Final Results

Masawara Plc

19 April 2011

Masawara plc ("Masawara" or the "Group")

Final Results for the year ended 31 December 2010

Masawara is pleased to announce its audited results for the year ended 31 December 2010. The results include the period since Masawara was admitted to AIM on 19 August 2011 ("Admission"), successfully raising approximately $25m before expenses. In addition to the statutory financial statements for the financial year ended 31 December 2010, the results include a Pro-forma Statement of Comprehensive Income that has been disclosed from the date of listing. The Directors believe that this more accurately reflects the Group's ongoing performance.

In line with its stated investment strategy, the Company has successfully applied a significant proportion of the funds raised on Admission to two investments which the Board believes will generate additional shareholder value in the medium term. The acquisition of the marketing and distribution assets of BP Zimbabwe (Private) Limited and Shell Zimbabwe (Private) Limited in Zimbabwe was announced in March 2011 and Masawara's investment in the telecommunications business, Telerix Communications (Private) Limited was finalised in January 2011. As both these investments were completed after Masawara's year end, the financial impact of these transactions on the results for the year and the net asset value of Masawara at 31 December 2010 are not included.

Following the successful deployment of the majority of the funds raised on Admission the Board has decided to pursue a secondary fundraising on AIM to raise up to $23.5 million (£14.5 million) at an expected price of approximately 60 pence per share. It is intended that these funds will be applied to additional investment opportunities in Zimbabwe. This fundraising is currently being finalised and further details will be announced in short order.

Contact details

Masawara plc

Oliver Lutz/Rutendo Maziva +263 4 751805

Cenkos Securities plc (Nominated adviser and broker)

Nicholas Wells/Max Hartley /Elizabeth Bowman +44 20 7397 8900

CHAIRMAN'S STATEMENT

David Suratgar - Chairman, Masawara plc

As this is the Group's first annual report, I invited the CEO of the Group's Investment Advisor, Shingai Mutasa, who is based and active in Zimbabwe overseeing the Group's investment strategies, to make a statement to you, our shareholders, on the Group's activities in the first few months since listing and to share his thoughts on the exciting and promising journey that lies ahead for the Group. His statement is incorporated in my report.

Shingai Mutasa, CEO, FMI Zimbabwe (Private) Limited (Masawara plc's Investment Advisor)

"I would like to thank the Chairman of Masawara Plc, for this opportunity to communicate to you our activities and achievements so far and to share with you our plans for the immediate future of Masawara plc.

Masawara plc was created to address the need for long-term capital that could be deployed in Africa. Once we began to think deeply around the investment case, with guidance from your Board it became clear that the immediate focus should be on Zimbabwe.

Why is Zimbabwe such a compelling case? Firstly, although degraded, the country's infrastructure remains largely intact and still offers the country a comparative advantage over other southern African nations outside of South Africa.

Secondly, Zimbabwe's human capital is arguably second to none in the region north of South Africa, with the highest literacy rate on the continent, and a very strong work ethic. As a people, Zimbabweans have survived some of the worst hyperinflation and exchange rate collapse of this and the past century. Zimbabweans have come out of the hyperinflation decade battered and bruised, but with a resilience and resourcefulness that is growing and will continue to grow this economy.

Last, but not least, Zimbabwe is blessed with an abundance of natural resources, providing opportunities in agriculture, mining, manufacturing and tourism. Our view is that the potential for agriculture in Zimbabwe is significant. As an example, tobacco production grew by 17% from 48 million kilogrammes in 2008 to 56 million kilogrammes in 2009, this increased by a further 125% to 126 million kilogrammes in 2010. The 2011 crop is anticipated to exceed 170 million kilogrammes, which will be a 35% increase from the 2010 output. In the mining sector, the potential of this country continues to exceed expectations, with production output doubling in 2010 from 2009 levels. Diamonds, platinum group metals, gold, coal, nickels, rare earths and chrome are all in very significant commercial quantities.

The challenge for Zimbabwe is the continued global perception reflecting:

- ongoing political uncertainty caused by the transition from the revolutionary politics of Independence to the next generation of Zimbabwean leaders;

- the misunderstanding and lack of clarity around economic empowerment and indigenisation legislation; and

- the lack of liquidity in the economy as it transitions from the hyperinflation decade.

