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Energising Zimbabwe’s Export Growth
2018ANNUAL REPORT
NOTICE IS HEREBY GIVEN THAT the twenty sixth Annual General Meeting of ZimTrade will be held on Thursday 26th September 2019 at 0830 hours at the Cresta Lodge, Msasa, Harare, Zimbabwe, for the purpose of transacting the following business:
1. To confirm the Minutes of the Previous Annual General Meeting and consider the Matters Arising therefrom.2. To receive the Chairman’s Report for the year ended 31 December 2018.3. To receive and approve the Audited Financial Statements and Auditors’ Report for the year ended 31
December 2018.4. To approve the remuneration of the Auditors for the year ended 31 December 2018.5. To reappoint Baker Tilly Chartered Accountants as Auditors for the ensuing year.6. To elect a new member to the Board.7. To adopt the new ZimTrade Constitution.
Note:1. In terms of the ZimTrade constitution, a member entitled to attend and vote at this meeting is entitled to
appoint a proxy to vote and speak in his/her stead.2. Completion of a proxy form does not preclude a person from subsequently attending and voting in person.3. Nomination and Proxy Forms are available at ZimTrade offices in Harare and Bulawayo.4. To be valid, Nomination and Proxy forms must be completed and returned so as to be received by ZimTrade
before 16:30 hours on 23 September 2019.
Energising Zimbabwe’s Export Growth
Norman MahoriCORPORATE SECRETARY
188 Sam Nujoma StreetAvondaleHarare, Zimbabwe+263 (24) 2369330-41+263 8677 000 374
48 Josiah Tongogara StreetBulawayoZimbabwe+263 (29) 266151/262378+263 8677 000 378
ZimTradeAlertsZimTrade Zimbabwe
www.tradezimbabwe.cominfo@zimtrade.co.zw
HEAD OFFICE
MARKET INTELLIGENCE | EXPORT DEVELOPMENT | EXPORT PROMOTION | ADVOCACY
REGIONAL OFFICE ONLINE
Notice ofAnnual General Meeting
tradezimbabwe.com
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Notice of Annual General Meeting ..................................................................... ii
Corporate Information ......................................................................................... 6
Chairman’s Statement ..................................................................................... 8
Testimonial: On Track ........................................................................................... 11
Chief Executive Officer’s Report ........................................................................12
Corporate Dashboard ............................................................................................ 16
Testimonial: A Stitch in Time ............................................................................ 11
Corporate Governance Report ......................................................................... 18
Board of Directors .............................................................................................. 21
Testimonial: Looking Beyond the Region .................................................. 22
Infographic: Export Promotion ........................................................................ 23
Management ....................................................................................................... 24
Infographic: Telling our Stories ..................................................................... 25
Infographic: Market Information ..................................................................... 26
Infographic: Export Development ..................................................................... 27
Human Resources Report ............................................................................... 28
Financial Statements ......................................................................................... 31
Contents
2018 ANNUAL REPORT
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Principal OfficesHEAD OFFICE188 Sam Nujoma StreetHarareZIMBABWETel: +263 (24) 2369 330-41+263 8677 000 374Email: info@zimtrade.co.zwWeb: www.tradezimbabwe.com
To contribute to Zimbabwe’s growth and prosperity through developing and catalysing viable and sustainable exports.
MANDATE ASPIRATION
VALUES
To energise Zimbabwe’s export growth.
Focused
ZimTrade, the national trade development and promotion organisation, is a unique joint venture partnership between the Private Sector and the Government of Zimbabwe. It was established in 1991.
REGIONAL OFFICE48 Josiah Tongogara StreetP.O. Box 3090BulawayoTel: +263 (29) 266151/262378+263 8677 000 378Email: info@zimtrade.co.zwWeb: www.tradezimbabwe.com
Corporate Information
BoldConnected Trusted
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Legal PractitionersDMH LEGAL PRACTITIONERS6th Floor GoldbridgeEastgate ComplexHARARE
AuditorsBAKER TILLY CHARTERED ACCOUNTANTS (ZIMBABWE)8 Fletcher Road, Mount PleasantHARARE
BankersCBZ BANK LIMITED7 Selous AvenueHARARE
We provide market intelligence through various channels such as the Trade Information Centre as well as various In-house Publications.
We nurture exisiting and potential exporters to become viable export entities.
We promote the marketing of Zimbabwean products and services to the global market through participation by local companies in Trade Fairs as well as Trade Missions.
We engage relevant stakeholders in order to improve the ease of doing export business.
ZimTrade executes its mandate through:
Export Promotion
Market Intelligence Export Development
Advocacy
2018 Intra-Africa Trade Fair, Cairo, Egypt
On behalf of ZimTrade Board, it is my pleasure to present to you the Report for the year ended 31 December 2018.
“”
Chairman’sStatementLance Jena, Board Chairman
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Trading EnvironmentOn behalf of ZimTrade Board, it is my pleasure to present to you the Report for the year ended 31 December 2018.
The macro economic environment continues to face challenges emanating from the low availability of foreign exchange to fund outgoing international payments, business failures, reduction in disposable incomes and more recently the three tier pricing system and cash crisis, however, the expected positive outturn for the 2018–2019 agricultural season, which is coming soon after good rains of the 2017-2018 season, is expected to improve the prospects for stimulating the national economy.
A number of policy measures in the second republic and economic reforms in the new dispensation are being implemented and chief among them is the Rapid Results Initiative (RRI), a strategy designed to remove institutional bottlenecks in the trading environment and therefore improve the ease of doing export business. The Program was championed by the Office of the President and Cabinet (OPC) and co-chaired by the Ministry of Industry, Commerce and ZimTrade. The 2018 Manufacturing Sector Survey, for the period September 2017 to August 2018, conducted by the Confederation of Zimbabwe Industries (CZI) reported a 3.1% increase in capacity utilisation from 45.1% to 48.2%, driven by improved performances in goods such as Foodstuffs; Drinks; Tobacco & Beverages; Wood & Furniture. This led to an growth in output recorded by the sector of 12.1%.
However, due to macroeconomic challenges faced in the last quarter of the year, the capacity utilisation declined from 48% recorded in August 2018, to 42% in November 2018.
During the period February to December 2018, the country’s total exports amounted to US$4.1 billion, indicating a 17% increase from the US$3.5 billion recorded in 2017. The total import bill increased by 29% from US$5 billion in 2017 to US$6.4 billion in 2018. Subsequently, the trade deficit increased by 53% from US$1.5 billion in 2017 to US$2.3 billion in 2018. Zimbabwe’s total trade for the period (Feb-Dec 2018) increased by 25% to US$10 billion from the US$8 billion recorded in 2017.
According to the World Economic Forum Global Competitiveness Index (GCI) Report for 2018/19, Zimbabwe is ranked 128 out of 140 countries on the global competitiveness rankings. On the Ease of Doing Business, Zimbabwe is ranked 155 among 190 economies, according to the latest World Bank annual ratings.
Business PerformanceTotal income for the year was US$2 741 294, which is 14% above that of 2017 which stood at US$2 399 553. The Trade Development Surcharge (TDS) contributed 97% of the total income, remaining the main source of income. The Board continues to explore measures to ensure efficiency in the collection of the TDS, while also seeking to augment total income through diversifying the revenue streams. Total expenditure for 2018 was US$2 817 063 representing a decline of 1%, compared to the previous year. Expenditure decline was on account of implementation of cost containment measures to align costs to the subdued income patterns. Expenditure priority was on export development and promotion programs while planned recruitment of staff and other administration projects were deferred.
A net deficit of US$72 196 was recorded in 2018 and was fully funded from internal resources.
I am glad to advise that in April 2018, ZimTrade moved into its own property situated at 188 Sam Nujoma Street, Avondale, Harare, which is ideally located for the Business Community.
ManufacturingSectorHighlights
12.1%
3.1%
45.1%
48.2%
Overall output for the sector as at 31 August 2018 grew by
Output increasedin tandem withimprovement incapacity utilisationwhich recorded agrowth of
CAPACITY UTILISATION(AUGUST 2017)
CAPACITY UTILISATION(AUGUST 2018)
2018 ANNUAL REPORT
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GovernanceThe Organisation is committed to acting in accordance with good corporate governance with the Board being responsible for setting the tone and ensuring that robust governance structures are in place. At the 2018 Annual General Meeting, Mr. M.E. Juru and Ms P. Rambanapasi were reelected for a second term of office and Mr. B.T Kagondo was elected to the Board. I wish Mr. Kagondo well in his role on the Board.
Outlook The Board will continue to encourage the Government and all stakeholders to follow through on policy pronouncements made during the year 2018. Furthermore, the implementation of key reforms under the Rapid Results Initiative and the Ease of Doing Business Approach is expected to improve the export business therefore contributing to sustainable growth of the economy.
As part of its advocacy role, ZimTrade will continue to encourage the adoption of principles of good corporate governance, standards and standardization and access to affordable finance by the current and emerging exporters.
AcknowledgementI wish to express my appreciation to the Chief Executive Officer Mr. A. T. Majuru, who took office in September 2018 and all members of staff for their continued dedication to duty. I am also grateful to my fellow Board members for their valuable contributions and support during the year.
Furthermore, I wish to thank our parent Ministries, initially the Ministry of Industry and Commerce and later the Ministry of Foreign Affairs and International Trade, the Business Member Organizations (BMOs) and all our other stakeholders for their continued support.
L. JenaCHAIRMAN
HARARE
2018 ANNUAL REPORT
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On track
We were having challenges balancing our product diversification drive and the development of our out-grower scheme. With the help of Dr. Van’t Klooster from PUM,we are now on track and we have put up a strategy that will make Owami contribute significantly towards the country’s exports in the near future.”
TESTIMONIAL
Seasoned berries expert from PUM, Dr. Kees Van’t Klooster, who recently visited Zimbabwe in February 2018,encouraged producers to take up market opportunities for berries. Dr. Klooster, visited for 2 weeks under the long-standing memorandum of understanding (MoU) between PUM, a Netherlands based senior expert consultancy organisation and ZimTrade.
“Noel MuwaniOwami Agriculture
2018 ANNUAL REPORT
Chief ExecutiveOfficer’s ReportAllan T. Majuru, ZimTrade CEO
Despite the challenging macro-economic conditions, Zimbabwean companies have remained resilient...
“”
CEO’s ProfileAllan Tawanda Majuru, holds a Master of Science (MSc) degree in Agricultural Applied Economics and Honors BSc degree in Agricultural Economics & Extension from the University of Pretoria and University of Zimbabwe, respectively.
His career started with the Ministry of Agriculture & Rural Development in 2004 as a Senior Economist in the Economics and Markets division. Thereafter, he joined the International Crop Research Institute for the Semi-Arid Tropics (ICRISAT) in 2009, as a Scientific Officer, where he worked on improving the performance of agricultural Input and Output Markets in Zimbabwe, Mozambique, Zambia, Malawi and Nigeria as well as harmonising seed policies for the SADC region.
Mr. Majuru joined ZimTrade in April 2014 as the SME Export Development Manager. His expertise in developing SMEs and maintaining client satisfaction afforded him a promotion to Director of operations in 2015.
