Zimbabwe Newspapers 1980 : 2023 FY Financials & Audit Report

CHAIRMAN'S STATEMENT

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2022

• 1. Overview

  On behalf of the Board and Management, I hereby present the financial results for Zimbabwe

• Newspapers (1980) Limited for the year ended 31 December 2022.

• 2. The Operating Environment

  The year under review witnessed some economic recovery as the country's gross domestic product (GDP) was reported by the Government of Zimbabwe (GoZ) to have grown by 4%. During the year, the Ministry of Finance and Economic Development made some worthwhile economic interventions to curtail inflation that was threatening the existence of the local currency. Regrettably, some of these measures severely affected liquidity in the market resulting in the general slowdown in economic activity. Inflationary pressures remained onshore as year on year (YoY) inflation closed the year at 243.8% compared to 60.7% for the same period in 2021.

• 3. The Media Environment

  The media environment continued to be stable. Recovery of our printed newspapers, which had taken a knock during the Covid-19 years is on course, whilst the digital platforms are enjoying remarkable growth in audiences. Radio continues to attract huge audiences while television is still an area of potential growth. The newly licensed television stations, including our own Zimpapers Television Network (ZTN), are steadily finding their place in a market that for years had been dominated by one player.

  The modest recovery of the print business is consistent with world trends as shown by the recently released WAN-IFRA World Press Trends 2022-2023 report. The report says print continues to dominate revenues. "When combined, print advertising and circulation generate more than half (53.5%) of the total income seen by our survey respondents but is down from last year's report when it was at 56.1%."

  The report also notes that: "Publishers are contending with issues on multiple fronts. These considerations include high levels of inflation, rising paper and print costs, as well as ongoing changes to advertising markets."

  We continue to make investments into our journalism through training and injection of new skills as we seek to remain relevant in the face of other competing sources of news and information. We, by far remain the most trusted source of credible news and information as confirmed by results of the Zimbabwe All Media Products Survey (ZAMPS), where our platforms are the most dominant.

  We continue to value professional and ethical journalism, which is the mainstay of mainstream journalism in an environment where fake news continues to spread, particularly through social media. Cabinet has since approved the principles of the Media Practitioners' Bill, paving the way for the enactment of a law that will demand high standards of journalism.

• 4. Digital Media

  The company has taken steps to exploit positive benefits arising from the Artificial Intelligence (AI) revolution to provide better user experience while ensuring protection against negative digital manipulation and unpredictable digital side effects. The company has configured its digital platforms to deliver the correct content to the right audience resulting in users that are more satisfied since they can easily locate what they need.

Using AI and research on global digital media trends, the company's digital platforms continue to improve and offer more value-added services and products that can keep the users engaged longer. This allows the company to provide better value to all its stakeholder chain.

5.

Financial Performance

Application of International Accounting Standard (IAS) 29: Inflation Adjusted Financial Statements

The Directors of the company have applied the principles of IAS 29 to prepare the Group's inflation adjusted financial statement for the year ended 31 December 2022. In that regard, the primary set of financial statements for the company are the hyperinflated numbers, which have been the basis for this commentary.

• 6. Financial Performance Overview

  Despite the challenging operating environment, the company grew its revenue by 61% to Z$18.6 billion from Z$11.6 billion recorded for the same period last year. Owing to inflationary pressures and unabated increase in the cost of imported raw materials, gross profit margin declined to 63% from the 66% for same period last year.

  Nevertheless, the company improved its earnings before interest and tax (EBIT) margin to 11% compared to 9% for the same period last year. This was a result of improved overheads management which were at 54% to turnover compared to 58% for last year.

  Owing to tight liquidity arising from delayed payments by most of our clients and the required capital expenditure, the company had to access costly short-term funds to meet its working capital needs. This had a negative impact of increasing the cost of borrowing to Z$610.7 million. Profitability for the company was further affected by a monetary loss adjustment of Z$940.8 million that was recorded during the period under review. Resultantly, a net profit before tax of Z$384.7 million was recorded compared to Z$494.9 million for the prior year.

