ANNUAL
REPORT
CEMENT
LAFARGE CEMENT ZIMBABWE
City of Harare skyline at night
2014
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 1
MORE HOUSING MORE COMPACT MORE DURABLE MORE CONNECTED
MORE BEAUTIFUL
CONTENTS
Lafarge Profile
A perspective on Lafarge Zimbabwe
Our Brands
Special Products
Mission Statement
Health & Safety
Corporate Social Responsibility
Directorate, Committees and Administration
Board of Directors
Executive Committee
Chairman’s Statement
Report of Directors
Statement on Corporate Governance
Contribution to Revenue
Statistics and Financial Ratios
Shareholder Analysis
Notice to Members
Sharehoulders Diary
Proxy Form
Financial Statements for the year ended 31 December 2014
04
07
08
10
11
12
13
14
15
16
17
18
19
20
21
22
23
23
25
27
LAFARGE
PROFILE
KEY FIGURES
01
61
countries
02
63,000
employees
03
12,843
revenues
in million euros
04
1,612
production sites
NET INCOME GROUP SHARE
143 M€
PAGE 4 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
LAFARGE PROFILE
LAFARGE ZIMBABWE
LAFARGE WORLDWIDE(1) (DECEMBER 31, 2014)
Western Europe
North America
Central and Eastern Europe
Middle East and Africa
Latin America
Asia
World map of Lafarge’s presence as of December 31, 2014 (plants and sales offices).
(1) Reference G4-6. See Section 4.5 (GRI content index) for more information on these references.
KEY FIGURES BY GEOGRAPHIC AREA (DECEMBER 31, 2014)
6 1
6 1
2
5
4
%
REVENUE
5
4
3
1. Western Europe
16.4%
2. North America
23.5%
3. Central and Eastern Europe 8.3%
4. Middle East and Africa
28.9%
5. Latin America
5.5%
6. Asia
17.4%
%
EMPLOYEES
2
3
1. Western Europe
23.6%
2. North America
12.5%
3. Central and Eastern Europe 8.8%
4. Middle East and Africa
30.0%
5. Latin America
3.5%
6. Asia
21.6%
Lafarge - Registration Document 2014
•
03
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 5
MORE HOUSING MORE COMPACT MORE DURABLE
MORE CONNECTED MORE BEAUTIFUL
LAFARGE ZIMBABWE
A PERSPECTIVE ON
LAFARGE ZIMBABWE
A subsidiary of the Lafarge Group, which is the world’s largest cement and other allied
products manufacturer and operates in 62 countries. Lafarge Cement Zimbabwe is a
market leader in the country and has an annual cement production capacity of
450 000 tonnes. The company’s mission is to develop sustainable building solutions
to create value for its diverse stakeholders. Lafarge remains resolute in maintaining
its position as a leading producer of cement and related building materials, an
employer of choice and a leader in ensuring sustainable development in the various
communities surrounding operations.
From inception in 1956, the company has made a significant contribution towards the
growth of the construction industry in the country. Lafarge is committed to providing
sustainable building solutions in the construction of infrastructure that withstands the
passage of time. Our materials, services and innovative building systems contribute
to building cities that offer more houses that are more compact, more durable, more
beautiful and better connected. This is in line with our ongoing campaign tag line
-“Building Better Cities”.
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 7
OUR
BRANDS
Lafarge products are produced to meet the dynamic needs of all its customers. Its broad product range
is suitable for industrial players, individual home builders, concrete makers and any other cement
users. Our long-standing international experience has gained us the expertise to produce and supply
quality cement and other building material to satisfy the needs of all our customers.
PORTLAND
COMPOSITE CEMENT
32.5N
PORTLAND COMPOSITE CEMENT 32.5N
Portland Composite Cement 32.5 N is a high strength cement extended by
either slag, limestone, calcined clay or a combination of these materials,
and is manufactured to EN 197:2000 standard. The product is most ideal
in the construction of beams, foundations, concrete and any other load
bearing structures.
SUPASET
SUPASET – 42.5 R
Supaset is a rapid setting cement which offers quick turnaround on
production resulting in higher productivity and better returns. The cement
is a premium brand which offers high quality bricks, concrete and other
applications for less. The product has undergone stringent testing in
laboratories and with customers to ensure the consistency and reliability
for block making and concrete applications. The consistent quality and
fast setting properties make it the ideal choice for concrete brick makers,
builders, architects, engineers, contractors and DIY enthusiasts.
PAGE 8 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
42.5R
LAFARGE ZIMBABWE
MASONARY
CEMENT MORTAR
22.5X
MASONRY CEMENT MC 22.5X
Masonry Cement: MC 22.5X is manufactured to EN 413:2001. The cement
is ideal for general construction works like floor screeds, brick and mortar
and plastering mortar.
AGGREGATES
AGGREGATES
Lafarge is one of the key producers of construction aggregate materials in
the country, amongst other players. The plant has a capacity to produce
up to 200,000 tons of aggregate materials per annum. Operating out of
the Sternblick quarry, Lafarge Cement Zimbabwe is strategically located to
service all sectors of the local construction industry. Extracted from quarries,
crushed and then calibrated, aggregates appear in a range of products,
including gravel, broken gravel and sand. Lafarge Cement Zimbabwe sells
the following aggregates:
• Washed sand
• 6mm stones
• 20mm stones (3/4 inch)
• Crusher run
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 9
LAFARGE ZIMBABWE
SPECIAL
PRODUCTS
Agricultural Lime
Agricultural Lime is a calcitic grade soil additive, which
enables it to produce quick results. It is made from
pulverised limestone. The primary active component is
calcium carbonate. It enhances crop yields as it increases
the pH of acidic soils, thereby greatly enhancing uptake of
nutrients by plants. It provides a source of calcium for plants
and permits improved water penetration for acidic soils.
Colorbrite & Snolime
Colorbrite is a pigmented lime-based paint for painting
the inside of houses. It is produced by Lafarge in a variety
of colors, including light blue, light green, mist grey,
rose pink, primrose, white, blue, green, ivory and corn.
Snolime is a traditional limewash paint made from lime.
Pre-sanded Cemwash
Pre-sanded Cemwash is an economical attractive
decorative Portland Cement-based paint manufactured by
Lafarge Cement Zimbabwe. It is sold as a powder, to which
water has to be added. It is easily mixed and applied with
a block brush. It provides a waterproof rock hard surface
that will last for years. It is available in colours that include
deep cream, mahogany, birch, cedar, oak, willow, pine,
sandalwood, stinkwood, ash and aspen (white).
Impermo
Impermo is a water repellent material that Lafarge
produces in powder form for mixing with Portland
cement before aggregates such as sand are added to
produce durable water repellent renderings. It is used
in the construction of water bearing structures such as
swimming pools, water reservoirs and dip tanks. It is also
used in structures where moisture should not be allowed
in, such as granaries and basements.
PAGE 10 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
OUR COMMITMENTS
• Health and Safety
We are committed to providing a healthy and safe work
environment for our stakeholders.
• Sustainable Development
We acknowledge and accept our responsibility to our
communities to preserve the environment and natural
resources. We are committed to reducing fugitive dust
emissions.
• Making our people successful
We strive to satisfy the aspirations of our employees
through being fair and consistent, offering opportunities for
development and rewarding on merit.
• Quality
We are committed to satisfying our customer needs and
value expectations by maintaining the highest standards of
quality and service.
HEALTH &
SAFETY
Ensuring the protection of our employees’ health and safety is our first priority. This is
the guiding principle for all employees of the company, starting from the highest levels
of responsibility.
For many years we have strived to make our industrial operations safer, to establish
directives and standards that are clear for everyone, and to increase the awareness of
both our employees and our contractors. It has been our credo that it is unacceptable
to risk your life to perform your work. There is no limit to our ambition in this area.
The scope of our responsibility extends far beyond our employees and our operations. By
2020 we want to not merely avoid fatal accidents but also to ensure that no employees
or contractors are victims of serious incidents, whether in our facilities or on the road.
PAGE 12 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
LAFARGE ZIMBABWE
CORPORATE SOCIAL
RESPONSIBILITY
Lafarge Cement Zimbabwe has an obligation to support and ensure
sustainable development of the communities surrounding its operations as
part of its Corporate Social Responsibility. The company’s competitiveness
and success is largely hinged on the implementation of corporate policies
and practices that also enhance social and economic development and
progress of the communities surrounding its operations. Lafarge Cement
Zimbawe’s support of sustainable development in communities is centered
on three core objectives; enhancing stakeholder relations, driving local
social development, and rendering support to local communities related
to its areas of expertise.
In line with Corporate Social Responsibility practices, the company
supported multi-faceted community development projects in 2014. Some
of the ways in which the company contributed to “Building Communities”
during the year were; donations for the rehabilitation/construction of
schools and clinics, providing support to health service delivery, employee
volunteering, clean up campaigns and tree planting activities.
Education is a key aspect in the social development of any community.
In 2014, the Lafarge bursary scheme supported a total of 393 students
from the Mabvuku/ Tafara and Mutawatawa districts. In the same year,
the company donated building material to support the construction of
a classroom block at Chikurubi Primary School. This was in addition
to support rendered to Tinokwirira Primary School in the construction
of infrastructure to start an income generating project for the school.
Over 2300 volunteer hours were spent by Lafarge employees in various
community development and rehabilitation projects and these included:
• Chikurubi Prison Primary School where employees volunteered 280
hours to plant trees at the school in support of the United Nations
International Volunteer Day
• SOS Children’s Home where 279 hours were volunteered by employees
to repaint the children’s home
• Mashambandzou Care Trust where Lafarge Cement Zimbabwe
employees volunteered 225 hours to make a fireguard for the
institution
• Mabvuku Polyclinic where employees volunteered 350 hours to clean
up Mabvuku-Tafara which a local community surrounding the BU
operations
Lafarge Cement Zimbabwe recognizes that local job creation is, more than
ever, part of business’ major responsibility. The company continued with
the tenders it awarded in 2013 to self-organised community groups from
Mabvuku/ Tafara and Chikurubi for car washing services, coal offloading,
walkway construction and laundry services. The total number of people
employed through this local job creation initiative represents 2% of the
Lafarge Cement Zimbabwe workforce.
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 13
LAFARGE ZIMBABWE
DIRECTORATE, COMMITTEES
AND ADMINISTRATION
Directorate
J.Shoniwa (Chairman)
I.F. Bingwa
D.L. Cruttenden
M.A. Masunda
F. Matanhire (Finance Director)
C. Moloseni*
S. Mutangadura*
A. Tantawi (Chief Executive Officer)
Executive Committee
A. Tantawi - Chief Executive Officer
P. du Preez - Operational Director
F. Matanhire - Finance Director and Company Secretary
E. Matekaire - Marketing and Communications Director
P. Murena- Nyika - Human Resources Director
B. Mandipezano - Sales Director
A. Farghaly - Safety, Health and Environment Director
Workers’ Committee
N. Katsiga - Chairman
V. Mandove - Vice Chairman
S. Chiutsi - Secretary
T. Tawulino
R. Mangenda
N. Mzaviya
S. Mungororo
M. Makurumure
E. Gwekwerere - Vice Secretary
B. Kondohwe - Spokesperson
S. Funye
G. Nyahodza
* Audit Committee members
PAGE 14 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
Company Secretary
F. Matanhire
Registered Ofice
Manresa Works
Arcturus Road
Harare
Zimbabwe
Auditors
Deloitte & Touche
Principal Bankers
Standard Chartered Bank Zimbabwe Limited
Stanbic Bank Zimbabwe
Transfer Secretaries
First Transfer Secretaries (Private) Limited
BOARD OF
DIRECTORS
J. Shoniwa
I.F. Bingwa
D.L. Cruttenden
M.A. Masunda
F. Matanhire
C. Moloseni
S.M. Mutangadura
A. Tantawi
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 15
LAFARGE ZIMBABWE
EXECUTIVE
COMMITTEE
A. Tantawi
Chief Executive Officer
B. Mandipezano
Sales Director
P. du Preez
Operational Director
E. Matekaire
Marketing and
Communications Director
PAGE 16 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
F. Matanhire
Finance Director and
Company Secretary
A. Farghaly
Safety Health and
Environment Director
P. Murena-Nyika
Human Resources
Director
CHAIRMAN’S
STATEMENT
Introduction
We hereby present the financial results of the
Company for the year ended 31 December 2014.
Operating environment
The liquidity constraints and the low average
manufacturing capacity utilisation, which was
reported at 36.3% compared to 39.6% for
2013, continued to have an adverse impact
on business activities. The continued frequent
power outages and retreating commodity prices
did not spare economic performance. Due to
the under performance by the major economic
J. Shoniwa
pillars, a GDP growth of 3.1% was recorded
which was 0.4 percentage points lower than the 2013 level. The year on
year rate of inflation was -0.8% compared to 0.33% for 2013. The economy
continues to suffer from weak aggregate demand arising from tight liquidity
and reduced disposable incomes.
maintenance spares required to shorten plant stoppage durations due to
breakdowns.