Mr. Majuru was appointed Acting CEO of ZimTrade in March, 2018 and was confirmed as the substantive CEO in September, 2018.
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Executive SummaryIn 2018, through the assistance of development co-operation partners that include COLEACP and PUM of the Netherlands as well as the SES of Germany, ZimTrade facilitated training and onsite technical interventions for numerous organisations in various sectors, in order to capacitate their operations as well as preparing them for the export market.
ZimTrade also assisted existing and new exporters to market their products to export markets through facilitating participation at key export promotion exhibitions in the region and overseas. Export business amounting to US$13 013 308, was generated emanating from the participation, against US$2.7million recorded in 2017. A total of nine (9) first time exporters were assisted to penetrate export markets.
Despite the challenging macro-economic conditions, Zimbabwean companies have remained resilient, with some companies registering notable growth in their export business ventures. ZimTrade will continue to focus its efforts on growing exports as it contributes towards Zimbabwe achieving sustainable economic development.
Key Operational Highlights 2018
MARKET SURVEYSFollowing a Botswana market survey conducted by ZimTrade in the first quarter of 2018, nine (9) companies in the processed foods, building and construction as well as agricultural inputs and implements sectors participated in the Botswana Global Expo under the ZimTrade banner and export deals worth over US$4 million were secured. A market survey was also conducted in Dubai and this will be followed by an inward buyer mission, in the second quarter of 2019, targeting the horticulture subsector and six (6) buyers are expected to participate. ZimTrade also conducted a market scan in Kenya during the fourth quarter. This is expected to be followed up by a training for Global GAP farm assurers, which will be carried out by IFC Kenya in the second quarter of 2019.
The dissemination seminars conducted by ZimTrade after the market surveys and scans attracted a wide range of players from among the SMEs as well as established exporters with an average 94% of the participating companies highlighting that they benefited from the information gathered through the market surveys conducted.
Export Development
Training Programmes17 training workshops were conducted for various sectors, including horticulture, furniture, arts and crafts and packaging, among others in Harare, Bulawayo, Gweru and Kwekwe. Four (4) of the workshops were run under ZimTrade’s flagship MBIC (Marketing and Branding for International Competitiveness) training program, through facilitation by expert technical associate trainers. A total of 489 companies and 171 artists participated in the workshops and on average 95% highlighted that they found the training relevant and practical to their businesses. The other 13 training workshops provided export awareness training for the local enterprises.
As Zimbabwe’s trade development organisation, ZimTrade is well positioned to deliver on its mandate of energising Zimbabwe’s export growth. ZimTrade plays a critical role in the country’s strategy to grow and diversify Zimbabwe’s export base, as it also endeavours to facilitate the increase in the contribution of value-added economic activity.
2018 ANNUAL REPORT
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Technical AssistanceZimTrade extends its gratitude to the various international development cooperation partners that worked tirelessly to support ZimTrade activities in 2018. Specific mention goes to PUM of the Netherlands, German SES, COLEACP and CBI.
”In 2018, at the invitation of ZimTrade, 41 experts from PUM Netherlands and 42 experts from German SES travelled to Zimbabwe to provide onsite technical assistance to enterprises in horticulture, food processing, leather, engineering, fashion, textile and clothing as well as arts and crafts sectors. All the companies assisted, registered improvements in their business processes and quality of goods produced.
ZimTrade partnered COLEACP, under the Fit for Market programme, to carry out capacity building for smallholder farmers and relevant entities in the horticulture value chain in Zimbabwe. A total of 17 applications, for support, had been approved by 31 December 2018. ZimTrade secured an agreement with a Dutch buyer of organic foods, EOSTA, in which EOSTA provided funding to support small scale pineapple growers in Ndiyadzo, Chipinge to prepare their products for organic certification, as part of initiatives to export organic foods to the EU markets. 22 Farmers are participating in this project and are all potential first-time exporters.
Best Model Farm ProjectThrough the assistance and guidance of PUM experts, ZimTrade selected and concluded memoranda of understanding with 3 farms located in Marondera, Chegutu and Gweru. The farms will serve as
model farms for the horticulture sector. Under this model farm project, ZimTrade intends to spearhead the establishment of resourced and effective out-grower schemes, which will lead to an increase in the horticulture exporter base.
Export Promotion
Trade Fairs and MissionsZimTrade facilitated the participation of a total of 40 companies at regional trade exhibitions and missions in 2018, namely Agritech Expo (Zambia), DRC Mining Week, Source Africa Trade Exhibition (South Africa), Global Expo Botswana and Mozambique Outward Seller Mission. In addition, 12 companies were facilitated to participate in three (3) international trade exhibitions, that is, at Fruit Logistica Berlin (Germany), One Belt One Road International Food Expo (Hong Kong) and China International Import Expo. Total orders amounting to US$9.8 million were realized and business valued at US$8.8 million is still under negotiation.
AdvocacyThe 2018 Annual Exporters’ Conference was held on 4 October 2018, at the Meikles Hotel. The conference was officially opened by, His Excellency, the President E.D. Mnangagwa, who attended as the Guest of Honour. This was the first ZimTrade conference to be attended by a Head of State.
The resolutions of the conference were as follows:• To introduce Technology-centric export solutions• To transition towards Export Diversification• To develop linkages that support export-oriented value chains
Progress was achieved in implementing the 2017 resolutions, with the following notable achievements being recorded:
• ZimTrade continued to collaborate with its parent Ministry, in spearheading the Rapid Results Initiative (RRI) under the Ease of Doing Export Business Framework, the RRI successfully implemented the reduction of fees that are outlined in terms of section 29 (d) of the Plant and Disease and Diseases Act (Chapter 19:08). This legislative amendment enabled the Ministry of Lands, Agriculture and Rural Resettlement (MoLARR) to reduce the cost of five agricultural export documents by 47%.
M&E Executive, Danisa Chinamasa; CEO, Allan Majuru; Finance Director, Mirirai Moyo and HR Director, Norman Savado celebrate the SADC QualityAwards.
2018 ANNUAL REPORT
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• Eleven (11) out of the twenty-one (21) identified statutory reforms were implemented.• ZimTrade was instrumental in crafting the National Trade Policy and National Export Strategy.
ZimTrade AcheivementsZimTrade was awarded the following business excellence awards:-
• SADC NAQA Award – Winner - Company of the year 2018 (February 2018)• Outstanding Contribution to National Standardization Work Award (October 2018)• NAQA Quality Award Company of the year 2018 (November 2018)• Winner - Gold Exhibitor Award at Global Expo, Botswana (November 2018)
Our PeopleZimTrade staff complement totaled 34 employees between Head Office and the Regional Office in Bulawayo. The matrices below were also recorded during theyear:-
• Operational Professional Staff Index 58%• Gender mix - males 59% and females 41%• Employees’ productivity rate recorded a 7% increase against the 2017 rate.
National market conditions were continuously monitored to ensure employment conditions complied with NEC CBA agreements.
OutlookIn the short-to-medium term, the Zimbabwe economy is expected to start responding to the various policy interventions being introduced. Various operational challenges may take longer to address but there is expectation that some progress will be achieved in the short term.
Vote of ThanksI would like to take this opportunity to express my gratitude to our exporters and all stakeholders for their resilience and determination to contribute to Zimbabwe’s economic growth, as well as for the trust they bestowed in ZimTrade to assist them in their export endeavours. I also thank the Ministry of Industry and Commerce, as well as, the Ministry Foreign Affairs and International Trade for their support in all our initiatives.
I also express my gratitude to the ZimTrade Board for their valued support and guidance throughout the year.
To Management and Staff, thank you for your commitment to our mandate, for your enthusiasm to assist our businesses as we continue on this journey of developing Zimbabwe’s export growth.
A. T. MajuruCHIEF EXECUTIVE OFFICER
2018 ANNUAL REPORT
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ZimTrade championed a number of policy and procedural reforms on several issues, being guided by industry expectations as well as benchmarking on best practises across the globe.
2018 Company Awardfor Standardisation
2018 Company ofthe Year
96.8%
Standards Association of Zimbabwe
SADC Annual Quality Awards
Customer satisfaction with ZimTrade services.
Big Magic Measures
A Focus on our Customers
Improving the Trade Environment
24%18%
33%
3%
22%
Employment - Admin
Employment - Direct Export
Governance Expenses
Direct Export Development
General Administration
Duty on some imported inputsExport of servicesNation brandingDelays in approval of foreign currency payment applicationsLobby for enhancement in curriculaDelays in the allocation of foreign currency for the importation of raw materialsReduction of Bill of Entry Cancellation Fee
2018Expenditure Contribution
by Class
Corporate Dashboard
2018 ANNUAL REPORT
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A stitch in time
Our immediate business is now to draft a three-year road map that will transform the industry. Key issues are creating synergies between the small and large players. On the technical front we have lots to do and will start early in 2019 with skills training for the small fashion houses with an initial focus on pattern making.
”ZimTrade has engaged SES to provide further consultations to individual companies. A second scoping mission was conducted in Bulawayo on 30 October with Ms. Chris Vijt who is assisting companies to identify product lines for export development, and to reorganise factory spaces to meet best practice in pursuit of quality and safety, among other areas of concern.
TESTIMONIAL
“Second MuguyoFinance and Admin Manager, Copperwares
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Corporate GovernanceReport
The Board seeks to go beyond “compliance” through the adoption, integration and embedding of the spirit and principles of good corporate governance.
“”
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IntroductionIn accordance with the Organisation’s Constitution, the Organisation operates through its Board of Directors and Management. The Board is responsible for the overall corporate governance of ZimTrade, including adopting and continually improving the appropriate policies and procedures designed to ensure that ZimTrade is properly managed to protect and enhance the interests of all stakeholders.
The Board is committed to compliance with good Corporate Governance and best practices, it recognises that governance is about effective and ethical leadership, the outcomes of which are sustained value creation, success and longevity. The Board seeks to go beyond “compliance” through the adoption, integration and embedding of the spirit and principles of good corporate governance and best practices.
Board of Directors During the period under review, the Board operated with eight (8) Non-Executive Directors and Executive Directors, until the Annual General Meeting held on 15 November 2018, when the ninth Non-Executive Director was elected.
In terms of Section 5.2 of the ZimTrade Constitution, four (4) of the Directors are elected by the ZimTrade members at Annual General Meetings (AGMs) and (5), including the Chairman, are appointed by the Minister of Industry and Commerce and in the Government of Zimbabwe. The Chief Executive Officer is an ex-officio member of the Board. In terms of Section 5.3 the Board appoints the Secretary to the Board.
Responsibilities of the BoardSection 6 of the ZimTrade Constitution guides the Directors on their duties and responsibilities. The Board is responsible for giving direction to the Organisation through setting of the overall strategy, key policies and risk parameters. It is also responsible for approving strategic plans and operational budgets as well as acquisitions and disposals. The Board constituted the Audit & Risk, Export Development and Human Resources & Premises Committees to assist it in the discharge of its responsibilities.
At its full complement, membership of each of the Board Committees comprise three Non-Executive Directors, with one of them chairing. The Board Committees are charged with specific responsibilities under their respective Terms of Reference. Committee Chairpersons present reports of their committees at the next meeting of the Board.