All of these factors have led to a valuation of Zimbabwean assets at levels that we believe are heavily discounted. We believe that notwithstanding the above factors, your Board and the Investment Advisor have the ability to navigate Masawara through the challenges and focus the Group's investments on the long-term delivery of superior returns for shareholders. We believe that the returns are sufficiently compelling to justify the risks.

We are convinced that Masawara is a very attractive vehicle for any investor seeking exposure to Zimbabwe. Our strategy is that of a proactive investor. We work closely with management of our underlying investee companies to map out their strategic direction and empower them to deliver outstanding results. Results of our investee companies are continually monitored and discussed with the respective management teams of the Group's investee companies. The Investment Advisor team is on the ground in Zimbabwe, and is continuously available to the management of our various investee companies to consult, guide and assist.

In spite of the difficult conditions pertaining in the international capital markets, Masawara raised US$24,3 million at listing in August last year. With this, Masawara has successfully completed two acquisitions post year-end (Note 32) of first class assets, the growth of which we believe will far surpass the Group's targeted Internal Rate of Return (IRR).

Operating in an environment that remains starved of investment capital, we believe that the Group has a strong negotiating position with respect to the acquisition of further assets. Zimbabwe is awash with attractive opportunities and the Investment Advisor is continually offered excellent investment opportunities. These factors have encouraged us to return to the capital markets to raise additional capital. In that regard, we are targeting a similar amount to that raised at the time of the listing, to be raised during the second quarter of 2011.

The Group would like to invest a significant portion of the further capital raised in the minerals and resources sector, a compelling investment case in Zimbabwe. The most attractive resources are coal, gold and chrome, although to a lesser extent the Group will look at platinum group metals and rare earths. More importantly, we will seek global players who have the technical expertise and capital to work the various opportunities that are presented to the Group.

A discussion of the opportunities and challenges presented by Zimbabwe would be incomplete without touching on indigenisation. Our belief is that the indigenisation policy is work in progress. There is a clear need to find effective ways to empower the citizens of Zimbabwe as this is important in promoting the sustainability of a society. However, this has to be balanced with Zimbabwe's need for international capital to develop. It is this challenge that leads us to believe that the current policies will evolve favourably. However, as a company that meets the requirements of the indigenisation rules, Masawara plc will be able to participate in the acquisition of and investment in Zimbabwean assets."

David Suratgar

Like Shingai, I am enthusiastic about the prospects for our Group and encouraged by Shingai and the investment Advisor team's plans. I believe that your capital has been deployed in first class assets. Whilst Zimbabwe has its unique challenges at this time, it is clear that there are further attractive investment opportunities waiting to be secured. The time to participate in the revival of Zimbabwe is now, and I believe that Masawara as an early mover is destined to maximise the potential returns to investors.

Looking at the investments held as at year-end, TA Holdings Limited, an associate of the Group, performed below expectations, and made a loss for the year of $5,1 million (Group's share $2 million). More details on these results are included in the Directors' Report on page 9. In 2011, TA Holdings Limited management is focusing on returning the Zimbabwe investments to profitability, and moving the Sable Chemical Industries Limited operations to a more efficient energy source like coal gasification.

The retail section of our investment property, Joina City, was opened for trade in March 2010 and occupancy was staged, increasing to 63% as at 31 December 2010. As at year-end, the office section of Joina City was 99% complete, and was fully completed in February 2011. Significant progress has been made post year-end in securing tenants for the office space, and we anticipate that the offices will be fully occupied by September 2011. Further details on the investment property are included in the Directors' report and in Note 14 of the financial statements.

Overall, the Group reported a loss for the year after tax of $2,1 million, and further details are included in the Directors report.

Post balance sheet events

Post year-end, the Group concluded the acquisition of BP Zimbabwe (Private) Limited and Shell Zimbabwe (Private) Limited, which jointly own BP and Shell Marketing Services (Private) Limited. BP and Shell Marketing Services (Private) Limited, is a long established importer and distributor of petroleum products in Zimbabwe. It has the largest storage capacity and widest distribution network for petroleum products in Zimbabwe comprising, 70 retail sites and 10 depots across the country. We expect this business to experience significant growth in the next two years, as it receives a working capital injection, and it regains lost market share from the current 16%, to the historical levels in excess of 40%.