Cash generated from operations decreased to $5.7 million in 2014 compared
to $11.6 million recorded in 2013. The adverse change was mainly a result
of a lower EBITDA of $6.1 million compared to $13.6 million for 2013.
Although inventory levels went up as a result of an increase in clinker stocks
and maintenance spare parts, this was mitigated by a good performance on
receivables due to stringent collections being implemented by the Company.
Capital expenditure
Despite the prevailing harsh economic environment, the Company invested
$7.2 million in capital expenditure, of which $4.9 million went towards
limestone quarry development.
Outlook
The overall annual domestic demand for cement remained flat at 1 million
tonnes compared to 2013 levels. The construction sector remained heavily
dependent on individual home building and small scale projects.
Although trading conditions are expected to remain difficult in 2015, I
continue to be optimistic about the Zimbabwean economy. Some growth will
be recorded from the anticipated increased activity in mining, construction
and infrastructural development. The prospects for further growth, in the
medium term, for domestic cement demand remain strong and the Company
is well positioned to capture that growth.
Results
Appreciation
The gross turnover recorded in 2014 declined by 11% to $60.4 million
following a 7% reduction in local sales volumes and 3% reduction on
average cement selling prices. Demand for cement and clinker exports in
the Company’s traditional markets remained low, and clinker export volumes
declined by 15kt compared to the same period last year.
The Company incurred high maintenance costs in the first half of the year,
following major plant maintenance works undertaken to improve the plant’s
performance. Despite the high maintenance costs that led to a half year
loss, the Company returned to profitability in the second half of the year.
Resultantly, the Company recorded a modest operating profit before other
income, finance costs and tax of $1.1 million which was $4.6 million
adverse to that achieved in 2013. The decline in operating profit was a
result of low sales revenue and high production costs incurred during the
year. Consequently, the profit before tax declined by $4.8 million to $0.4
million compared to 2013.
The impact of low sales volumes and late payments by customers due to
the prevailing liquidity crisis resulted in an increase in debt. The Company
incurred an additional $0.2 million in finance costs as short term borrowings
were increased to meet its working capital requirements.
Basic earnings per share declined to 0.1 cents per share from 4.4 cents in
2013.
The current assets of the Company, excluding cash and cash equivalents,
increased by $2.0 million to $29.6 million due to an increase in critical
I would like to express my appreciation to the management team, employees,
my fellow directors as well as shareholders and various other stakeholders
for their continued support and commitment. We continue to receive
tremendous financial and technical support from the Lafarge Group and I
take this opportunity to once again thank them in earnest for having been
resilient: a clear demonstration of their confidence in our country.
_______________________
J. Shoniwa
Chairman
6 March 2015
Dividend
The Directors have recommended that no dividend be declared due to the
low profitability recorded by the Company during the year under review.
By order of the Board
_______________________
F. Matanhire
Company Secretary
6 March 2015
Registered Office
Manresa Works
Arcturus Road, Harare
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 17
LAFARGE ZIMBABWE
REPORT OF
DIRECTORS
The Directors have pleasure in presenting their annual report together with
the audited financial results for the year ended 31 December 2014.
Capital expenditure
Share capital
Capital expenditure for the year amounted to $7.2 million. This included
critical plant sustaining projects, normal replacements, upgrades of
equipment and mines development costs.
The authorised number of shares of the Company remained unchanged at
80,000,000 shares with a nominal value of $0.01 per share.
Dividend
Reserves
The Directors have recommended that no dividend be declared due to the
need to preserve cash for working capital needs.
The movements in the reserves of the Company were attributable to transfers
made out from the revaluation reserve to retained earnings in relation to
disposals of previously revalued assets, and transfers made out from the
share based payments reserve to retained earnings.
Financial performance
The Company’s historical results for the year ended 31 December 2014 are
summarised as follows:
2014
2013
60,448,745
67,601,367
80,950
3,492,470
0.13%
5.17%
$
Revenue
Profit for the year
Profit margin
$
Profit for the year decreased by $3.4 million from prior year to $0.08 million,
largely due to lowered revenue and high production and maintenance costs.
Directorate
Mr. J. Shoniwa was appointed as Chairman of the Board of Directors
with effect from 1 January 2014. On the same date, Mrs A. Tantawi was
appointed as the Managing Director.
Directors’ interests
There were no Directors with interests that conflicted with the Company’s
business.
Directors’ fees
A resolution will be proposed at the Annual General Meeting to approve
Directors’ fees in respect of the period ended 31 December 2014 amounting
to $60,000.
Auditors
Members will be asked to re-appoint Deloitte & Touche as auditors of the
Company.
By order of the Board
Basic earnings per share declined from $0.044 to $0.001.
Borrowings
The Company did not issue out any new shares during the year. Borrowing
levels were increased to finance working capital activities.
The ultimate holding Company, Lafarge SA, provided the guarantees for the
Company’s borrowings.
PAGE 18 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
_______________________
F. Matanhire
Company Secretary
6 March 2015
STATEMENT ON
CORPORATE GOVERNANCE
The Company applies the following governance practices, which are based
on the principles contained in the Cadbury and King Reports on corporate
governance.
Financial statements
The Directors are responsible for the preparation and presentation of the
financial statements. The Company’s external auditors are responsible for
expressing an opinion on the financial statements based on their audit. The
auditor’s report is set out on page 30.
Audit committee
The Company has an audit committee which assists the Board in the
fulfillment of its duties. It is regulated by a specific mandate from the
board and consists of three non-executive Directors. The Audit Committee
oversees the financial reporting process, is concerned with compliance with
Company policies and internal control within the Company and interacts
with the internal and external auditors. It meets at least twice a year with
senior management. The internal and external auditors have unrestricted
access to the Audit Committee.
Board of directors
The Board of Directors, the members of which represent a broad spectrum
of professional and business interests, is comprised mainly of non-executive
Directors. The Company follows a decentralized approach with regard to
the day-today running of its operations but the Board reserves the right to
make key decisions to ensure that it retains proper control over the strategic
direction of the Company. The Board meets four times per annum.
Management reporting
There are comprehensive management reporting disciplines in place which
include the preparation of annual budgets. The Company’s budget, including
budgeted capital expenditure, is reviewed and approved by the Board.
Monthly results of the Company are reported against approved budgets and
reviewed by the Executive Committee. Profit projections and forecast cash
flows are updated monthly while working capital and borrowing levels are
monitored on an ongoing basis.
Executive committee
The Executive Committee, consisting of the heads of each discipline, meets
weekly with its main duty being to ensure that the objectives as set by the
Board are being met. All aspects of the business are monitored regularly by
the Executive Committee.
Stakeholder communication
The Board subscribes to the principles of openness, fairness, relevance and
promptness in communications but believes that the best interests of the
company should be considered in applying the concept of openness, as
disclosures may not be appropriate in all circumstances and, in certain
instances, may be in conflict with legal or regulatory requirements.
Internal control
The Directors are responsible for and ensure that the Company maintains
adequate accounting records and internal controls and systems designed to
provide reasonable assurance on the integrity and reliability of the financial
statements, and to adequately safeguard, verify and maintain accountability
for its assets. Such controls are based on established policies and
procedures and are implemented by trained personnel with an appropriate
segregation of duties. The effectiveness of these internal controls and
systems is monitored in a number of ways, as set out below, dependent
upon the particular circumstances:
• the use of both an internal audit department and the Paris based group
internal audit function, which independently review the adequacy and
effectiveness of the internal controls and systems which support them,
in the various operating divisions, as well as business and financial risks
which could have an adverse effect on the Company.
• utilisation of an efficient security department.
Internal audit
Internal audit department is an is an independent appraisal function
and has the respect and co-operation of both the Board of Directors and
management. Weaknesses identified by internal audit are reported to the
Directors and management.
Nothing has come to the attention of the Directors, nor to the attention
of the internal auditors, to indicate that any material breakdown in the
functioning of the internal controls and systems has occurred during the
year under review.
Ethics
Directors and employees are required to maintain the highest ethical
standards, ensuring that business practices are conducted in a manner
which, in all reasonable circumstances, is beyond reproach.
Full disclosure is made by the Directors concerning their interests, including
those of their families, in outside activities or in businesses which may
conflict with their positions at the Company or result in relationships or
balances that need to be disclosed.
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 19
LAFARGE ZIMBABWE
CONTRIBUTION TO
REVENUE
Product Contribution to Revenue for the year ended 31 December 2014
2014
%
2013
%
Cement
57 349 123
95%
63 325 592
94%
Clinker
78 472
0%
1 286 428
2%
550 518
1%
667 281
1%
2 470 632
4%
2 328 173
3%
$
Special Paints
Aggregates
PAGE 20 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
$
STATISTICS AND
FINANCIAL RATIOS
Statistics and Financial Ratios for the year ended 31 December 2014
2014
2013
80
80
Net assets per share ($ per share)
0,470
0,469
Basic earnings per share ($ per share)
0,001
0,044
Operating profit to revenue
2,1%
8,6%
Profit before tax to revenue
0,6%
7,6%
Return on shareholders' funds
0,2%
9,3%
1,29
1,39
Total liabilities to total shareholders' funds
86,1%
76,1%
Borrowings to total shareholders' funds
12,9%
2,7%
249
234
242 766
288 895
5 189
24 929
Purchase of property, plant and equipment ($)
2 217 763
3 718 658
Mines development ($)
4 942 901
6 964 892
7 160 664
10 683 550
Depreciation expense ($)
3 771 098
3 958 712
Mines development amortisation ($)
1 008 590
3 782 791
Approved capital commitments ($)
5 152 841
7 074 783
$
$
Share Statistics
Number of shares in issue (millions)
Profitability and Asset Management
Liquidity
Current ratio
Employees
Number of employees
Revenue per employee ($)
Operating profit per employee ($)
Capital Expenditure
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 21
LAFARGE ZIMBABWE
SHAREHOLDER
ANALYSIS
2014
No. of
Shareholders
Shareholding
(Shares)
2013
Shareholding
%
No. of
Shareholders
Shareholding
(Shares)
Shareholding
%
Classification
Banks and nominees
Deceased estates
Employees
Corporates
Insurance companies
Investments, trusts and property
Non-resident individuals
External corporate holders
Pension funds
Resident individuals
Other
39
22
1
107
8
13
77
1
32
431
6
3 463 436
37 197
369
4 250 623
2 026 069
2 368 392
773 841
61 158 400
2 641 984
3 265 833
13 856
4,33
0,05
5,31
2,53
2,96
0,97
76,45
3,30
4,08
0,02
39
22
1
107
10
9
80
2
15
436
8
998 599
37 397
369
4 187 962
1 164 723
2 290 436
2 979 040
63 153 231
1 957 114
3 225 333
5 796
1,25
0,05
5,23
1,46
2,86
3,72
78,94
2,45
4,03
0,01
Total
737
80 000 000
100,00
729
80 000 000
100,00
Shareholding Range
0 - 100
101 - 200
201 - 500
501 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 50,000
50,001 - 100,000
100,001 - 500,000
500,001 - 1,000,000
1,000,001 - 10,000,000
> 10,000,000
153
66
129
117
146
49
44
8
14
3
7
1
7 587
10 509
48 624
94 509
352 246
302 397
1 013 369
548 107
3 332 683
1 650 460
11 481 109
61 158 400
0,01
0,01
0,06
0,12
0,44
0,38
1,27
0,68
4,17
2,06
14,35
76,45
159
68
136
116
151
44
27
7
11
1
8
1
7 799
10 844
50 682
93 562
359 801
301 375
483 418
528 405
2 458 348
579 931
13 967 435
61 158 400
0,01
0,01
0,06
0,12
0,45
0,38
0,60
0,66
3,07
0,72
17,46
76,45
Total
737
80 000 000
100,00
729
80 000 000
100,00
61 158 400
76,45
61 158 400
76,45
2 075 652
2 030 047
2,59
2,54
2 075 652
2 030 047
2,59
2,54
1 905 747
2,38
2 068 043
2,59
1 680 488
1 535 663
1 498 095
1 491 834
1 438 781
1 145 226
2,10
1,92
1,87
1,86
1,80
1,43
1 680 488
1 535 663
1 437 485
1 145 226
2,10
1,92
1,80
1,43
75 959 933
94,94
73 131 004
91,42
Top Ten Major Shareholders
Associated Cement International
Limited
The Farlow Trust
Roy Turner
Standard Chartered Nominees (PVT)
LTD - NNR. ,
The Sasko Trust
The Leaf Tree Trust
Stanbic Nominees (PVT) LTD - MNR
Stanbic Nominees (PVT) LTD
National Social Security Authority
Workers Compensation Insurance Fund
Total
Directors Shareholding
I. F. Bingwa
D. L. Cruttenden
M.A. Masunda
J. Shoniwa
S. Mutangadura
PAGE 22 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
1 136
1 000
1 710
1 000
-
1 136
1 000
1 710
1 000
1 000
NOTICE TO
MEMBERS
Notice is hereby given that the sixty-first Annual General Meeting of the members of Lafarge Cement Zimbabwe Limited will be held at Manresa Club,
Arcturus Road, Harare, at 11.30 hours on Friday 5 June 2015, for the following businesses:
Ordinary business
1. To receive the reports of the Directors and Auditors and to consider the financial statements for the year ended 31 December 2014.