Audit and Risk Board CommitteeIn 2018 the Committee comprised 2 non-executive Directors and met once every quarter during the year. The Committee is charged with the key corporate governance issues such as risk management, review of the effectiveness of internal controls, budget approval and review, compliance as well as considering internal and external audit reports. Before the close of the year, the Committee met with the Organisation’s external auditors to discuss accounting, auditing, financial reporting and risk management matters. The external and internal auditors have unrestricted access to the Committee.
Human Resources and Premises Board CommitteeThe Committee comprised 3 non-executive Directors and met at least once every quarter of the year. The Committee was responsible for the assessment and approval of the Organisation’s remuneration strategy and to review Human Resources Policies and Procedures as well as the short-term and long-term remuneration of executive directors and senior executives. In addition, the Committee is responsible for matters relating to the Organisation’s premises.
2018 ANNUAL REPORT
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MAIN BOARD
Board Member AttendanceL. Jena 4/4A.T. Majuru* 3/3M. E. Juru 4/4H. Kuzvinzwa 3/4B. Mafusire 4/4A. Masenda 4/4O. Mutizhe 4/4P. Rambanapasi 4/4C. Zhanje 3/4B. Kagondo** -
EXPORT DEVELOPMENT BOARD COMMITTEE
Board Member AttendanceM. E. Juru 4/4C. Zhanje 4/4A.T. Majuru* 3/3
AUDIT AND RISK BOARD COMMITTEE
Board Member AttendanceO. Mutizhe 4/4P. Rambanapasi 4/4A.T. Majuru* 3/3
HUMAN RESOURCES & PREMISES BOARD COMMITTEE
Board Member AttendanceH. Kuzvinzwa 4/4B. Mafusire 4/4A. Masenda 4/4A.T. Majuru* 3/3
* A.T. Majuru was appointed Executive member of the Board (ex-officio) on 1 September 2018. Prior to that he attended by invitation.
** B. Kagondo was elected as a Non-Executive Board member on 15 November 2018. No Board meetings were held between 15/11/18 and 31/12/18.
Attendance RecordScheduled Board and Board Committee Meetings
N. MahoriCORPORATE SECRETARY
20 August 2019
Export Development Board CommitteeThe Committee comprised 2 non-executive Directors and met at least once every quarter during the year. As part of its mandate, the Committee assists the Board through providing strategic direction in the development and review of the Annual Work Programme. The Committee updates the Boards on the developments on the export market. Conflict of InterestEach Director is required to notify of actual and potential conflicts of interest to the Board as soon as they become aware of them. Every Director signs a Declaration of Interest Form each quarter before the main Board meeting.
Attendance at Meetings of the Board and Board Committees in the 2018 Financial Year.During the period under review, four (4) scheduled and two (2) ad-hoc Board meetings were held, which included a meeting to review the Constitution before the Extraordinary General Meeting to adopt the Constitution. During the same period, 12 (4 per Committee) scheduled Board Committees’ meetings and six (6) ad-hoc meetings, i.e. four (4) for the Human Resources and Premises Committee and two (2) for the Audit and Risk Committee, were held.
2018 ANNUAL REPORT
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Board ofDirectors
Lance Jena
Admire Masenda
Allan T. Majuru Brian Kagondo
Constance Zhanje
Mike E. Juru
Olifinah Mutizhe
Happias Kuzvinzwa Bridget Mafusire
Peggy Rambanapasi
Chairman
Non-Executive
Executive(appointed 01/09/18)
Non-Executive(appointed 15/11/18)
Non-Executive
Non-Executive
Non-Executive
Non-Executive Non-Executive
Non-Executive
2018 ANNUAL REPORT
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Looking beyondthe region
We attained a lot of value at the Intra-Africa Trade Fair. We participated in a workshop that left us with an International Business Drivers Licence Certificate. The workshop was an eye opener and geared us with the skills to asses business opportunities, identify business partners and deal with international clients.
“
”ZimTrade facilitated the participation of 22 companies from sectors including agriculture, textiles, leather, arts and crafts, processed foods, ICT, and finance among others. Also present were representatives from four government departments and eight business membership organisations.
TESTIMONIAL
Clive ChirovaSamuneti Leathers
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Export PromotionFive (5) horticulture exporters were facilitated to undertake a Market Visit to Fruit Logistica Trade Expo. Fruit Logistica is the premier trade show for fruits and vegetables in Berlin, Germany.
Nine (9) local companies participated in the expo. The companies were drawn from the following sectors; agricultural machinery, herbicides and pesticides, irrigation equipment, agricultural inputs and implements.
For the first time in DRC, ZimTrade facilitated the participation of nine (9) companies in DRC Mining Week. Local companies had tours and B2B meetings with large mining houses in the Katanga province such as Tenke Fungurume, Camoa Copper and RIashi Mine.
Ten (10) local companies in the clothing and textiles sectors participated in the event. Source Africa is an important annual trade event for the textile, clothing, and footwear sectors in South Africa. It encourages linkages between buyers, suppliers and manufacturers.
Twenty-two (22) Zimbabwean companies participated in the Mission where they conducted B2B meetings and factory visits with over 30 Mozambican companies in the Tete province. The companies were drawn from all sectors of the manufacturing sector.
ZimTrade coordinated the participation of twenty (20) local companies, eight (8) BMOs and four (4) Government departments in the inaugural edition of the Intra-African trade Fair (IATF) which was held at the Egypt International Exhibition Centre in Cairo.
Participants at the 2018 edition of Source Africa reported doing good business
The Minister of Industry and Commerce led a delegation of business people to China for B2Bs with potential investors and buyers of Zimbabwean produce.
33 718
358 113
122441
90
US$9,3m US$0,2m
US$0,3m US$0,08m
US$0,27m
US$0,11m
US$2,0m US$0,4m
US$0,6m US$0,2m
US$0,66m US$3,1m
US$0,12m
LeadsGenerated
LeadsGenerated
LeadsGenerated
LeadsGenerated
LeadsGenerated
LeadsGenerated
LeadsGenerated
Confirmed Orders Confirmed Orders
Confirmed Orders Confirmed Orders
Confirmed Orders
Confirmed Orders
Orders Under Negotiation Orders Under Negotiation
Orders Under Negotiation Orders Under Negotiation
Orders Under Negotiation Orders Under Negotiation
Orders Under Negotiation
7-9 Feb. 2018 14-16 Apr. 2018
13-15 Jun. 2018 20-21 Jun. 2018
30 Oct-1 Nov 2018
11-17 Dec. 2018
5-10 Nov. 2018
OUTWARD SELLER MISSION TO TETE, MOZAMBIQUE
INTRA-AFRICAN TRADE FAIR, EGYPT
CHINA INTERNATIONAL IMPORT EXPO, CHINA
SOURCE AFRICA, SOUTH AFRICA
FRUIT LOGISTICA, GERMANY AGRITECH, ZAMBIA
MINING WEEK, DRC
2018 ANNUAL REPORT
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Norman MahoriVuyiswa Mafu
Similo Nkala
Mirirai Moyo Anne Bake
Pamela Muzenda
Norman Savado
Tonderai Marufu
Danisa Chinamasa
Sihle DhliwayoHarry Davies
Talent Mbizvo
Corporate SecretaryManager: Export Promotion
Manager: Regional Office
Director: Finance Manager: Market Information
Manager: Export Development
Director: HR & Administration
Manager: Finance
Monitoring and Evaluation Executive
Manager: HR & AdministrationManager: Communications
Manager: ICT
ManagementAllan T. MajuruChief Executive Officer
2018 ANNUAL REPORT
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Telling Our Stories
3,481
25,316
3,7211,983
132.3%
662Followers
Total Page Visitors
Total EngagementsNew Followers
Growth in Followers
New Followers
(as at 31 Dec. 2018) (in 2018)
(in 2018)
(in 2018) (in 2018)
@ZimTradeAlerts fb.com/ZimTrade Zimbabwe
#energisingZimExports
A monthly newsletter published by ZimTrade Newspapers
779 58.8% 243227Total Subscribers Subscriber Growth Total ArticlesNew Subscribers
(in 2018) (in 2018) (in 2018)(as at 31 Dec. 2018)
2018 ANNUAL REPORT
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MarketInformation
65
241
80Market Briefs and Pointers distributed
Enquiries handled through the Trade Information Portal chat platform.
Participants trained in Market Analysis Tools
During the period February to December 2018, the country’s total exports amounted to US$4.1 billion, indicating a 17% increase from the US$3.5 billion recorded in 2017. The total import bill increased by 29% from US$5 billion in 2017 to US$6.4 billion in 2018. Subsequently, the trade deficit increased by 53% from US$1.5 billion in 2017 to US$2.3 billion in 2018. Zimbabwe’s total trade for the period (Feb - Dec 2018) increased by 25% to US$10 billion from the US$8 billion recorded in 2017.
According to the World Economic Forum Global Competitiveness Index (GCI) Report for 2018/19, Zimbabwe is ranked 128 out of 140 countries on the global competitiveness rankings. On the Ease of Doing Business, Zimbabwe is ranked 155 among 190 economies, according to the latest World Bank annual ratings.
Opportunities were identified for various horticultural products in the Dubai market. An Inward buyer mission is scheduled for the second quarter of 2019.
Opportunities were identified and shared with companies in the processed foods and horticultural products sectors.
Eight (8) companies have signed supplier agreements. Two (2) companies have supplied orders worth US$35 250. Two (2) have generated deals worth over US$1 million but are still in the process of addressing compliance issues. ZimTrade facilitated 10 companies to participate in the Botswana Global Expo in October 2018 as a follow up to the survey.
Market Surveys Market Scan
Dubai (UAE)
Trade Information Portal
Botswana Kenya
1,250 copies of the 2018 Trade Directory printed and distributed globally.
5-16 February 2018 16-23 February 2018 15-19 October 2018
2018 ANNUAL REPORT
27
Export Development
ZimTrade in partnership with RVO of the Netherlands and EOSTA a Dutch buyer of organic produce embarked on a project to export organic pineapples from Ndiyadzo area of Chipinge. The project involved capacity building through on farm trainings, technical interventions by our partners such as PUM as well as organic certification through Ecorcert. 22 small scale farmers were identified and engaged as a pilot project with a view to expand and duplicate the successes of the project. An offtake agreement is already in place with EOSTA and the certification process will be conducted in 2019. Approximately 40 tons worth of exports are expected to be realized through this project.
Programme Sectors Programme Sectors
161
42 41
171
Clothing & Textiles
Small & MediumEnterprises Trained
MissionsConducted
MissionsConducted
ArtistsTrained
MacadamiaLeather Model FarmArts & Craft Cold Chain & Ocean Freight
Fashion Design
Pineapple
Marketing and Brandingfor International Competitiveness
2018 ANNUAL REPORT
28
HumanResources Report
A new employee culture value proposition with key elements such as creativity, service delivery and transparency is currently being implemented.