Another transaction concluded post year-end, was the acquisition of a 50% share in a Zimbabwean Internet Service Provider, Telerix Communications (Private) Limited. A wholly owned subsidiary of Telerix Communications (Private) Limited has a licence that allows it to construct, operate, develop and maintain a public data internet access and Voice Over IP network in Zimbabwe. During the second quarter of 2011, the roll-out of a Fourth Generation ("4G") network will be implemented, and a fast, reliable WiMax network established to allow end user connectivity to the Internet.

We are very excited by these two acquisitions, and they will have a significant impact on the net asset value and the results of the Group from 2011 onwards.

Let me conclude by thanking my fellow Board members for their sterling work in helping me steer the Group during the first year. I also thank Shingai and his team at the Investment Advisor, which has played a critical role in our achievements so far.

Thank you

D Suratgar

18 April 2011.

REPORT OF DIRECTORS

The directors present the audited financial statements of the Group for the year ended 31 December 2010.

Principal Activities

Masawara Plc is an investment company and was admitted to the London Stock Exchange's AIM and successfully raised $24,3 million on 19 August 2010. The initial portfolio comprises an interest in Joina City through its subsidiary Dubury Investments (Private) Limited, and a 30% interest in TA Holdings Limited ("TA Holdings").

Joina City is a premium, multi-purpose property, located in Harare Central Business District in Zimbabwe, providing rental property for retail, entertainment and office space.

TA Holdings Limited is a diversified investment company that holds stakes in insurance, agro-chemical and hospitality businesses across sub-Saharan Africa and is listed on the Zimbabwe Stock Exchange.

Investment Strategy

Masawara Plc invests in businesses and assets primarily located in Zimbabwe. To the extent that value opportunities exist and attractive returns can be achieved, investments will also be considered elsewhere on the African continent.

In the identification of investment opportunities, emphasis is placed by Masawara Plc on identifying value propositions, with a view to finding, unlocking and extracting embedded real value. The Investment Advisor, FMI Zimbabwe (Private) Limited (a subsidiary of the company), advises the Board on opportunities, acquisitions and sales, exit strategies and manages the Group's portfolio of investments on a day-to-day basis, with a view to achieving the Group's investment objective and strategy.

Return

The Group targets investments that it considers likely to generate a minimum project IRR of 25%.

Business preference

The investment criteria adopted are:

·; emphasis on investment in cash generative businesses;

·; ability to influence the business at a board level, with the Group's executives adding structuring and financing expertise to the management of the business, as well as significant industry relationships and access to finance;

·; ability to work alongside a strong management team to maximize returns through revenue growth, accretive acquisitions, and the optimization of cost control and customer issues;

·; investing in businesses with a clear growth potential; and

·; focusing on the creation of intrinsic value through the restructuring of the investment or a merger

with complementary businesses.

The Group will continuously assess its portfolio of investments in the light of further opportunities and the mix of investments.

Business Review

Zimbabwe is poised for significant growth, after more than a decade of economic decline. The change to multicurrency from the Zimbabwean Dollar in January 2009 resulted in much needed stability. Year on year inflation is currently at about 3%, a complete turnaround from the hyperinflation era. Zimbabwe, with its abundance of mineral and agricultural resources, as well as skilled manpower has a solid base for future growth.

Principal risks and uncertainties

The principal risks and uncertainties affecting the business relate to the political and economic environment of Zimbabwe, where the investments are predominantly held. There is a further risk that investments made by the Group will not result in the envisaged cash generation or capital appreciation. This risk is managed by the careful evaluation of all proposed investments, with detailed due diligence work being undertaken, before any investments are made. The senior management of the Investment Advisor collectively has over 65 years of experience in identifying and concluding good transactions.

There is a risk that the illiquidity of the Zimbabwean capital market may affect the valuation of the Group's investment in investment property in the short to medium term. Significant judgements, estimates and assumptions made when valuing the investment property are detailed in Note 3.1 and Note 14. There is a further risk that should the Group decide to sell its shares in TA Holdings Limited on the Zimbabwe Stock Exchange, that it will not realize a good return on the investment, due to the illiquidity on the stock exchange. The Group's financial risk management objectives and policies are discussed in Note 29 to the financial statements.

