notice of annual general meeting - zimtrade...held on thursday 27 august 2015 at 0830 hours at...

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the twenty second Annual General Meeting of ZimTrade will be held on Thursday 27 August 2015 at 0830 hours at Cresta Lodge, Shizha Conference Room, Msasa, Harare, for the purpose of transacting the following business:

1. To confirm the Minutes of the Previous Annual General Meeting and consider the Matters Arising thereof.

2. To receive the Chairman’s Report for the year ended 31December 2014.3. To receive, consider, and, if deemed fit, adopt the Financial Statements for the year

ended 31 December 2014.4. To appoint the Auditors for the ensuing year.5. To elect Members of the Board.

In terms of Section 13 of the Constitution, Mr. D. Norupiri and Mr. S. Jabangwe are due for retirement by rotation and are offering themselves for re-election. (Nomination forms are available at the addresses below).

In terms of Section 18.4.5 of the ZimTrade constitution, a member entitled to attend and vote at this meeting is entitled to appoint a proxy to vote and speak in his/her stead. All proxy forms must be received by ZimTrade before 1600 hours on 25 August 2015. The forms are available at ZimTrade offices in Harare and Bulawayo.

By Order of the Board

T. MarufuACTING COMPANY SECRETARY

HEAD OFFICE: 904 Premium Close, Mt. Pleasant Business Park, Harare, Zimbabwe; Phone: +263 4 369330-43; Fax: +263 4 369224; Email: [email protected] OFFICE: 48 Josiah Tongogara Street, Bulawayo, Zimbabwe; Phone: +263 9 66151, 62378; Fax: +263 9 62397; Email: [email protected]

Developing Viable & Sustainable International Trade

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the twenty second Annual General Meeting of ZimTrade will be held on Thursday 27 August 2015 at 0830 hours at Cresta Lodge, Shizha Conference Room, Msasa, Harare, for the purpose of transacting the following business:

1. To confirm the Minutes of the Previous Annual General Meeting and consider the Matters Arising thereof.

2. To receive the Chairman’s Report for the year ended 31December 2014.3. To receive, consider, and, if deemed fit, adopt the Financial Statements for the year

ended 31 December 2014.4. To appoint the Auditors for the ensuing year.5. To elect Members of the Board.

In terms of Section 13 of the Constitution, Mr. D. Norupiri and Mr. S. Jabangwe are due for retirement by rotation and are offering themselves for re-election. (Nomination forms are available at the addresses below).

In terms of Section 18.4.5 of the ZimTrade constitution, a member entitled to attend and vote at this meeting is entitled to appoint a proxy to vote and speak in his/her stead. All proxy forms must be received by ZimTrade before 1600 hours on 25 August 2015. The forms are available at ZimTrade offices in Harare and Bulawayo.

By Order of the Board


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HEAD OFFICE: 904 Premium Close, Mt. Pleasant Business Park, Harare, Zimbabwe; Phone: +263 4 369330-43; Fax: +263 4 369224; Email: [email protected] OFFICE: 48 Josiah Tongogara Street, Bulawayo, Zimbabwe; Phone: +263 9 66151, 62378; Fax: +263 9 62397; Email: [email protected]

Developing Viable & Sustainable International Trade

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ANNUALREPORT 2014

Vision, Mission & Values.…........................………………...............................................................................4

Corporate Information.........……………….……………………...............................................................................5

Chairman’s Statement……………..……..…………………….….........................................................................…..6

Chief Executive Officer’s Report..............……….......…………....................................................................8

Corporate Governance Report...........………………………......................................................................... 11

Board of Directors……………....…………..…………………………...........................................................................14

Senior Management.......…....………………....…………………...........................................................................16

Financial Statements……………………………….....………………........................................................................ 18

Directors’ Responsibility Statement..........................................................................................19

Independent Auditors’ Report.............……………….……………..........................................….............20

Statement of Financial Position................................................................................................ 21

Statement of Profit or Loss and Other Comprehensive Income.......................................22

Statement of Changes in Reserves............................................................................................ 23

Statement of Cash Flows.......................................................................................................... 24

Notes to the Financial Statements.....................................................................................25-38

Contents

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ANNUALREPORT 2014

Our MissionTo provide world standard services to Zimbabwe’s exporting community so as to enhance global competitiveness, mindful of the environmental impact of business operations.

Our VisionGrowth in prosperity and employment generation in Zimbabwe through increased trade.

Our ValuesClient Focus

Responsiveness

Integrity

Teamwork

Innovation

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ANNUALREPORT 2014

About ZimTradeZimTrade, the national trade development and promotion organisation, is a unique joint venture partnership between the Private Sector and the Government of Zimbabwe. It was established in 1991.

Principal OfficesHEAD OFFICE904 Premium CloseMount Pleasant Business ParkP.O. Box 2738Harare, ZimbabweTel: +263 (4) 369 330-41Email: [email protected]: www.zimtrade.co.zw

REGIONAL OFFICE48 JosiahTongogara StreetP.O. Box 3090Bulawayo, ZimbabweTel: +263 (9) 66151Email: [email protected]: www.zimtrade.co.zw

Legal PractitionersDMH LEGAL PRACTITIONERS6th Floor GoldbridgeEastgate ComplexHarare, Zimbabwe

AuditorsBDO ZIMBABWE CHARTERED ACCOUNTANTS3 Baines AvenueHarare, Zimbabwe

BankersCBZ BANK LIMITED7 Selous AvenueHarare, Zimbabwe

Corporate Information

On behalf of the ZimTrade Board of Directors, it is my pleasure to present to you the report for the year ended 31 December 2014.

During 2014, ZimTrade developed and started implementing its Performance Improvement Roadmap (PIRM). The roadmap is a 10-point action plan that has been designed to build and improve the organisation’s capacity to better serve the export sector through providing quality products and services. To date, significant progress has been made in capacitating the organisation to better service its clients.

Chairman’sReport

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ANNUALREPORT 2014

BUSINESS ENVIRONMENTZimbabwe’s business environment has remained subdued as the constraints that have negatively affected the economy over the past years have continued unabated. Gross Domestic Product (GDP) growth rate decreased from 4.5% in 2013 to an estimated 3.1% in 2014. Whilst the agricultural sector registered significant growth in 2014, the mining sector was sluggish due to declining mineral prices.

The manufacturing sector continued to be affected by operational challenges that include tight liquidity; antiquated plant and machinery; frequent power outages; influx of cheap imports; high cost of inputs; strengthening of the US$; and general competitiveness challenges arising from a plethora of non-tariff barriers, which foreign competitors do not face. As a result, the private sector continues to report company closures, therefore, further shrinking the country’s manufacturing sector. Among other things, the above situation has resulted in poor trade performance with imports continuing to increase against declining exports. Although the trade deficit narrowed from US$4.1 billion in 2013 to US$3.3 billion in 2014, this was more of a result of import control measures, which were adopted by the Government.