“”
Staff Training Session
29
Leadership, Accountability & CultureZimTrade is committed to be an employer of choice, culture is therefore, central to this theme and the following initiatives are being implemented:
• A new employee culture value proposition with key elements of (Execution, Creativity, Service Delivery, Transparency & Integrity, Teamwork) is currently being implemented.
• Regular discussions and briefings are conducted by the Chief Executive Officer with Staff on organisational performance, alignment with strategy and key areas of focus to drive the performance agenda.
Employee DevelopmentTo support equal opportunities for employee development and promotion as well as development of ZimTrade capability a Competency Based Training Calendar is now in place.
Through competency-based training, employees are receiving opportunities to maintain and develop capabilities to achieve their goals and successfully deliver on ZimTrade Strategy.
Remuneration, Recognition and Conditions of ServicePerformance reviews were conducted in line with the Intergrated Results Based Management System as well as the Values based Balanced Scorecard System and competency-based training needs were drawn-up from the results of the appraisals and competency assessments.
• Employee productivity for 2018 was 7% above the 2017.
Employee Engagement – Works CouncilZimTrade Works Council held a total of 3 meetings in 2018 and achieved the following:
• Improved employee engagement and moral, through provision and maintenance of continuous exchange of information and ideas as well as rapport between management and employees with a view to make ZimTrade a great place to work.
• Greater efficiency and improved performance through improved engagement.• Common understanding and solutions to problems thereby fostering, encouraging and maintaining good
employee relations.• Better insight into various interconnected aspects of ZimTrade business and its challenges so that they
appreciate its role, function and service to the nation.
People ProfileHEADCOUNT OPERATIONAL PROFESSIONAL
STAFF INDEXGENDER DISTRIBUTION
MALE FEMALE
39 59% 41%58%
2018 ANNUAL REPORT
30
Works Council
Tsitsi Mtandwa
Dadirayi Mungate
Mirirai Moyo
Pamela Muzenda
Secretary
Employee Representative
Chairman
Management Representative
Better insight into ZimTrade business
AchievementsImproved employee engagement and morale
Greater efficiency and improved performance
Good employee relations
2018 ANNUAL REPORT
31
For the year ended 31 December 2018
Financial Report
2018 ANNUAL REPORT
32
DIRECTOR DIRECTOR
Directors’ Responsibilitiesand ApprovalThe directors are required in terms of the Trade Development Surcharge Act 1991 (Chapter 14:22) to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and related financial information included in this report. It is their responsibility to ensure that the financial statements fairly present the state of affairs of the organization as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards. The external auditors are engaged to express an independent opinion on the financial statements.
The financial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.
The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the organization and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the organization and all employees are required to maintain the highest ethical standards in ensuring the organization’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the organization is on identifying, assessing, managing and monitoring all known forms of risk across the organization. While operating risk cannot be fully eliminated, the organization endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.
The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.
The directors have reviewed the organization’s cash flow forecast for the year to 31 December 2019 and, in light of this review and the current financial position, they are satisfied that the company has access to adequate resources to continue in operational existence for the foreseeable future.
The external auditors are responsible for independently auditing and reporting on the organization’s financial statements. The financial statements have been examined by the organization’s external auditors and their report is presented on pages 33 to 35.
The financial statements were prepared under the supervision of the Director Finance, Mr Moyo, ACCA (Reg number 2771015), PAAB (Reg number 04130).
The financial statements set out on pages 36 to 58, which have been prepared on the going concern basis, were approved by the board of directors on 20 August 2019 and were signed on their behalf by:
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33
Independent Auditors’ReportTo the directors of ZimTrade
Adverse opinionWe have audited the financial statements of ZimTrade set out on pages 36 to 58, which comprise the statement of financial position as at 31 December 2018, and the statement of profit or loss and other comprehensive income, statement of changes in funds and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, because of the significance of the matter described in the basis for adverse opinion section of our report, the financial statements do not present fairly the financial position of ZimTrade as at 31 December 2018, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Trade Development Surcharge Act 1991 (Chapter 14:22).
Basis for adverse opinionAs described in Note 1.1, during the year ended 31 December 2018, the entity transacted using a combination of the United States Dollars (USD), bond notes and bond coins, electronic money and other foreign currencies. Acute shortage of USD cash and other foreign currencies in the country resulted in an increase in utilization of different modes of payment for goods and services such as settlement via the Real Time Gross Settlement (RTGS) system overseen by the Central Bank and mobile money platforms. The note further explains that during the year there was a significant divergence in the market of the relative values between the USD, and the bond note, bond coin, mobile money platforms and RTGS, collectively referred to as ‘’local currency’’. Although RTGS and mobile money platforms were not legally recognized as currency during the year ended 31 December 2018, the substance of the economic phenomenon suggested that it was currency.
In February 2019, an electronic currency called the RTGS dollar was introduced through Statutory Instrument 33 of 2019 (S.I 33) with an effective date of 22 February 2019 and the currency commenced trading at a rate of 2.5 to the USD. In addition, S.I 33 fixed the exchange rate between RTGS dollar and the USD at a rate of 1:1 for periods before the effective date. The rate of 1:1 is consistent with the rate mandated by the Central Bank at the time it issued the bond notes and coins as currency.
Although there was a functional currency change from USD to local currency and it was evident that the market exchange rate between the USD and the local currency was not 1:1, financial statements have been presented in USD using an exchange rate of 1:1, in compliance with S.I 33/19. This constitutes a departure from the requirements of IAS 21. The directors have performed a sensitivity analysis of how different exchange rates would impact the Organization’s statement of financial position in note 21 to the financial statements however, the amounts presented may not reflect the opening balances in RTGS dollars going forward. This confirms that had the local currency been translated to USD in accordance with IAS 21, elements in the statement of financial position would have been materially affected therefore the departure from the requirements of IAS 21 is considered to be pervasive. The effects of this departure on the Organization’s financial statements have not been determined.
2018 ANNUAL REPORT
34
Other informationThe directors are responsible for the other information. The other information comprises the Directors’ Report and the Audit Committee’s Report as required by the Trade Development Surcharge Act 1991 (Chapter 14:22) of Zimbabwe, which we obtained prior to the date of this report. Other information does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.As described in the Basis of Adverse Opinion section above, we have concluded that the other information is materially misstated for the same reason with respect to the amounts or other items in the Annual Financial Review, Chairman’s Statement and Directors Report affected by the failure to translate the local currency transactions and balances using a rate which complies with the requirements of IAS 21.
Responsibilities of the directors for the Financial StatementsThe directors are responsible for the preparation and fair presentation of the financial statements in accordance with International Financial Reporting Standards and the requirements of the Trade Development Surcharge Act 1991 (Chapter 14:22), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the organization’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the organization or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial StatementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
We conducted our audit in accordance with International Standards on Auditing (ISAs). We are independent of the Organisation in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code), together with the ethical requirements that are relevant to our audit of the financial statements in Zimbabwe, and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code.
As part of an audit in accordance with International Standards on Auditing, we exercise professionaljudgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the organization’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
2018 ANNUAL REPORT
35
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the organization’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the organization to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
From the matters communicated with those charges with governance, we determine those matters that were of most significance in the audit of the financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstance, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonable be expected to outweigh the public interest benefits of such communication.
__________________________________Partner : Fungai NyagwayaPAAB Practising Number: 0477Baker Tilly Chartered Accountants (Zimbabwe)8 Fletcher Road, Mount PleasantHarare
20 August 2019
2018 ANNUAL REPORT
36
2018 ANNUAL REPORT
as at 31 December 2018
Statement of Financial PositionZimTradeFinancial Statements for the year ended 31 December 2018
Statement of Financial Position as at 31 December 20182018 2017
Note(s) $ $
Assets
Non-Current AssetsProperty and equipment 4 1,967,726 1,981,208
Current AssetsInventories 5 16,579 17,713
Receivables 6 13,608 33,825
Prepayments 29,392 23,634
Cash and cash equivalents 7 157,898 206,730
217,477 281,902
Total Assets 2,185,203 2,263,110
Funds Employed and Liabilities
Funds Employed Reserves 70,476 70,476
Accumulated Surplus 1,029,288 1,101,484
1,099,764 1,171,960
Liabilities
Non-Current LiabilitiesOther financial liabilities 9 691,074 777,449
Current LiabilitiesPayables 11 151,064 165,921
Other financial liabilities 9 98,500 31,084
Provisions 10 144,801 116,696
394,365 313,701
Total Liabilities 1,085,439 1,091,150
Total Equity and Liabilities 2,185,203 2,263,110
Director Director
8
DIRECTOR
20 August 2019
DIRECTOR
37
2018 ANNUAL REPORT
for the year ended 31 December 2018
Statement of Surplus or Deficit and Other Comprehensive IncomeZimTradeFinancial Statements for the year ended 31 December 2018
Statement of Surplus or Deficit and Other Comprehensive Income2018 2017
Note(s) $ $
Revenue 12 2,669,892 2,362,446Other operating income 71,402 37,107Gross Income 2,741,294 2,399,553
Other operating deficitLosses on disposal of assets (455) (51,376)
Other operating expensesBoard and governance expenses 13 (93,213) (117,746)Employment expenses 16 (1,423,203) (1,423,189)Direct export development expenses 14 (613,636) (607,516)General administration expenses 15 (687,011) (669,731)
(2,817,063) (2,818,182)
Operating gains Investment Income 4,028 24,186
Deficit for the year (72,196) (445,819)Other comprehensive surplus (deficit) - - Total comprehensive deficit for the year (72,196) (445,819)
9
38
2018 ANNUAL REPORT
Statement of Changes in FundsZimTradeFinancial Statements for the year ended 31 December 2018
Statement of Changes in FundsRevaluation
reserveAccumulated
SurplusTotal equity
$ $ $
Balance at 01 January 2017 70,476 1,547,303 1,617,779
Deficit for the year - (445,819) (445,819)Total for the year 70,476 (445,819) (375,343)
Balance at 01 January 2018 70,476 1,101,484 1,171,960
Deficit for the year - (72,196) (72,196)Total for the year - (72,196) (72,196)
Balance at 31 December 2018 70,476 1,029,288 1,099,764
10
for the year ended 31 December 2018
39
2018 ANNUAL REPORT
for the year ended 31 December 2018Statement of Cash FlowsZimTradeFinancial Statements for the year ended 31 December 2018
Statement of Cash Flows2018 2017
Note(s) $ $
Cash flows utilised in operating activities
Deficit for the year (72,196) (445,819)
Adjustments for:Depreciation and amortisation 192,370 185,244
Losses on disposals, scrappings and settlements of assets andliabilities
455 51,376
Other income - prior year depreciation adjustment (59,897) -
Interest received (4,028) (24,186)
Fair value losses - 3,754
Impairment losses and reversals - 74,513
Movements in operating lease assets and accruals - (39,262)
Movements in provisions 28,105 -
Changes in working capital:Inventories 1,135 (4,381)
Receivables 20,217 31,685
Prepayments (5,758) 2,265
Payables (14,857) 79,898
Cash generated from operations 85,546 (84,913)
Interest income 4,028 24,186
Net cash utilised in operating activities 89,574 (60,727)
Cash flows utilised in investing activities
Purchase of property and equipment 4 (119,447) (1,656,542)
Proceeds from insurance claims - 39,262
Net cash utilised in investing activities (119,447) (1,617,280)
Cash flows utilised in financing activities
Mortgage - ZB bank (18,959) 808,533
Net cash utilised in financing activities (18,959) 808,533
Total cash movement for the year (48,832) (869,474)
Cash at the beginning of the year 206,730 1,076,204
Total cash at end of the year 7 157,898 206,730
11
40
2018 ANNUAL REPORT
for the year ended 31 December 2018
Accounting PoliciesZimTradeFinancial Statements for the year ended 31 December 2018
Accounting Policies
1. Significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set outbelow.
1.1 Basis of preparation
The financial statements have been prepared on the going concern basis in accordance with, and incompliance with, International Financial Reporting Standards ("IFRS") and International FinancialReporting Interpretations Committee ("IFRIC") interpretations issued and effective at the time ofpreparing these financial statements and the Trade Development Surcharge Act 1991 (Chapter 14:22).
