MASIMBA HOLDINGS LIMITED

Abridged Audited Results for the Eighteen Months Ended 31 December 2013
CHAIRMANS STATEMENT TO SHAREHOLDERS For the 18 month period ended 31 December 2013
Introduction Following the recent shareholders resolution to change the Groups financial reporting period end to 31 December from 30 June, this statement and the accompanying audited financial results therefore relate to the 18 month period ended 31 December 2013, with the comparative period being for the 12 months ended 30 June 2012. Operating environment During the period under review Zimbabweans held peaceful Parliamentary and Presidential elections. Throughout the period the economy experienced significant liquidity constraints, which had an adverse impact on business operations, and this trend has continued since the conclusion of the elections. The economic environment during the review period has however been increasingly more difficult and has been characterised by a stifling liquidity problem, which has affected most of the key drivers in the economy. As the cash squeeze has progressively tightened, particularly in the last six months of the reporting period, funding for construction activity has diminished and large projects were few and far between. The profile in the construction sector has shifted to smaller scale projects and consequently, a larger number of these smaller projects are being run at any one time in order to operate at a profitable level of activity. This presents additional challenges in respect of resources deployment and management oversight but the Group has effectively responded to these challenges. The ability to secure payments for work carried out in accordance with contractual terms has become a problem in some areas, resulting in further challenges in cash flow planning and management. Group Performance Group revenue for the 18 month period was US$62,314,499 compared to US$43,018,590 for the 12 month period ended 30 June 2012. This is a 45% increase over the comparative period to 30 June 2012. While this is a commendable achievement under the challenging conditions, the Group has experienced noticeable decline in monthly revenues since the elections which has been a result of the liquidity constraints noted above. The Group achieved higher gross profit margins of 17% in the period under review compared to the last reporting period of 15%, driven by a major drive for efficiencies undertaken during the period. An EBITDA of US$3,941,011 was recorded for the full 18 months compared to US$3,566,553 for the previous 12 months. In addition the Group has managed to show a net positive cash flow of US$489,348 for the period under review. As stated above, the operating environment has proved difficult during the review period and is becoming increasingly more so. Consequently, the Directors have taken steps to ensure that overheads and business activities are appropriately structured so as to weather the current operating environment and more importantly, to ensure that the Group is well positioned to respond to an anticipated recovery in economic activity. Some tough decisions have been taken as this recovery is not anticipated to occur in the short term and it is therefore important that the Group maintains a streamlined and efficient operating profile at present. This will not be at the expense of identifying and targeting new growth opportunities and there are some interesting prospects currently being considered. The re-alignment of Group activities during the period has resulted in a once -off charge to earnings of US$1,250,000. There was an additional charge of US$357,000 which represents a fair value adjustment to property values as a consequence of a general slump in the property sector. Furthermore, properties with a value of US$645,000 were disposed of and proceeds applied to the reduction of Group borrowings. These efforts have improved the Groups cost base going forward and offer an opportunity to weather the likely scarcity of projects in the short term while positioning the Group for the long-term opportunities offered by the many pressing areas where Zimbabwe has poor or inadequate infrastructure. Proplastics continues to enjoy moderate levels of demand despite countrywide cash flow issues. The Board anticipates that demand for HDPE piping systems in particular is likely to remain buoyant in the near term. In this regard the Board has approved an expansion plan aimed at manufacturing large bore HDPE pipes at the Ardbennie premises. The plant will be commissioned towards the end of the first half of this calendar year, and should further strengthen Proplastics position in the mining and agriculture sectors. As at 31 December 2013 the Groups direct exposure to Government and quasiGovernment was US$5,728,000. These amounts are mainly in Masimba Construction and are up from US$4,904,000 at 30 June 2013. Efforts to recover these amounts are ongoing and the Board remains confident that the amounts are fully recoverable. Prospects We anticipate that business conditions will remain constrained in the new year