Legal and professional fees 2,209,132 1,185,557 2,039,328 118,353 Insurance 1,174,467 1,674,470 792,984 125,803 Licenses and levies 2,361,595 1,589,308 1,367,729 272,011 Repairs and maintenance 3,343,124 1,047,694 1,762,405 72,308 Security expenses 4,462,626 1,185,848 2,981,572 110,919 Share based payments (954,814) 4,699,377 (954,814) 1,047,565 Other 9,654,201 13,652,376 3,788,203 779,493 Staff 94,711,927 68,543,094 69,502,462 7,224,979

242,565,976 160,250,789 163,343,597 20,284,167

17.1 Administrative expenses Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Net exchange loss 61,594,770 9,851,275 40,231,588 3,980,888 Audit fees 9,071,120 10,734,553 6,624,230 1,101,898 Increase in allowance for credit losses (1,994,567) 14,025,285 (828,537) 1,576,193 Bank charges 8,633,877 3,344,439 17,879,096 536,604 2%(IMT) Government Tax 15,200,965 10,032,104 11,243,313 1,735,145 Communication 2,189,743 1,071,511 1,613,664 123,096 Computer printing and stationery expenses 2,057,411 1,448,272 1,618,427 171,784 Consultancy /technical fees 1,944,854 181,174 1,635,066 17,965 Donations 901,747 1,395,411 400,000 76,465 Depreciation 19,604,001 6,002,133 7,951,947 536,803 Directors Fees 7,709,125 8,586,903 5,644,743 647,659 Legal and professional fees 2,209,132 1,185,557 1,050,396 118,353 Insurance 1,094,121 1,674,471 769,007 100,579 Licenses and levies 2,361,595 1,589,308 1,367,729 272,011 Repairs and maintenance 3,343,125 1,047,694 7,467,430 72,308 Security expenses 4,462,626 1,185,849 2,981,572 110,919 Share based payments (954,814) 4,699,377 (954,814) 1,047,565 Other 9,551,927 12,202,280 (14,566,615) 748,763 Staff 94,711,927 68,543,095 69,502,462 7,224,979

243,691,828 158,800,691 161,630,703 20,199,976



18. PROFIT BEFORE TAXATION Group Inflation adjusted Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Depreciation 61,764,911 58,213,746 35,071,316 1,610,676 Pension 6,341,119 3,160,217 4,226,922 214,775 Compensation to directors and key management 7,709,125 45,740,689 5,644,743 3,108,634 Share option expenses (954,814) 4,699,377 (954,814) 1,047,565 Profit on disposal of property ,plant and equipment 81,307 21,847 80,880 5,150


Depreciation 70,266,282 42,677,633 34,441,548 1,590,724 Pension 6,210,885 274,615 1,893,563 214,775 Compensation to directors and key management 7,709,125 10,196,320 5,644,743 3,108,634 Share option expenses (954,814) 4,699,377 (954,814) 1,047,565 Profit on disposal of property ,plant and equipment 81,307 21,847 80,880 5,150

Profit before taxation has been arrived at after taking into account the following items, which have not been disclosed separately:

18.1 Income tax expense Group Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Current income tax 69,546,096 115,005,701 69,546,096 12,561,855 Deferred tax movement 20,657,560 53,884,807 (36,601,481) (1,400,629)

Tax per income statement 90,203,655 168,890,508 32,944,615 11,161,226

Reconciliation of current income taxation Profit before tax 173,785,001 252,126,769 194,331,006 43,788,929 Tax at standard rate 42,959,652 64,922,643 48,038,625 11,275,572 *Effects of non-deductible expenses 26,586,442 50,083,058 21,507,472 1,286,283 Effects of other permanent differences 20,657,560 53,884,807 (36,601,481) (1,400,629)

Effective income tax expense 90,203,655 168,890,508 32,944,615 11,161,226

Company Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Income tax expense Current income tax 68,004,854 114,849,720 68,004,854 12,553,539

Deferred tax movement (55,691,964) 35,975,539 (52,197,306) (1,385,850)

Tax per income statement 12,312,890 150,825,259 15,807,548 11,167,689



18. PROFIT BEFORE TAXATION (continued)

18.1 Income tax expense (continued)

Reconciliation of current income taxation Company Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Profit before tax 154,938,773 254,707,803 178,404,705 43,773,450 Tax at standard rate 38,300,850 62,963,769 44,101,643 11,271,663 *Effects of non- deductible expenses (93,992,828) 51,885,951 23,903,211 1,281,876 Effects of other permanent differences 68,004,854 35,975,539 (52,197,306) (1,385,850)

Effective income tax expense 12,312,890 150,825,259 15,807,548 11,167,689

* The Group and Company’s non-deductible expenses are expenses which give rise to permanent differences .The Group and Company’s non-deductible expenses include Intermediary Money Transfer Tax, depreciation, legal expenses, and fines.