The financial statements have been prepared on the historic cost convention, unless otherwise stated inthe accounting policies which follow and incorporate the principal accounting policies set out below.They are presented in US Dollars, which is the organization's functional currency.
These accounting policies are consistent with the previous period.
1.2 Functional Currency
Considerations on functional currency
The financial statements are expressed in United States of America dollars (‘’USD’’) which was both thefunctional and presentation currency of the company for the year ended 31 December 2018.
The continued scarcity of the USD in 2018 resulted in pricing and market distortions. The Real TimeGross Settlement (RTGS) balances and bond notes appeared to have a different inflation rate comparedto the USD. This was particularly more observable in the last quarter of 2018 and resulted in a 3 – tierpricing system mostly in the informal market. There were huge settlement discounts for marketparticipants settling in USD.
This initiated debate on whether the USD remained as the functional currency of most entities. Despiteall this, the official exchange rate between RTGS balances/Bond Notes and USD remained at 1:1.
The Monetary Policy Statement (MPS) of 20 February 2019, pointed out that the foreign exchangepremiums on the parallel market ranged from 1:40 to 1:80 to the USD up to September 2018 andincreased to levels of between 3.0 to 4.0 in February 2019. The company is of the opinion that thefunctional currency of the entity is the USD for the entirety of 2018 however, this was in order to complywith local laws and regulations, particularly SI 33, and based on the guidance of Public Accountants andAuditors Board issued on 21 March 2019, paragraph 27. As such the company adopted the USD as itspresentation currency. SI 33 has precluded the company from applying an independent assessment offunctional currency as provided for under International Accounting Standard 21 ‘’The Effects of Changein Foreign Exchange Rates’’.
Refer to Note 20 for events occurring after the date of the statement of financial position. Thedetermination of the functional currency was a matter of significant judgment accordingly, it wasincluded under critical areas of judgment per Note 1.3.
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Accounting Policies (continued)
41
2018 ANNUAL REPORT
for the year ended 31 December 2018
ZimTradeFinancial Statements for the year ended 31 December 2018
Accounting Policies
1.3 Significant judgements and sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires management, from time totime, to make judgements, estimates and assumptions that affect the application of policies andreported amounts of assets, liabilities, income and expenses. These estimates and associatedassumptions are based on experience and various other factors that are believed to be reasonableunder the circumstances. Actual results may differ from these estimates. The estimates and underlyingassumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in theperiod in which the estimates are revised and in any future periods affected.
Critical judgements in applying accounting policies
The critical judgements made by management in applying accounting policies, apart from thoseinvolving estimations, that have the most significant effect on the amounts recognised in the financialstatements, are outlined as follows:
Functional currency
Owing to the continued scarcity of the USD in 2018 which resulted in a lot of pricing and marketdistortions, the determination of functional currency has become a matter of significant judgement. TheInstitute of Chartered Accountants of Zimbabwe (ICAZ) issued recommendations for entities to considerthe possibility of a change in the functional currency. This assessment was to be entity specific.
The Public Accountants and Auditors Board (PAAB) in consultation with the Reserve Bank Zimbabwe(RBZ) also deliberated on the matter. The PAAB issued some guidance on disclosures to address thematter. The disclosures intent to provide users with sensitivities of the amounts presented in thefinancial statements to the application of different deemed exchange rates between the USD and RealTime Gross Settlement (RTGS) balances. Refer to note 20. RTGS balances and bond note appeared tohave a different inflation rate compared to hard currency. This was particularly more observable in thelast quarter of 2018 and resulted in a 3-tier pricing system mostly in the informal market. There werehuge settlement discounts for market participants settling in USD. This initiated the debate on whetherthe USD is still the functional currency of most entities. Despite all this, the official exchange ratebetween the Bond and USD remained at 1:1.
There are a number of arguments supporting the 1st of October 2018 as the effective date for a changein functional currency owing to the spontaneous rise in the bond dollar inflation during the last quarter of2018. When the organization’s cost structure for the last quarter is analysed, the observed high inflationdoes not necessary hold true as a result of the contractual nature of organization’s signficantexpenditure. The organization also managed to settle some transactions on a 1:1 basis. Theorganization is of the opinion that the change in functional currency considerations are a post year endevent pursuant to the Monetary Policy Statement (MPS) of 20 February 2019.
Therefore, the functional and reporting currency of the organization was USD for the entirety of 2018.Refer to note 19 for events occurring after the balance sheet date.
1.4 Property and equipment
Property and equipment are tangible assets which the company holds for its own use or for rental toothers and which are expected to be used for more than one year.
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Accounting Policies (continued)
42
2018 ANNUAL REPORT
for the year ended 31 December 2018
ZimTradeFinancial Statements for the year ended 31 December 2018
Accounting Policies
1.4 Property and equipment (continued)
An item of property and equipment is recognised as an asset when it is probable that future economicbenefits associated with the item will flow to the company, and the cost of the item can be measuredreliably.
Property and equipment is initially measured at cost. Cost includes all of the expenditure which isdirectly attributable to the acquisition or construction of the asset, including the capitalisation ofborrowing costs on qualifying assets and adjustments in respect of hedge accounting, whereappropriate.
Expenditure incurred subsequently for major services, additions to or replacements of parts of propertyand equipment are capitalised if it is probable that future economic benefits associated with theexpenditure will flow to the company and the cost can be measured reliably. Day to day servicing costsare included in profit or loss in the year in which they are incurred.
Depreciation of an asset commences when the asset is available for use as intended by management.Depreciation is charged to write off the asset's carrying amount over its estimated useful life to itsestimated residual value, using a method that best reflects the pattern in which the asset's economicbenefits are consumed by the company. Leased assets are depreciated in a consistent manner over theshorter of their expected useful lives and the lease term. Depreciation is not charged to an asset if itsestimated residual value exceeds or is equal to its carrying amount. Depreciation of an asset ceases atthe earlier of the date that the asset is classified as held for sale or derecognised.
The useful lives of items of property and equipment have been assessed as follows:
The residual value, useful life and depreciation method of each asset are reviewed at the end of eachreporting year. If the expectations differ from previous estimates, the change is accounted forprospectively as a change in accounting estimate.
Each part of an item of property and equipment with a cost that is significant in relation to the total costof the item is depreciated separately.
The depreciation charge for each year is recognised in profit or loss unless it is included in the carryingamount of another asset.
Impairment tests are performed on property and equipment when there is an indicator that they may beimpaired. When the carrying amount of an item of property and equipment is assessed to be higher thanthe estimated recoverable amount, an impairment loss is recognised immediately in profit or loss tobring the carrying amount in line with the recoverable amount.
An item of property and equipment is derecognised upon disposal or when no future economic benefitsare expected from its continued use or disposal. Any gain or loss arising from the derecognition of anitem of property and equipment, determined as the difference between the net disposal proceeds, if any,and the carrying amount of the item, is included in profit or loss when the item is derecognised.
1.5 Leasehold improvements
Leasehold improvements are depreciated on a straight line basis over the lesser of the estimated usefullife of the improvements or the unexpired period of the lease. Leasehold improvements do not includemaintenance and repairs done in the normal course of the business. Leasehold improvements do nothave a residual value. Improvements made in lieu of rent should be expensed in the period incurred.
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Accounting Policies (continued)
43
2018 ANNUAL REPORT
for the year ended 31 December 2018
ZimTradeFinancial Statements for the year ended 31 December 2018
Accounting Policies
1.6 Financial instruments
Classification
The company classifies financial assets and financial liabilities into the following categories: Loans and receivables
Cash and cash equivalents
Classification depends on the purpose for which the financial instruments were obtained / incurred andtakes place at initial recognition. Classification is re-assessed on an annual basis, except for derivativesand financial assets designated as at fair value through profit or loss, which shall not be classified out ofthe fair value through profit or loss category.
Initial recognition and measurement
Financial instruments are recognised initially when the company becomes a party to the contractualprovisions of the instruments.
The company classifies financial instruments, or their component parts, on initial recognition as afinancial asset, a financial liability or an equity instrument in accordance with the substance of thecontractual arrangement.
Financial instruments are measured initially at fair value, except for equity investments for which a fairvalue is not determinable, which are measured at cost and are classified as available-for-sale financialassets.
For financial instruments which are not at fair value through profit or loss, transaction costs are includedin the initial measurement of the instrument.
Subsequent measurement
Financial instruments at fair value through profit or loss are subsequently measured at fair value, withgains and losses arising from changes in fair value being included in profit or loss for the period.
Loans and receivables are subsequently measured at amortised cost, using the effective interestmethod, less accumulated impairment losses.
Trade and other receivables
Trade receivables are measured at initial recognition at fair value, and are subsequently measured atamortised cost using the effective interest rate method. Appropriate allowances for estimatedirrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset isimpaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy orfinancial reorganisation, and default or delinquency in payments (more than 30 days overdue) areconsidered indicators that the trade receivable is impaired. The allowance recognised is measured asthe difference between the asset’s carrying amount and the present value of estimated future cash flowsdiscounted at the effective interest rate computed at initial recognition.
The carrying amount of the asset is reduced through the use of an allowance account, and the amountof the loss is recognised in profit or loss within operating expenses. When a trade receivable isuncollectable, it is written off against the allowance account for trade receivables. Subsequentrecoveries of amounts previously written off are credited against operating expenses in profit or loss.
Trade and other receivables are classified as loans and receivables.
15
Accounting Policies (continued)
44
2018 ANNUAL REPORT
for the year ended 31 December 2018
ZimTradeFinancial Statements for the year ended 31 December 2018
Accounting Policies
1.6 Financial instruments (continued)
Trade and other payables
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost,using the effective interest rate method.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highlyliquid investments that are readily convertible to a known amount of cash and are subject to aninsignificant risk of changes in value. These are initially and subsequently recorded at fair value.
1.7 Inventories
Inventories are measured at the lower of cost and net realisable value.
Inventories are measured at the lower of cost and net realisable value on the first-in-first-out basis.
Net realisable value is the estimated selling price in the ordinary course of business less the estimatedcosts of completion and the estimated costs necessary to make the sale.
The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurredin bringing the inventories to their present location and condition.