2. To elect directors in place of those retiring in terms of the Company’s Articles of Association.
3. To determine the fees of the directors for the past year.
4. To re-appoint Auditors for the current year and to fix their remuneration for the past year.
Proxies
A member entitled to attend and vote at the meeting may appoint any person or persons, (whether a member of the company or not) to attend, speak and
vote in his stead.
Proxy forms must be lodged at the registered office of the Company not less than 48 hours before the meeting.
By order of the Board
_______________________
F. Matanhire
Company Secretary
6 March 2015
P O Box GD 160
Greendale
Manresa Works
Arcturus Road
Harare
SHAREHOLDERS
DIARY
Financial Year Ended – 31 December 2014
Annual Report
Published May 2015
Annual General Meeting
5 June 2015
Financial Year Ending – 31 December 2015
Half Yearly Interim Report
To be published September 2015
Year End Profit
To be announced March 2016
Annual Report
To be published April 2016
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 23
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PROXY
FORM
POSTAL ADDRESS
THE SECRETARY
LAFARGE CEMENT ZIMBABWE LIMITED
P.O.Box GD 160
Greendale
Harare
Zimbabwe
Sixty-First Annual General Meeting
I/We...............................................................................................................................................................
of ..................................................................................................................................................................
being a member of the above Company and entitled to vote, hereby appoint
.....................................................................................................................................................................
of ..................................................................................................................................................................
or failing him .................................................................................................................................................
of ..................................................................................................................................................................
or failing him the Chairman of the meeting as my/our proxy to vote for me/us on our behalf at the Annual General
Meeting of the Company to be held at Menresa Club at 11:30hrs on 5 June 2015 and at any adjournment thereof.
Signed this ............................. day of ............................. 2015
Signature of member: .....................................................................................................................................
NOTE: A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend, vote and speak in
their stead. A proxy need not be a member of the Company. Proxy forms must be lodged at the registered office of the
Company not less than forty-eight hours before the scheduled time of the meeting.
Change of Address
Shareholders are reminded of the need to keep the Company’s transfer secretaries up to date with their contact details.
If contact details have changed within the past year, please complete this form and hand it over to the Company
secretary at the Annual General Meeting.
Shareholder’s name in full................................................................................................................................
(Block letters please)
.....................................................................................................................................................................
New address...................................................................................................................................................
Block letters please)
.....................................................................................................................................................................
.....................................................................................................................................................................
.....................................................................................................................................................................
Email address.................................................................................................................................................
Shareholder’s signature....................................................................................................................................
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 25
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LAFARGE CEMENT ZIMBABWE LIMITED
FINANCIAL
STATEMENTS
for the year ended 31 December 2014
CONTENTS
Directors’ responsibility for financial reporting
Report of the independent auditors
Statement of profit or loss and other comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
29
30
32
33
34
36
37
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LAFARGE ZIMBABWE
DIRECTORS’ RESPONSIBILITY
FOR FINANCIAL REPORTING
The Directors of the Company are responsible for the maintenance of adequate accounting records and
the preparation of the annual financial statements and related information. The financial statements
have been prepared in accordance with International Financial Reporting Standards and comply with
the disclosure requirements of the Companies Act (Chapter 24:03), the relevant statutory instruments
(SI 33/99 and SI 62/96) and the Zimbabwe Stock Exchange Listing Requirements. The Company’s
independent external auditors, Deloitte & Touche, have audited the financial statements.
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 safeguard,
verify and maintain accountability of assets and to prevent and detect material misstatements and
losses. 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.
The financial statements have been prepared on the going concern basis. The Directors have reviewed
the Company’s budget and projected cash flows for the year ending 31 December 2015. On the basis
of this review and an assessment of the Company’s current financial position, nothing has come to
the attention of the Directors to indicate that the Company will not remain a going concern for the
foreseeable future.
The financial statements for the year ended 31 December 2014 were approved by the Board of
Directors on 6 March 2015 and signed on its behalf by:
J. Shoniwa
A. Tantawi
Chairman
6 March 2015
Chief Executive Officer
6 March 2015
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 29
P O Box 267
Harare
Zimbabwe
Deloitte & Touche
West Block
Borrowdale Office Park
Borrowdale Road
Harare
Tel:
+263 (0)8677 000261
+263 (0)8644 041005
Fax: +263 (0)4 852130
www.deloitte.com
REPORT OF THE INDEPENDENT AUDITORS
TO THE MEMBERS OF LAFARGE
CEMENT ZIMBABWE LIMITED
We have audited the accompanying financial statements of Lafarge Cement Zimbabwe Limited (“the Company”) as set out on pages
32 to 62, which comprise the statement of financial position as at 31 December 2014, the statement of profit or loss and other
comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and a summary
of significant accounting policies and other explanatory information.
Directors’ responsibility for the financial statements
The Company’s Directors are responsible for the preparation and fair presentation of these financial statements in accordance with
International Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24:03), statutory instruments
SI 33/99 and SI 62/96 and the Zimbabwe Stock Exchange Listing Requirements, and for such internal controls as are determined
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on these 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 the auditor’s judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
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.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of Lafarge Cement Zimbabwe
Limited as at 31 December 2014 and its financial performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards.
Report on other legal and regulatory requirements
In our opinion, the financial statements have been prepared, in all material respects, in accordance with the disclosure requirements
of the Companies Act (Chapter 24:03), statutory instruments SI 33/99 and SI 62/96 and the Zimbabwe Stock Exchange Listing
Requirements.
Deloitte & Touche
Chartered Accountants (Zimbabwe)
Harare
6 March 2015
A full list of partners and directors is available on request
Member of Deloitte Touche Tohmatsu
PAGE 30 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
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LAFARGEMORE
ZIMBABWE
LAFARGE ZIMBABWE
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2014
Revenue
Notes
2014
2013
5
60,448,745
67,601,367
(50,754,112)
(50,409,898)
9,694,633
17,191,469
7
1,234,256
(1,600,039)
(7,194,887)
(1,082,383)
240,565
(331,556)
(1,861,518)
(7,344,712)
(1,040,898)
(1,000,000)
220,631
10
1,292,145
5,833,416
8
(934,350)
(692,677)
357,795
5,140,739
(276,845)
(1,648,269)
80,950
3,492,470
-
-
80,950
3,492,470
80,000,000
80,000,000
0.001
0.044
Cost of sales
Gross profit
Other gains / (losses)
Distribution expenses
Administration expenses
Retrenchment costs
Contribution to community share ownership trust
Other income
Profit before interest and tax
Finance costs
6
Profit before tax
Income tax expense
9
Profit for the year
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
$
$
Earnings per share
Number of shares
Basic earnings per share ($ per share)
PAGE 32 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
11
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2014
Notes
2014
2013
12
12.3
15
37,889,349
60,264
452,354
35,762,254
21,653
1,139,373
38,401,967
36,923,280
22,479,628
1,910,992
4,932,288
322,943
1,893,251
18,222,829
1,670,821
7,683,503
1,523,510
Total current assets
31,539,102
29,100,663
Total assets
69,941,069
66,023,943
800,000
10,664,627
47,785
26,061,086
800,000
10,676,939
71,677
25,943,932
37,573,498
37,492,548
7,096,632
808,263
6,819,787
808,263
7,904,895
7,628,050
5,315,505
2,005,178
10,419,491
4,839,030
1,883,472
5,241,768
3,192,275
8,834,931
1,000,000
893,258
1,741,113
Total current liabilities
24,462,676
20,903,345
Total equity and liabilities
69,941,069
66,023,943
$
$
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Non-current portion of other receivables
Total non-current assets
Current assets
Inventories
Prepayments and deposits
Trade and other receivables
Current tax asset
Cash and bank balances
13
14
15
16
EQUITY AND LIABILTIES
Capital and reserves
Issued capital
Revaluation reserve
Share-based payment reserve
Retained earnings
17
18
18
19
Total equity
Non-current liabilities
Deferred tax
Provision for quarry rehabilitation
9.2
20.1
Total non-current liabilities
Current liabilities
Trade and other payables
Accrued expenses
Related party payables
Borrowings
Current tax payable
Provisions and other accruals
21
22
23
20
J. Shoniwa
A. Tantawi
Chairman
6 March 2015
Chief Executive Officer
6 March 2015
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 33
LAFARGE ZIMBABWE
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2014
Issued capital
$
Revaluation reserve
$
Share based
payment reserve
$
800,000
10,914,209
95,569
Profit for the year
-
-
-
Other comprehensive income for the year, net of tax
-
-
-
Total comprehensive income for the year
-
-
-
Transfer from share-based payments to retained earnings
-
-
(23,892)
Transfer from revaluation reserve to retained earnings
-
(237,270)
-
Balance at 1 January 2013
Balance at 31 December 2013
800,000
10,676,939
71,677
Profit for the year
-
-
-
Other comprehensive income for the year, net of tax
-
-
-
Total comprehensive income for the year
-
-
-
Transfer from share-based payments to retained earnings
-
-
(23,892)
Transfer from revaluation reserve to retained earnings
-
(12,312)
-
800,000
10,664,627
47,785
Balance at 31 December 2014
PAGE 34 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
Retained earnings
Total
22,190,300
34,000,078
3,492,470
3,492,470
-
-
3,492,470
3,492,470
23,892
-
237,270
-
25,943,932
37,492,548
80,950
80,950
-
-
80,950
80,950
23,892
-
12,312
-
26,061,086
37,573,498
$
$
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 35
LAFARGE ZIMBABWE
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2014
Notes
2014
2013
80,950
3,492,470
276,845
1,648,269
$
$
Cash flows from operating activities
Profit for the year
Adjustments for:
Income tax expense recognised in profit or loss
Finance costs recognised in profit or loss
Loss / (profit) on disposal of property, plant and equipment
Write-offs of property, plant and equipment
934,350
692,677
46,929
(38,379)
6,550
31,448
Depreciation expense
3,771,098
3,958,712
Amortisation of quarry stripping costs
1,008,590
3,782,791
Amortisation of intangible assets
28,289
10,143
(1,281,185)
369,935
4,872,416
13,948,066
(4,256,799)
(1,855,681)
Decrease / (increase) in trade and other receivables
3,438,234
(5,275,511)
(Increase) / decrease in prepayments and deposits
(240,171)
93,709
Increase in trade, related party and other payables, net of unrealised exchange
gains
(Decrease) / increase in accrued expenses
2,939,482
3,307,861
(1,187,097)
1,402,079
142,359
(67,843)
Cash generated from operations
5,708,424
11,552,680
Finance costs paid
(934,350)
(692,677)
Income taxes paid
(1,216,201)
(1,788,564)
3,557,873
9,071,439
Purchase of property, plant and equipment (replacement)
(2,217,763)
(3,718,658)
Capitalised quarry stripping costs
(4,942,901)
(6,964,892)
Net foreign exchange (gains) / losses
Net cash from operations before working capital changes
Movements in working capital:
Increase in inventories
Increase / (decrease) in provisions
Net cash generated by operating activities
Cash flows from investing activities
Additions of intangible assets
(66,900)
(6,372)
Proceeds from disposal of property, plant and equipment
200,402
1,644,555
(7,027,162)
(9,045,367)
Increase / (repayment) of short term borrowings
3,839,030
(1,354,835)
Net cash generated from / (used in) financing activities
3,839,030
(1,354,835)
Net increase / (decrease) in cash and cash equivalents
369,741
(1,328,763)
Cash and cash equivalents at the beginning of the year
1,523,510
2,852,273
1,893,251
1,523,510
Net cash used in investing activities
Cash flows from financing activities
Cash and cash equivalents at the end of the year
PAGE 36 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
16
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
1. GENERAL INFORMATION
Lafarge Cement Zimbabwe Limited (“the Company”) is incorporated
in Zimbabwe and is engaged in the manufacture and distribution of
cement and allied products. Its parent and ultimate holding company
is Lafarge S.A., a French company which is listed on the Euronext stock
exchange. The address of its registered office and principal business is
Manresa Works, Arcturus Road, Greendale, Harare, Zimbabwe.