with continuing liquidity challenges. Politically, there are indications of moves towards a thawing in relations with some Governments in the European Union. In addition, there are ongoing discussions with multilateral institutions, which are a positive indication of intent by the Government. Whilst these initiatives will not lead to a short- term uplift in activity, we believe that the trend-line is positive and that investment and aid flows will inevitably follow as Government actively pursues an environment which is geared toward growth and development. The large backlog in infrastructure development points to longer term potential for Masimba Construction. Government statistics suggest that this sector has grown at rates in excess of 10% since 2009, and projects the same rate of growth in coming years. Government has also announced that it will continue with infrastructure development projects by way of joint venture partnerships or similar arrangements, with local players being given preference if they have the capacity. Whilst this is positive news for our construction business, the real key driver will be Governments ability to harness and mobilise the financial resources required to kick-start these infrastructure projects. There is much work to be done in order to achieve this and we follow political developments with a keen interest in our future. Mindful of the potential liquidity trap typically associated with Government projects the Group will continue to participate in Government construction projects. Where possible the Group will endeavor to participate in the creation of financial solutions for such projects without introducing unnecessary risk to the Group. Opportunities in the mining sector are evident but this sector is in need of significant investment if it is to realise its true potential. Such investment will only occur once Government and the mining community reach a consensus on appropriate investment conditions and a social contract that achieves support from all stakeholders. In the absence of these, contracting opportunities will remain limited. Dividend declaration An interim dividend of US$0.0012 per share was declared (in cash or scrip) and paid on 11 October 2013. In total the cash outflow of the company amounted to US$25,882 as 90% of shareholders elected the scrip dividend. In view of the reported loss after tax in the 18 month period of US$60,412, a final dividend has been passed. The interim dividend was declared in line with the Group policy to declare a twice covered dividend each year. However, in the current environment where liquidity challenges remain this policy will continue to be pursued through the scrip dividend alternative that does not consume Group cash while offering the shareholders improved liquidity in the counter, opportunity to increase shareholding in the company for those who opt for script and a liquidity mechanism for shareholders opting to sell their scrip dividend. Directorate Mr. Stewart Mangoma resigned as Chief Executive Officer and board member effective 28 February 2013. We thank him for the valuable contribution he made to the Group. He was replaced by Mr. Canada Malunga, whom prior to his appointment was a non-executive director. Honourable Paddy Tendayi Zhanda (Snr) resigned from the Board on 27 September 2013 following his appointment to the position of Deputy Minister of Agriculture. He had served on the Board for nineteen years, most of that time as Chairman of the Board. His insight and leadership will be missed and we wish him great success in his new appointment. Mr. Michael Tapera was appointed Finance Director and member of the Board effective 5 September 2013. Mr Paddy Tongai Zhanda (Jnr) was appointed to the Board as non-executive director effective 25 October 2013. We welcome the new Board members and wish them great success at Masimba. Appreciation I wish to extend a special thank you to my colleagues on the Board for their support during the period. I would also like to thank management and staff for their commitment and dedication towards delivering value to the stakeholders. Last but not least, I extend my appreciation to customers, suppliers and regulatory authorities for their continued support. For and on Behalf of the Board
FINANCIAL HIGHLIGHTS Proforma information Following the change in the Companys reporting period end from 30 June to 31 December, this being the first time reporting under the new period end, the reported audited results incorporate 18 months of trading being presented against 12 months of audited trading results in the previous period. In order to bring better appreciation of the business performance in the period under review compared to the same previous period the directors have prepared, and present with this report, unaudited proforma financial information extracted from results of the Group.
Eighteen Twelve Twelve Six Six months to months to months to Months to Months to 31 December 30 June 30 June 31 December 31 December 2013 2013 2012 2013 2012 Audited Reviewed Audited Proforma Unaudited US$ US$ US$ US$ US$