19. CURRENT TAX PAYABLE

Group Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 *Restated ZWL ZWL ZWL ZWL Audited Audited Unaudited Unaudited

Opening balance 54,056,422 14,554,934 12,049,866 283,562 Add current tax 69,546,095 115,005,701 69,546,095 12,561,855 Less payments (36,623,024) (68,863,854) (23,422,331) (795,550) Less monetary loss (28,805,863) (6,640,354) - -

Closing Balance as at 31 December 2020 58,173,630 54,056,422 58,173,630 12,049,866

19.1 Current tax payable

Company Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 *Restated ZWL ZWL ZWL ZWL Audited Unaudited Unaudited Unaudited

Opening balance 54,039,883 14,554,934 12,046,180 284,040 Add current tax 68,004,854 114,849,720 68,004,854 12,553,539 Less payments (35,256,683) (68,724,414) (22,384,162) (791,399) Less monetary loss (29,121,181) (6,640,357) - -

Closing Balance as at 31 December 2020 57,666,872 54,039,883 57,666,872 12,046,180




20. EARNINGS PER SHARE-GROUP

Basic earnings per share

The calculation is based on the profit attributable to ordinary shareholders and the number of shares in issue at the end of the period, which participated in the profit of the Company.


Earnings Earnings attributable to the equity holders of the Group 83,581,407 83,236,314 161,386,392 32,547,053

Number of shares ZWL Weighted average number of shares in issue used in the determination of: Basic earnings per share 256,435,628 253,435,628 256,435,628 253,435,628 Diluted earnings per share 259,035,628 259,835,628 259,035,628 259,835,628 Earnings per share (cents): Basic 32.59 32.84 62.93 12.87 Diluted 32.27 32.03 62.30 12.56 Headline earnings per share (cents) 32.50 32.78 62.88 12.87

20. EARNINGS PER SHARE

EARNINGS PER SHARE-COMPANY Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Unaudited Unaudited Unaudited

Earnings Earnings attributable to the equity holders of the Company 142,625,835 103,882,544 162,597,157 32,605,761

Number of shares ZWL Weighted average number of shares in issue used in the determination of: Basic earnings per share 256,435,628 253,435,628 256,435,628 253,435,628 Diluted earnings per share 259,035,628 259,835,628 259,035,628 259,835,628 Earnings per share (cents): Basic 55.62 40.99 63.41 12.87 Diluted 55.06 39.98 62.77 12.55 Headline earnings per share (cents) 55.53 40.99 64.10 12.87

20. EARNINGS PER SHARE

Basic earnings per share

The calculation is based on the profit attributable to ordinary shareholders and the number of shares in issue at the end of the period, which participated in the profit of the Company.

Diluted earnings basis The calculation is based on the profit attributable to ordinary shareholders and the number of shares in issue after adjusting to assume

conversion of share options not yet exercised.

Headline earnings basis The calculation is based on the profit attributable to ordinary shareholders, adjusted for capital profits and losses and other non-headline

items (insurance refunds and profit on disposal ) and the number of shares in issue at the end of the period.



21 RETIREMENT BENEFIT COSTS

Pension funds

The Group and Company operations and all permanent employees contribute to the funds below:

21.1 Masimba Holdings Limited Pension Fund

All entity employees are members of this fund administered by Old Mutual. The Fund is a defined contribution scheme.

All members joining the fund automatically participate on the defined contribution pension benefit basis. As of 31 December 2020, there were 76 members on the scheme.

21. RETIREMENT BENEFIT COSTS

21.2 National Social Security Authority (NSSA)

The entity and its employees contribute to the National Social Security Authority. This is a social security scheme promulgated under the National Social Security Act 1989. The Group’s and Company’s obligations under the scheme are limited to specific contributions legislated from time to time.

Pension costs recognised as an expense for the period.

Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Unaudited Unaudited Unaudited

Masimba Holdings Pension Fund 5,932,127 574,800 3,911,561 175,244 National Social Security Authority 408,992 129,662 315,361 39,531

6,341,119 704,462 4,226,922 214,775

22 CAPITAL COMMITMENTS - Group & Company

Capital Expenditure for the period to 31 December 2020 amounted to ZWL 66,127,808The budgeted capital expenditure for the period to 31 December 2021 is ZWL 307,190,173. The expenditure will be financed from internal resources and existing facilities.

Construction of the new Factory is now complete, and the estimated cost of construction is ZWL 322,752,145. The new factory is owned by Dudway Investments (Private) Limited, a Company which is 100% owned by Proplastics Limited. Migration of the plant to the new factory was completed in February 2020. The automated handling system was successfully installed was commissioned in December 2020.

23 DIRECTORS’ INTERESTS (GROUP AND COMPANY)

The Directors directly/indirectly hold the following number of shares in the Group and Company:

Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 Audited Unaudited Unaudited Unaudited

G. Sebborn - - - - S. Roberts - - - - H. Mashanyare - - - - K. Chigiya 6,666,667 6,666,667 6,666,667 6,666,667 P. Changunda 3,333,133 3,333,133 3,333,133 3,333,133 P. Zhanda 23,829,479 23,829,479 23,829,479 23,829,479 M.McCulloch 54,733,312 54,733,312 54,733,312 54 733 712 M.Di Nicola 54,733,312 54,733,312 54,733,312 54 733 712



24. BORROWING POWERS

Authority is granted in the Articles of Association for Directors to borrow a sum not exceeding 300% of the ordinary shareholders’ funds without the prior sanction of an ordinary resolution of the Group.