The Company’s financial statements are presented in the United States
dollar, which is also the functional currency.
2. APPLICATION OF NEW AND REVISED INTERNATIONAL
FINANCIAL REPORTING STANDARDS (IFRSs)
2.1 New and revised IFRSs mandatorily effective at the end of
the reporting period with no material effect on the reported
amounts and disclosures in the current period or prior period
IFRIC 21 Levies (issued May 2013, effective annual periods beginning
on or after 1 January 2014)
Provides guidance on when to recognise a liability for a levy imposed
by a government, both for levies that are accounted for in accordance
with IAS 37 Provisions, Contingent Liabilities and Contingent Assets
and those where the timing and amount of the levy is certain.
The interpretation identifies the obligating event for the recognition
of a liability as the activity that triggers the payment of the levy in
accordance with the relevant legislation. It provides the following
guidance on recognition of a liability to pay levies:
• The liability is recognised progressively if the obligating event
occurs over a period of time
• If an obligation is triggered on reaching a minimum threshold, the
liability is recognised when that minimum threshold is reached.
The application of this IFRS does not have a material impact on the
Company’s financial statements, as the Company does not have any
levies imposed on it by government that require accounting treatments
proposed by IFRIC 21.
2.2 Amendments to IFRSs mandatorily effective at the end of
the reporting period with no material effect on the reported
amounts and disclosures in the current period or prior period
IAS 32 Financial Instruments: Presentation (amended December
2011, effective annual periods beginning on or after 1 January 2014)
Amends IAS 32 Financial Instruments: Presentation to clarify certain
aspects because of diversity in application of the requirements on
offsetting, focused on four main areas:
• the meaning of ‘currently has a legally enforceable right of set-off’
• the application of simultaneous realisation and settlement
• the offsetting of collateral amounts
• the unit of account for applying the offsetting requirements.
The application of this IFRS does not have a material effect on the
Company’s financial statements, as the Company does not offset any
of its financial instruments.
Investment Entities (amendments to IFRS 10, IFRS 12 and IAS 27)
(issued October 2012, effective annual periods beginning on or after
1 January 2014)
Amends IFRS 10 Consolidated Financial Statements, IFRS 12
Disclosure of Interests in Other Entities and IAS 27 Separate Financial
Statements to:
• provide ‘investment entities’ (as defined) an exemption from the
consolidation of particular subsidiaries and instead require that
an investment entity measure the investment in each eligible
subsidiary at fair value through profit or loss in accordance with
IFRS 9 Financial Instruments or IAS 39 Financial Instruments:
Recognition and Measurement
• require additional disclosure about why the entity is considered
an investment entity, details of the entity’s unconsolidated
subsidiaries, and the nature of relationship and certain
transactions between the investment entity and its subsidiaries
• require an investment entity to account for its investment in a
relevant subsidiary in the same way in its consolidated and
separate financial statements (or to only provide separate financial
statements if all subsidiaries are unconsolidated).
The application of this IFRS does not have a material effect on the
Company’s financial statements, as it is not an investment entity.
Recoverable Amount Disclosures for Non-Financial Assets
(amendments to IAS 36, issued May 2013, effective annual periods
beginning on or after 1 January 2014)
Amends IAS 36 Impairment of Assets to reduce the circumstances
in which the recoverable amount of assets or cash-generating units
is required to be disclosed, clarify the disclosures required, and to
introduce an explicit requirement to disclose the discount rate used
in determining impairment (or reversals) where recoverable amount
(based on fair value less costs of disposal) is determined using a
present value technique.
The application of this IFRS does not have an effect on the Company’s
financial statements, as there were no impairments or impairment
reversals arising on its non-financial assets during the year.
Novation of Derivatives and Continuation of Hedge Accounting
(amendments to IAS 39, issued June 2013, effective annual periods
beginning on or after 1 January 2014)
Amends IAS 39 Financial Instruments: Recognition and Measurement
to make it clear that there is no need to discontinue hedge accounting
if a hedging derivative is novated, provided certain criteria are met.
A novation indicates an event where the original parties to a derivative
agree that one or more clearing counterparties replace their original
counterparty to become the new counterparty to each of the parties.
In order to apply the amendments and continue hedge accounting,
novation to a central counterparty (CCP) must happen as a consequence
of laws or regulations or the introduction of laws or regulations.
The application of this IFRS does not have an effect on the Company’s
financial statements, as the Company does not make use of derivatives
or hedge accounting.
2.3 New, revised and amended IFRSs mandatorily effective at
the end of the reporting period with a material effect on the
reported amounts and disclosures in the current and prior
period
There were no new revised or amended IFRSs mandatorily effective
at the end of the reporting period that had a material effect on the
reported amounts and disclosures in the financial statements.
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 37
LAFARGE ZIMBABWE
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(CONTINUED)
2.4New, revised and amended IFRSs in issue, but not yet
mandatorily effective at the end of the reporting period and
not yet adopted
IFRS 9 Financial Instruments (issued November 2009, no stated
effective date)
IFRS 9 introduces new requirements for classifying and measuring
financial assets, as follows:
• debt instruments meeting both a ‘business model’ test and a ‘cash
flow characteristics’ test are measured at amortised cost (the use
of fair value is optional in some limited circumstances);
• investments in equity instruments can be designated as ‘fair value
through other comprehensive income’ with only dividends being
recognised in profit or loss;
• all other instruments (including all derivatives) are measured at
fair value with changes recognised in the profit or loss; and
• the concept of ‘embedded derivatives’ does not apply to financial
assets within the scope of the standard and the entire instrument
must be classified and measured in accordance with the above
guidelines.
The future application of this IFRS will not have a material impact
on the Company’s financial statements, as the Company currently
measures its borrowings at amortised cost, does not have any
investments in equity instruments and does not have any financial
instruments with embedded derivatives.
IFRS 9 Financial Instruments (issued October 2010, no stated
effective date)
This is a revised version of IFRS 9 incorporating revised requirements
for the classification and measurement of financial liabilities, and
carrying over the existing derecognition requirements from IAS 39
Financial Instruments: Recognition and Measurement. The revised
financial liability provisions maintain the existing amortised cost
measurement basis for most liabilities. New requirements apply
where an entity chooses to measure a liability at fair value through
profit or loss – in these cases, the portion of the change in fair value
related to changes in the entity’s own credit risk is presented in other
comprehensive income rather than within profit or loss.
measurement requirements. Notwithstanding the removal of an
effective date, each standard remains available for application.
The future application of this IFRS will not have a material impact on
the Company’s financial statements, as the Company does not engage
in transactions that give rise to hedge accounting.
IFRS 9 Financial Instruments (issued July 2014, effective annual
periods beginning on or after 1 January 2018, early application
permitted)
This is a finalised version of IFRS 9 which contains accounting
requirements for financial instruments, replacing IAS 39 Financial
Instruments:
Recognition and Measurement. The standard contains requirements
in the following areas:
Classification and measurement:
Financial assets are classified by reference to the business model within
which they are held and their contractual cash flow characteristics.
The 2014 version of IFRS 9 introduces a ‘fair value through other
comprehensive income’ category for certain debt instruments.
Financial liabilities are classified in a similar manner to under IAS
39, however there are differences in the requirements applying to the
measurement of an entity’s own credit risk.
Impairment:
The 2014 version of IFRS 9 introduces an ‘expected credit loss’
model for the measurement of the impairment of financial assets, so
it is no longer necessary for a credit event to have occurred before a
credit loss is recognised.
Hedge accounting:
Introduces a new hedge accounting model that is designed to be more
closely aligned with how entities undertake risk management activities
when hedging financial and non-financial risk exposures.
Derecognition:
The requirements for the derecognition of financial assets and
liabilities are carried forward from IAS 39.
The future application of this IFRS will not have a material impact
on the Company’s financial statements, as the Company currently
measures its borrowings at amortised cost and has no future intention
to measure them at fair value.
The future application of this IFRS is not expected to have a material
impact on the Company’s financial statements, as it currently complies
with IAS 39 Financial Instruments: Measurement requirements, and
does not have any complicated financial instruments.
IFRS 9 Financial Instruments (Hedge Accounting and amendments
to IFRS 9, IFRS 7 and IAS 39) (2013) (issued November 2009, no
stated effective date)
A revised version of IFRS 9 which:
• introduces a new chapter to IFRS 9 on hedge accounting, putting
in place a new hedge accounting model that is designed to be
more closely aligned with how entities undertake risk management
activities when hedging financial and non-financial risk exposures
• permits an entity to apply only the requirements introduced in
IFRS 9 (2010) for the presentation of gains and losses on financial
liabilities designated as at fair value through profit or loss without
applying the other requirements of IFRS 9, meaning the portion
of the change in fair value related to changes in the entity’s own
credit risk can be presented in other comprehensive income rather
than within profit or loss
• removes the mandatory effective date of IFRS 9 (2013), IFRS
9 (2010) and IFRS 9 (2009), leaving the effective date open
pending the finalisation of the impairment and classification and
IFRS 14 Regulatory Deferral Accounts (applicable to an entity’s first
annual IFRS financial statements for a period beginning on or after
1 January 2016, issued January 2014, effective annual periods
beginning on or after 1 January 2016, early application permitted)
PAGE 38 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
IFRS 14 permits an entity which is a first-time adopter of International
Financial Reporting Standards to continue to account, with some
limited changes, for ‘regulatory deferral account balances’ in
accordance with its previous GAAP, both on initial adoption of IFRS
and in subsequent financial statements.
The future application of this IFRS will not have a material impact on
the Company’s financial statements, as the Company does not have
regulatory deferral account balances related to the provision of goods
or services subject to rate regulation.
IFRS 15 Revenue from Contracts with Customers (issued May 2014
and applicable to an entity’s first annual IFRS financial statements
for a period beginning on or after 1 January 2017, early application
permitted)
IFRS 15 provides a single, principles based five-step model to be
applied to all contracts with customers. The five steps in the model
are as follows:
• identify the contract with the customer;
• identify the performance obligations in the contract;
• determine the transaction price;
• allocate the transaction price to the performance obligations in
the contracts; and
• recognise revenue when (or as) the entity satisfies a performance
obligation.
Guidance is provided on topics such as the point in which revenue is
recognised, accounting for variable consideration, costs of fulfilling
and obtaining a contract and various related matters. New disclosures
about revenue are also introduced.
IFRS 15 will replace IAS 11 Construction Contracts, IAS 18 Revenue,
IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the
Construction of Real Estate, IFRIC 18 Transfer of Assets to Customers
and SIC 31 Revenue - Barter Transactions Involving Advertising
Services.
The future application of this IFRS will result in the Company disclosing
sufficient information to enable users of financial statements to
understand the nature, amount, timing and uncertainty of revenue
and cash flows arising from contracts with customers.
IAS 19 Employee Benefits (amended June 2011, effective annual
periods beginning on or after July 2014)
Amended IAS 19 Employee Benefits with revised requirements for
pensions and other post-retirement benefits, termination benefits and
other changes.
The key amendments included:
• requiring the recognition of changes in the net defined benefit
liability (asset) including immediate recognition of defined benefit
cost, disaggregation of defined benefit cost into components,
recognition of remeasurements in other comprehensive income,
plan amendments, curtailments and settlements (eliminating the
‘corridor approach’ permitted by the existing IAS 19)
• introducing enhanced disclosures about defined benefit plans
• modifying accounting for termination benefits, including
distinguishing benefits provided in exchange for service and
benefits provided in exchange for the termination of employment
and affect the recognition and measurement of termination
benefits
• clarifying various miscellaneous issues, including the classification
of employee benefits, current estimates of mortality rates, tax and
administration costs and risk-sharing and conditional indexation
features
• incorporating other matters submitted to the IFRS Interpretations
Committee.
The future application of this IFRS will not have a material effect
on the Company’s financial statements, with respect to accounting
for defined benefit plans, as it does not operate or participate in
defined benefit pension schemes. The entity had already started
distinguishing benefits provided in exchange for service and benefits
provided in exchange for the termination of employment in prior
financial statements.