1.8 Impairment of assets
The company assesses at each end of the reporting period whether there is any indication that an assetmay be impaired. If any such indication exists, the company estimates the recoverable amount of theasset.
If there is any indication that an asset may be impaired, the recoverable amount is estimated for theindividual asset. If it is not possible to estimate the recoverable amount of the individual asset, therecoverable amount of the cash-generating unit to which the asset belongs is determined.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the assetis reduced to its recoverable amount. That reduction is an impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation or amortisation isrecognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as arevaluation decrease.
16
Accounting Policies (continued)
45
2018 ANNUAL REPORT
for the year ended 31 December 2018
ZimTradeFinancial Statements for the year ended 31 December 2018
Accounting Policies
1.9 Employee benefits
Short-term employee benefits
The cost of short-term employee benefits, (those payable within 12 months after the service is rendered,such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care),are recognised in the period in which the service is rendered and are not discounted.
The expected cost of compensated absences is recognised as an expense as the employees renderservices that increase their entitlement or, in the case of non-accumulating absences, when the absenceoccurs.
The expected cost of profit sharing and bonus payments is recognised as an expense when there is alegal or constructive obligation to make such payments as a result of past performance.
Defined contribution plans
Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.
Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with asdefined contribution plans where the company’s obligation under the schemes is equivalent to thosearising in a defined contribution retirement benefit plan.
1.10 Provisions and contingencies
Provisions are recognised when: the company has a present obligation as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to
settle the obligation; and a reliable estimate can be made of the obligation.
The amount of a provision is the present value of the expenditure expected to be required to settle theobligation.
Provisions are not recognised for future operating surplus.
Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note .
17
Accounting Policies (continued)
46
2018 ANNUAL REPORT
for the year ended 31 December 2018
ZimTradeFinancial Statements for the year ended 31 December 2018
Accounting Policies
1.11 Revenue
Revenue is measured at the fair value of the consideration received or receivable for services in theordinary course of the organisation's activities. Revenue is classified as follows:
Trade development surcharge levy
The trade development surcharge levy is accounted for on a receipt basis. The trade developmentsurcharge levy is calculated at 0.1% of free on board value of goods, which is allocated as 70% toZimTrade and 30% to Competition and Tariff Commission (CTC). Trade surcharge is collected by banksand is immediately remitted to ZimTrade.
Government Grants
Government grants are related to income. These are recognised in profit or loss on a systematic basisover the period in which the organisation has expensed the related costs for which the grants areintended to compensate. No grants were received in the year.
Donations
Donations are recognised on a receipt basis.
Interest income
Interest income is recognised on a time proportion basis taking account of the principal outstanding andeffective rate over the period to maturity.
Other income
Other income is recognised on an accrual basis.
18
47
ZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements2018 2017
$ $
2. Changes in accounting policy
The financial statements have been prepared in accordance with International Financial ReportingStandards on a basis consistent with the prior year except for the adoption of the following new orrevised standards.
IFRS 9 Financial Statements
The company adopted IFRS 9 with a transition date of IFRS 9 in relation to the impairment offinancial assets, IFRS 9, as opposed to an incurred credit loss model under IAS 39. The companyhas chosen comparatives on absorption of IFRS 9 and therefore, are not reflected in the prior yearfinancial statements. Rather, these changes have been processed at the date of intial application (i.e1 January 2018) and recognised in the opening balance of retained earnings.
IFRS 15 Revenue
The company adopted IFRS 15 with a transition date of 1 January 2018. It supersedes IAS 11Construction contracts: IAS 18 Revenue: IFRIC 13 Customer loyalty programmes: IFRIC 15Agreements for the construction of Real Estate; IFRIC 18 Transfers of asets to Customers revenue -Barter transactions Involving Advertising. It defines a new five-step model to recognize revenue fromcontracts with customers.
19
Notes to the Financial Statementsfor the year ended 31 December 2018
2018 ANNUAL REPORT
Notes to the Financial Statements (continued)for the year ended 31 December 2018
48
2018 ANNUAL REPORT
ZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements
3. New Standards and Interpretations
3.1 Standards and interpretations effective and adopted in the current year
In the current year, the company has adopted the following standards and interpretations that areeffective for the current financial year and that are relevant to its operations:
IFRS 9 Financial Instruments
IFRS 9 issued in November 2009 introduced new requirements for the classification andmeasurements of financial assets. IFRS 9 was subsequently amended in October 2010 to includerequirements for the classification and measurement of financial liabilities and for derecognition, andin November 2013 to include the new requirements for general hedge accounting. Another revisedversion of IFRS 9 was issued in July 2014 mainly to include a)impairment requirements for financialassets and b) limited amendments to the classification and measurement requirements byintroducing a "fair value through other comprehensive income" (FVTOCI) measurement category forcertain simple debt instruments.
Key requirements of IFRS 9: All recognised financial assets that are within the scope of IAS 39 Financial Instruments:
Recognition and Measurement are required to be subsequently measured at amortised costor fair value. Specifically, debt investments that are held within a business model whoseobjective is to collect the contractual cash flows, and that have contractual cash flows thatare solely payments of principal and interest on the outstanding principal are generallymeasured at amortised cost at the end of subsequent reporting periods. Debt instrumentsthat are held within a business model whose objective is achieved by both collectingcontractual cash flows and selling financial assets, and that have contractual terms of thefinancial asset give rise on specified dates to cash flows that are solely payments of principaland interest on outstanding principal, are measured at FVTOCI. All other debt and equityinvestments are measured at fair value at the end of subsequent reporting periods. Inaddition, under IFRS 9, entities may make an irrevocable election to present subsequentchanges in the fair value of an equity investment (that is not held for trading) in othercomprehensive income with only dividend income generally recognised in profit or loss.
With regard to the measurement of financial liabilities designated as at fair value throughprofit or loss, IFRS 9 requires that the amount of change in the fair value of the financialliability that is attributable to changes in the credit risk of the liability is presented in othercomprehensive income, unless the recognition of the effect of the changes of the liability'scredit risk in other comprehensive income would create or enlarge an accounting mismatchin profit or loss. Under IAS 39, the entire amount of the change in fair value of a financialliability designated as at fair value through profit or loss is presented in profit or loss.
In relation to the impairment of financial assets, IFRS 9 requires an expected credit lossmodel, as opposed to an incurred credit loss model under IAS 39. The expected credit lossmodel requires an entity to account for expected credit losses and changes in thoseexpected credit losses at each reporting date to reflect changes in credit risk since initialrecognition. It is therefore no longer necessary for a credit event to have occurred beforecredit losses are recognised.
20
Notes to the Financial Statements (continued)for the year ended 31 December 2018
49
2018 ANNUAL REPORT
ZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements
3. New Standards and Interpretations (continued) The new general hedge accounting requirements retain the three types of hedge accounting
mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has beenintroduced to the types of transactions eligible for hedge accounting, specifically broadeningthe types of instruments that qualify for hedging instruments and the types of riskcomponents of non-financial items that are eligible for hedge accounting. In addition, theeffectiveness test has been replaced with the principal of an "economic relationship".Retrospective assessment of hedge effectiveness is also no longer required. Enhanceddisclosure requirements about an entity's risk management activities have also beenintroduced.
The effective date of the standard is for years beginning on or after 01 January 2018.
The company has adopted the standard for the first time in the 2018 financial statements.
The impact of the standard is set out in note 2 Changes in Accounting Policy.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 supersedes IAS 11 Construction contracts; IAS 18 Revenue; IFRIC 13 Customer LoyaltyProgrammes; IFRIC 15 Agreements for the construction of Real Estate; IFRIC 18 Transfers of Assetsfrom Customers and SIC 31 Revenue - Barter Transactions Involving Advertising Services.
The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promisedgoods or services to customers in an amount that reflects the consideration to which the entityexpects to be entitled in exchange for those goods or services. An entity recognises revenue inaccordance with that core principle by applying the following steps:
Identify the contract(s) with a customer
Identify the performance obligations in the contract
Determine the transaction price
Allocate the transaction price to the performance obligations in the contract
Recognise revenue when (or as) the entity satisfies a performance obligation.
IFRS 15 also includes extensive new disclosure requirements.
The effective date of the standard is for years beginning on or after 01 January 2018.
The company has adopted the standard for the first time in the 2018 financial statements.
The impact of the standard is not material.
21
Notes to the Financial Statements (continued)for the year ended 31 December 2018
50
2018 ANNUAL REPORT
Zim
Tra
de
Fin
an
cia
l S
tate
me
nts
fo
r th
e y
ea
r e
nd
ed
31
De
ce
mb
er
20
18
No
tes
to
th
e F
ina
nc
ial
Sta
tem
en
tsF
igure
s in
US
Dolla
r
4.