• 7. Newspaper Division

  The Newspapers Division increased its top line by 59% mainly as a result of the need to protect margins in a hyperinflationary environment. Cost optimisation remained critical in ensuring its survival and improving the profit margins of the division. The division recorded earnings before interest, tax, and monetary adjustments of Z$1.9 billion.

• 8. Commercial Printing Division

  The Division recorded a 63% revenue growth driven by some volume growth in labels and general printing. In line with the revenue growth and cost optimisation interventions, the unit posted earnings before interest, tax, and monetary adjustment of Z$443.0 million for the period under review. The division continued to face challenges in obtaining adequate foreign currency for importation of critical raw materials, resulting in a negative impact on the ability of the division to stretch its growth ambitions.

• 9. Broadcasting Division

  Top line for the division grew by 67% compared to last year. The growth in revenue was driven by both radio and television units which grew by 74% and 42% respectively. The broadcasting division's overall profitability continued to be weighed down by the newly licensed television channel that was launched on DSTV channel 294 in May 2022. The channel has however been gaining acceptance in the market and its prospects are very high.

• 10. Corporate Governance

  In compliance with good Corporate Governance, the company's Audit and Risk Committee, Business Development and Marketing Committee, Human Resources, Remuneration, Nomination and Pension Fund Committee and the Corporate Social Responsibility Committee met four times each during the year under review to assess operations and adequacy of systems and procedures that safeguard the company's assets.

• 11. Corporate Social Investment

  The company's corporate community social responsibility programs remained robust and has embarked on Sustainable Development Goals (SDGs) driven programs. Under the green up campaign, the company is leading and encouraging other organisations to green up their business premises, rooftops and road verges. Furthermore, the Zimpapers Junior Media Club mentorship program was rolled out in different schools across the country. In addition, relationships with learning institutions were strengthened as the company's bursary scheme remained in place and its advocacy for cancer and health related matters continued during the period under review. We continued to host our flagship highly subscribed annual Cancer Power Walk where all proceeds were donated for the fight against cancer.

• 12. Dividend

  Due to the difficult operating environment associated with severe liquidity challenges at the background of new capital-intensive projects that are being pursued by the company, the Board of directors recommend that there be no dividend payment for the year just ended.

• 13. Outlook

  The obtaining economic outlook is encouraging despite the first quarter of the year having started on a very difficult patch. The diversification strategy adopted by the company will continue to anchor its ability to give clients media options of their choice as the company now offers a 360-degree media solution.

  The situation on the supply of imported raw materials is improving. This gives us better prospects for the future of the company as new supply chains replacing the traditional Ukraine/Russia sources are being found. The increased use of the United States Dollar in the economy may bring some relief on the availability of foreign exchange. Furthermore, the record-breaking agricultural output and encouraging growth prospects from mining, tourism and general construction is the basis for our optimism for a better year ahead.

• 14. Appreciation

  Let me extend my sincere appreciation to all the customers, readers, listeners, viewers, advertisers, shareholders and all other stakeholders who have supported the company that has been in existence for over a century. I am aware of the sacrifices and perseverance by my fellow Board members and our greatest asset, the employees to keep the company going and would like to thank and applaud them for their resilience and a job very well done under very difficult circumstances.

DIRECTORS' RESPONSIBILITY STATEMENT

The directors are required by the Companies and Other Business Entities' Act (Chapter 24:31) to maintain adequate accounting records and are responsible for the content and integrity of the Company's abridged financial statements and related financial information included in this report. It is their responsibility to ensure that the Company's abridged financial statements fairly present the state of affairs of the Company as at the end of the period and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards.