Annual Improvements 2010-2012 Cycle (applicable to annual periods
beginning on or after 1 July 2014, effective financial reporting periods
beginning on or after July 2014)
Makes amendments to the following standards:
• IFRS 2 — Amends the definitions of ‘vesting condition’ and
‘market condition’ and adds definitions for ‘performance condition’
and ‘service condition’
• IFRS 3 — Require contingent consideration that is classified as
an asset or a liability to be measured at fair value at each reporting
date
• IFRS 8 — Requires disclosure of the judgements made by
management in applying the aggregation criteria to operating
segments, clarify reconciliations of segment assets only required
if segment assets are reported regularly
• IFRS 13 — Clarifies that issuing IFRS 13 and amending IFRS 9
and IAS 39 did not remove the ability to measure certain shortterm receivables and payables on an undiscounted basis (amends
basis for conclusions only)
• IAS 16 and IAS 38 — Clarifies that the gross amount of property,
plant and equipment is adjusted in a manner consistent with a
revaluation of the carrying amount IAS 24 — Clarify how payments
to entities providing management services are to be disclosed
Annual Improvements 2011-2013 Cycle (applicable to annual periods
beginning on or after 1 July 2014, effective financial reporting periods
beginning on or after July 2014)
Makes amendments to the following standards:
• IFRS 1 — Clarifies which versions of IFRSs can be used on initial
adoption (amends basis for conclusions only)
• IFRS 3 — Clarifies that IFRS 3 excludes from its scope the
accounting for the formation of a joint arrangement in the financial
statements of the joint arrangement itself
• IFRS 13 — Clarifies the scope of the portfolio exception in
paragraph 52
• IAS 40 — Clarifies the interrelationship of IFRS 3 and IAS 40
when classifying property as investment property or owneroccupied property
Accounting for Acquisitions of Interests in Joint Operations (issued
May 2014, applicable to annual periods beginning on or after 1
January 2016)
Amends IFRS 11 Joint Arrangements to require an acquirer of an
interest in a joint operation in which the activity constitutes a business
(as defined in IFRS 3 Business Combinations) to:
• apply all of the business combinations accounting principles in
IFRS 3 and other IFRSs, except for those principles that conflict
with the guidance in IFRS 11
• disclose the information required by IFRS 3 and other IFRSs for
business combinations.
The amendments apply both to the initial acquisition of an interest
in joint operation, and the acquisition of an additional interest in a
joint operation (in the latter case, previously held interests are not
remeasured).
Clarification of Acceptable Methods of Depreciation and Amortisation
(amendments to IAS 16 and IAS 38, applicable to annual periods
beginning on or after 1 January 2016)
Amends IAS 16 Property, Plant and Equipment and IAS 38 Intangible
Assets to:
• clarify that a depreciation method that is based on revenue that
is generated by an activity that includes the use of an asset is not
appropriate for property, plant and equipment;
• introduce a rebuttable presumption that an amortisation method
that is based on the revenue generated by an activity that includes
the use of an intangible asset is inappropriate, which can only
be overcome in limited circumstances where the intangible
asset is expressed as a measure of revenue, or when it can be
demonstrated that revenue and the consumption of the economic
benefits of the intangible asset are highly correlated;
• add guidance that expected future reductions in the selling price
of an item that was produced using an asset could indicate the
expectation of technological or commercial obsolescence of the
asset, which, in turn, might reflect a reduction of the future
economic benefits embodied in the asset.
Agriculture: Bearer Plants (amendments to IAS 16 and IAS 41,
applicable to annual periods beginning on or after 1 January 2016)
Amends IAS 16 Property, Plant and Equipment and IAS 41 Agriculture
to:
• include ‘bearer plants’ within the scope of IAS 16 rather than IAS
41, allowing such assets to be accounted for a property, plant
and equipment and measured after initial recognition on a cost or
revaluation basis in accordance with IAS 16;
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 39
LAFARGE ZIMBABWE
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(CONTINUED)
Agriculture: Bearer Plants (amendments to IAS 16 and IAS 41,
applicable to annual periods beginning on or after 1 January 2016)
(continued)
• introduce a definition of ‘bearer plants’ as a living plant that
is used in the production or supply of agricultural produce, is
expected to bear produce for more than one period and has a
remote likelihood of being sold as agricultural produce, except for
incidental scrap sales; and
• clarify that produce growing on bearer plants remains within the
scope of IAS 41.
Equity Method in Separate Financial Statements (amendments to
IAS 27, applicable to annual periods beginning on or after 1 January
2016)
Amends IAS 27 Separate Financial Statements to permit investments
in subsidiaries, joint ventures and associates to be optionally accounted
for using the equity method in separate financial statements.
Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture (amendments to IFRS 10 and IAS 28, applicable on
a prospective basis to a sale or contribution of assets occurring in
annual periods beginning on or after 1 January 2016)
Amends IFRS 10 Consolidated Financial Statements and IAS 28
Investments in Associates and Joint Ventures (2011) to clarify the
treatment of the sale or contribution of assets from an investor to its
associate or joint venture, as follows:
• requires full recognition in the investor’s financial statements
of gains and losses arising on the sale or contribution of assets
that constitute a business (as defined in IFRS 3 Business
Combinations); and
• requires the partial recognition of gains and losses where the assets
do not constitute a business, i.e. a gain or loss is recognised only
to the extent of the unrelated investors’ interests in that associate
or joint venture.
These requirements apply regardless of the legal form of the
transaction, e.g. whether the sale or contribution of assets occurs by
an investor transferring shares in an subsidiary that holds the assets
(resulting in loss of control of the subsidiary), or by the direct sale of
the assets themselves.
Annual Improvements 2012-2014 Cycle (applicable to annual periods
beginning on or after 1 July 2016)
Makes amendments to the following standards:
• IFRS 5 — Adds specific guidance in IFRS 5 for cases in which
an entity reclassifies an asset from held for sale to held for
distribution or vice versa and cases in which held-for-distribution
accounting is discontinued;
• IFRS 7 — Additional guidance to clarify whether a servicing
contract is continuing involvement in a transferred asset, and
clarification on offsetting disclosures in condensed interim
financial statements;
• IAS 9 — Clarifies that the high quality corporate bonds used in
estimating the discount rate for post-employment benefits should
be denominated in the same currency as the benefits to be paid;
• IAS 34 — Clarifies the meaning of ‘elsewhere in the interim
report’ and requires a cross-reference.
Disclosure Initiative (amendments to IAS 1, effective for annual
periods beginning on or after 1 January 2016)
Amends IAS 1 Presentation of Financial Statements to address
perceived impediments to preparers exercising their judgement in
presenting their financial reports by making the following changes:
PAGE 40 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
• clarification that information should not be obscured by aggregating
or by providing immaterial information, materiality considerations
apply to the all parts of the financial statements, and even when a
standard requires a specific disclosure, materiality considerations
do apply;
• clarification that the list of line items to be presented in these
statements can be disaggregated and aggregated as relevant
and additional guidance on subtotals in these statements and
clarification that an entity’s share of OCI of equity-accounted
associates and joint ventures should be presented in aggregate as
single line items based on whether or not it will subsequently be
reclassified to profit or loss; and
• additional examples of possible ways of ordering the notes to clarify
that understandability and comparability should be considered
when determining the order of the notes and to demonstrate
that the notes need not be presented in the order so far listed in
paragraph 114 of IAS 1.
Investment Entities: Applying the Consolidation Exception
(amendments to IFRS 10, IFRS 12 and IAS 28, effective for annual
periods beginning on or after 1 January 2016)
Amends IFRS 10 Consolidated Financial Statements, IFRS 12
Disclosure of Interests in Other Entities and IAS 28 Investments in
Associates and Joint Ventures (2011) to address issues that have
arisen in the context of applying the consolidation exception for
investment entities by clarifying the following points:
• The exemption from preparing consolidated financial statements
for an intermediate parent entity is available to a parent entity
that is a subsidiary of an investment entity, even if the investment
entity measures all of its subsidiaries at fair value.
• A subsidiary that provides services related to the parent’s
investment activities should not be consolidated if the subsidiary
itself is an investment entity.
• When applying the equity method to an associate or a joint
venture, a non-investment entity investor in an investment entity
may retain the fair value measurement applied by the associate or
joint venture to its interests in subsidiaries.
• An investment entity measuring all of its subsidiaries at fair value
provides the disclosures relating to investment entities required
by IFRS 12.
3. SIGNIFICANT ACCOUNTING POLICIES
3.1 Statement of compliance
The financial statements of the Company have been prepared in
accordance with International Financial Reporting Standards (IFRS).
3.2 Basis of preparation
The financial statements have been prepared on the historical cost
basis except for certain property, plant and equipment items that are
measured at revalued amounts, and financial instruments measured
at amortised cost, as explained in the accounting policies below.
Historical cost is generally based on the fair value of the consideration
given in exchange for assets.
The principal accounting policies are set out below.
3.3Revenue
3.6 Retirement benefit costs
Revenue is measured at the fair value of the consideration received
or receivable. Revenue is reduced for estimated customer returns,
rebates and other similar allowances.
Payments to defined contribution retirement benefit plans are
recognised as an expense when employees have rendered services
entitling them to the contributions.
Sale of goods
Revenue from the sale of goods is recognised when all the following
conditions are satisfied:
• the Company has transferred to the buyer the significant risks and
rewards of ownership of the goods;
• the Company retains neither continuing managerial involvement
to the degree usually associated with ownership nor effective
control over the goods sold;
• the amount of revenue can be measured reliably;
• it is probable that the economic benefits associated with the
transaction will flow to the Company; and
• the costs incurred or to be incurred in respect of the transaction
can be measured reliably.
Retirements benefits are provided for the Company’s employees
through an independently administered defined contribution fund
and the Zimbabwe government’s National Social Security Authority.
With the Company’s independent fund, contributions are charged to
profit or loss so as to spread the cost of pension over the employee’s
working life within the Company. The amounts payable to the National
Social Security Authority are determined by the systematic recognition
of legislated contributions. Payments to the two retirement benefit
schemes are charged as an expense as they fall due.
Specifically, revenue from the sale of goods is recognised when goods
are delivered and legal title is passed.
Rendering of services
Revenue arising from transport services rendered in the delivery of
cement to customers is recognised when the outcome the transaction
involving the rendering of the transport service can be estimated
reliably, by reference to the stage of completion of the transport
service at the end of the reporting period.
Interest income
Interest income from financial assets is recognised when it is probable
that the economic benefits will flow to the Company and the amount
of income can be measured reliably. Interest income is accrued on
a time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life
of the financial asset to that asset’s net carrying amount on initial
recognition.
Rental income
Rental income from the use of staff housing is recognised on the
basis of the amount of time that employees have enjoyed use of the
Company’s staff houses.
3.4 Foreign currencies
In preparing the financial statements, transactions in currencies
other than the Company’s functional currency (foreign currencies)
are recognised at the rates of exchange prevailing at the dates
of the transactions. At the end of each reporting period, monetary
items denominated in foreign currencies are retranslated at the rates
prevailing at that 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. Nonmonetary items that are measured in terms of historical cost in a
foreign currency are not retranslated.
3.5 Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or production of qualifying assets, which are assets that necessarily
take a substantial period of time to get ready for their intended use
or sale, are added to the cost of those assets, until such time as the
assets are substantially ready for their intended use or sale.
Investment income earned on the temporary investment of specific
borrowings pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation. All other borrowing
costs are recognised in profit or loss in the period in which they are
incurred.
3.7 Share-based payment arrangements
Equity-settled share-based payments to employees are measured at
the fair value of the equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled sharebased payments is expensed on a straight line basis over the vesting
period, based on the Company’s estimate of equity instruments that
will eventually vest, with a corresponding increase in equity. At the
end of each reporting period, the Company revises its estimate of the
number of equity instruments expected to vest. 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 the equity-settled employee benefits
reserve.
3.8Taxation
Income tax expense represents the sum of tax currently payable and
deferred tax.
Current tax
The tax currently payable is based on taxable income for the year.
Taxable income differs from profit as reported in the income statement
because it excludes items of income or expense that are taxable
or deductible in other years and items that are never taxable or
deductible. The Company’s liability for current tax is calculated using
tax rates that have been enacted or substantively enacted by the end
of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the consolidated financial
statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally recognised for
all taxable temporary differences. Deferred tax assets are generally
recognised for all deductible temporary differences to the extent that
it is probable that taxable income will be available against which those
deductible temporary differences can be utilised. Such deferred tax
assets and liabilities are not recognised if the temporary difference
arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction
that affects neither the taxable income nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of
each reporting period 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 that
are expected to apply in the period in which the liability is settled or
the asset realised, based on tax rates (and tax laws) that have been
enacted or substantively enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 41
LAFARGE ZIMBABWE
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(CONTINUED)
Deferred tax (continued)
tax consequences that would follow from the manner in which the
Company expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities.
Current and deferred tax for the period
Current and deferred tax are recognised in profit or loss, except when
they relate to items that are recognised in other comprehensive income
or directly in equity, in which case, the current and deferred tax are
also recognised in other comprehensive income or directly in equity
respectively. Where current tax or deferred tax arises from the initial
accounting for a business combination, the tax effect is included in
the accounting for the business combination.