ZIMTRADE’S FINANCIAL PERFORMANCETotal income for the year was US$2 651 700, which is 4% above total income for the year 2013 at US$2 550 489. The Trade Development Surcharge (TDS) remained the main source of income, contributing 93% to total income. It should be noted that the TDS collections have stabilised around an average of US$2.4 million per annum. The Board continues to explore measures to ensure efficiency in the collection of this income. Furthermore, the Board will continue to explore ways of diversifying the revenue base. Total expenditure for 2014 was US$2 382 394 representing an increase of 55%, compared to the previous year. This is due to a continued increase in the number of export development programmes implemented following significant progress in the staff recruitment exercise, which created added capacity to deliver on activities. The surplus for the year was US$269 306.

THE ZIMTRADE CONSTITUTION The Organisation’s constitution is outdated, hence the Board is in the process of reviewing it in order to align it with current corporate governance best practice. Once the process is complete, an Extra-Ordinary General Meeting (EGM) will be called in order to adopt the new constitution.

DIRECTORATEAt the 2014 Annual General Meeting, Messrs. B. Moyo and J. Youmans were elected to the Board, replacing Mr. B. Mushohwe and Dr. M. S. D. Mutopo. I would like to thank the former Board members for their effort during their tenure and wish them well in their future endeavours. May I also take the opportunity to welcome Messrs. Moyo and Youmans to the Board.

OUTLOOK The Organisation will continue implementing its Performance Improvement Roadmap (PIRM) to build and strengthen its internal capacity in order to consistently provide quality export development and promotion services to its clients.

Engagement of industry in order to unlock export opportunities in various value-chains will continue to be intensified. This will be coupled with continuing efforts to engage Government in an effort to collectively improve the operating environment for exporters.

ACKNOWLEDGEMENTI wish to express appreciation to the Chief Executive Officer, Ms. S. P. Pilime and all employees for their dedication and commitment to duty in a relatively difficult operating environment. I am also grateful to my fellow Directors for their valuable contributions and support during the year.

Further, I wish to thank our parent Ministry, the Ministry of Industry and Commerce and all our other stakeholders for their continued support.

L. JenaCHAIRMAN

HARARE14 JULY 2015

The operating environment for exporters during 2014 continued to deteriorate, with companies across key export sub-sectors reporting challenges to their businesses. Industry continued to perform at low levels of production with capacity utilisation at 37.3%, according to the CZI Manufacturing Sector Survey.

Some of the challenges that have been impeding Zimbabwean exporters include: high costs of production; high transportation costs; requirement for multiple export licences/permits and centralisation thereof; trade facilitation issues; as well as cumbersome and expensive product registration processes.

Chief ExecutiveOfficer’s Report

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ANNUALREPORT 2014

TRADE PERFORMANCEIn 2014, exports amounted to US$3.1 billion, a 12.7% decline from the year 2013. Imports were US$6.4 billion in 2014, resulting in a trade deficit of US$3.3 billion.

The need to improve our trade performance, particularly through the export of value added products, cannot be over-emphasised given the glaring trade deficit.

platform for Zimbabwean companies in this sector to be visible in the South African market and beyond. ZimTrade organised the participation of Zimbabwean companies in an Outward Trade Mission to Tete, Mozambique. Some companies are now exporting successfully to that market with others continuing to explore opportunities that exist in that market.

A delegation comprising players in the Cotton to Clothing Value Chain participated at the Origin Africa Showcase, which was held in Nairobi, Kenya. Origin Africa is both an event and an ongoing effort dedicated to improving African cotton, textile and apparel trade. The maiden participation in this event assisted to position Zimbabwe’s products in the East African Market and beyond.

Government, through the Ministry of Industry and Commerce, launched the Cotton to Clothing Value Chain Strategy, which was developed with the assistance of the ITC and COMESA. As part of its support to revive the clothing industry, ZimTrade provided sponsorship to both the Harare and Bulawayo Clothing Indabas that were organised by the Zimbabwe Clothing Manufacturers’ Association.

The Exporters’ Conference and Exporter of the Year Awards were held under the Theme: Creating Brand Zimbabwe. An expert from Costa Rica was present to share her country’s experiences in nation branding. The Conference agreed that, as a country, we needed to do more work on our brand in order to enhance trade and investment.

OPERATIONSFollowing an Institutional Performance Benchmarking Assessment of ZimTrade conducted by the International Trade Centre (ITC) in 2013, the Organisation developed a Performance Improvement Roadmap (PIRM) with support from the ITC. The Road Map, which will be implemented over the period 2014-2017, focuses on actions and activities to strengthen the following pillars: Measurement and Results; Resources and Processes; Product and Service Delivery as well as Leadership and Direction.

During 2014, the Organisation implemented market exploratory and promotional initiatives covering the SADC and COMESA regions. The following are highlights of key activities, which were undertaken:

A Field Research was conducted in Luanda, Angola, to gather market intelligence on possible export products to consider for the Angolan market. The findings assisted in the participation by local companies in the Luanda International Trade Fair (FILDA), after a 10 year break. Whilst opportunities exist in the Angolan market, there are still logistical challenges in moving products to that market. We are currently exploring possibilities of resolving these challenges.

Players in the clothing sector participated, for the second time, at Source Africa, the African Textile, Apparel & Footwear Trade Event, through the support of ZimTrade, in collaboration with the Zimbabwe Clothing Manufacturers’ Association. The Event provided a

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Exports 2014 Exports 2013 Imports 2014 Imports 2013

Figure 1: Exports and Imports, trends for 2013 and 2014

SOURCE: ZIMSTAT

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ANNUALREPORT 2014

The Organisation, with the assistance of the International Trade Centre, commenced the implementation of the programmes under the EU-funded Trade and Private Sector Development Programme (TPSDP).

To date, the following have been achieved:i. installation of new ICT hardware at Head Office and the

Regional Office ii. setting up and inauguration of the Zimbabwe-EU

Business Information Centre (Zim-EBIC) in Harare iii. revamping of the Trade Information Centre iv. reviewing and rebranding of the Export Marketing

Training Programme (EMTP) to the Marketing and Branding for International Competitiveness (MBIC) training programme in line with international best practice.

These components have gone a long way in improving service delivery to our clients.