INDEPENDENT AUDITOR'S OPINION STATEMENT

The audited abridged inflation adjusted financial results should be read in conjunction with the complete set of financial statements of Zimpapers for the financial year ended 31 December 2022, which have been audited by Baker Tilly Chartered Accountants, signed by Courage Matsa, PAAB Practising certificate 0607 and an unqualified opinion has been issued thereon.

The audit repor t also includes an emphasis of matter paragraph relating to the fact that the radio licences for Capitalk and Nyaminyami were awarded to Kingstons by the Broadcasting Authority of Zimbabwe and Zimpapers is operating the radio stations under a management agreement.

The auditor's report on these inflation adjusted financial statements and the full set of the inflation adjusted financial statements, is available for inspection at the Company's registered office and the same has been lodged with the ZSE.

STATEMENT OF COMPLIANCE

The Company's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and in compliance with the Companies and Other Business Entities Act (Chapter 24.31). The Company's financial statements are based on the statutory records maintained under the historical cost convention as restated in line with IAS29 principles. The operating environment was declared on the 1st of July 2019 to have met the conditions for hyperinflation repor ting.

IAS29 requires that prior year comparatives and current year's transactions be restated to take account of the effects of the changes in the general purchasing power of the local currency. To that effect, the indices and conversion factors used were as follows:

AUDITED CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the year ended 31 December 2022

Condensed Statement of Financial Position as at 31 December 2022

Number of shares in issue(000s)

Basic earnings per share (cents)

Diluted earnings per share (cents)

Headline earnings per share (cents)

Total comprehensive income for the year

Revenue

Gross profit

Other operating income

Operating exenses

Selling & distribution expenses Administration expenses

Profit from operations before financing cost, exchange gain and monetary adjustments

Net financing cost

Exchange gain/ (loss)

Monetary loss

Profit before tax

Tax expense

Profit after tax

Other Comprehensive income

Total Other Comprehensive incomeAudited 2021 ZWL$

Audited 2021 ZWL$

Notes

(6,734,794,411)

(1,088,879,067) (5,645,915,344)

11,577,760,955

1,054,577,810

7,639,091,805

150,280,416

(161,784,949)

(289,911,312)

(313,984,019)

333,112,692

494,897,641

- 333,112,692

44,215,162

576,000 57,83 57,83 49,72

-

(1,593,004,955)

(259,942,235) (1,333,062,720)

1,770,780,218

2,708,274,032

(44,137,093)

(67,446,774)

36,016,556

213,791,819

11,569,839

157,914,884

113,777,791

- 113,777,791

576,000 19,75 19,75 17,21

-

-

ASSETS Non-current assets

Property, plant and equipment

Long term investment 3,231,771

Current assets Inventories

Trade and other receivables Financial assets at fair value through profit and loss

Tax refundable

Bank and cash

Total assets

EQUITY AND LIABILITIES

Equity and reserves Share capital Accumulated profit Revaluation reserve

Non-current liabilities Long term borrowings Deferred tax

Current liabilites

Trade and other payables Short term borrowings Tax payable

Bank overdraft

Total liabilities

Total equity and liabilities

7

Net cash inflows from operations Net cash outflows from investing activities

Net cash (outflows)/Inflows from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at end of the period

Audited 2021 ZWL$

1,319,622,119

• (1,155,420,792) (2,051,937,352)

• (1,093,274,922) 298,122,896

(434,192,337)Audited 2021 ZWL$

(312,397,353)

121,794,984

244,748,697

• (599,119,250) (462,425,661)

• (523,418,000) 104,758,091

(112,918,873)

22,042,254

(90,876,619)