3.9 Property, plant and equipment
Land and buildings held for use in the production or supply of goods or
services, or for administrative purposes, are stated in the statement of
financial position at their revalued amounts, being the fair value at the
date of revaluation, less any subsequent accumulated depreciation
and subsequent accumulated impairment losses. Revaluations are
performed with sufficient regularity such that the carrying amounts do
not differ materially from those that would be determined using fair
values at the end of each reporting period.
Any revaluation increase arising on the revaluation of such land
and buildings is recognised in other comprehensive income and
accumulated in equity, 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 the revaluation of such land and buildings
is recognised in profit or loss to the extent that it exceeds the balance,
if any, held in the properties revaluation reserve relating to a previous
revaluation of that asset.
Depreciation on revalued buildings is recognised in profit or loss. On the
subsequent sale or retirement of a revalued property, the attributable
revaluation surplus remaining in the properties revaluation reserve is
transferred directly to retained earnings.
Freehold land and capital work in progress items are not depreciated.
Quarry stripping costs relate to the costs incurred in removing
overburden from new limestone reserves that are currently being
opened up. Quarry stripping costs will be depreciated over the
expected lives of the new limestone mine, once extraction activities
commence.
Furniture and office equipment are stated at cost less accumulated
depreciation and accumulated impairment.
Depreciation is recognised so as to write off the cost or valuation of
assets (other than freehold land) less their residual values over their
useful lives, using the straight-line method. The estimated useful
lives, residual values and depreciation method are reviewed at the end
of each reporting period, with the effect of any changes in estimate
accounted for on a prospective basis.
Property, plant and equipment items are depreciated over their
estimated useful life. The maximum estimated useful lives are as
follows:
Buildings
50 years
Plant and machinery
15 years
Motor vehicles
5 years
Earth moving equipment
25 years
Trailers
25 years
Furniture and office equipment
8 years
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on the
disposal or retirement of an item of property, plant and equipment
is determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in profit or loss.
3.10 Intangible assets
Intangible assets with finite useful lives that are acquired separately
are carried at cost less accumulated amortisation and accumulated
impairment losses. Amortisation is recognised on a straight-line
basis over their estimated useful lives. The estimated useful life
and amortisation method are reviewed at the end of each reporting
period, with the effect of any changes in estimate being accounted
for on a prospective basis. Intangible assets with indefinite useful
lives that are acquired separately are carried at cost less accumulated
impairment losses.
An intangible asset is derecognised on disposal, or when no future
economic benefits are expected from use or disposal. Gains or losses
arising from derecognition of an intangible asset, measured as the
difference between the net disposal proceeds and the carrying
amount of the asset, are recognised in profit or loss when the asset
is derecognised.
3.11 Impairment of tangible and intangible assets other than
goodwill
At the end of each reporting period, the Company reviews the
carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered
an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of
the impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the Company estimates
the recoverable amount of the cash-generating unit to which the
asset belongs. Where a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated to individual
cash-generating units, or otherwise they are allocated to the smallest
group of cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets
not yet available for use are tested for impairment at least annually,
and whenever there is an indication that the asset may be impaired.
PAGE 42 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
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.
Where an impairment subsequently reverses, the carrying amount
of the asset (or a cash-generating unit) is increased to the revised
estimate of its recoverable amount, but 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 (or
cash-generating unit) in prior years.
A reversal of impairment loss is recognised immediately in profit
or loss, unless the relevant asset is carried at a revalued amount,
in which case the reversal of the impairment loss is treated as a
revaluation increase (see 3.9 above).
3.12Inventories
Inventories are stated at the lower of cost and net realisable value.
Costs of inventories are determined on a first-in-first-out basis. Net
realisable value represents the estimated selling price for inventories
less all estimated costs of completion and costs necessary to make
the sale.
3.13Provisions
Provisions are recognised when the Company has a present obligation
(legal or constructive) as a result of a past event, it is probable that
the Group will be required to settle the obligation, and a reliable
estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end of
the reporting period, taking into account the risks and uncertainties
surrounding the obligation. When a provision is measured using the
cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (where the effect of
the time value of money is material).
3.14 Financial Instruments
Financial assets and financial liabilities are recognised when the
Company becomes a party to the contractual provisions of the
instrument.
Financial assets and financial liabilities are initially measured at
fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other
than financial assets and financial liabilities at fair value through
profit or loss) are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial
recognition. Transaction costs directly attributable to the acquisition
of financial assets or financial liabilities at fair value through profit
or loss are recognised immediately in profit or loss.
Effective interest rate method
The effective interest method is a method of calculating the
amortised cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash receipts (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 debt instrument, or,
where appropriate, a shorter period, to the net carrying amount on
initial recognition. Income is recognised on an effective interest
basis for debt instruments other than those financial assets that
would be classified as at FVTPL.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed
or determinable payments that are not quoted in an active market.
Loans and receivables (including trade and other receivables, bank
balances and cash) are measured at amortised cost using the
effective interest method, less any impairment.
Interest income is recognised by applying the effective interest rate,
except for short-term receivables when the recognition of interest
would be immaterial.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at the end of each reporting period.
Financial assets are considered to be impaired when there is objective
evidence that, as a result of one or more events that occurred after
the initial recognition of the financial asset, the estimated future
cash flows of the investment have been affected.
For loans and receivables, objective evidence of impairment includes:
• significant financial difficulty of the issuer or counterparty; or
• breach of contract, such as a default or delinquency in interest or
principal payments; or
• it becoming probable that the borrower will enter bankruptcy or
financial re-organisation.
For certain trade receivables, assets that are assessed not to be
impaired individually are, in addition, assessed for impairment on
a collective basis. Objective evidence of impairment for a portfolio
of receivables could include the Company’s past experience of
collecting payments, an increase in the number of delayed payments
in the portfolio past the average credit period of 90 days, as well as
observable changes in national or local economic conditions that
correlate with default on receivables.
For loans and receivables, if, in a subsequent period, the amount
of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised,
the previously recognised impairment is reversed through profit or
loss to the extent that the carrying amount of the instrument at the
date the impairment is reversed does not exceed what the amortised
cost would have been had the impairment loss not been recognised.
Financial assets are classified into the following specified categories:
financial assets ‘at fair value through profit or loss’ (FVTPL), ‘heldto-maturity’ investments, ‘available-for-sale’ (AFS) financial assets
and ‘loans and receivables’. The classification depends on the
nature and purpose of the financial assets and is determined at
the time of initial recognition. All regular way purchases or sales
of financial assets are recognised and derecognised on a trade date
basis. Regular way purchases or sales are purchases or sales of
financial assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace.
Derecognition of financial assets
The 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 Company
neither transfers nor retains substantially all the risks and rewards
of ownership and continues to control the transferred asset,
the Company recognises its retained interest in the asset and an
associated liability for amounts it may have to pay. If the Company
retains substantially all the risks and rewards of ownership of a
transferred financial asset, the Company continues to recognise the
financial asset and also recognises a collateralised borrowing for the
proceeds received.
The Company did not have any financial assets other than loans and
receivables during the year.
On derecognition of a financial asset in its entirety, the difference
between the asset’s carrying amount and the sum of the consideration
3.15 Financial assets
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 43
LAFARGE ZIMBABWE
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(CONTINUED)
Derecognition of financial assets (continued)
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.
3.16 Financial liabilities and equity interests
Classification as debt or equity
Debt and equity instruments issued by the Company are classified
as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Company are recognised at the
proceeds received, net of direct issue costs.
Repurchase of the Company’s own equity instruments is recognised
and deducted directly in equity. No gain or loss is recognised in profit
or loss on the purchase, sale, issue or cancellation of the Company’s
own equity instruments.
Financial liabilities
Financial liabilities are classified as either financial liabilities ‘at
FVTPL’ or ‘other financial liabilities’.
The Company did not have any financial liabilities classified as at
FVTPL during the year.
Other financial liabilities
Other financial liabilities (including borrowings) 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.
Derecognition of financial liabilities
The Company derecognises financial liabilities when, and only when,
the 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.
4. CRITICAL ACCOUNTING JUDGMENTS AND SOURCES OF
ESTIMATION UNDCERTAINTY
In the application of the Company’s accounting policies, which are
described in note 3, the Directors are required to make judgements,
estimates and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources.
PAGE 44 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual
results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that period,
or in the period of the revision and future periods if the revision affects
both current and future periods.
4.1 Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and
other key sources of estimation uncertainty at the end of the reporting
period, that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial
year.
Useful lives of property, plant and equipment
The Company reviews the useful lives of property, plant and equipment
at the end of each reporting period. The Directors engaged independent
valuers to revalue the Company’s property, plant and equipment as
at the end of the 2012 financial year, and also re-estimated their
remaining useful lives at that point. Subsequent to this revaluation,
the Directors are of the opinion that the revised estimated useful
lives determined at that point were still reliable and relevant to the
Company’s property, plant and equipment as at 31 December 2014.
Rehabilitation provision
There have been no significant changes in the underlying assumptions
related to the quarry rehabilitation provision balance of USD 808,263
as at 31 December 2014. The Directors deem appropriate the
environmentalist’s three year interval for reassessment, in light of
the last formal reassessment done in 2012. In 2012 the Company
changed its approach to rehabilitating its quarries which resulted in
the reassessment of the provision at that time.