25. PRINCIPAL SUBSIDIARIES NOTE

Name Nature of Proportion of business ordinary shares held directly by the parent

(%) Promouldings Property Holding 100 Dudway Property Holding 100

All subsidiaries were incorporated in Zimbabwe and are property holding companies.

26. RELATED PARTY DISCLOSURES - Group & Company

Balances and transactions between entities within the Group and Company have been eliminated on consolidation and are not disclosed in this note.

The Company had significant transactions with Masimba Holdings Limited, a significant shareholder in Proplastics Limited. In addition,

some of the significant shareholders in Proplastics Limited are also significant shareholders in Masimba Holdings. The Company also had significant transactions with Kosto Holdings, whose shareholders are significant shareholders in Proplastics Limited.

All transactions with Masimba Holdings and Kosto Holdings are at arm’s length. Below are the sales made to, purchases made from and balances owing (to)/from Masimba Holdings and Kosto Holdings as of 31 December 2020:

26. RELATED PARTY DISCLOSURES - Group & Company


Sales to Masimba Holdings 602,397 266,643 493,682 20,033 Purchases from Masimba - 72,739,534 - 16,214,787

Purchase from Kosto 80,706,603 - 38,610,736 -

Balances owing (to) from Related Parties Balance owing from Masimba Holdings - 1,870,285 - 416,916 Balance owing to Masimba Holdings 11,062,600 (62,474,979) 11,062,600 (13,945,308) Balance owing to Kosto 16,915,798 - 16,915,798 -

The remuneration of Directors and other members of key management during the period were as follows:


Short term benefits 39,675,008 12,110,476 27,135,508 3,756,293 Termination benefits 1,893,593 274,615 1,893,563 83,724

For services rendered as Directors 7,709,125 1,914,156 5,644,743 647,659 For managerial services 39,365,883 10,196,320 21,490,765 3,108,634

The Remuneration Committee having regard to the performance of individuals and market trends determines the remuneration of Directors and key executives.



26. RELATED PARTY DISCLOSURES - Group & Company (continued)

Loans and advances to Directors- Group &Company Inflation Adjusted Historical 31 December 31 December 31 December 31 December 2020 2019 2020 2019 ZWL ZWL ZWL ZWL Audited Unaudited Unaudited Unaudited Short -term 2,101,000 395,324 2,101,000 88,124 Long term 1,981,570 2,383,165 1,981,570 531,245

Total 4,082,570 2,778,489 4,082,561 619,369

Loans to Directors - Group &Company Inflation Adjusted Historical 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 ZWL ZWL ZWL ZWL Audited Unaudited Audited Audited

Opening balance 619,369 2,982,885 619,369 664,932 New Loans 4,631,471 610,755 4,631,471 136,147 Repayment of loans (1,168,271) ( 815,151) (1,168,271) (181,710)

Closing balances 4,082,561 2,778,489 4,082,561 619,369

Terms and Conditions: The loan amount limit ranges between 6-12 months’ salary and is subject to cash flow availability and Remuneration Committee approval. The annual interest rate is 6-12% per annum. The repayment period is between 6 months to 5 years.

These loans have been assessed to have low credit risk. Accordingly, the Group and Company does not recognise lifetime ECL for these loans until they are derecognised. The Director’s loans are disclosed under Note 7 within the line item Deposits and Other receivables.

Share Based Payments Senior executives of the Group and Company receive remuneration in the form of share-based payments, whereby they receive equity

instruments as consideration for rendering services. The below is the share-based payments that was expensed in the statement of comprehensive income.


Share based payments (954,814) 4,699,377 (954,814) 1,047,565

27. Prior period error

Management , while preparing financial statements of the Group and Company for the period ended 31st December 2020, noticed that.1. Prior year revaluation reserves were misclassified by way of elimination to retained earnings. The Group and Company adopted

the application of IAS29, Financial Reporting in Hyperinflationary Economies, in the 2019 financial statements. Revaluation reserves are required to be eliminated in the first period of application of IAS29. These eliminations were incorrectly recorded against revaluation movements presented in both 2018 and 2019 in the Group and Company financial statements for the year ended 31 December 2019.

The Group and Company reserves were understated by ZWL 331,076 , whilst retained earnings were overstated by the same figure in 2018.

The Group reserves were understated by ZWL 508 million for the Group and ZWL 448 million for the Company, whilst retained earnings were overstated by the same figures in 2019.



27. Prior period error (continued)

There was no impact on statement of cashflows.

2. Deferred tax balances for the Group and Company were understated in 2019, due to the use of incorrect temporary differences in their respective calculations.

The effect was that deferred tax liability was understated by ZWL 150 million for the Group and ZWL 121 million for the Company, whilst profit for the year was overstated by the same figures.