CONDENSED STATEMENT OF CHANGES IN EQUITYfor the year ended 31 December 2022

Balance at 31 December, 2020

Total comprehensive income for the period

Dividend paid

Balance at 31 December, 2021

Total comprehensive income for the period

Revaluation surplus

Dividend paid

Balance at 31 December, 2022

Balance at 31 December, 2020

Total comprehensive income for the periodDividend paid

Balance at 31 December, 2021

Balance at 31 December, 2021

Total comprehensive income for the periodRevaluation surplus

Dividend paid

Balance at 31 December, 2022

Share capital

Revaluation reserve

ZWL$

ZWL$

57,600

• 286,920,461 124,779,226 411,757,287

  - -- -

  57,600

  • 286,920,461 238,557,017 525,535,078

    -

  • - 579,794,287 579,794,287

  • - 8,779,869,767

  - 57,600

  -9,066,790,228

  Share capital

  ZWL$

  Revaluation reserve

  ZWL$

  2,579,767

  1,105,498,039

  -

  • - 96,902,726

  -

  -

  • 2,579,767 1,105,498,039

  • 8,868,204 3,800,258,701

  -

  -

  • - 5,437,099,050

  Retained (loss)/ profit

  ZWL$

  Total ZWL$

  (22,291,200)

• 113,777,791 113,777,791

796,060,104

--

Retained (loss)/ profit

ZWL$

8,868,204

-

9,237,357,751

-

1,166,625,394

-

4,343,502,712 8,152,629,617

96,526,062

-

(35,003,245)

4,405,025,529

BUSINESS SEGMENT REPORT

The commercial printing segment is involved in the printing of books, labels, security documents, diaries, calendars and offering of origination services. The newspaper segment is involved in newspaper and magazine printing and publishing. The broadcasting segment includes commercial free-to-air radio stations and television channel. The corporate segment comprises Head Office administrative operations.

External revenue

Results

Segment profit/ (loss) Net finance expenses Exchange gain Income tax expense Profit for the period

CommercialNewspapersBroadcasting

Printing 2022 ZWL$

2022 ZWL$

2,525,423,532

8,038,814,882 2,690,815,038

337,283,748

1,201,932,547 (324,787,985)

As at 31 December 2022 reportable segment assets and liabilitiesSegment assets

Current Assets Non current Assets

Segment liabilities

Current liabilities Non current liabilities

Deferred tax liabilityCorporate

2022 ZWL$

2022 ZWL$

-39,219,180

4,893,901,343

10,248,752,524 1,346,863,509 120,216,523

973,391,955 1,710,141,685 857,317,600 77,687,681

3,920,509,388 8,538,610,839 489,545,909 42,528,842

600,357,686 1,913,420,747 762,179,845 509,094,234

594,718,797 1,913,420,747 743,965,343 509,094,234

External revenue

Results

Segment profit/ (loss)

Net finance expenses Exchange loss Monetary loss Income tax expense Profit for the period

CommercialNewspapersBroadcasting

Printing 2022 ZWL$

2022 ZWL$

3,370,966,978

11,563,436,189 3,700,984,271

442,988,902

1,881,832,585 (456,050,476)

As at 31 December 2022 reportable segment assets and liabilitiesSegment assets

Current Assets Non current Assets

Segment liabilities

Current liabilities Non current liabilities

5,199,712,178 987,994,414 4,211,717,764

13,186,362,579 2,723,468,334 295,370,302

1,733,995,465 865,343,782 116,483,689

11,452,367,114 1,858,124,552 178,886,613

600,357,686 1,913,420,747 762,179,845 509,094,234

594,718,797 1,913,420,747 743,965,343 509,094,234

- 18,214,502

- -

As at 31 December 2021 reportable segment assets and liabilities

External revenue

Results

Segment profit /(loss) Net finance expenses Exchange gain Income tax expense

Commercial Newspapers BroadcastingPrinting 2021 ZWL$

2021 ZWL$

• 492,211,577 1,691,059,811

• 38,337,703 200,104,916

Profit for the period

As at 31 December 2021 repor table segment assets and liabilities

Corporate

2022 ZWL$

2022 ZWL$

-85,581,630

-

-

-Corporate

2021 ZWL$

2021 ZWL$

525,002,644

-

(17,033,340)

(7,617,460)