Pro
pe
rty a
nd
eq
uip
me
nt
2018
2017
Co
st o
rre
valu
atio
nA
ccum
ula
ted
depre
ciatio
nC
arr
ying
valu
eC
ost
or
reva
luatio
nA
ccum
ula
ted
depre
ciatio
nC
arr
ying
valu
e
Land
224,8
08
-224,8
08
224,8
08
-224,8
08
Build
ings
1,3
40
,56
9(3
4,0
70
)1
,30
6,5
00
1,2
75
,00
0(7
,80
0)
1,2
67
,20
0F
urn
iture
an
d f
ixtu
res
195,4
39
(81
,29
3)
114,1
46
196,1
98
(62
,01
5)
134,1
84
Moto
r ve
hic
les
783,6
44
(58
4,2
41
)199,4
03
783,6
44
(53
4,3
90
)249,2
54
Off
ice
eq
uip
me
nt
95,5
82
(44
,56
0)
51,0
22
92,3
82
(35
,22
0)
57,1
63
IT e
qu
ipm
en
t121,3
90
(82
,47
2)
38,9
18
109,3
40
(63
,93
0)
45,4
10
Lease
hold
impro
vem
ents
83,3
90
(83
,32
3)
67
83,3
89
(80
,20
0)
3,1
89
Fre
ehold
impro
vem
ents
34,2
91
(1,4
29
)32,8
62
--
-
To
tal
2,8
79
,11
3(9
11
,38
8)
1,9
67
,72
62
,76
4,7
61
(78
3,5
55
)1
,98
1,2
08
22
Notes to the Financial Statements (continued)for the year ended 31 December 2018
51
2018 ANNUAL REPORTZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements2018 2017
$ $
4. Property and equipment (continued)
Reconciliation of property and equipment - 2018
Openingbalance
Additions Disposals Depreciation Total
Land 224,808 - - - 224,808Buildings 1,267,200 65,569 - (26,269) 1,306,500Furniture and fixtures 134,184 - (455) (19,582) 114,147Motor vehicles 249,254 - - (49,851) 199,403Office equipment 57,163 3,200 - (9,340) 51,022IT equipment 45,410 16,387 - (22,880) 38,917Leasehold improvements 3,189 - - (3,124) 67Freehold Improvement - 34,291 - (1,429) 32,862
1,981,208 119,447 (455) (132,475) 1,967,726
Reconciliation of property and equipment - 2017
Openingbalance
Additions Disposals Depreciation Impairmentloss
Total
Land 34,808 190,000 - - - 224,808Buildings 58,500 1,284,513 - (1,300) (74,513) 1,267,200Furniture and fixtures 152,337 1,360 - (19,513) - 134,184Motor vehicles 307,922 135,220 (55,129) (138,759) - 249,254Office equipment 63,410 2,879 - (9,125) - 57,163IT equipment 16,263 42,570 - (13,423) - 45,410Leaseholdimprovements
6,313 - - (3,124) - 3,189
639,553 1,656,542 (55,129) (185,244) (74,513) 1,981,208
Net carrying amounts of leased assets
Leasehold improvements 67 3,189
5. Inventories
Fuel 3,952 6,307Certificate of origin forms 8,329 5,550Stationery 4,298 5,856
16,579 17,713
23
ZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements2018 2017
$ $
4. Property and equipment (continued)
Reconciliation of property and equipment - 2018
Openingbalance
Additions Disposals Depreciation Total
Land 224,808 - - - 224,808Buildings 1,267,200 65,569 - (26,269) 1,306,500Furniture and fixtures 134,184 - (455) (19,582) 114,147Motor vehicles 249,254 - - (49,851) 199,403Office equipment 57,163 3,200 - (9,340) 51,022IT equipment 45,410 16,387 - (22,880) 38,917Leasehold improvements 3,189 - - (3,124) 67Freehold Improvement - 34,291 - (1,429) 32,862
1,981,208 119,447 (455) (132,475) 1,967,726
Reconciliation of property and equipment - 2017
Openingbalance
Additions Disposals Depreciation Impairmentloss
Total
Land 34,808 190,000 - - - 224,808Buildings 58,500 1,284,513 - (1,300) (74,513) 1,267,200Furniture and fixtures 152,337 1,360 - (19,513) - 134,184Motor vehicles 307,922 135,220 (55,129) (138,759) - 249,254Office equipment 63,410 2,879 - (9,125) - 57,163IT equipment 16,263 42,570 - (13,423) - 45,410Leaseholdimprovements
6,313 - - (3,124) - 3,189
639,553 1,656,542 (55,129) (185,244) (74,513) 1,981,208
Net carrying amounts of leased assets
Leasehold improvements 67 3,189
5. Inventories
Fuel 3,952 6,307Certificate of origin forms 8,329 5,550Stationery 4,298 5,856
16,579 17,713
23
ZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements2018 2017
$ $
4. Property and equipment (continued)
Reconciliation of property and equipment - 2018
Openingbalance
Additions Disposals Depreciation Total
Land 224,808 - - - 224,808Buildings 1,267,200 65,569 - (26,269) 1,306,500Furniture and fixtures 134,184 - (455) (19,582) 114,147Motor vehicles 249,254 - - (49,851) 199,403Office equipment 57,163 3,200 - (9,340) 51,022IT equipment 45,410 16,387 - (22,880) 38,917Leasehold improvements 3,189 - - (3,124) 67Freehold Improvement - 34,291 - (1,429) 32,862
1,981,208 119,447 (455) (132,475) 1,967,726
Reconciliation of property and equipment - 2017
Openingbalance
Additions Disposals Depreciation Impairmentloss
Total
Land 34,808 190,000 - - - 224,808Buildings 58,500 1,284,513 - (1,300) (74,513) 1,267,200Furniture and fixtures 152,337 1,360 - (19,513) - 134,184Motor vehicles 307,922 135,220 (55,129) (138,759) - 249,254Office equipment 63,410 2,879 - (9,125) - 57,163IT equipment 16,263 42,570 - (13,423) - 45,410Leaseholdimprovements
6,313 - - (3,124) - 3,189
639,553 1,656,542 (55,129) (185,244) (74,513) 1,981,208
Net carrying amounts of leased assets
Leasehold improvements 67 3,189
5. Inventories
Fuel 3,952 6,307Certificate of origin forms 8,329 5,550Stationery 4,298 5,856
16,579 17,713
23
Notes to the Financial Statements (continued)for the year ended 31 December 2018
52
2018 ANNUAL REPORT
ZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements2018 2017
$ $
6. Receivables
Other receivables 15,902 11,217Provision for bad debts (10,988) (10,988)Staff loans 8,694 33,596
13,608 33,825
7. Cash and cash equivalents
Cash and cash equivalents consist of:
Cash on hand 5 831Bank balances 157,720 145,678Money market investments 173 60,221
157,898 206,730
Included in cash and cash equivalents are balances with Banks. These balances are used fortransacting on a daily basis. In 2018 the Central Bank through Exchange Control Directive RT120 of2018 introduced Nostro Foreign Currency Accounts. These accounts are held with financialinstitutions operating in Zimbabwe in which money in the form of foreign currency is deposited fromoffshore or domestic sources.
ZimTrade maintained these Nostro Foreign Currency Accounts during the year ending 31 December2018. Thus, its balances are in Real Time Gross Settlement [RTGS] form whose parity to the UnitedStates Dollars is at 1:1 according to the Central Bank and Nostro FCA accounts. Refer to thesensitivity analysis of the statement of financial position on Note 20.
8. Revaluation reserve
Revaluation reserves 70,476 70,476
9. Other financial liabilities
Held at amortised costMortgage ZB Bank - non current portion 691,074 777,449Mortgage ZB Bank - current portion 98,500 31,084
789,574 808,533
Non-current liabilitiesAt amortised cost 691,074 777,449
24
Notes to the Financial Statements (continued)for the year ended 31 December 2018
53
2018 ANNUAL REPORT
ZimTradeFinancial Statements for the year ended 31 December 2018Notes to the Financial Statements
10. Provisions
Reconciliation of provisions - 2018
Opening Net Closing balance Increase/ Balance
(Decrease)
Provision for Service Gratuity 43,200 480 43,680Bonus fees provision - 24,724 24,724Leave Pay Provision 73,496 2,901 76,397
116,696 28,105 144,801
Reconciliation of provisions - 2017
Opening Net Closing balance Increase/ Balance
(Decrease)
Provision for service gratuity 46,830 (3,630) 43,200Leave Pay Provision 69,853 3,643 73,496
116,683 13 116,696
2018 2017
$ $
11. Payables
Other payables 91,584 90,119Payroll accruals 59,480 75,802
151,064 165,921
12. Revenue
Revenue from Trade surcharge 2,571,790 2,308,468Fees for services and publication sales 42,046 22,153Donations 38,200 22,250Events participation fees 17,856 9,576
2,669,892 2,362,447
13. Board and Governance Expenses
Board Fees 62,808 61,701Audit Expense 16,914 13,657Annual General Meeting cost 9,806 7,447Board stakeholder engagements 3,685 16,491Internal audit fees - 7,626Board travel and subsistence - 6,755Board training and development - 4,069
93,213 117,746
25
Notes to the Financial Statements (continued)for the year ended 31 December 2018
54
2018 ANNUAL REPORT
ZimTradeFinancial Statements for the year ended 31 December 2018Notes to the Financial Statements
10. Provisions
Reconciliation of provisions - 2018
Opening Net Closing balance Increase/ Balance
(Decrease)
Provision for Service Gratuity 43,200 480 43,680Bonus fees provision - 24,724 24,724Leave Pay Provision 73,496 2,901 76,397
116,696 28,105 144,801
Reconciliation of provisions - 2017
Opening Net Closing balance Increase/ Balance
(Decrease)
Provision for service gratuity 46,830 (3,630) 43,200Leave Pay Provision 69,853 3,643 73,496
116,683 13 116,696
2018 2017
$ $
11. Payables
Other payables 91,584 90,119Payroll accruals 59,480 75,802
151,064 165,921
12. Revenue
Revenue from Trade surcharge 2,571,790 2,308,468Fees for services and publication sales 42,046 22,153Donations 38,200 22,250Events participation fees 17,856 9,576
2,669,892 2,362,447
13. Board and Governance Expenses
Board Fees 62,808 61,701Audit Expense 16,914 13,657Annual General Meeting cost 9,806 7,447Board stakeholder engagements 3,685 16,491Internal audit fees - 7,626Board travel and subsistence - 6,755Board training and development - 4,069
93,213 117,746
25
ZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements2018 2017
$ $
14. Employment Expenses
Salaries and Allowances 1,074,781 953,062Pension Costs 81,870 77,704Zimdef & Nec Contributions 18,846 16,652Medical Aid 73,425 71,565Funeral Assurance Contributions 2,706 2,816Perfomance Bonus Pay Provision 76,380 102,582Leave Pay Provision 22,587 26,160Recruitment costs 29,688 29,760Training and people Development 10,085 41,941Organisational Development 14,358 62,159Staff Welfare 18,477 38,788
1,423,203 1,423,189
15. Direct Export Development Expenses
Exhibitions, Fairs and Missions 342,665 244,042Exporters' Conference 68,000 65,239Client Satisfaction Survey 8,000 12,000Market surveys - Foreign 16,251 304Networking/Benchmarking Programmes 300 -Publications (TIC) - 1,016Certificates of Origin Forms 21,852 14,219Quality Management System - ISO Certification 7,885 17,073Seminars and Workshops 41,790 98,497Export capacity building programmes 51,266 61,871Travelling and Subsistence - external - 542Professional fees, consultancy and business development - 31,270Promotions, Advertising and Publicity 51,234 52,622Subscriptions 4,393 8,821
613,636 607,516
26
ZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements2018 2017
$ $
6. Receivables
Other receivables 15,902 11,217Provision for bad debts (10,988) (10,988)Staff loans 8,694 33,596
13,608 33,825
7. Cash and cash equivalents
Cash and cash equivalents consist of:
Cash on hand 5 831Bank balances 157,720 145,678Money market investments 173 60,221
157,898 206,730
Included in cash and cash equivalents are balances with Banks. These balances are used fortransacting on a daily basis. In 2018 the Central Bank through Exchange Control Directive RT120 of2018 introduced Nostro Foreign Currency Accounts. These accounts are held with financialinstitutions operating in Zimbabwe in which money in the form of foreign currency is deposited fromoffshore or domestic sources.
ZimTrade maintained these Nostro Foreign Currency Accounts during the year ending 31 December2018. Thus, its balances are in Real Time Gross Settlement [RTGS] form whose parity to the UnitedStates Dollars is at 1:1 according to the Central Bank and Nostro FCA accounts. Refer to thesensitivity analysis of the statement of financial position on Note 20.
8. Revaluation reserve
Revaluation reserves 70,476 70,476
9. Other financial liabilities
Held at amortised costMortgage ZB Bank - non current portion 691,074 777,449Mortgage ZB Bank - current portion 98,500 31,084
789,574 808,533
Non-current liabilitiesAt amortised cost 691,074 777,449
24
41,790
-
Notes to the Financial Statements (continued)for the year ended 31 December 2018
55
2018 ANNUAL REPORT
ZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements2018 2017
$ $
16. General Administration Expenses
Bank Charges 19,478 11,791Electricity, Water and Rates 16,758 21,353Entertainment 768 955Insurance 32,146 24,366Legal Expenses 16,039 8,168Rent 27,105 108,435Security 24,479 10,885Telecommunications 55,722 55,228Repairs and Maintenance (Office) 34,847 10,014Mortgage 96,966 8,533Stationery and office supplies 4,342 5,135Computer Expenses 25,942 21,932Other General Expenses 2,941 1,267Depreciation 192,370 185,244Motor Vehicle Fuel 59,118 51,073Motor Vehicle Service and Repairs 51,779 50,450Impairment loss on building - 74,513Mortgage Administration fees - 20,389Relocation costs 26,211 -
Sub - total 687,011 669,731
17. Risk management
Financial risk management
The company’s activities expose it to a variety of financial risks: market risk (including currency risk,fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.