3. Consequently, Group and Company basic and diluted earnings per share were overstated.

The errors have been corrected by restating each of the affected financial statement line items for prior periods. The impact of the error in point 1 noted above in respect of the opening position as of 1 January 2019, only relates to a reclassification between reserves and retained earnings with the correction increasing reserves by ZWL 331,076 and reducing retained earnings by the same amount. No other statements were impacted as of 1 January 2019 and therefore, a separate statement of financial position as of 1 January 2019 has not been presented. The numbers presented have been indexed by 4.486 being the factor of CPI upliftment from 31 December 2019 to 31 December 2020. The following table summarises the impact on the Group and Company financial statements.

27. Prior period error (continued)

Statement of financial position Group Company Impact of correction of error Impact of correction of error As previously adjustment Restated As previously adjustment Restated reported Reported 01 January 2020 (Dec 19) (Dec 19)

Reserves 199,606,095 507,870,951 707,493,820 182,625,752 448,531,351 631,157,103 Retained earnings 852,919,411 (658,032,065) 194,887,349 767,147,301 (570,011,802) 197,135,499 Deferred tax 32,420,143 150,161,108 182,581,251 32,436,909 121,480,444 153,917,353

Statement of profit or loss and other comprehensive income

Group Company Impact of correction of error Impact of correction of error As previously adjustment Restated As previously adjustment Restated for the year ended reported Reported 31 December 2020 (Dec 19) (Dec 19) Net monetary gain/loss 132,598,455 (115,510,357) 17,088,088 118,969,338 (98,181,510) 20,787,828 Profit before interest and tax 373,474,577 (115,510,357) 257,964,215 360,559,118 (98,181,510) 262,377,606 Profit before tax 367,637,131 (115,510,357) 252,126,769 352,889,315 (98,181,510) 254,707,803 Income tax expense (134,256,740) (34,633,768) (168,890,508) (127,526,038) (23,299,224) (150,825,259) Profit for the year 233,380,391 (150,144,126) 83,236,261 225,363,278 (121,480,734) 103,882,544 Total comprehensive income 585,803,167 (150,144,126) 435,659,037 606,649,559 (121,480,734) 386,987,613 Basic earnings per share (cents) 92.09 32.84 88.92 40.99 Diluted Earnings per share (cents) 92.02 32.78 88.86 40.92 28. FINANCIAL INSTRUMENTS

(a) Significant accounting policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement

and the basis on which income and expenses are recognised, in respect of each class of financial assets, financial liability and equity instruments are disclosed per note 3.



28. FINANCIAL INSTRUMENTS (continued)

(b) Financial assets and financial liabilities-Group


Financial Assets Trade and other receivables 32,371,405 24,655,555 32,371,405 5,491,215 Cash and cash equivalents 28,265,471 25,135,593 28,265,471 5,603,045 Loans to Directors 4,082,561 2,778,489 4,082,561 619,369

Financial Liabilities Borrowings and payables 222,349,909 252,662,830 270,647,425 52,433,722 Lease liability 9,912,716 1,762,356 7,148,069 392,852

Included in cash and cash equivalents are balances with banks. These balances are used for transacting on a daily basis. The Zimbabwe dollar became the functional currency effective 22 February 2019. Foreign denominated cash balances were converted at interbank rate of 83.8313 to US$.

29. FINANCIAL RISK MANAGEMENT The Group and Company’s financial liabilities comprise bank loans and trade and other payables. The main purpose of these financial

instruments is to raise finance for the Group and Company’s operations. The Group and Company have financial assets such as trade receivables, cash, and short-term deposits, which arise directly from its operations. The Group and Company do not use derivative financial instruments in their management of foreign currency risk, and these are not held or issued for trading purposes.

The main risks arising from financial instruments are foreign currency risk, interest rate risk, credit risk and liquidity risks. Senior executives

of the Group and Company meet on a regular basis to review and agree on policies to manage each of these risks. Treasury management strategies together with currency and interest rate exposures are re-evaluated against revised economic forecasts. Compliance with the Group and Company policies and exposure limits are reviewed at Audit and Risk Committee meetings.

29.1 Foreign exchange risk management -Group and Company

Foreign exchange risk is the risk arising from fluctuations in foreign exchange rates and their effect on future commercial transactions or recognised assets and liabilities denominated in a currency that is not the Group and Company’s functional

currency. The Group & Company are exposed to foreign exchange risk arising from various currency exposures on purchases that are denominated in a currency other than the ZWL, primarily with respect to the South African Rand, Euro, and the United States Dollar.

The Group and Company’s foreign liability exposure as at reporting date, is summarised as:

Historical Foreign 2020 Foreign 2019 Group & Company Balance ZWL Balance ZWL Currency outstanding equivalent outstanding equivalent Payables ZAR (6,376,176) (33,567,886) (6,862,493) (8,313,910)

EUR - - (90,000) (1,726,416) USD (782,834) (65,625,991 - -

Total (99,193,877) (10,040,326)

Abbreviation of currencies ZAR - South African rand USD - United States dollar EUR- European currency



29. FINANCIAL RISK MANAGEMENT (continued)

Foreign Exchange risk Sensitivity

Group and Company Monetary Assets and Liabilities Total $ZWL Total $ZWL Total $ZWLElement US$ ZWL US$1: ZWL83.83 US$1: $ZWL110 US$1: $ZWL120Trade and other receivables 1,318,075.72 30,263,363.49 140,757,651.15 175,251,692.75 188,432,449.96Cash and Cash equivalents 148,608.03 15,807,659.54 28,265,470.92 32,154,543.13 33,640,623.46Trade and other payables (1,811,688.52) (77,442,880.21) (229,316,729.03) (276,728,617.66) (294,845,502.88)Net Position (345,004.77) (31,371,857.18) (60,293,606.96) (69,322,381.78) (72,772,429.46)

The Loans and Borrowings are ZWL denominated and do not have any foreign exchange risk. Therefore, they are not included in the

table above.