Segment assets

Current Assets Non current Assets

Segment liabilities

Current liabilities Non current liabilitiesDeferred tax liability

• 244,737,699 748,149,286 357,238,658 79,107,693

• 152,905,396 307,942,425 115,353,323 24,716,299

• 91,832,303 440,206,861 241,885,335 54,391,394

  112,220,926 94,196,684 18,024,242

  425,510,417 417,994,303 7,516,114

  -

  -As at 31 December 2021 repor table segment assets and liabilitiesExternal revenue -

  Results

  Segment profit /(loss)

  Net finance expenses Exchange gain Monetary loss Income tax expense

  Profit for the period

  CommercialNewspapers

  Printing 2021 ZWL$

  2021 ZWL$

  2,071,916,204

  7,288,031,265 2,217,813,486

  149,894,552

  941,156,469

  As at 31 December 2021 repor table segment assets and liabilities

• 219,697,122 79,542,693

• 145,632,679 71,699,556

• 74,064,443 7,843,137

-

-

BroadcastingCorporate

2021 ZWL$

2021 ZWL$

-(24,724,654)

(11,748,557)

Current Assets Non current Assets

Segment liabilities

Current liabilities Non current liabilities

2,949,336,426 8,074,225,948 1,885,904,181 335,849,045

1,113,162,499 1,836,173,927

1,082,399,386 400,631,192 85,176,190 6,991,826,562 1,485,272,989 250,672,855

385,770,517 323,810,405

1,462,734,087 1,436,896,703

• 61,960,112 25,837,384

-

• - 18,214,502

-

-

-

-Deferred tax liability

• 755,230,559 334,998,789

• 500,626,720 308,037,231

• 254,603,839 26,961,558

-

-

-

-NOTES TO THE AUDITED CONDENSED FINANCIAL STATEMENTS for the year ended 31 December 2022

• 1. General information

  Zimbabwe Newspapers (1980) Limited and its subsidiaries are incorporated and domiciled in Zimbabwe. The Company's main business is that of newspaper proprietors, printers ,publishers and broadcasters. The Company's registration number is 600/B280.

• 2. Currency

  • 4. Accounting policies

    The principal accounting policies adopted in the preparation of these financial statements are consistent in all material respects with those applied in the previous annual financial statements. The Company has adopted IAS 29 (Financial Reporting in Hyperinflationary Economies).

  • 4.1 Adoption of IAS 29 ( Financial Reporting in Hyperinflationary Economies)

    In October 2019, the Public Accountants and Auditors Board (PAAB) issued a pronouncement prescribing that the adoption of financial reporting in hyper inflationary economies had become effective for the reporting periods on or after 1 July 2019 in Zimbabwe. These financial statements have been prepared in accordance with IAS 29 (Financial Reporting in Hyperinflationary Economies) together with International Financial Reporting Interpretations Committee (IFRIC) 7, as if the economy had been hyperinflationary from 1 January 2018. The Company adopted the Zimbabwe Consumer Price Index as the general price index to restate trannsactions and balances. Assets and liabilities carried at fair value have not been restated as they are presented at the measuring unit current at the end of the reporting period. Items recognised in the Statement of Profit or Loss and Other Comprehensive Income have been restated by applying the change in the general price index from the dates when the transactions were intially recorded in the Company"s records. A net monetary adjustment was recognised in the Statement of profit/ loss for the year and the comparative period. All items in the Statement of Cashflows are expressed based on the restated financial information for the period.

    The Company applied the Zimbabwe Consumer Price Index (CPI) as the general price index and used the monthly indices to inflation adjust the historical cost figures. Below are the factor used in the period under review.