During the period under review, the Organisation managed to establish mutually beneficial linkages. Collaboration between ZimTrade and the Indian Institute of Foreign Trade (IIFT), culminated in an Executive Development Programme on International Trade, which was conducted in Harare. Based on feedback from participants, the programme enhanced their understanding of international trade practices.

In our quest to inculcate an export culture, Export Awareness Seminars were conducted in Binga, Bulawayo, Kwekwe and Harare. These seminars were targeting SMEs, established exporters and women farmers.

In line with our internal capacity building strategy, staff participated in a benchmarking programme at Enterprise Mauritius (EM) as well in the ITC 2014 Trade Promotion Organisations (TPOs) Networking Conference and Awards Ceremony that was held in Dubai. Under the Government to Government cooperation, two managers attended training programmes in India and China.

As part of our mandate to ensure systemic competitiveness of exporters, our submissions to the Ministry Finance and Economic Development on export incentives were accommodated in the 2015 National Budget. It is our expectation that, when fully implemented, the incentives will contribute towards enhancing the competitiveness of the export sector.

OUTLOOKWe continue to seek export excellence as we grapple with the challenges of competing in the global village. In seeking

to carve out our niché in the global market place, it is important that we look at various strategic alternatives. ZimTrade will build on the momentum thus far whilst exploring new niché markets and emerging opportunities as guided by its Strategy and the National Economic Policy Blue Print, Zim Asset.

ZimTrade is on course in the implementation of its programmes under the TPSDP. The Organisation will also ensure that key deliverables under the PIRM, such as complete strategy development, clients’ needs analysis and segmentation are achieved.

APPRECIATIONI would like to express my gratitude to the ZimTrade Board, the Ministry of Industry and Commerce as well as various stakeholders for their invaluable support in what has been a very challenging operating environment.

I also extend my appreciation to Development Partners and Sponsors for the timely assistance which they continue to provide to the Organisation. These include: the EU, ITC, Embassy of India, CBZ Holdings, Stanbic Bank, Old Mutual, FMRe and ZB Bank.

To ZimTrade Management and Staff, I say thank you for your hard work and commitment to quality service delivery.

S. P. Pilime (Ms.)CHIEF EXECUTIVE OFFICER

HARARE14 JULY 2015

ZimTrade recognises the need to conduct business in line with best corporate governance practices. The Organisation is, therefore, committed to maintaining the highest standards of Corporate Governance and is guided by the principles of sound corporate governance applicable in Zimbabwe.

CorporateGovernance Report

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ANNUALREPORT 2014

Good Corporate Governance is the responsibility of the Board and as such, the Board will continue to review and improve its governance practice to ensure alignment with principles and standards laid down in the recently launched National Code on Corporate Governance as well as international best practice.

The Board, therefore, has an obligation to exercise due care whilst acting in good faith to safeguard all stakeholders’ interests.

MEMBERSHIP OF THE BOARD The Board comprises 11 Directors. In terms of section 11 of the ZimTrade Constitution, 4 of the Directors are elected by the ZimTrade members at Annual General Meetings (AGMs) and 5, including the Chairman, are appointed by the Minister of Industry and Commerce in the Government of Zimbabwe. The Chief Executive Officer as well as the Director: Finance and Administration are ex-officio members of the Board. The Director: Finance and Administration is the Secretary to the Board.

According to the Constitution, 2 of the Directors elected at the AGM retire after two years; 3 of the Directors appointed by the Minister retire after the first two years with the remaining two retiring after the second two years.

RESPONSIBILITIES OF THE BOARDThe ZimTrade Board is governed by the Constitution which spells out its duties and responsibilities. Besides providing strategic direction, the Board is charged with key governance issues such as providing sound risk management and effective systems of internal control. Overall, the Board is entrusted with ultimate responsibility for the management, direction and performance of the Organisation. The Board delivers its mandate through the following three Board Committees; Export Development, Finance & Audit and Human Resources & Premises.

These Board Committees are made up of three non-executive Directors, with one of them chairing. The Board Committees are charged with specific responsibilities under their respective Terms of Reference. Finance and Audit Board CommitteeThe Committee comprises 3 non-executive Directors and meets at least 4 times per year. The Committee is charged with the key corporate governance issues such as risk management, review of the effectiveness of internal controls,

budget approval and review, compliance as well as considering internal and external audit reports.

Human Resources and Premises Board CommitteeThe Committee comprises 3 non-executive Directors and meets at least 4 times per year. The Committee assists the Board on matters relating to remuneration policies and staff welfare, appointment of the Chief Executive Officer and Senior Management as well determining their remuneration. In addition, the Committee looks into matters relating to organisational premises. Export Development Board CommitteeThe Committee comprises 3 non-executive Directors and meets at least 4 times per year. The Committee assists the Board through providing strategic direction in the development and review of the Annual Work Programme. CONFLICT OF INTERESTEach Director is required to notify of actual and potential conflicts of interest to the Board as soon as they become aware of them. Every Director signs a Declaration of Interest Form each quarter before the main Board meeting.

ATTENDANCE AT MEETINGS OF THE BOARD AND BOARD COMMITTEES IN THE 2014 FINANCIAL YEARThe Board discharges its responsibilities through scheduled and ad-hoc meetings. With regard to scheduled meetings, the Board meets once every quarter to review the performance of the Organisation. However, for the period under review, there had not been a substantive Board since 31 March 2014 following the expiry of the term of the previous Board. The new Board was only constituted in October 2014. During that period, Management was reporting directly to the Permanent Secretary for Industry and Commerce.

Key matters for consideration at all Board meetings include the Chief Executive Officer’s Report, the Finance Report as well as Board Committee Reports.

During the period under review, 2 scheduled and 26 ad-hoc Board meetings were held. During the same period, 6 scheduled and 1 ad-hoc Board Committee meetings were held.