29.2 Interest rate risk- Group and Company

Interest rate risk is the potential for investment losses that result from a change in interest rates. The Group and Company currently only have one ZWL credit line facility with Standard Chartered Bank and the interest rates have not materially fluctuated in the current year. Refer to note 9 for breakdown of short- and long-term loans.

The group’s treasury policy limits exposure to interest rate fluctuations by adopting a non-speculative approach to managing interest rate risk and only deals in approved financial instruments.

Interest rate sensitivity The table below demonstrates the sensitivity of reasonable movements in interest rate on the Company loan whose rate moves in line

with RBZ overnight lending rates.

Item 45% 55% 60%Finance costs 8,301,744.31 10,146,576.38 11,068,992.42

29.3 Credit risk- Group and Company

Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge a contract. Financial assets, which potentially subject the Group and Company to concentration of credit risk consists principally of cash, short - term deposits and trade receivables. The Group’s and Company’s surplus cash equivalents and short-term deposits are placed with high quality creditworthy financial institutions. The trade receivables are presented net of the allowance for credit losses and comprise a large, widespread customer base and the Group and Company monitor the performance and financial condition of its customers so that the exposure to credit losses is not significant. The Group and Company has not incorporated loans and advances to Directors in the expected credit loss determination as they believe there is no credit risk emanating from them as they can recover this from their interests in the entity.

Considering the COVID-19 pandemic that prevailed in 2020 and the lockdown restrictions put in place by Government, the Group and Company was not materially affected as it was designated as an essential service provider. Furthermore, the Group’s strategy

to focus on cash sales resulted in a ratio of 87% cash sales against credit sales of 13% as of 31 December 2020. This resulted in a low risk of default from credit customers. Credit facilities were given on a customer-by-customer basis with normal trading terms suspended, furthermore the Group and Company has well established credit control procedures that monitor activity on a customer account basis and allow for remedial action should the customer not comply with payment terms.

For credit impaired customers (ageing of 90 days past due), the Group and Company provided for 50%, from 100% in the prior year, because of approximately 50% of the balance emanating from regular customers who do not have a history of default. This expected credit loss allowance is also supported by the subsequent analysis done on the trade receivables ageing where the regular customers have significantly reduced the balance owing in 2021.

The Group and Company applies the simplified approach using a provisioning matrix where they apply relevant historical loss rates to the trade receivables balances outstanding (receivables ageing)-and the following considerations are applied in the model -:

a. The Group and Company uses groupings based on the receivables ageing (all customers within a particular band are assumed to have the same risk of default)

b. Rates are based on the days past due, historical trends, current performance of the debtor’s book




29.3 Credit risk- Group and Company (continued)

Exposure to credit risk for financial assets (Trade Receivables)

Trade Receivables 32,371,405

Expected credit loss (632,417)

31,738,988

29.4 Liquidity risk

Liquidity risk is the risk that the Group and Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s and Company’s objective when managing liquidity is to ensure as far as possible that it will have sufficient liquidity to meet its liabilities when they are due, under both and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s and Company’s reputation.

Liquidity and interest rate tables

The following table’s detail the Group’s and Company’s remaining contractual maturity for its financial liabilities with agreed repayment periods and fixed interest rate. There are no financial liabilities with floating rates. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date at which the Group and Company’s may be required to pay. The tables include both interest and principal cash flows. The contractual maturity is based on the earliest date on which the Group and Company’s may be required to pay.

Historical Group and Company 31-Dec-20 Weighted average 0-2months 2-12 months 12-36 months Total effective interest rate ZWL ZWL ZWL ZWL Fixed interest rate instruments 45 1,500,000 8,500,000 31,326,583 41,326,583 Trade and other payables - 117,990,832 37,307,136 - 155,297,968 - 119,490,832 45,807,136 31,326,583 196,624,551 Liquidity and interest rate tables

31-Dec-19 Weighted average 0-2months 2-12 months 12-36 months Total effective interest rate ZWL ZWL ZWL ZWL Fixed interest rate instruments 30 894,730 6,036,757 4,003,437 10,934,924 Trade and other payables - 14,700,129 2,377,977 - 17,078,106 - 15,594,859 8,414,734 4,003,437 28,013,030

Inflation adjusted 31-Dec-20 Weighted average 0-2months 2-12 months 12-36 months Total effective interest rate ZWL ZWL ZWL ZWL

Fixed interest rate instruments 45 1,500,000 8,500,000 31,326,583 41,326,583 Trade and other payables - 117,990,832 37,307,136 - 155,297,968 - 119,490,832 45,807,136 31,326,583 196,624,551

Inflation adjusted 31-Dec-19 Weighted average 0-2months 2-12 months 12-36 months Total effective interest rate ZWL ZWL ZWL ZWL Fixed interest rate instruments 30 894,730 6,036,757 4,003,437 10,934,924 Trade and other payables - 14,700,129 2,377,977 - 17,078,106 - 15,594,859 8,414,734 4,003,437 28,013,030 The Group and Company’s has access to financing facilities of which were fully utilised at the end of the reporting period. The Group

and Company expect to meet its obligations from operating cash flows. Included in trade and other payables were foreign obligations amounting to USD 1,811,489 (2019- USD784, 530).