    Dec-20

    Dec-21

    Dec-22

  • 5. Significant transactions

    Month	Factor
    2,474.50	5.53
    3,977.46	3.44
    13,672.91	1.00

  • 5.1 Additions to proper ty,plant and equipment

  • 5.2 Deferred Tax liability

  • 6 Earnings per share Profit for the year

  2022 ZWL$

  Inflation Adjusted

  2021 ZWL$

  6.1 6.2 6.3

  7

  Number of shares used in calculating earnings per share

  Shares in issue

  Weighted average number of shares in issue

  Basic earnings per share

  Historical Cost

  2022 ZWL$

  8

  Basic earnings per share is calculated by dividing the profit attributable to ordinary equity holders of the parent company by the average number of ordinary shares in issue during the year.

  Headline earnings per share

  Headline earnings per share is calculated by dividing headline earnings for the period attributable to ordinary equity holders of the parent company by the weighted average number of ordinary shares in issue during the year.

  plant and equipment	85,746,103
  Fair value gain on equities	35,377,511
  Headline profit	217,649,676
  Basic earnings per share - cents	16,76
  Diluted earnings per share - cents	16,76
  Headline earnings per share - cents	37,79
  Borrowings
  FBC Bank Limited:
  Long term portion	23,853,391
  Short term portion of long term
  borrowings	131,887,962
  155,741,353

  2021 ZWL$

  Headline earnings is calculated as follows: Profit for the year attributable

  to ordinary equity holders 96,526,062	333,112,692	579,794,287	113,777,791
  Loss/(profit) on disposal of property,
  (3,519,548)	(35,795,421)	(636,962)
  (43,229,613)	(4,704,222)	(14,036,971)
  286,363,531	539,294,643	99,103,858
  57,83	100,66	19,75
  57,83	100,66	19,75
  49,72	93,63	17,21
  369,362,893	23,853,391	107,447,936
  229,090,324	131,887,962	66,642,543
  598,453,217	155,741,353	174,090,479

  Trade	749,721,835	309,605,934	749,721,835	90,064,593
  Accruals	1,796,533,221	1,547,599,558	1,796,533,221	432,289,144
  Tax related payables	551,962,891	81,567,392	551,962,891	23,728,014
  3,098,217,948	1,938,772,884	3,098,217,948	546,081,751
  Cyclicality of operations

  Trade and other payables

  The FBC Bank Limited borrowing was obtained at the prevailing interest rate per annum and is repayable over 3 years. The loan is secured by land and building with a carrying amount of $5,052 billion.

  1,208,276,139 3,968,609,397 96,526,062 lating earnings per 576,000,000 576,000,000 culated by dividing th r of ordinary shares ialculated by dividing h y the weighted averag as follows: 96,526,062 er ty, 85,746,103 35,377,511 217,649,676 16,76 s nts 16,76 37,79 23,853,391 131,887,962 155,741,353 g was obtained at the land and building with 749,721,835 1,796,533,221 551,962,891 3,098,217,948	639,774,311 2,961,773,455 579,794,287 576,000,000 576,000,000 o ordinary equity h ar. he period attributab shares in issue du 579,794,287 (35,795,421) (4,704,222) 539,294,643 100,66 100,66 93,63 23,853,391 131,887,962 155,741,353 e per annum and i f $5,052 billion. 749,721,835 1,796,533,221 551,962,891
  3,098,217,948

  1,208,276,139 3,968,609,397

  2,095,443,299 639,774,311 466,163,714 2,153,952,031 2,961,773,455 66,727,100

  96,526,062

  • 333,112,692 579,794,287 113,777,791

    576,000,000 576,000,000

    576,000,000 576,000,000

  • 576,000,000 576,000,000

  • 576,000,000 576,000,000

  9

  A significant portion of the Company's revenue is derived from newspapers sales and advertising. Due to the nature of the Company's income, there is no defined pattern of cyclicality or seasonality of operations and profitability.

  The Company's functional and presentation currency is the Zimbabwean dollar ("ZWL$") effective 1 January 2018.

• 3. Basis of preparation

  The company's financial statements for the year ended 31 December 2022 have been prepared in accordance with the Zimbabwe Stock Exchange listing requirements and the Zimbabwe Companies and Other Business Entities Act (Chapter 24:31). The inflation adjusted financial statements have been prepared based on statutory records maintained under the historical cost basis as modified by the revaluation of property, plant and equipment and equity investments have been measured at fair value.