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ANNUALREPORT 2014

Scheduled Board and Board Committee meetings Attendance Record

MAIN BOARD

Board Member AttendanceL. Jena * 1/1S. P. Pilime 1/1P. Changunda 2/2S. Jabangwe 2/2H. Kuzvinzwa * 1/1B. Mafusire* 1/1B. Moyo** 0/1M. B. Mpofu *** 0/1D. Mushayavanhu *** 1/1B. Mushohwe **** 1/1B. Mutetwa *** 0/1O. Mutizhe * 1/1M. S. D. Mutopo **** 1/1T. Ndlela *** 1/1D. Norupiri 2/2J. Siziba *** 1/1J. Youmans ** 1/1C. Zhanje * 0/1

EXPORT DEVELOPMENT BOARD COMMITTEE

Board Member AttendanceB. Moyo ** n/aS. P. Pilime 2/2P. Changunda 2/2B. Mushohwe **** 1/1B. Mutetwa *** 0/1M. S. D. Mutopo **** 2/2T. Ndlela *** 1/1C. Zhanje * 1/1J. Youmans ** n/a

FINANCE AND AUDIT BOARD COMMITTEE

Board Member AttendanceD. Norupiri ***** 1/1S. P. Pilime 2/2P. Changunda 2/2S. Jabangwe ***** 1/1L. Jena * 1/1M. B. Mpofu *** 1/1B. Mushohwe **** 1/1O. Mutizhe * 1/1

HUMAN RESOURCES & PREMISES BOARD COMMITTEE

Board Member AttendanceH. Kuzvinzwa * 1/1S. P. Pilime 2/2P. Changunda 2/2S. Jabangwe ***** 1/1B. Mafusire * 1/1D. Mushayavanhu *** 1/1D. Norupiri ***** 1/1J. Siziba *** 1/1

S. P. Pilime and P. Changunda are ex-officio members of the Board

* L. Jena, H. Kuzvinzwa, B. Mafusire, O. Mutizhe and C. Zhanje were appointed to the Board on 16 October 2014

** B. Moyo and J. Youmans were elected to the Board on 27 November 2014

*** M. B. Mpofu, D. Mushayavanhu, B. Mutetwa, T. Ndlela and J. Siziba’s terms on the Board expired on 31 March 2014

**** B. Mushohwe was appointed to the Export Development Board Committee on 10 November 2014. Prior to that, he was a member of the Finance and Audit Board Committee

**** B. Mushohwe and M. S. D. Mutopo stepped down from the Board on 27 November 2014

***** D. Norupiri was appointed to the Finance and Audit Board Committee on 10 November 2014. Prior to that, he was a member of the Human Resources and Premises Board Committee

***** S. Jabangwe was appointed to the Human Resources and Premises Board Committee on 10 November 2014. Prior to that, he was a member of the Finance and Audit Board Committee


HARARE14 July 2015

Board of Directors

L. JenaCHAIRMAN

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ANNUALREPORT 2014

S. P. Pilime (ex-officio)CHIEF EXECUTIVE OFFICER

P. ChangundaCOMPANY SECRETARY

B. MoyoNON-EXECUTIVE

H. KuzvinzwaNON-EXECUTIVE

D. NorupiriNON-EXECUTIVE

C. Zhanje NON-EXECUTIVE

J. YoumansNON-EXECUTIVE

S. JabangweNON-EXECUTIVE

O. MutizheNON-EXECUTIVE

B. MafusireNON-EXECUTIVE

S. P. PilimeCHIEF EXECUTIVE OFFICER

Management

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ANNUALREPORT 2014

T. MarufuFINANCE MANAGER

C. TsimbaTRADE INFORMATIONCENTER MANAGER

P. ChangundaDIRECTOR: FINANCE &ADMINISTRATION

V. MafuTRADE DEVELOPMENT & EXPORT PROMOTION MANAGER

S. NkalaREGIONAL MANAGER:BULAWAYO

D. KamutengaPUBLIC RELATIONSOFFICER

A. MajuruSME EXPORT DEVELOPMENT MANAGER

T. MbizvoSYSTEMS ADMINISTRATOR

R. ChizemaDIRECTOR: OPERATIONS

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ANNUALREPORT 2014

FinancialStatementsfor the year ended 31 December 2014

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ANNUALREPORT 2014

The directors are required by the Organisation’s

Constitution to maintain adequate accounting records

and are responsible for the content and integrity of the

financial statements and related financial information

included in this report. It is their responsibility to ensure

that the financial statements fairly present the state of

affairs of the Organisation as at the end of the financial

year and the results of its operations and cash flows for

the year then ended, in conformity with International

Financial Reporting Standards.

The directors acknowledge that they are ultimately

responsible for the system of internal financial

control established by the Organisation and place

considerable importance on maintaining a strong

control environment. To enable the directors to meet

these responsibilities, management set standards for

internal control aimed at reducing the risk of error or

loss in a cost effective manner. The standards include

the proper delegation of responsibilities within a clearly

defined framework, effective accounting procedures

and adequate segregation of duties to ensure an

acceptable level of risk. These controls are monitored

throughout the Organisation and all employees are

required to maintain the highest ethical standards in

ensuring the Organisation’s business is conducted

in a manner that, in all reasonable circumstances, is

above reproach. The focus of risk management in the

Organisation is on identifying, assessing, managing

and monitoring all known forms of risk across the

Directors’Responsibility Statement

Organisation. While operating risk cannot be fully

eliminated, the Organisation endeavours to minimize

it by ensuring that appropriate infrastructure, controls,

systems and ethical behaviour are applied and managed

within predetermined procedures and constraints.

The directors are of the opinion, based on the information

and explanations given by management that the system

of internal control provides reasonable assurance that

the financial records may be relied on for the preparation

of the financial statements. However, any system of

internal financial control can provide only reasonable and

not absolute assurance against material misstatement

or loss.

The directors have assessed the ability of the Organisation

to continue operating as a going concern and believe that

the preparation of the financial statements on a going

concern basis is still appropriate.

The external auditors are responsible for independently

auditing and reporting on the Organisation’s financial

statements. The financial statements and related notes

have been audited by the Organisation’s external auditors

and their report is presented on page 20.

The financial statements and the related notes set out on

pages 21 to 38, which have been prepared on the going

concern basis, were approved by the board and were

signed on its behalf by:

L. JenaCHAIRMAN

14 July 2015


INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF ZIMTRADE

Report on the financial statementsWe have audited the accompanying financial statements of ZIMTRADE set out on pages 21 to 38 which comprise the statement of financial position at 31 December 2014, the statement of profit or loss and other comprehensive income, the statement of changes in reserves and the statement of cash flows for the year then ended, and the notes to the financial statements, which include a summary of the significant accounting policies and other explanatory notes.

Directors’ responsibility for the financial statementsThe Organisation’s directors are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards. This responsibility includes designing, implementing and maintaining internal control relevant for the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

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

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

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

Unqualified OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of ZIMTRADE as at 31 December 2014 and the results of its operations and cash flows for the year then ended in accordance with International Financial Reporting Standards.

Report on legal and regulatory requirementsIn our opinion, the financial statements of ZIMTRADE comply in all material respects, with the Trade Development Surcharge Act 1991 and the Organisation’s constitution.

BDO ZimbabweChartered Accountants

Harare

14 July 2015

Tel/Fax: +263 4 703876/7/8Cell: +263 772 573 266/7/8/[email protected]

Kudenga House3 Baines AvenueP.O. Box 334HarareZimbabwe

BDO Zimbabwe, a Zimbabwean partnership, is a member of BDO International Limited, a UK company limited by guarantee and forms part of the international BDO network of independent member firms.