MORE HOUSING MORE COMPACT MORE DURABLE
MORE CONNECTED MORE BEAUTIFUL
LAFARGE ZIMBABWE
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(CONTINUED)
5.REVENUE
The following is an analysis of the Company’s revenue for the year from its products and services:
2014
2013
58,971,199
66,312,412
58,892,727
58,063,265
(2,191,688)
3,021,150
78,472
78,472
-
65,000,851
63,011,505
(1,006,108)
2,995,454
1,312,561
1,286,428
26,133
1,477,546
1,287,955
60,448,745
67,601,367
2014
2013
(46,929)
38,379
1,281,185
(369,935)
1,234,256
(331,556)
2014
2013
$
Revenue from sale of goods
- Third party
Cement sales
Discounts and rebates
Other
- Related party
Clinker sales
Cement sales
Revenue from rendering of services - transport
$
6. OTHER GAINS / (LOSSES)
Other gains / (losses) comprise the following amounts:
$
(Loss) / profit on disposal of property, plant and equipment
Net foreign exchange gains / (losses)
$
7. OTHER INCOME
Other gains / (losses) comprise the following amounts:
Rental income
Interest on staff loans
Sundry
$
149,418
19,940
71,207
$
150,112
27,054
43,465
240,565
220,631
2014
2013
8. FINANCE COSTS
Finance costs incurred during the year comprise the following amounts:
Borrowing costs on loans and bank overdrafts
Bank charges
Other borrowings related charges
PAGE 46 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
$
654,946
99,404
180,000
$
426,531
159,466
106,680
934,350
692,677
9. INCOME TAX EXPENSE
9.1 Income tax recognised in profit or loss
2014
2013
-
2,323,874
Deferred tax expense / (credit)
276,845
(675,605)
Net income tax expense
276,845
1,648,269
Profit before tax
357,795
5,140,739
Income tax expense calculated at 25.75%
Tax effect of non-deductible expenses
Tax effect of income not subject to tax
92,132
184,713
-
1,323,740
334,411
(9,882)
276,845
1,648,269
$
Current tax expense
$
The tax expense for the year can be reconciled to the accounting profit
as follows:
9.2 Deferred tax
2014
2013
6,819,787
7,495,392
276,845
(675,605)
7,096,632
6,819,787
Property, plant and equipment
Consumable stores
Provision for rehabilitation
Other
4,784,408
2,682,701
(208,128)
(162,349)
5,154,094
1,988,641
(208,128)
(114,820)
Deferred tax at the end of the year
7,096,632
6,819,787
$
Deferred tax liability at the beginning of the year
Deferred tax expense / (credit) attributable to the origination / (reversal)
of temporary differences
Deferred tax at the end of the year
$
Deferred tax comprises temporary differences from the following:
10.PROFIT BEFORE INTEREST AND TAX
Profit before interest and tax has been arrived at after charging:
2014
2013
Auditor's remuneration:
- Prior year audit disbursements approved
- Interim audit fees
- Final audit fees
86,535
2,135
13,000
71,400
83,000
13,000
70,000
Amortisation of intangible assets
28,289
10,143
3,771,098
3,620,254
150,844
3,958,712
3,799,958
158,754
60,000
35,058
2,417,950
3,040,000
10,105,769
955,738
8,067,648
1,082,383
9,060,595
787,232
7,232,465
1,040,898
$
Depreciation of property, plant and equipment:
- Cost of sales
- Administration
Directors’ fees
Technical fees (note 22)
Employee benefits expense:
- Post employment benefits (note 24)
- Short term employment benefits
- Termination benefits
$
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 47
LAFARGE ZIMBABWE
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2014
(CONTINUED)
11.EARNINGS PER SHARE
2014
2013
0.001
0.044
$
Basic earnings per share
$
11.1 Basic earnings per share
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as
follows:
2014
2013
80,950
3,492,470
2014 Shares
2013 Shares
80,000,000
80,000,000
$
Earnings used in the calculation of basic earnings per share
Weighted average number of ordinary shares for the purposes of basic
earnings per share
PAGE 48 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
$
MORE HOUSING MORE COMPACT
MORE DURABLE MORE CONNECTED MORE BEAUTIFUL
LAFARGE ZIMBABWE
NOTES TO THE FINANCIAL
STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014 (CONTINUED)
12.PROPERTY, PLANT AND EQUIPMENT
Freehold land &
buildings
$
Plant and
machinery
$
Motor vehicles
and earthmoving
equipment
$
COST / REVALUATION
12,498,799
12,634,224
4,066,726
474,908
1,586,948
49,160
Capital work in progress transfers
-
174,683
23,908
Disposals
-
-
(1,761,848)
Balance at 1 January 2013
Additions
Write-offs
-
-
-
12,498,799
14,395,855
2,377,946
Additions
474,908
675,560
183,730
Capital work in progress transfers
Balance at 31 December 2013
426,214
309,747
98,484
Disposals
-
-
(381,150)
Write-offs
-
-
-
13,399,921
15,381,162
2,279,010
-
-
-
614,423
2,407,377
766,594
-
-
(156,258)
Balance at 31 December 2013
614,423
2,407,377
610,336
Depreciation expense
614,443
2,622,620
324,245
-
-
(141,805)
1,228,866
5,029,997
792,776
As at 1 January 2013
12,498,799
12,634,224
4,066,726
As at 31 December 2013
11,884,376
11,988,478
1,767,610
As at 31 December 2014
12,171,055
10,351,165
1,486,234
Balance at 31 December 2014
ACCUMULATED DEPRECIATION
Balance at 1 January 2013
Depreciation expense
Elimination on disposals
Eliminated on disposals
Balance at 31 December 2014
CARRYING AMOUNT
PAGE 50 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
Furniture & office
equipment
Capital work in
progress
Quarry stripping
costs
Total
419,649
823,090
4,015,343
34,457,831
115,234
1,967,316
6,964,892
10,683,550
-
(198,591)
-
-
(680)
-
-
(1,762,528)
$
$
$
$
-
(31,448)
-
(31,448)
534,203
2,560,367
10,980,235
43,347,405
130,156
753,409
4,942,901
7,160,664
4,675
(896,302)
57,182
-
(11,578)
-
-
(392,728)
-
(6,550)
-
(6,550)
657,456
2,410,924
15,980,318
50,108,791
-
-
-
-
170,318
-
3,782,791
7,741,503
(94)
-
-
(156,352)
170,224
-
3,782,791
7,585,151
209,790
-
1,008,590
4,779,688
(3,592)
-
-
(145,397)
376,422
-
4,791,381
12,219,442
419,649
823,090
4,015,343
34,457,831
363,979
2,560,367
7,197,444
35,762,254
281,034
2,410,924
11,188,937
37,889,349
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 51
LAFARGE ZIMBABWE
NOTES TO THE FINANCIAL
STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014 (CONTINUED)
12.PROPERTY, PLANT AND EQUIPMENT (continued)
12.1Revaluation
In 2012, the Directors engaged an independent valuer, C.B. Richard Ellis, and revalued all of the Company’s property,
plant and equipment. The effective date of the revaluation was 31 December 2012.
12.2 Encumbrances on property, plant and equipment
The Company has provided security for its overdraft and loan facilities by way of a deed of hypothecation for $ 3 million
in favour of its bankers over Lots 1, 3a and 5 of Manresa, which had a value of $2.425 million at 31 December 2014.
12.3 Intangible assets
The intangible assets recognised in the statement of financial position relate to computer software licenses that are
amortised over 3 years.
13.INVENTORIES
2014
2013
2,838,846
8,311,774
936,807
10,684,244
1,918,489
5,840,801
2,751,505
7,894,442
22,771,671
18,405,237
(292,043)
(182,408)
22,479,628
18,222,829
2014
2013
381,922
1,529,070
102,571
1,568,250
1,910,992
1,670,821
$
Raw materials
Work in progress
Finished goods
Maintenance spares
Provision for obsolete inventory
$
The cost of inventories recognised as an expense during the year was $
14,589,448 (2013: $ 17,525,160).
14.PREPAYMENTS AND DEPOSITS
Prepayments and deposits comprise the following amounts:
$
Goods in transit
Other prepayments and deposits
PAGE 52 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
$
15.TRADE AND OTHER RECEIVABLES
2014
2013
4,498,170
6,874,386
-
231,579
$
$
Trade receivables:
- Third party
- Related party
Allowance for doubtful receivables
(797,608)
(584,781)
Net trade receivables
3,700,562
6,521,184
Other receivables - current portions
1,231,726
1,162,319
281,857
285,682
65,382
149,803
216,475
135,879
949,869
876,637
4,932,288
7,683,503
85,322
221,202
59,103
117,786
- Staff loans and advances
• Related Party (Directors and Executive Committee members)
• Other employees
- Other receivables
• Third party
Other receivables – non-current portions
- Staff loans and advances
• Related Party (Directors and Executive Committee members)
• Other employees
- Other debtors
26,219
103,416
367,032
918,171
452,354
1,139,373
15.1 Trade receivables
Trade receivables are classified as loans and receivables and are therefore measured at amortised cost. Credit terms
offered by the entity are for 14 and 30 days. Interest is charged at 11% per annum on trade receivables aged more than
60 days.
Allowances for credit losses are recognised against trade receivables over 90 days based on estimated irrecoverable
amounts determined by reference to past default experience of the counterparty and an analysis of the counterparty’s
current financial position.
Before accepting any new credit customer, the Company performs a credit vetting process. The customer is required to
have reputable business references and its directors must be in good credit standing. Credit is only offered to customers
who comply with the conditions required by the Company.
Trade receivables disclosed include amounts (see below for aged analysis) that are past due at the end of the reporting
period but against which the Company has not recognised an allowance for credit losses because they are attributable
to a related party or there has not been a significant change in the credit quality and the amounts are still considered
recoverable. In some instances, the Company does not hold any collateral or other credit enhancements over these
balances nor does it have a legal right of offset against any amounts owed by it to the counterparty.
Ageing of past due but not impaired trade receivables
2014
2013
5,313
607,291
4,865,913
978,524
612,604
5,844,437
2014
Days
2013
Days
36
28
$
30 - 60 days
60 – 90+ days
Debtor days
$
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 53
LAFARGE ZIMBABWE
NOTES TO THE FINANCIAL
STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014 (CONTINUED)
15.1 Trade receivables (continued)
Movement in provision for doubtful receivables
2014
2013
Balance at the beginning of the year
584,781
376,779
Impairment recognised on receivables
212,827
208,002
Balance at the end of the year
797,608
584,781
$
$
In determining the recoverability of a trade receivable, the Company considers any change in the credit quality of the trade
receivables from the date credit was initially granted up to the end of the reporting period. 51% of the Company’s credit
risk stems from its fifteen largest customers. The concentration of credit risk does not exceed 2% for each of the remaining
individual trade debtors, due to the customer base being large and unrelated.
$607,291 of the trade receivables aged over 90 days have not been provided for, as various mechanisms had been or
were in the process of being put in place as at 31 December 2014 to reasonably ensure recovery of those amounts.
These mainly include, but were not limited to, warehouse rental agreements, payment plans, bonds, securing of title to
properties and set off arrangements against liabilities arising with the debtors on other service agreements the Company
has with them.
Included in the allowance for doubtful debts are individually impaired trade receivables amounting to $238,836 (2013:
$229,826) that have been handed over to the Company’s lawyers. The impairment recognised represents the full extent
of the amount due. The Company does not hold any collateral over these balances.
Ageing of impaired trade receivables
2014
2013
176,733
620,875
5,809
20,878
558,094
797,608
584,781
$
60 - 90 days
90 - 120 days
120+ days
$
16.CASH AND CASH EQUIVALENTS
For the purposes of the statement of cash flows, cash and cash equivalents include cash on hand and in banks, net of
outstanding bank overdrafts. Cash and cash equivalents at the end of the reporting period, as shown in the statement of cash
flows, can be reconciled to the related items in the statement of financial position as follows:
2014
2013
1,887,428
5,823
1,517,879
5,631
1,893,251
1,523,510
$
Bank balances
Cash balances
$
17.SHARE CAPITAL
17.1 Authorised share capital
Authorised share capital comprises 100 000 000 ordinary shares of $0.01 par value each. (2013: 100 000 000 ordinary
shares of $0.01 par value each)
PAGE 54 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
17.2 Issued capital
Issued capital comprises:
2014
2013
800,000
800,000
Number of
shares Units
Share capital
Balance at 1 January 2014
80,000,000
800,000
Balance at 31 December 2014
80,000,000
800,000
$
80 000 000 fully paid shares of USD 0.01 each
$
17.2.1 Fully paid ordinary shares
$
Fully paid ordinary shares, which have a par value of $0.01 each, carry one vote per share and carry a right to participate
in any dividend declared.
17.3 Unissued share capital
Unissued shares may, by a resolution passed at an extraordinary general meeting and subject to the restrictions set out in
the Companies Act (Chapter 24:03), be issued by the Directors on such terms and conditions, and with such rights and
privileges attached thereto, as the Directors may determine.
18.RESERVES
2014
2013
10,664,627
47,785
10,676,939
71,677
10,712,412
10,748,616
2014
2013
10,676,939
10,914,209
(12,312)
(237,270)
10,664,627
10,676,939
$
Revaluation reserve
Share-based payment reserve
$
18.1 Revaluation reserve
$
Balance at the beginning of the year
Transfer to retained earnings arising from disposal of previously revalued
property, plant and equipment
Balance at the end of the year
$
The property revaluation reserve arises on the revaluation of property, plant and equipment. When revalued property, plant
and equipment are sold, the portion of the property revaluation reserve that relates to that asset, and that is effectively
realised, is transferred directly to retained earnings.
18.2 Share-based payment reserve
2014
$
Balance at beginning of the year
Transfer to retained earnings
Balance at end of the year
2013
$
71,677
95,569
(23,892)
(23,892)
47,785
71,677
The share based payment reserve relates wholly to the discount element of shares in the parent, Lafarge S.A. that were
taken up by employees of the Company under the Lafarge group’s employee share ownership scheme that was effective in
2012. The reserve is being amortised to retained earnings over a period of five years, which is the closed-trade period for
employees who were awarded the shares, commencing from the date of their award.
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 55
NOTES TO THE FINANCIAL
STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014 (CONTINUED)
19.RETAINED EARNINGS
2014
2013
25,943,932
80,950
22,190,300
3,492,470
Transfer from share-based payment reserve
23,892
23,892
Transfer from revaluation surplus
12,312
237,270
26,061,086
25,943,932
$
Balance at beginning of the year
Profit for the year
Balance at end of the year
$
In respect of the current year, the Directors have recommended that no dividend be declared in order to preserve cash for
continued business development and upkeep of plant and equipment (2013: no dividend declared).
20.PROVISIONS AND OTHER ACCRUALS
2014
2013
911,201
1,780,534
762,501
1,786,875
2,691,735
2,549,376
1,883,472
808,263
1,741,113
808,263
2,691,735
2,549,376
Quarry
rehabilitation (ii)
Technical fees
(iii)
Audit fees (iv)
Total
$
$
Balance at 1 January 2013
Provisions recognised
Reductions from payments
Reductions arising from transfers to intercompany
payables
808,263
-
1,231,606
3,040,000
(3,334,994)
30,000
83,000
(71,000)
-
2,069,869
3,123,000
(71,000)
(3,334,994)
Balance at 31 December 2013
808,263
936,612
42,000
1,786,875
-
2,417,950
(2,453,691)
86,535
(57,135)
-
2,502,350
(57,135)
(2,453,691)
808,263
900,871
71,400
1,780,534
$
Employee benefits (i)
Other provisions and accruals (note 20.1)
Current portion
Non-current portion
$
20.1 Other provisions and accruals
Provisions recognised
Reductions from payments
Reductions arising from transfers to intercompany
payables
Balance at 31 December 2014
$
$
(i) The accruals and provisions for employee benefits represent annual leave and bonus payments due to employees.