Chartered Accountants Celestial Office Park, Unit D & H Block 1, Borrowdale Road, Borrowdale, Harare Zimbabwe

T: +263 242 369 730, 369 737, 301 598, 301 537

enquiries@bakertilly.co.zwwww.bakertilly.co.zw

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Zimbabwe Newspapers 1980 Limited ("Zimpapers")

Report on the Audit of the Inflation Adjusted Consolidated Financial Statements

Opinion

We have audited the inflation adjusted consolidated financial statements of Zimbabwe Newspapers 1980 Limited ("Zimpapers") and its divisions which comprise the inflation adjusted consolidated statement of financial position as at 31 December 2022, the inflation adjusted consolidated statement of profit or loss and other comprehensive income, inflation adjusted consolidated statement of changes in equity, inflation adjusted consolidated statement of cash flows for the year then ended, a summary of significant accounting policies and other explanatory notes to the financial statements.

In our opinion, the consolidated inflation adjusted financial statements fairly presents the inflation adjusted consolidated statement of financial position as at 31 December 2022, and its financial performance and cashflows for the year ended in accordance with the International Financial Reporting Standards (IFRS) and in the manner required by Zimbabwe Newspapers 1980 Limited ("Zimpapers") accounting policies.

Basis for Opinion

We conducted our audit in accordance with International Standards (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the financial statements section of our report. We are independent of the organisation in accordance with the International Ethics Standards Board for Accountants Code of Ethics Professional Accountants (Parts A and B) (IESBA Code) and other independence requirements applicable to performing audits of financial statements in Zimbabwe. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and in accordance with other ethical requirements applicable to performing audits in Zimbabwe. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

ADVISORY • AUDIT • TAX • ACCOUNTING

Baker Tilly Chartered Accountants trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities.

Emphasis of Matter

Ownership of Radio Licences for Capitalk and Nyaminyami

We draw attention to the notes of the inflation adjusted financial statements which brings to attention of users of financial statements that the radio licences for Capitalk and Nyaminyami were awarded to Kingstons by the Broadcasting Authority of Zimbabwe. Zimpapers is managing the radio stations on behalf of Kingstons under a management agreement. Our opinion is not modified in respect of this matter.

Other Information

The directors are responsible for the other information. The other information comprises the Directors Report Chairman's Report, Chief Executive Officer's Report and the Corporate Governance Report. Other information does not include the inflation adjusted financial statements and our auditor's report thereon.

Our opinion on the inflation adjusted 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 inflation adjusted financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the inflation adjusted financial statements or our knowledge obtained during 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 on this other information, we are required to report that fact. We have nothing to report in this regard.

Auditor's Responsibilities for the Audit of the Financial Statements

The objectives of our audit 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 ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with International Standards on Auditing, we exercise professional judgment and maintain professional scepticism throughout the planning and performance of 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 entity's internal control.

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

•  Conclude on the appropriateness of the directors' use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group'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 the auditor's report. However, future events or conditions may cause the company to cease to continue as a going concern.

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

•  Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the inflation adjusted consolidated financial statements.

We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for the audit opinion.

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

We also provide the directors with a statement that we complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be brought to bear on our independence, and where applicable related safeguards.

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

The engagement partner on the audit resulting in the Independent Auditor's report is Courage Matsa

Report on Other Legal and Regulatory Requirements

Companies and Other Business Entities Act (Chapter 24:31)

In our opinion, the accompanying inflation adjusted financial statements have in all material respects, been properly prepared in compliance with the disclosure requirements of and in the manner required by the Companies and Other Business Entities Act (Chapter 24:31).

Partner: Courage Matsa

PAAB Practising Number: 0607

Baker Tilly Chartered Accountants (Zimbabwe) Harare

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