The company’s overall risk management program focuses on the unpredictability of financial marketsand seeks to minimise potential adverse effects on the company’s financial performance. Riskmanagement is carried out by management under policies approved by the board of directors.Management identifies, evaluates and hedges financial risks in close co-operation with thecompany’s operating units. The board of directors provides written principles for overall riskmanagement, as well as written policies covering specific areas, such as foreign exchange risk,interest rate risk, credit risk, use of derivative financial instruments and non-derivative financialinstruments, and investment of excess liquidity.
Liquidity risk
The company’s risk to liquidity is a result of the funds available to cover future commitments. Thecompany manages liquidity risk through an ongoing review of future commitments and creditfacilities.
18. Going concern
We draw attention to the fact that at 31 December 2018, the organization had accumulated surplus of$ 1,029,288 and that the organization's total assets exceed its liabilities by $ 1,099,764.
27
Notes to the Financial Statements (continued)for the year ended 31 December 2018
56
2018 ANNUAL REPORT
ZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements2018 2017
$ $
18. Going concern (continued)
The financial statements have been prepared on the basis of accounting policies applicable to agoing concern. This basis presumes that funds will be available to finance future operations and thatthe realisation of assets and settlement of liabilities, contingent obligations and commitments willoccur in the ordinary course of business.
The organization’s operations have been significantly affected and may continue to be affected by thechallenging environment particularly the lack of liquidity in the Zimbabwean economy. However, theDirectors have a reasonable expectation that the organization has adequate resources to continue inoperational existence for the foreseeable future.
The Directors have assessed the ability of the organization to continue operating as a going concernand believe that the preparation of these financial statements on a going concern basis is stillappropriate.
19. Events after the reporting period
Owing to the continued scarcity of the USD in 2018 which resulted in a lot of pricing and marketdistortions, the determination of functional currency has become a matter of significant judgement.The Institute of Chartered Accountants of Zimbabwe (ICAZ) issued recommendations for entities toconsider the possibility of a change in the functional currency. This assessment was to be entityspecific. The Public Accountants and Auditors Board (PAAB) in consultation with the Reserve BankZimbabwe (RBZ) also deliberated on the matter. The PAAB issued some guidance on disclosures toaddress the matter. The disclosures intent to provide users with sensitivities of the amountspresented in the financial statements to the application of different deemed exchange rates betweenthe USD and Real Time Gross Settlement (RTGS) balances. RTGS balances and bond noteappeared to have a different inflation rate compared to hard currency. This was particularly moreobservable in the last quarter of 2018 and resulted in a 3-tier pricing system mostly in the informalmarket. There were huge settlement discounts for market participants settling in USD. This initiatedthe debate on whether the USD is still the functional currency of most entities. Despite all this, theofficial exchange rate between the Bond and USD remained at 1:1. There are a number ofarguments supporting the 1st of October 2018 as the effective date for a change in functionalcurrency owing to the spontaneous rise in the bond dollar inflation during the last quarter of 2018.When the organization’s cost structure for the last quarter is analysed, the observed high inflationdoes not necessary hold true as a result of the period in which the signficant part of the organization’sexpenditure was incurred which before October 2018. The organization is of the opinion that thechange in functional currency considerations are a post year end event pursuant to the MonetaryPolicy Statement (MPS) of 20 February 2019. Therefore, the functional and reporting currency of theorganization was USD for the entirety of 2018.
28
Notes to the Financial Statements (continued)for the year ended 31 December 2018
57
2018 ANNUAL REPORT
ZimTradeFinancial Statements for the year ended 31 December 2018
Notes to the Financial Statements2018 2017
$ $
20. Sensitivity of the Statement of Financial Position
As disclosed in note 1 and note 19, the functional currency of most reporting entities domiciled inZimbabwe has become a matter of significant judgement. The Public Accountants and AuditorsBoard (PAAB) came up with recommended disclosures to provide the users of financial statementswith more information assuming the application of different exchange rates to elements disclosed onthe statement of financial position. The company has split its Nostro USD valued assets and liabilitiesfrom the assets and liabilities held/contracted in local RTGS balances.
29
Notes to the Financial Statements (continued)for the year ended 31 December 2018
58
2018 ANNUAL REPORT
Zim
Trad
e
Fina
ncia
l Sta
tem
ents
for t
he y
ear e
nded
31
Dec
embe
r 201
8No
tes
to th
e Fi
nanc
ial S
tate
men
ts
20. S
ensi
tivity
ana
lysi
s of
the
stat
emen
t of f
inan
cial
pos
ition
to a
pplic
atio
n of
diff
eren
t exc
hang
e ra
tes.
Key
Ass
umpt
ions
The
com
pany
app
lied
the
follo
wing
ass
umpt
ions
in c
omin
g up
with
this
dis
clos
ure:
1
Nos
tro re
fers
to th
e in
tern
atio
nal U
SD th
at is
trad
able
on
inte
rnat
iona
l mar
kets
2 3
Alth
ough
sha
re c
apita
l is
deno
min
ated
in N
ostro
USD
follo
wing
ado
ptio
n of
USD
in 2
009,
it is
ass
umed
to b
e in
RTG
S do
llars
.4
The
sam
e ap
plie
s to
all
othe
r res
erve
s no
t with
stan
ding
that
they
wer
e ac
cum
ulat
ed in
a N
ostro
USD
env
ironm
ent.
5Th
e di
ffere
nce
betw
een
net a
sset
s an
d th
e re
sulta
nt e
quity
at t
rans
latio
n (th
e ba
lanc
ing
figur
e) h
as b
een
treat
ed a
s a
trans
latio
n re
serv
e in
equ
ity.
6
Elem
ent
ASSE
TSN
ote
Prop
erty
and
equ
ipm
ent
-
1,
967,
726
-
1,96
7,72
6
1,96
7,72
6
1,96
7,72
6
Inve
ntor
ies
16,5
79
16
,579
16
,579
16
,579
Tr
ade
and
othe
r rec
eiva
bles
-
43
,000
-
-
43
,000
43
,000
43
,000
C
ash
and
Cas
h eq
uiva
lent
s -F
CA
RTG
S U
SD87
,211
87,2
11
87,2
11
87,2
11
Cas
h an
d C
ash
equi
vale
nts
- Nos
tro U
SD70
,688
-
-
-
70,6
88
176,
720
282,
752
Tota
l ass
ets
70,6
88
2,
114,
514
-
-
2,
185,
203
2,
291,
235
2,
397,
267
LIAB
ILIT
IES
Non
-cur
rent
liab
ilitie
s78
9,57
4
789,
575
789,
575
789,
575
Trad
e an
d ot
her p
ayab
les
-
15
1,06
3
-
-
15
1,06
3
15
1,06
3
15
1,06
3
Pr
ovis
ions
-
14
4,80
1
-
14
4,80
1
14
4,80
1
14
4,80
1
To
tal l
iabi
litie
s-
1,08
5,43
8
-
-
1,08
5,43
9
1,08
5,43
9
1,08
5,43
9
EQU
ITY
Res
erve
s-
70,4
76
-
70
,476
70
,476
70
,476
Ac
cum
ulat
ed S
urpl
usSC
E-
1,02
9,28
8
-
1,
029,
288
1,
029,
288
1,
029,
288
N
on D
istri
buta
ble
Res
erve
- Ba
lanc
ing
figur
e-
-
-
-
10
6,03
2
21
2,06
4
To
tal s
hare
hold
ers'
equ
ity-
1,09
9,76
4
-
-
1,09
9,76
4
1,20
5,79
6
1,31
1,82
8
Tota
l equ
ity a
nd li
abili
ties
-
2,
185,
202
-
-
2,
185,
203
2,
291,
235
2,
397,
267
The
entit
y'sfu
nctio
nalc
urre
ncy
refle
cts
the
trans
actio
ns,e
vent
san
dco
nditi
ons
unde
rwhi
chth
een
tity
cond
ucts
itsbu
sine
ss.T
hefu
nctio
nalc
urre
ncy
does
notc
hang
eun
less
ther
eis
ach
ange
inth
eun
derly
ing
natu
reof
the
trans
actio
ns,r
elev
entc
ondi
tions
and
even
ts.N
otwi
thst
andi
ngth
ele
galf
ram
ewor
kwh
ere
the
bond
note
swe
reat
parw
ithth
eU
nite
dSt
ates
Dol
lar,
the
cond
ition
sin
the
alte
rnat
ive
mar
kets
refle
cted
asi
gnifi
cant
chan
geon
the
exch
ange
rate
ofth
ebo
ndto
the
Uni
ted
Stat
esdo
llar.
The
Publ
icAc
coun
tant
san
dAu
dito
rsBo
ad(P
AAB)
bein
gth
ere
gula
tory
boar
din
term
sof
the
Publ
icAc
coun
tant
san
dAu
dito
rsAc
t[C
hapt
er27
:12]
(her
ein
afte
rref
erre
dto
asth
eAc
t)is
sued
guid
elin
eson
disc
losu
res
topr
ovid
eus
ers
offin
anci
alst
atem
ents
with
usef
ulin
form
atio
nfo
rdec
isio
nm
akin
gas
sum
ing
the
appl
icat
ion
ofdi
ffere
ntex
chan
gera
tes
toth
eel
emen
tsdi
sclo
sed
inth
e fin
anci
al s
tate
men
ts a
s a
way
of a
sses
sing
the
impa
ct o
f the
exc
hang
e ra
te to
the
finan
cial
sta
tem
ents
thro
ugh
a se
nsiti
vity
ana
lysis
.
An a
dditi
onal
rate
of R
TGS$
4/U
SD w
as a
pplie
d in
com
ing
up w
ith th
e se
nsiti
vity
ana
lysis
. The
rate
is b
elie
ved
to b
e th
e pa
ralle
l mar
ket r
ate
prev
ailin
g at
31
Dec
embe
r
Mon
etar
y As
sets
/Lia
bilit
ies
Nos
tro
USD
Mon
etar
y As
sets
/Lia
bilit
ies
FCA
RTG
S U
SD
Non
-Mon
etar
y As
sets
/Lia
bilit
ies
Nos
tro
USD
Non
-Mon
etar
y As
sets
/ Lia
bilit
ies
FCA
RTG
S U
SD
Tota
l USD
@
1:1
Tota
l N
ostr
o U
SD
@1:
2.5
Tota
l N
ostr
o U
SD
@1:
4
Non
-mon
etar
y as
sets
are
ord
inar
ily tr
ansl
ated
at t
he s
pot r
ate
at d
ate
of p
urch
ase.
The
ass
umed
spo
t dat
e is
31
Dec
embe
r 201
8.
30
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