(ii) There have been no significant changes in the underlying assumptions related to the quarry rehabilitation provision balance of USD 808,263
that occurred during the year, and the environmentalist’s 3 year interval for its reassessment is still appropriate, in light of the last formal
reassessment done in 2012. In 2012 the Company changed its approach to rehabilitating its quarries which resulted in the reassessment of
the provision.
(iii)The accrual for technical fees represents technical fees payable to Lafarge SA, the ultimate parent of the Company.
(iv)The accrual for audit fees represents fees payable for external audit services received.
PAGE 56 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
LAFARGE ZIMBABWE
21.TRADE AND OTHER PAYABLES
2014
2013
Trade payables
Other payables
Customer prepayments
3,873,544
742,049
699,912
4,305,351
729,380
491,053
Total trade and other payables
5,315,505
5,525,784
$
$
Trade and other payables comprise amounts outstanding to third parties for inventories, and other services for day-to-day
operations, that were obtained on credit.
22.RELATED PARTY TRANSACTIONS AND BALANCES
22.1 Trading transactions and balances
During the year, the Company entered into the following related party transactions:
2014
2013
78,472
-
890,318
396,110
26,133
78,472
1,312,561
350,135
-
842,492
1,592,272
1,192,627
1,592,272
$
Sale of goods
- Clinker sales to Lafarge Cement Malawi Limited (fellow subsidiary)
- Clinker sales to Lafarge Cement Zambia Limited (fellow subsidiary)
- Cement sales to key management personnel
Purchases of goods
- Cement purchases from Lafarge South Africa Industries (Pty) Ltd
(South Africa) (fellow subsidiary)
- Cement purchases from Lafarge Cement Zambia Limited (fellow
subsidiary)
$
The following trade related balances were outstanding as at the end of the reporting period:
2014
2013
-
222,076
9,503
$
Amounts due from related parties
- Lafarge Cement Zambia Limited (fellow subsidiary)
- Key management personnel
$
231,579
Amounts owed to related parties
- Cement purchases from Lafarge South Africa Industries (Pty) Ltd
(South Africa) (fellow subsidiary)
- Lafarge Cement Zambia Limited (fellow subsidiary)
60,561
-
238,891
284,017
299,452
284,017
Sales of goods to related parties were made at the Company’s usual list prices. Purchases were made at market prices.
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 57
LAFARGE ZIMBABWE
NOTES TO THE FINANCIAL
STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014 (CONTINUED)
22.2 Non-trading transactions and balances
The Company is charged technical fees by the ultimate parent, Lafarge SA, of which amounts for the year inclusive of the
related withholding tax were as follows:
2014
2013
2,417,950
3,040,000
$
Technical fees
$
As at year end the following non-trade related amounts were (due from) / payable to fellow group subsidiaries:
2014
2013
(158,027)
(33,551)
124,529
25,729
40,844
-
3,678
-
300,855
115,841
-
42,043
9,166,260
8,093,478
300,940
-
51,323
-
289,637
307,374
10,120,039
8,550,914
$
Lafarge Cement Malawi Limited (fellow subsidiary)
Lafarge Middle East and Africa Building Materials S.A.E. (Egypt) (fellow
subsidiary)
Lafarge Cement (Tanzania) (fellow subsidiary))
Lafarge Cement (Pakistan) (fellow subsidiary)
Lafarge Cement Zambia (Zambia) (fellow subsidiary)
Lafarge South Africa Industries (Pty) Ltd (South Africa) (fellow subsidiary)
Lafarge SA (France) (parent company)
Lafarge Technical Centre (France) (fellow subsidiary)
Lafarge Cement (Cameroon) (fellow subsidiary)
Blue Circle Industries, (United Kingdom) (fellow subsidiary)
$
The amounts due or payable are unsecured and will be settled in cash. No guarantees have been given or received. No
expense has been recognised in the current or prior years for bad or doubtful debts in respect of the amounts owed by
related parties.
The total amount of related party payables balances from trading and non-trading transactions for the year was as follows:
2014
2013
10,419,491
8,834,931
2014
2013
124,485
374,744
$
$
22.3 Loans to related parties
$
Loans to key management personnel
$
The Company has provided several of its key management personnel with short-term loans and salary advances. The
short term loans attract interest at a rate of 6% per annum. The loans to key management are secured against the assets
acquired with the loaned funds.
PAGE 58 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
22.4 Compensation of Directors and other key management personnel
The remuneration of Directors and other key management personnel during the year was as follows:
2014
2013
1,567,054
100,000
117,387
644,373
936,343
35,058
105,793
161,528
2014
2013
4,839,030
1,000,000
$
Short term benefits
Directors’ fees
Post employment benefits
Termination benefits
$
23.BORROWINGS
$
Secured – at amortised cost
- Local loan facilities
$
Short term borrowings are at interest rates ranging from 4% per annum to 6.5% per annum.
No loan terms were breached during the period.
The Company has provided security for its loan facilities by way of:
• a deed of hypothecation for $ 3 million in favour of its bankers over Lots 1, 3a and 5 of Manresa which had a value
of $ 2.425 million at 31 December 2014, after revaluation; and
• cession of fire policy over Lots 1, 3a and 5 of Manresa for $ 9,443,175.
The Company also has an unconditional parental guarantee from Financiere Lafarge S.A. for $ 3 million.
23.1 Borrowing powers
In terms of the Company’s Articles of Association, the Directors may exercise the powers of the Company to borrow as they
deem necessary, subject to approval from the Lafarge Group parent company.
24.RETIREMENT BENEFIT PLANS - DEFINED CONTRIBUTION PLANS
The Company makes contributions to two defined contribution plans; the Company’s private pension scheme, and the
national pension scheme.
The contributions are made through direct deductions by the Company and remitted to the funds. The amounts remitted
have been disclosed in note 10.
24.1 Private pension scheme
The Company operates a defined contribution scheme for all qualifying employees. The assets of the scheme are held
separately from the Company in funds under the control of fund’s trustees. The only obligation of the Company with
respect to the defined contribution scheme is to make the specified contributions.
24.2 National Pension Scheme - National Social Security Authority
The employees of the Company are members of the State-managed retirement benefit plan promulgated under the National
Social Security Act of 1989. The Company’s obligation under the scheme is limited to specific contributions legislated
from time to time, which was currently 3.5% of basic salary up to a maximum of $24.50 per employee per month.
25.FINANCIAL INSTRUMENTS
25.1 Capital management
The Company manages its capital to ensure that it will be able to continue as going concern while maximising the return to
stakeholders through the optimisation of the debt and equity balance. The Company’s overall strategy remains unchanged
from previous years.
The capital structure of the Company consists of debt, as detailed in note 23, and equity of the Company comprising
issued capital, reserves and retained earnings as detailed in notes 17 to 19.
The Company is not subject to any externally imposed capital requirements.
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 59
NOTES TO THE FINANCIAL
STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014 (CONTINUED)
25.1 Capital management (continued)
The Company’s Board reviews the capital structure of the Company on a semi-annual basis. As part of this review, the
Board considers the cost of capital and the risks associated with each class of capital. The gearing ratio at 31 December
2014 was as follows:
25.1.1 Gearing ratio
The gearing ratio at the end of the reporting period was as follows:
2014
2013
4,839,030
1,000,000
37,573,498
37,492,548
13%
3%
2014
2013
Cash and bank balances
1,893,251
1,523,510
Loans and receivables
5,384,642
8,822,876
5,315,505
10,419,491
4,839,030
5,241,768
8,834,931
1,000,000
2,005,178
900,871
71,400
3,192,275
936,612
42,000
$
Debt (i)
Equity (ii)
Net debt to equity ratio
$
(i)Debt is defined as long term and short term borrowings, as set out in note 23.
(ii)Equity includes all capital and reserves of the Company that are managed as capital.
25.2 Categories of financial instruments
$
$
Financial assets
Financial liabilities
Amortised cost:
- trade and other payables
- related party payables
- borrowings
Accruals
- general
- technical fees
- audit fees
25.3 Financial risk management objectives
The Company’s executive committee meets on a regular basis to analyse, amongst other matters, currency and interest
rate exposures and to re-evaluate treasury management strategies against revised economic forecasts. Compliance with
the Company’s policies and exposure limits is reviewed at quarterly board meetings.
PAGE 60 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
LAFARGE ZIMBABWE
25.4 Foreign currency risk management
The Company undertakes transactions denominated in foreign currencies. Consequently, exposures to exchange rate fluctuations arise. Exchange rate
exposures are managed within approved policy parameters.
The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period
are as follows:
Entity
Rate
Currency
Balance
Blue Circle Industries (United Kingdom, liability)
GBP
185,815
1.559
289,637
Lafarge South Africa Industries (Pty) Ltd (South
Africa, liability)
ZAR
700,100
0.087
60,651
Lafarge SA (France, liability)
Euro
7,549,839
1.214
9,166,260
Interco Technical Centre Europe (France, liability)
Euro
247,871
1.214
300,940
Rupee
370,727
0.010
3,678
Lafarge Cement (Pakistan) (fellow subsidiary)
($ per Currency)
$
25.4.1 Foreign currency sensitivity analysis
The Company is mainly exposed to the British Pound Sterling, South African Rand, Pakistan Rupee and Euro.
The following table details the Company’s sensitivity to a 10% increase and decrease in the USD against the relevant foreign currencies. 10% is
the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of
the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary
items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number below indicates an increase in
profit and other equity where the USD strengthens 10% against the relevant currency. For a 10% weakening of the USD against the relevant currency,
there would be a comparable impact on the profit and other equity, and the balances below would be negative.
Currency
Effect on profit or loss
GBP
ZAR
Euro
Rupee
28,963
5,384
937,054
368
25.5 Interest rate risk management
The Company has no exposure to interest rate risk as at year end, as it had no offshore borrowings.
25.6 Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company
has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating
the risk of financial loss from defaults. The Company only transacts with entities that are rated the equivalent of investment grade and above. Credit
exposure is controlled by counterparty limits that are reviewed and approved by management annually.
Trade receivables consist of a large number of customers, spread across diverse industries and geographical areas. Ongoing credit evaluation is
performed on the financial condition of accounts receivable.
25.7 Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management
framework for the management of the Company’s short, medium and long-term funding and liquidity management requirements. The Company
manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and
actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
Borrowing facilities in the form of bank overdrafts and acceptance credits are negotiated with approved and registered financial institutions at
acceptable interest rates. Expended overdraft facilities are repayable on demand. Approved financial institutions with sound capital bases are utilised
to both borrow funds and invest surplus funds.
2014 | LAFARGE ZIMBABWE ANNUAL REPORT | PAGE 61
LAFARGE ZIMBABWE
NOTES TO THE FINANCIAL
STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2014 (CONTINUED)
26.COMMITMENTS FOR CAPITAL EXPENDITURE
The Company’s Board reviews the capital structure of the Company on a semi-annual basis. As part of this review, the Board
considers the cost of capital and the risks associated with each class of capital. The gearing ratio at 31 December 2014
was as follows:
2014
2013
5,152,841
7,074,783
$
Commitments for the acquisition of property, plant and equipment
$
27.CONTINGENT LIABILITIES AND ASSETS
At the date of approval of the financial statements there were no contingent liabilities or contingent assets.
28.EVENTS AFTER THE REPORTING PERIOD
28.1 Adjusting events
At the date of approval of the financial statements, there were no material adjusting events subsequent to period end.
28.2 Non-adjusting events
As stated in note 15.1, as at 31 December 2014, $ 607,291 of the Company’s trade receivables aged over 90 days had not
been provided for as various mechanisms were in the process of being put in place to reasonably ensure recovery of those
amounts. These mainly included, but were not limited to, warehouse rental agreements, payment plans, bonds, securing
of title to properties and set off arrangements against liabilities arising with the debtors on other service agreements the
Company has with them.
Subsequent to year end, the Company secured warehousing lease agreements with two of its trade debtors with total
unprovided balances aged over 90 days amounting to $ 240,215. The effect of these agreements is that trade receivables
balances amounting to $ 265,117 were subsequently reclassified out of trade receivables into prepayments as prepaid
warehouse rentals. Given the tenure of the warehousing lease agreements, the prepaid warehouse rentals will be split
between current and non-current assets.
29.APPROVAL OF FINANCIAL STATEMENTS
The financial statements were approved by the board of directors and authorised for issue on 6 March 2015.
PAGE 62 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014
MORE HOUSING
MORE COMPACT MORE DURABLE MORE CONNECTED MORE BEAUTIFUL
Lafarge Zimbabwe
Manresa Works, Arcturus, Greendale
Tel: +263 4 290 0709
www.lafarge.co.zw
PAGE 64 | LAFARGE ZIMBABWE ANNUAL REPORT | 2014