The Group also has capacity to generate revenue in both foreign currency and ZWL balances which will enable it to liquidate its foreign obligations while also accessing foreign currency on the interbank market to liquidate its foreign obligations.




29.5 Capital risk management- Group and Company

The Group manages its capital structure to ensure that it will be able to continue as a going concern, while maximising the return to stakeholders through the optimisation of debt and equity. The capital structure of the Group consists of debt, which includes borrowings disclosed in Note 9, interest bearing borrowings and equity attributable to equity holders, comprising issued share capital, reserves and retained earnings.

The Group’s Audit and Risk Committee reviews the capital structure on a quarterly basis. As a part of this review, the committee considers the cost of capital and the risks associated with each class of capital. Based on the recommendations of the committee, the Group will balance its overall structure through payments of dividends, new share issues and share buy backs as well as the issue of new debt or the redemption of existing debt.

30. GOING CONCERN

Despite the continued risk and uncertainty posed by COVID-19 pandemic, the business is forecasting growth in the provision of water reticulation for sanitation and irrigation. The business has been classified as an essential service provider and have continued to operate even during periods of lockdown.

The Directors have assessed the ability of the Group and Company to continue operating as a going concern and believe that the preparation of these financial statements on a going concern basis is still appropriate. The Directors are of the view that the significant doubt related to current COVID-19 virus uncertainties does not significantly affect the Group and Company’s ability to continue as a going concern.

31. EVENTS AFTER THE REPORTING PERIOD

Due to a spike in cases of the COVID-19 variant, a level 4 national lockdown was imposed by the Government of Zimbabwe from the 4th of January 2021 for 30 days. The national lockdown was subsequently extended by some further four weeks until the end of February 2021. The Company’s income was not materially impacted by the national lockdown because the business is classified under “essential services” and this allowed operations to continue. The Company’s income for the first quarter of 2021 managed to surpass budget.

Meanwhile, the Government of Zimbabwe has since received vaccines from China and India. The vaccines are being inoculated based on a Government roll out vaccination program on a willing person basis. In addition, the company is participating in the National COVID-19 Vaccination program being spearheaded by Government, through the Ministry of Health and Child Care (MoHCC) under the Private Sector vaccination initiative. A total of 500 Sinovac doses for willing employees and their immediate family members have been secured through a partnership with Cimas medical aid.

There were no other events that occurred between the end of the reporting period and the date when the financial statements were authorised for issue that require adjustments to the reported amounts in the financial statements or disclosure in the financial statements.

32. DIVIDEND DECLARATION

On 24 March 2021, the Proplastics Limited Board declared a final dividend of ZWL 20.50 cents per share for the year ended 31 December 2020 payable in respect of all ordinary shares of the Company. The dividend will have an option to be paid in United States Dollars at the ruling interbank rate at closing date.

33. APPROVAL OF FINANCIAL STATEMENTS

The financial statements were approved by the Board of Directors and approved for issue on 14 May 2021.