A list of partner names is open to inspection at our registered office, No. 3 Baines Avenue, Harare.

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ANNUALREPORT 2014

for the year ended 31 December 2014Statement of Financial Position

2014 2013Note US$ US$

ASSETS

Non current assetsProperty and equipment 4 713,577 568,153

Current assetsInventories 5 18,206 6,581 Accounts receivable 6 68,523 56,035 Cash and cash equivalents 1,293,582 1,104,315

1,380,311 1,166,931

Total assets 2,093,888 1,735,084

RESERVES AND LIABILITIES

ReservesNon distributable reserve - 345,826 Revaluation reserve 70,476 70,476 Accumulated surplus 1,884,530 1,269,398

1,955,006 1,685,700

Current liabilitiesAccounts payable 7 138,882 49,384

Total reserves and liabilities 2,093,888 1,735,084

L. JenaCHAIRMAN

14 July 2015


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ANNUALREPORT 2014

for the year ended 31 December 2014Statement of Profit or Loss and Other Comprehensive Income

2014 2013Note US$ US$

INCOME 2,651,700 2,550,489 Trade development surcharge 2,461,486 2,402,328 Government grant - 5,000 Finance income 65,422 32,794 Fees for services and publication sales 21,542 24,084 Donations 50,567 37,980 Event participation fees 18,638 22,170 Other income 34,045 26,133

EXPENDITURE (2,382,394) (1,535,715)Board and governance expenses 8 (103,714) (112,762)Employment expenses - administration 9 (337,660) (208,973)Employment expenses - direct export development 10 (708,947) (332,619)Direct export development expenses 11 (858,043) (622,667)General administration expenses 12 (374,030) (258,694)

SURPLUS FOR THE YEAR 269,306 1,014,774

Other comprehensive income - -

Items that will not be reclassified to profit or loss - -

Items that will or may be reclassified to profit or loss - -

Total comprehensive income for the year 269,306 1,014,774

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ANNUALREPORT 2014

for the year ended 31 December 2014Statement of Changes in Reserves

NonDistributable Revaluation Accumulated

Reserve Reserve Surplus TotalUS$ US$ US$ US$

Balance as at 31 December 2012 345,826 70,476 254,624 670,926

Total comprehensive income for the year - - 1,014,774 1,014,774

Balance as at 31 December 2013 345,826 70,476 1,269,398 1,685,700

Transfer to retained earnings (345,826) - 345,826 -

Total comprehensive income for the year - - 269,306 269,306

Balance as at 31 December 2014 - 70,476 1,884,530 1,955,006

Non distributable reserveNon distributable reserve arose as a result of the restatement of assets values from Zimbabwe dollars to United States dollars on 1 January 2009. The reserve has now been transferred to retained earnings as most of the assets have since been disposed.

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ANNUALREPORT 2014

for the year ended 31 December 2014Statement of Cash Flows

2014 2013Note US$ US$

CASH FLOWS FROM OPERATING ACTIVITIES

Surplus for the year 269,306 1,014,774 Adjustments for:Depreciation of property and equipment 176,537 104,769 Loss on disposal of property and equipment 8,649 15,482 Finance income (65,422) (32,794)Cash generated before changes in working capital 389,070 1,102,231

Working capital changes:Increase in inventories (11,625) (2,175)Increase in accounts receivable (12,488) (39,971)Increase / (decrease) in accounts payable 89,498 (46,863)Net cash generated from operating activities 454,455 1,013,222

CASH FLOWS FROM INVESTING ACTIVITIES

Addition or replacement of property and equipment (338,691) (405,735)Proceeds from disposal of property and equipment 8,081 6,702 Finance income 65,422 32,794 Net cash flows utilised in investing activities (265,188) (366,239)

INCREASE IN CASH AND CASH EQUIVALENTS 189,267 646,983 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR 1,104,315 457,332 CASH AND CASH EQUIVALENTS AT END OF YEAR 13 1,293,582 1,104,315

25

ANNUALREPORT 2014

Notes to the Financial Statements

1. GENERAL INFORMATION

1.1 NATURE OF OPERATIONSThe main activity of the Organisation is to develop and promote trade between Zimbabwe and other countries.

The registered address of the Organisation is: 904 Premium Close Mt Pleasant Harare1.2 CURRENCYThe Organisation’s functional and presentation currency is the United States of America dollar (“US$”).

2. ACCOUNTING POLICIES

2.1 BASIS OF PREPARATIONThe principal accounting policies adopted in the preparation of financial statements are set out below. The policies have been consistently applied from prior year.

These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB).The preparation of financial statements in compliance with IFRS requires the use of certain critical accounting estimates. It also requires the Organisation’s management to exercise judgment in the most appropriate application in complying with the Organisation’s accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effects are disclosed on note 3.

2.2 CHANGES IN ACCOUNTING POLICY AND INTERPRETATIONS

(a) New standards, interpretations and amendments effective from 1 January 2014, and that have not had a material impact on the Organisation

The following new standards, amendments and interpretations are effective for the first time in these financial statements but have not had a material effect on the Organisation:

- IAS 19 Employee Benefits (Amendment to IAS 19 Employee Benefits: Defined Benefit Plans: Employee Contributions). - IFRS 7 Financial Instruments: Disclosure – Offsetting financial assets and financial liabilities - Additional disclosures

required in relation to information about rights of offset and related arrangements for financial instruments under an enforceable master netting arrangement (or similar arrangement).

- IAS 36 Impairment of Assets (Amendment to IAS 36 Impairment of Assets - Recoverable amount disclosures for non-financial assets).

- IAS 32 - Amendment to IAS 32 Financial Instruments Presentation : Offsetting financial assets and financial liabilities (amended December 2011 and effective annual periods commencing on or after 1 January 2014).

b) New standards, interpretations and amendments not yet effective and not early adopted, and that will not have a material impact on the Organisation

The following new standards, interpretations and amendments, which have not been applied in these financial statements, will not have a material effect on the Organisation’s future financial statements:

for the year ended 31 December 2014

Notes to the Financial Statements (cont.)for the year ended 31 December 2014

26

ANNUALREPORT 2014

- IFRS 2 Share based payments (Amendments to IFRS 2: Vesting conditions), effective for annual periods beginning on or after 1 July 2014.

- Amendments to IFRS 8 Operating Segments (Aggregation of operating segments), Mandatory adoption for periods beginning on or after 1 July 2014, and early adoption permitted.