NOTES TO THE CONSOLIDATED FINANCIAL RESULTS 1. Basis of presentation Statement of compliance  The abridged financial results for the 18 month period have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS).The same accounting policies, presentation and methods are followed in the abridged financial results as applied in the Groups annual financial statements. 2. Change in year end  During the period under review the Group changed its financial year end from 30 June to 31 December. 3. Auditors report  The underlying financial statements to these financial results have been prepared in accordance with International Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24: 03).  These financial results should be read in conjunction with the complete set of financial statements for the period ended 31 December 2013, which have been audited by Deloitte & Touche and an unmodified audit opinion issued thereon. The auditors report on these financial statements is available for inspection at the Companys registered office. 4. Currency of reporting  The abridged financial statements are presented in United States Dollars, which is the functional currency of the Group.
31 December

Revenue EBITDA EBITDA/Turnover Basic (loss)/earnings per share (US cents)

62,314,449 43,961,311 43,018,590 18,353,138 26,537,659 3,941,011 3,126,166 3,566,553 814,845 1,739,873 6.3% 7.1% 8.3% 4.4% 6.6% (0.03) 0.23 0.61 (0.26) 0.19

ABRIDGED CONSOLIDATED INCOME STATEMENT

Eighteen Twelve Twelve Six Six months to months to months to Months to Months to 31 December 30 June 30 June 31 December 31 December 2013 2013 2012 2013 2012 Audited Reviewed Audited Proforma Unaudited Notes US$ US$ US$ US$ US$

18 months 12 months

Revenue 62,314,449 43,961,311 43,018,590 18,353,138 26,537,659 Profit before depreciation and fair value adjustment 4,298,011 3,126,166 2,204,253 1,171,845 1,739,873 Fair value adjustment (357,000) - 1,362,300 (357,000) Depreciation (2,968,120) (2,025,016) (1,743,761) (943,104) (1,013,671) Operating profit/(loss) 972,891 1,101,150 1,822,792 (128,259) 726,202 Net interest paid (521,299) (424,202) (175,858) (97,097) (182,485) Profit/(loss) before tax 4.1 451,592 676,948 1,646,934 (225,356) 543,717 Taxation (512,004) (174,314) (346,517) (337,690) (140,007) (Loss)/profit after tax (60,412) 502,634 1,300,417 (563,046) 403,710 Number of shares in issue (millions) 220.5 214.8 214.8 220.5 214.8 Basic (loss)/earnings per share (cents) (0.03) 0.23 0.61 (0.26) 0.19 Commentary on proforma information The performance reflected during the 6 month period to 31 December 2013 compared to 31 December 2012 highlights the challenges in the trading environment particularly post election period when the liquidity crisis peaked and a number of projects, particularly those funded by Government were inactive.

4.1 Profit before tax Profit before tax is shown after charging/(crediting) the following items: Staff costs 6,350,963 4,265,673 Compensation of directors and key management for services as directors 113,577 92,212 for management services 1,753,171 1,805,097 Impairment on investment 139,015 Share option expense 44,022 147,555 Pension 954,584 789,714 Profit/(loss) on disposal of investment 3,579 (9,303) Fair value gain on investments designated at fair value through profit and loss 10 (297)