Shareholder AnalyisCONSOLIDATED TOP 20 AS AT 31 DECEMBER 2020

Rank Account Name Shares % of Total

1 ZUMBANI CAPITAL (PVT)LTD, 54,733,312 21.34

2 OLD MUTUAL LIFE ASS CO ZIM LTD 49,644,670 19.36

3 STANBIC NOMINEES 26,973,393 10.52

4 AMALGAMATED AFRICAN VENTURES 23,829,479 9.29

5 GIONA CAPITAL (PVT) LTD 16,137,846 6.29

6 MASIMBA HOLDINGS LIMITED, 15,675,377 6.11

7 SCB NOMINEES 9,743,343 3.80

8 STANBIC NOMINEES NR 8,156,784 3.18

9 BULKWOOD INVESTMENTS 6,749,567 2.63

10 OMZIL STRA SHREHLDER TRAP FUND 6,396,986 2.49

11 STREAMCOAST INVESTMENTS P/L 3,343,033 1.30

12 THE ROY TURNER TRUST 2,756,599 1.07

13 NSSA - NATIONAL PENSION SCHEME 2,607,684 1.02

14 HIPPO VALLEY ESTATES PF-IMARA 2,093,056 0.82

15 NATIONAL FOODS PENSION FUND 1,549,410 0.60

16 CATERING INDUSTRY PENSION FUND 1,360,437 0.53

17 ZESA STAFF PENSION FUND 1,338,590 0.52

18 PUBLIC SERVICE PENSION FUND 1,318,056 0.51

19 LOBB, MARCUS RICHARD 1,205,581 0.47

20 FBC HOLDINGS PF-IMARA 954,584 0.37

TOTAL 236,567,787 92.25

OTHER SHAREHOLDERS 19,867,841 7.75

New allotments November 2020 3,000,000

Total number of shares before allotments 253,435,628

TOTAL NUMBER OF SHARES 256,435,628 100.00


Shareholder Analysis (continued) Company Statistics as at 31 December 2020

Country Holders % of Holders Shares % of Shares

AUSTRALIA 5 0.50 15,148 0.01

BELGIUM 1 0.10 8,089,621 3.15

BOTSWANA 2 0.20 1,400 0.00

CANADA 2 0.20 5,772 0.00

IRELAND 3 0.30 2,328 0.00

KENYA 1 0.10 11,003 0.00

MALAWI 1 0.10 5,774 0.00

MAURITIUS 1 0.10 1,099 0.00

NEW ZEALAND 1 0.10 8,660 0.00

SOUTH AFRICA 45 4.52 337,675 0.13

ISRAEL 2 0.20 11,893 0.00

SWEDEN 2 0.20 10,237 0.00

TURKEY 1 0.10 553,750 0.22

United Arab Emirates 1 0.10 38 0.00

UNITED KINGDOM 9 0.90 243,159 0.09

UNITED STATES 3 0.30 23,284 0.01

WARRANT NOT PRESENTABLE 206 20.70 1,193,744 0.47

ZIMBABWE 709 71.26 245,921,043 95.90

Total 995 100.00 256,435,628 100.00

Industry Holders % of Holders Shares % of Shares

Companies 115 11.56 128,681,726 50.18

Estate Late 10 1.01 58,723 0.02

Fund Managers 2 0.20 363,858 0.14

Insurance Companies 14 1.41 57,236,142 22.32

Investment Trusts And Property 19 1.91 3,574,577 1.39

Local Resident 598 60.10 7,819,083 3.05

Nominees Local 33 3.32 10,785,831 4.21

Non Residents 3 0.30 8,157,883 3.18

Non Resident Individual 106 10.65 1,367,298 0.53

Pension Fund 95 9.55 38,390,507 14.97

Total 995 100.00 256,435,628 100.00

Range Holders % of Holders Shares % of Shares

0 - 500 179 17.99 34,351 0.01

501 - 5,000 432 43.42 896,304 0.35

5,001 - 10,000 117 11.76 861,516 0.34

10,001 - 50,000 128 12.86 2,921,249 1.14

50,001 - 100,000 29 2.91 1,986,852 0.77

100,001 - 1,000,000 83 8.34 27,208,305 10.61

1,000,000 - 27 2.71 222,527,051 86.78

Total 995 100.00 256,435,628 100.00


NOTICE TO SHAREHOLDERS

Notice is hereby given that the Sixth Annual General Meeting of the Members of Proplastics Limited will be held virtually on Thursday, 24 June 2021 at 10.00 hours.

ORDINARY BUSINESS

Approval of Financial Statements and ReportsTo receive, consider and adopt the financial statements for the year ended 31 December 2020, together with the reports of the Directors and Auditors thereon.

1. Election of Directors To re-elect retiring Directors Mr. Kudakwashe Chigiya and Mr. Gregory Sebborn who retire by rotation and being eligible, offer themselves

for re-election.

2. Directors’ Fees To approve the fees of the Directors for the year ended 31 December 2020.

3. Directors’ Report To Receive, consider and adopt: 3.1 Financial statements for the year ended 31 December 2020; 3.2 Directors report on its activities for the year ended 31 December 2020.

4. Audit Committee Report To receive, consider and adopt report of the Audit Committee for the year ended 31 December 2020.

5. Corporate Governance Report To receive, consider and adopt the Company’s report on Corporate Governance.

6. External Auditor’s Report To receive, consider and adopt the external Auditor’s report for the year ended 31 December 2020.

7. External Auditor’s Appointment and Compensation 7.1 To approve the compensation of KPMG Chartered Accountants (Zimbabwe) for 2020. 7.2 To approve appointment of KPMG Chartered Accountants (Zimbabwe) as the Company’s auditors for 2021.

8. Dividend To declare a final dividend of ZWL 20.50 cents per ordinary share in the capital of the Company.

Note: In terms of the Companies Act (Chapter 24:03) a member entitled to attend and vote at a meeting is entitled to appoint a proxy to attend and vote of a poll and speak in his stead. A proxy need not to be a member of the Company, and shall not be a Director or officer of the Company. Proxy forms must be lodged with the secretary not less than forty-eight (48) hours before the time of holding of the meeting.

By Order of the Board

P. ChangundaCompany Secretary


PROXY FORMFor the Sixth Annual General Meeting of the Members of Proplastics Limited to be held virtually on Thursday, 24 June 2021 at 10.00 hours

I/We …………………………………………………………………………………………………………………………………… (Name in block letters)

Of ………………………………………………………………………………………………………………………………………

Being the holder of ……………………………………………………………………………… shares in the Company hereby appoint:

1 ……………………………………………………………… of …………………………………………………… or failing him/her

2 ………………………………………………………………. of …………………………………………………… or failing him/her

3 the Chairman of the AGM.