- Amendments to IAS 16 (Revaluation method – proportionate restatement of accumulated depreciation), the adoption is mandatory for adoption for periods beginning on or after 1 July 2014. Early adoption is permitted.

- Amendments to IAS 16 and IAS 38 – Clarification of Acceptable Methods of Depreciation and Amortisation, the adoption is mandatory for adoption for periods beginning on or after 1 January 2016. Early adoption is permitted.

- IFRS 9 Financial Instruments (2014): Incorporates the final requirements on all three phases of the financial instruments projects – classification and measurement, impairment, and hedge accounting. Application date is for annual reporting periods commencing on or after 1 January 2018.

- IFRS 13 Fair Value Measurement: (Measurement of short-term receivables and payables with no stated interest rate). Application date is for annual reporting periods commencing on or after 1 July 2014.

- IAS 24 Related Party Disclosures: (Entities that provide key management personnel services to a reporting entity). Mandatory adoption for periods beginning on or after 1 July 2014.

- IFRS 15 Revenue from Contracts with Customers: IFRS 15 Revenue from Contracts with Customers supersedes IAS 18 Revenue, IAS 11 Construction Contracts and related Interpretations (IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers and SIC 31 Revenue – Barter Transactions Involving Advertising Services). The standard is mandatory for periods beginning on or after 1 January 2017.

2.3 REVENUERevenue comprises the fair value of the consideration received or receivable for services in the ordinary course of the Organisation’s activities. Revenue is recognised as follows:

2.3.1 Trade development surcharge levyThe trade development surcharge levy is accounted for on a receipt basis. The trade development surcharge is calculated as 0.1% of free on board value of goods. The surcharge is collected by banks on behalf of the Organisation and the Trade Development Surcharge Act does not give ZimTrade absolute control over what is recorded by the banks.

2.3.2 Government grantsThe Organisation’s Government grants are related to income. These are recognised in profit and loss on a systematic basis over the period in which the Organisation recognises, as expenses, the related costs for which the grants are intended to compensate.

2.3.3 DonationsDonations are recognised on a receipt basis.

2.3.4 Interest incomeInterest income is recognised on a time proportion basis taking account of the principal outstanding and effective rate over the period to maturity.

2.3.5 Other IncomeOther income is recognised on an accrual basis.


27

ANNUALREPORT 2014

2.4 FINANCIAL INSTRUMENTS

2.4.1 Financial assetsThe Organisation classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Organisation has not classified any of its financial assets as held to maturity.

Loans and receivablesThese assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of loans to staff and prepayments for services. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Organisation will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For advances, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within operating expenses in the statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Cash and cash equivalentsCash and cash equivalents include bank balances, cash on hand, deposits held on call with banks and other short term highly liquid investments readily convertible to known amounts of cash with original maturities of three months or less.

2.4.2 Derecognition of financial assetsFinancial assets are derecognised when the rights to receive cash flows from financial assets have expired or where they have been transferred and the Organisation has also transferred substantially all risks and rewards of ownership. Gains and losses are recognised in income statement when the financial assets are derecognised or impaired, as well as through the amortization process.

2.4.3 Impairment of financial assetsA financial asset is deemed to be impaired when its carrying amount is greater than its estimated receivable amount, and there is evidence to suggest that the impairment occurred subsequent to the initial recognition of the asset in the financial statements.

2.4.4 Impairment of other non-financial assets Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.

The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). 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. Impairment losses are recognised in the statement of profit or loss and comprehensive income. When an impairment loss subsequently reverses, the carrying amount of the asset (cash generating unit) is increased to the revised estimate of its recoverable amount so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash generating unit) in prior years. A reversal of the impairment loss is recognised as income immediately unless the relevant asset is carried at a


28

ANNUALREPORT 2014

revalued amount in which case the reversal of the impairment loss is treated as an increase in the revaluation reserve.

2.4.5 Financial liabilities The Organisation’s financial liabilities comprise trade and other payables. These are initially recognised at fair value and subsequently carried at amortised cost using effective interest method.

2.5 RETIREMENT BENEFITSContributions to defined contribution pension schemes are charged to the statement of profit or loss in the year to which they relate.

2.6 PROPERTY AND EQUIPMENTItems of property and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. Items of property and equipment are subsequently measured at cost less subsequent depreciation and accumulated impairment losses.

Depreciation is provided on items of property and equipment to write off the carrying value of items over their expected useful economic lives.

Freehold buildings - 2% per annum straight lineMotor vehicles - 25% per annum straight lineFurniture and fittings - 10% per annum straight lineOffice equipment - 10% per annum straight lineComputer equipment - 33% per annum straight lineLeasehold improvements - 33% per annum straight line

The assets’ residual values and useful lives are reviewed at each reporting date and adjusted if appropriate. The residual value of an asset is the estimated amount that would currently be obtained from disposal of the asset, after deducting the estimated costs of disposal, if the asset was already of the age and in condition expected at the end of its useful life. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Derecognition of property and equipment An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected from use or disposal. Gains and losses on disposals are determined by comparing proceeds with the carrying amounts. These gains and losses are included in the statement of profit or loss and other comprehensive income.

2.7 LEASEHOLD IMPROVEMENTSLeasehold improvements are depreciated on a straight-line basis over the lesser of the estimated useful life of the improvements or the unexpired period of the lease. Leasehold improvements do not include maintenance and repairs done in the normal course of business. Leasehold improvements do not have a residual value. Improvements made in lieu of rent should be expensed in the period incurred.

2.8 OPERATING LEASESLeases where substantially all risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessors) are recognised in profit or loss on a straight-line basis over the period of the lease. Contingent rents are recognised as an expense in profit or loss when incurred.

2.9 INCOME TAXThe Organisation is not liable for corporate tax as it is exempt in terms of the 3rd schedule of the Income Tax Act (Chapter 23:06).


29

ANNUALREPORT 2014

2.10 INVENTORIESThe inventories of the Organisation comprise of stationery and fuel coupons. Inventories are initially measured at cost and are subsequently stated at the lower of cost and net realisable value.

2.11 CONTINGENT LIABILITIES AND CONTINGENT ASSETSContingent liabilities are potential obligations that arise from past events and whose existence will only be confirmed by the occurrence of one or more uncertain future events that, however, are beyond the control of the Organisation. Furthermore, present obligations may constitute contingent liabilities if it is not probable that an outflow of resources will be required to settle the obligation, or a sufficiently reliable estimate of the amount of the obligation cannot be made.

Provision for this litigation would be made at such a time as an unfavourable outcome becomes probable and the amount reasonably estimated.