Going concern

In March 2011 the Group entered into a loan agreement of $7,5 million to assist the funding of the acquisition of BP and Shell Marketing Services (Private) Limited ('BPSMS') which took place post year-end (as discussed below). This loan is repayable in March 2012. Other than this loan, the Group will effectively be debt free by the end of April 2011. The Directors are in negotiations for the setting up of new long-term loan facilities with Zimbabwean banks and are confident that these facilities will be made available. Management anticipates that the $7,5 million loan will be repaid from a combination of dividends received from the BPSMS investment and new facilities granted during the coming year. Management have prepared cash flow forecasts indicating there is adequate operating cash for the period to March 2012 and short-term facilities will be utilized to fund any operating cash flow deficit that may arise post March 2012. In addition, there is a capital raise planned for the second quarter of 2011, which will be used to finance new acquisitions during the year. Management are confident therefore that the Group will have sufficient resources to continue to trade as a going concern for a period of at least 12 months from the date of approval of these financial statements and accordingly, the Directors have prepared the financial statements on the going concern basis.

Group restructuring

During 2010, the FMI Zimbabwe (Private) Limited group was restructured so as to create a new Jersey holding company for the Group called Masawara Plc, which was incorporated on 28 June 2010. Masawara Plc issued shares to the existing shareholders of FMI Zimbabwe (Private) Limited in exchange for shares already held in that entity. This transaction falls outside of the scope of IFRS 3 (Revised) Business Combinations, and so the pooling of interests method has been applied, where the consolidated financial statements of Masawara Plc are presented as a continuation of the existing group.

As the consolidated financial statements of Masawara Plc are effectively presented as a continuation of the FMI Zimbabwe (Private) Limited Group, the previous reserves of the FMI Zimbabwe (Private) Limited Group will continue to be reflected in the consolidated financial statements.

The pooling of interests method involves the following:

·; The assets and liabilities of the combining entities are reflected at their carrying amounts;

·; No 'new' goodwill is recognized as a result of the combination;

·; The income statement reflects the results of the combining entities for the full year, irrespective of when the combination took place; and

·; Comparatives are presented as if the entities had always been combined.

Significant restructuring changes that were made prior to the listing of Masawara Plc, including the capitalization of loans, are reflected in the Group's results for the year. These are detailed in Note 5 and Note 20 of the financial statements. The Directors therefore feel that the Pro-forma Statement of Comprehensive Income that has been disclosed from the date of listing more accurately reflects the Group's ongoing performance, as significant numbers, like the imputed interest on the loans capitalized prior to listing, are not included.

Results from the date of listing -Pro-forma Statement of Comprehensive Income

Masawara Plc was listed on the London Stock Exchange's AIM on 19 August 2010. From the date of listing, the Group's loss for the period was $503,000 after accounting for a fair value gain of $2,3 million for the uplift in the year-end valuation of the investment property Joina City, and the share of associate loss of $1 million for TA Holdings Limited.

The share of comprehensive income in associates, which is a loss of $1,9 million, relates primarily to an adjustment passed for the impairment of the electrolysis plant at Sable Chemical Industries Limited. Sable Chemical Industries Limited impaired the plant after recognizing the need to move to a sustainable alternative technology for producing ammonium nitrate, such as coal gasification.

Results for the year

The results for the year are set out in the financial statements.

The results for the full year, where the pooling of interests has been applied, include all the pre-listing income and expenses, as well as the group restructuring. The loss for the year after tax is $2,2 million, after accounting for $1,8 million imputed interest on shareholders' loans, which were capitalized prior to the listing.

TA Holdings Limited

The results for the year were impacted by the poor performance of the associate TA Holdings Limited, which made a loss after tax for the year of $5,1 million (Group's share $2 million).

TA Holdings Limited's total comprehensive income for the year net of tax, was a loss of $12,1 million (Group's share $4,3 million). The major contributors to the total comprehensive loss in TA Holdings Limited were Sable Chemical Industries Limited and PG Industries (Zimbabwe) Limited. Sable Chemical Industries Limited, which is a big user of electricity due to its electrolysis process, operated at a loss due to the unviable electricity tariff being charged to the company. Negotiations with the relevant authorities are at an advanced stage to review the tariff to a breakeven level. Sable Chemical Industries Limited impaired the electrolysis plant after recognizing the need to move to a sustainable alternative technology for producing ammonium nitrate, such as coal gasification. TA Holdings Limited's share of the impairment was $6,9 million net of tax, and the Group's share was $2,1 million. The impairment is being allocated to the revaluation reserve, as the electrolysis plant had previously been revalued.