30 June 2013 2012 US$ US$

4.2 Property, plant and equipment Movement for the period: Balance at the beginning of the period 12,703,542 10,199,825 Capital expenditure 1,344,836 4,272,373 Revaluation 1,731,477 Depreciation (2,968,120) (1,743,760) Disposals (558,441) (24,896) ABRIDGED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Balance at the end of the period 12,253,294 12,703,542 18 months 12 months 4.3 Investment property 31 December 30 June Movement for the period: 2013 2012 Balance at beginning of the period 6,118,000 4,755,700 Audited Audited Fair value gain for the period (357,000) 1,362,300 US$ US$ Disposals during the period (645,000) Balance at end of the period 5,116,000 6,118,000 (Loss)/profit for the period (60,412) 1,300,417  The investment property was revalued at the end of December 2013 by an independent sworn valuers on the open market basis. Other comprehensive income/(loss): Exchange differences on translating foreign operations (4,947) 1,430 4.4 Contracts in progress and accounts receivable Available for sale financial assets - (5,701) Contract receivables and contract work in progress 8,420,183 7,268,615 Reclassification adjustment relating to available for sale - (71) Trade receivables 2,614,030 1,953,972 Revaluation reserve 1,731,477 Prepayments 1,238,160 1,758,163 Income tax relating to components of Deposits and other receivables 657,080 893,869 12,929,453 11,874,619 other comprehensive income (362,533) 58 Less: Allowance for credit losses (276,561) (306,246) Receivables at end of the period 12,652,892 11,568,373 Other comprehensive income/(loss) for the period, net of tax 1,363,997 (4,284)  The average credit period for trade receivables is 60 days. No interest is charged on the overdue trade receivables. The Group has recognised an allowance for credit TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 1,303,585 1,296,133 losses against all receivables on a case by case basis. 4.5 Borrowings Long term 833,333 750,000 ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Short term 2,816,666 2,362,186 3,649,999 3,112,186 31 December 30 June  The short term loans have tenure of three months and the long term loans have 2013 2012 tenure of two years. Audited Audited  The loans accrue interest at an effective rate ranging between 8%-12%. These Notes US$ US$ loans are fully secured against movable property and a notarial general covering ASSETS bond over moveable assets including a cession of book debts Property, plant and equipment 4.2 12,253,294 12,703,542 Investment property 4.3 5,116,000 6,118,000 4.6 Accounts payable Investments 504 152,080 Trade 1,359,483 1,657,645 Non-current assets 17,369,798 18,973,622 Contract accruals and other payables 5,344,293 9,302,270 Subcontractor liabilities 3,880,455 2,782,719 Current assets 10,584,231 13,742,634 Cash and cash equivalents 2,476,137 1,986,789 Contracts in progress and accounts receivable 4.4 12,652,892 11,568,373 Capital commitments Inventories 4,951,542 5,659,718 Authorised but not contracted for 2,155,000 3,650,000 Current tax asset - 82,069 20,080,571 19,296,949 This expenditure will be financed from internal resources and existing facilities. Total assets 37,450,369 38,270,571 Contingent liabilities Bank guarantees on construction contracts in respect of performance, advance payments, retentions 2,872,001 6,619,727 EQUITY AND LIABILITIES Share capital 2,204,937 2,147,746 Segment information Share premium 260,063 82,733 Information reported to the chief operating decision maker for the purpose of Reserves 18,129,178 17,039,376 resource allocation and assessment of segment performance focuses on types 20,594,178 19,269,855 of operations. The Groups reportable segments under IFRS 8 are Contracting, Manufacturing and Corporate (incorporating treasury and property management). Non-current liabilities Borrowings 4.5 833,333 750,000 The accounting policies of the reportable segments are the same as the Companys Deferred tax 2,575,572 2,145,896 accounting policies. 3,408,905 2,895,896 Current liabilities Segment revenues and results Borrowings 2,816,666 2,362,186 The following is an analysis of the Groups revenue and results by reportable Current tax liability 46,389 segment. These revenues represent amounts generated from external customers. Accounts payable 4.6 10,584,231 13,742,634 13,447,286 16,104,820 Segment profit/(loss) before tax Segment revenue 18 months 12 months 18 months 12 months 31 December 30 June 31 December 30 June 2013 2012 2013 2012 US$ US$ US$ US$ ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS Contracting 39,974,312 26,896,765 820,610 531,228 18 months 12 months Manufacturing 22,340,137 16,121,825 452,215 (98,627) 31 December 30 June Corporate - - (821,233) 1,214,333 2013 2012 Total 62,314,499 43,018,590 451,592 1,646,934 Total equity and liabilities 37,450,369 38,270,571 Segment assets and liabilities 31 December 30 June Cash generated by continuing operations 986,285 3,973,397 2013 2012 Interest paid (521,299) (175,858) Segment assets US$ US$ Contracting 14,721,743 17,903,011 Income tax paid (316,402) (224,067) Manufacturing 9,513,061 9,675,648 Dividend received 520 7,724 Corporate 13,215,565 10,691,912 Investing activities (171,687) (4,224,521) Consolidated total assets 37,450,369 38,270,571 Financing activities 511,931 1,512,186 Net increase in cash and cash equivalents 489,348 868,861 Segment liabilities Contracting 12,697,668 15,005,893 ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Manufacturing 2,882,418 3,036,674 Corporate 1,276,105 958,149 Consolidated total liabilities 16,856,191 19,000,716 31 December 30 June 2013 2012 Other segment information Audited Audited Depreciation Capital expenditure US$ US$ 18 months 12 months 18 months 12 months 31 December 30 June 31 December 30 June Shareholders equity at the beginning of the period 19,269,855 17,826,167 2013 2012 2013 2012 Share based payments reserve 46,620 147,555 US$ US$ US$ US$ Dividend paid (25,882) Other comprehensive income/(loss) for the period 1,363,997 (4,284) Contracting 1,707,544 947,672 768,747 3,041,512 (Loss)/profit for the period (60,412) 1,300,417 Manufacturing 994,118 665,108 552,641 1,010,273 Shareholders equity at the end of the period 20,594,178 19,269,855 Corporate 266,458 130,981 23,448 220,588 2,968,120 1,743,761 1,344,836 4,272,373
Audited

31 December 30 June 2013 2012 Audited Audited US$ US$

US$

Audited

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G Sebborn 24 March 2014

Directors: G Sebborn (Chairman), C Malunga*, M W McCulloch, S Sithole, M Tapera*, P T Zhanda (Jnr) (*Executive) Registered Office: 44 Tilbury Road, Willowvale, Harare, Zimbabwe