Contingent assets are possible assets whose existence will only be confirmed by future events not wholly within the control of the Organisation and are not recognised as assets until the realisation of income is virtually certain.

3. CRITICAL JUDGEMENTS IN APPLYING THE ORGANISATION’S ACCOUNTING POLICIES

In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts presented in the financial statements and related disclosures. Use of available information and the application of judgment is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial statements. Significant judgments include:

(a) Accounts receivableThe Organisation assesses its receivables for impairment at each reporting date. In determining whether an impairment loss should be recorded in the financial statements, the Organisation makes judgments as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

(b) Impairment testingThe Organisation assesses its property, vehicles and equipment for impairment at each reporting date. Impairment testing is an area involving management judgement, requiring assessment as to whether the carrying amount of assets can be supported by the net present value of future cash flows derived from such assets using cash flow projections which have been discounted at an appropriate rate.

(c) Residual values and useful livesThe Organisation is required to assess the remaining useful lives of its property, vehicles and equipment on an annual basis. This affects the amount of depreciation that is recognised in the statement of financial position. Management assessed residual values at nil for equipment as it intends to use the assets until the end of their economic useful lives.

ANNUALREPORT 2014

Not

es to

the

Fina

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ents

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PRO

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IPM

ENT


31

ANNUALREPORT 2014

2014 2013US$ US$

5 INVENTORIES

Fuel 7,615 2,743 Stationery 10,591 3,838

18,206 6,581

6 ACCOUNTS RECEIVABLE

Staff loans 48,829 35,669 Other 468 2,966 Total financial assets other than cash and cash equivalents classified as loans andreceivables

49,297 38,635

Prepayments 19,226 17,400 68,523 56,035

The fair values of accounts receivable classified as loans and receivables are not materially different to their carrying values. As at 31 December 2014 there were no receivables that were past due and fully impaired. Other classes of financial assets included within accounts receivable do not contain impaired assets.

7 ACCOUNTS PAYABLE

Leave pay provision 52,906 19,728 Service gratuity 50,595 - Accruals 35,381 29,656

138,882 49,384

8 BOARD AND GOVERNANCE EXPENSES

External audit fees 8,934 8,994 Special remuneration audit fees 5,713 - Internal audit 3,185 - Board fees 63,244 71,582 Board travel and subsistence 12,591 21,819 Annual general meeting costs 10,047 10,367

103,714 112,762


32

ANNUALREPORT 2014

2014 2013US$ US$

9 EMPLOYMENT EXPENSES - ADMINISTRATION

Salaries and allowances 248,676 152,762

Pension costs 15,059 12,918 Zimbabwe Manpower Development Fund (ZIMDEF) 2,869 1,561 Medical aid 15,842 10,568 Funeral assurance contribution 1,166 66 Bonus pay provision 15,438 10,345 Leave pay provision 9,458 3,087 Recruitment costs 1,864 1,870 Staff welfare 27,288 15,796

337,660 208,973

10 EMPLOYMENT EXPENSES - DIRECT EXPORT DEVELOPMENT

Salaries and allowances 478,490 224,929Pension costs 45,246 24,816 Zimbabwe Manpower Development Fund (ZIMDEF) 8,608 4,682 Medical aid 34,550 20,249 Funeral assurance contribution 3,497 198 Bonus pay provision 27,450 12,345 Leave pay provision 28,374 9,261 Recruitment costs 5,591 5,610 Staff welfare 77,141 30,529

708,947 332,619

11 DIRECT EXPORT DEVELOPMENT EXPENSES

Exhibitions, fairs and missions 243,165 51,422 Exporters’ conference 95,050 115,957 Local industry survey (Export capacity) 6,373 18,618 Information systems maintanance 14,519 17,199 Market researches - Foreign 38,110 28,864 Networking/Benchmarking Programmes 8,503 1,834 Publications/Certificates of origin 14,717 19,371 Quality management systems - ISO certification 26,020 5,112 Seminars and workshops 58,992 37,207 Sponsorship (Export promotion) 12,000 12,000 Balance carried forward 517,449 307,584


33

ANNUALREPORT 2014

2014 2013

US$ US$

11 DIRECT EXPORT DEVELOPMENT EXPENSES

Balance brought forward 517,449 307,584 Travelling and subsistence - External 35,948 29,813 Client entertainment - 120 Professional fees, consultancy and business development 11,918 89,859 Promotions, advertising and publicity 7,597 15,702 Telecommunications 49,226 27,165 Motor vehicle service & repairs 33,722 12,514 Motor vehicle fuel 53,221 29,199 Depreciation - Management vehicles 73,667 46,564 Depreciation - Pool cars 24,089 20,695 Subscriptions 13,070 6,740 People development programme 20,743 34,631 Training and people development 17,393 2,081

858,043 622,667

Employment expenses amounting US$708,947 (2013: US$332,619) were incurred in relation to direct export development and have been included under note 10 above.

12 GENERAL ADMINISTRATION EXPENSES

Bank charges 13,288 8,356 Electricity, water and rates 18,643 17,742 Insurance 26,316 25,223 Legal expenses 8,552 1,955 Training and development 5,798 694 Rent 102,230 100,464 Security 12,410 8,115 Telecommunication costs 5,470 3,018 Loss on disposal of assets 8,649 15,482 Repairs and maintenance 40,617 14,721 Bad debts written off 20,828 5,330 Stationery and office supplies 24,924 14,349 Other general expenses 1,842 1,043 Depreciation expense - Other assets 54,225 21,988 Depreciation - Management vehicles 24,556 15,521 Motor vehicle service & repairs - Management 5,682 4,693

374,030 258,694


34

ANNUALREPORT 2014

2014 2013US$ US$

13 CASH AND CASH EQUIVALENTS

Cash balances 846 142 Bank balances 746,709 642,095 Money market investments 546,027 462,078

1,293,582 1,104,315

14 POST EMPLOYMENT BENEFITS

14.1 DEFINED CONTRIBUTION FUND All employees are members of a defined contribution pension scheme administered by Old Mutual Life Assurance Company.

Contributions for the year 46,055 30,957

14.2 NATIONAL SOCIAL SECURITY AUTHORITY SCHEMEAll eligible employees are members of the National Social Security Scheme to which the employees and the Organisation contribute. The scheme was promulgated under the National Social Security Authority Act 1989. The Organisation’s obligations under this scheme are limited to specific contributions legislated from time to time. Contributions by the Organisation amount to 3.5% of pensionable emoluments with a maximum of US$24.50 per month per employee.