As my/our proxy to act for me/us at the AGM for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed thereat, and at each adjournment thereof, and to vote for and/or against the resolutions and/or abstain from voting in respect of the shares in the issued share capital of the Company registered in my/our name (see note 2) in accordance with the following instructions:

Resolution For Against Abstain

1. Ordinary Resolution number 1 1.1 To re-elect Kudakwashe Chigiya as a Director of the Company. 1.2 To re-elect Gregory Sebborn as a Director of the Company.

2. Ordinary Resolution number 2 To approve the fees of the Directors for the year ended 31 December 2020.

3. Ordinary Resolution number 3 To approve: 3.1 Financial statements for the year ended 31 December 2020; 3.2 Directors’ report on its activities for the year ended 31 December 2020.

4. Ordinary Resolution number 4 To approve report of the Audit Committee for the year ended 31 December 2020.

5. Ordinary Resolution number 5 To approve the Company’s report on Corporate Governance.

6. Ordinary Resolution number 6 To approve the external Auditor’s report for the year ended 31 December 2020.

7. Ordinary Resolution number 7 To approve: 7.1 The compensation of KPMG for 2020; 7.2 Appointment of KPMG Chartered Accountants (Zimbabwe) as the Company’s auditors for 2021;

8. Ordinary Resolution number 8 To approve a final dividend of ZWL 20.50 cents per ordinary share in the capital of the Company.

Every person present and entitled to vote at the AGM shall, on a show of hands, have one vote only, but in the event of a poll, every share shall have one vote.

Signed at ________________________________________________ on ______________________________________________ 2021

Signature (s) ___________________________________________________________________________________________________

Assisted by me _________________________________________________________________________________________________Full name (s) of signatory/ries if signing in a representative capacity (see note 2). (PLEASE USE BLOCK LETTERS).

PROXY FORM (IN TERMS OF SECTION 171, COBEA)


INSTRUCTIONS FOR SIGNING AND LODGING THIS FORM OF PROXY

1. A Shareholder may insert the name of a proxy or the names of two alternative proxies of the Shareholder’s choice in the space provided, with or without deleting “the Chairman of the AGM”, but any such deletion must be initialed by the Shareholder. The person whose name appears first on the form of proxy will, unless his/her name has been deleted, be entitled to act as proxy to the exclusion of those whose names follow.

2. A Shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that shareholder in the appropriate space/s provided as well as by means of a cross whether the Shareholder wishes to vote, for, against or abstain from the resolutions. Failure to comply with the above will be deemed to authorize the proxy to vote or abstain from voting at the AGM as he/she deems fit in respect of the entire Shareholder’s votes exercisable thereat. A Shareholder or his/her proxy is not obliged to use all the votes exercisable by the Shareholder or by his/her proxy, or cast them in the same way.

3. A deletion of any printed matter and the completion of any blank spaces need not be signed or initialed. Any alteration or correction must be initialed by the signatory/ries.

4. The Chairman shall be entitled to decline to accept the authority of a person signing the proxy form:i. Under a power of attorneyii. On behalf of a company

Unless that person’s power if attorney or authority is deposited at the offices of the Company’s transfer secretaries, or the registered office of the Company, not less that forty-eight (48) hours before the meeting.

5. If two or more proxies attend the meeting then that person attending the meeting whose name appears first on the proxy form and whose name is not deleted, shall be regarded as the validly appointed proxy.

6. When there are joint holders of shares, any one holder may sign the form of proxy. In the case if joint holders, the senior who tenders a vote will be accepted to the exclusion of other joint holders. Seniority will be determined by the order in which names stand in the register of members.

7. The completion and lodging of this form of proxy will not preclude the member who grants this proxy form from attending the AGM and speaking and voting in person thereat to the exclusion of any proxy appointed in terms thereof should such member wish to do so.

8. In order to be effective, completed proxy forms must reach the Company’s transfer secretaries or the registered office of the Company not less than 48 hours before the time appointed for the holding of the AGM.

9. Please ensure that name(s) of the member(s) on the form of proxy and the voting form are exactly the same as those on the share register.

10. Please be advised that the number of votes a member is entitled to will be determined by the number of shares recorded on the Share Register by 16.00 hours on 22 June 2021.

Contact us:Head O�ce: 5 Spurn Road, Ardbennie, Harare, Zimbabwe

Tel: +263 773 888 923, +263 773 894 561 - 2Harare Show Grounds: Stand No.14, 1st Avenue, (Along Samora Machel Avenue)

Tel: +263 (242) 751 75, +263 (0) 8644 219 155Bulawayo Branch: Military Road (o� Khami Road), Raylton , Bulawayo

Tel: +263 (292) 683 96 / 620 59Gweru Branch: 1041 Coventry Road, Gweru

Tel: +263 (542) 2222 277/9Email: [email protected] I Website: www.proplastics.co.zw

Documents

I FABRICATION PLASTICS