Contributions for the year 14,250 6,777

15 FINANCIAL INSTRUMENTS- RISK MANAGEMENT The Organisation is exposed, through its operations, to the following financial risks:

1. Credit risk2. Fair value or cash flow interest rate risk3. Liquidity risk

In common with all other businesses, the Organisation is exposed to risks that arise from its use of financial instruments. This note describes the Organisation’s objectives, policies and processes for managing those risks and methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantial changes in the Organisation’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from the previous periods unless otherwise stated in this note.

Principal financial instrumentsThe principal financial instruments used by the Organisation, from which financial instrument risk arises, are as follows:a) Accounts receivableb) Bank and cash balancesc) Money market investmentsd) Accounts payable


35

ANNUALREPORT 2014

Loans and receivables2014 2013US$ US$

Accounts receivable 49,297 38,635 Money market investments 546,027 462,078 Bank and cash balances 747,555 642,237

1,342,879 1,142,950

Financial liabilitiesArmotised cost

2014 2013US$ US$

Accounts payable 138,882 49,384

Financial instruments not measured at fair valueFinancial instruments not measured at fair value include cash and cash equivalents, accounts and long term receivables as well as accounts payable.The carrying value of cash and cash equivalents, accounts and long term receivables, trade and other payables approximates their fair value.

General objectives, policies and processesThe Board has overall responsibility for the determination of the Organisation’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Organisation’s finance function.

Credit risk Credit risk is the risk of financial loss to the Organisation if a customer or a counterparty to a financial instrument fails to meet its contractual obligations. Financial assets which potentially subject the Organisation to concentrations of credit risk consist primarily of cash and bank balances and receivables. The Organisation’s cash and cash equivalents are placed with high quality financial institutions.

Quantitative disclosures of the credit risk exposure in relation to financial assets are set out below.

Carrying Maximum Carrying Maximumvalue exposure value exposure2014 2014 2013 2013US$ US$ US$ US$

Financial assets

Accounts receivable 49,297 49,297 38,635 38,635 Money market investments 546,027 546,027 462,078 462,078 Bank and cash balances 747,555 747,555 642,237 642,237

1,342,879 1,342,879 1,142,950 1,142,950

A summary of the financial instruments held by category is provided below:

Financial assets


36

ANNUALREPORT 2014

Liquidity riskThis is the risk of insufficient liquid funds being available to cover commitments. In order to mitigate any liquidity risk that the Organisation faces, the Organisation’s policy has been, throughout the year ended 31 December 2014, to maintain significant liquid resources from the trade surchages collected.

Between Between Up to 3 3 and 12 Up to 3 3 and 12months months months months

2014 2014 2013 2013US$ US$ US$ US$

Accounts payable 138,882 - 49,384 -

Fair value or cash flow interest rate riskThe Organisation has adopted a non speculative policy on managing interest rate risk. Only approved financial institutions with sound capital bases are used to invest surplus funds in.

16 MANAGEMENT OF CAPITAL

The Organisation’s objective when managing capital is to safeguard the Organisation’s ability to continue as a going concern, so that it can benefit stakeholders. The capital of the Organisation comprise of reserves.

17 TRADE DEVELOPMENT SURCHARGE COLLECTION

Management carried out an analysis of the collection process which revealed weaknesses/loopholes that resulted in incomplete collection of trade development surcharge. This revealed the need to have the Trade Development Surcharge Act strengthened. Accordingly management formally requested the Ministry of Industry and Commerce to consider the following proposals for the Amendment of the Act:

a) Tightening the wording of the Trade Development Surcharge Act to empower ZimTrade to enforce collection by banks or inclusion in the Act of a monitoring role by the Reserve Bank of Zimbabwe. b) The Reserve Bank of Zimbabwe to be vested with powers to audit banks to ensure compliance. c) Submission, to ZimTrade, of monthly returns by banks showing details of surcharge collection by importer/exporter (this is already being done by some banks). d) Using trade information obtained from the Reserve Bank of Zimbabwe, which was extracted from the computer system used by banks to report cross border payments, Management has started engaging banks on the gap between expected income and collected amounts with a view to ensure completeness in surcharge collections.


37

ANNUALREPORT 2014

18 RELATED PARTY INFORMATION

18.1 RELATED PARTIESThe following are the related parties of the Organisation:

Related party Nature of relationshipL. Jena Key managementS. P. Pilime Key managementP. Changunda Key managementR. Chizema Key managementS. Jabangwe Key managementH. Kuzvinzwa Key managementB. Mafusire Key managementB. Moyo Key managementO. Mutizhe Key managementD. Norupiri Key managementJ. Youmans Key managementC. Zhanje Key management

18.2 RELATED PARTY BALANCESIncluded in accounts receivable is the following related party balance:

2014 2013US$ US$

Related partySenior Management Loans 29,167 34,667

This relates to loans advanced to senior management which accrue 7% interest per annum and is repayable over 5 years.

18.3 COMPENSATION TO KEY MANAGEMENTKey management personnel are employees who have authority and are responsible for planning, directing and controlling the activities of the Organisation.

2014 2013US$ US$

Executive directorsShort term benefits 274,886 127,044 Post employment benefits 18,837 9,829

293,723 136,873

Non-Executive directorsShort term benefits 63,244 71,582

Total 356,967 208,455


38

ANNUALREPORT 2014

2014 2013US$ US$

Authorised and contracted for - 8,900 Authorised but not contracted for 893,050 478,300

893,050 487,200

19 CAPITAL COMMITMENTS

Capital expenditure will be financed from internal resources.

20 CONTINGENT LIABILITY - VALUE ADDED TAX

In terms of Section 9 of the Value Added Tax Act (Chapter 23:06), the activities offered by ZimTrade may constitute a trade as defined in the VAT Act. Such a trade would be subject to Value Added Tax. The Organisation had not been charging Value Added Tax on the understanding that the trade development surcharge (TDS) is outside the scope of VAT as it is not a payment for goods or services. The services of ZimTrade are intended to benefit all sectors in Zimbabwe irrespective of whether or not one has exported or imported. The Organisation has applied to the Zimbabwe Revenue Authority (ZIMRA) for an advance tax ruling on the matter. ZIMRA is yet to make a determination on the matter. Potential liability, if any, which may arise will be quantified after the ruling has been made.

21 EVENTS AFTER THE REPORTING DATE

21.1 APPROVAL OF FINANCIAL STATEMENTS These financial statements were approved by the Board of Directors for issue on 14 July 2015 and they have the power to ammend the financial statements after issue should such circumstances arise.

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ANNUALREPORT 2014

Notes

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ANNUALREPORT 2014

Notes

notice of annual general meeting - zimtrade...held on thursday 27 august 2015 at 0830 hours at...

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