PG Industries (Zimbabwe) Limited is currently accounted for as an associate in TA Holdings Limited, and TA Holdings Limited's share of losses for 2010 was $2,5 million (Group's share $750,000).

Joina City

The retail section of Joina City was opened for trade in March 2010 and occupancy was staged, increasing to 63% as at 31 December 2010. The biggest unoccupied space in the retail section was the cinema complex, after the tenant that had been secured pulled out. Suitable operators are being approached to lease this space. As at year-end, the office section of Joina City was 99% complete, and no leases had been signed. However, letters of intent had been received from prospective tenants for a number of the floors. The rental income received for the year of $537,828 was therefore only for the retail section. Further details on the investment property are included in Note 14.

Cashflow for the year

Cash generated from financing activities of $23 million, includes the cash raised from the IPO. Operating activities utilized $712,000 of cash and cash equivalents, while $11 million was utilized in investing activities, and resulted in the overall increase in cash and cash equivalents of $11,3 million. The major element in investing activities was a deposit of $8 million paid for the acquisition of a business Note 16.

Financial position

Financial liabilities decreased from $33,5 million in 2009, to $5,8 million in 2010 due to the capitalization of shareholder loans as part of the Group Restructuring prior to listing Note 25.2. The Group had cash and cash equivalents of $11,5 million at year-end (2009: $212,000). As a result of the IPO and issue of shares as part of the Group Restructuring, as detailed in Note 20, Shareholders' equity increased from $11,3 million as at 31 December 2009 to $60 million as at 31 December 2010.

Post balance sheet events

Post year-end, the Group concluded the acquisition of BP Zimbabwe (Private) Limited and Shell Zimbabwe (Private) Limited, which jointly own BP and Shell Marketing Services (Private) Limited. BP and Shell Marketing Services (Private) Limited, is a long established importer and distributor of petroleum products in Zimbabwe. It has the largest storage capacity and widest distribution network for petroleum products in Zimbabwe comprising, 70 retail sites and 10 depots across the country. We expect this business to experience significant growth in the next two years, as it receives a working capital injection, and it regains lost market share from the current 16%, to the historical levels in excess of 40%.

Another transaction concluded post year-end, was the acquisition of a 50% share in a Zimbabwean Internet Service Provider, Telerix Communications (Private) Limited. A wholly owned subsidiary of Telerix Communications (Private)

Limited has a licence that allows it to construct, operate, develop and maintain a public data internet access and Voice Over IP network in Zimbabwe. During the second quarter of 2011, the roll-out of a Fourth Generation ("4G") network will be implemented, and a fast, reliable WiMax network established to allow end user connectivity to the Internet.

Outlook

The year 2011 has started well for the Group, with the conclusion of the two acquisitions mentioned above. Going forward, these businesses will contribute positively to the profitability of the Group.

TA Holdings Limited management is focusing on returning the Zimbabwe investments to profitability. For Sable Chemical Industries Limited, the focus this year will be on the move to coal gasification. Funding proposals have already been put forward and these will be dependant on the findings of the feasibility study, and the report is expected in July 2011. As indicated above, a reduced electricity tariff is required for this business to breakeven, and these negotiations will continue to be a focal point for the management team.

PG Industries Zimbabwe Limited has recently had a successful capital raising exercise and an improved performance is expected in 2011, with emphasis being placed on enhancing cost control and working capital management.

Post year-end, the Joina City the office tower was completed and handed over to the property manager, who has made progress in leasing out the offices. We anticipate that the office tower will be fully occupied by the third quarter of 2011.

Some potential investments are currently in the due diligence phase, and we will also continue to identify good investment opportunities for the Group.

Share Capital

Authorised:

The authorised share capital of the Company as at 31 December 2010 stood as follows:

35,000,000,000 ordinary shares, with a US$0.01 par value.

Issued:

The issued ordinary share capital was 99,362,845 ordinary shares.

Dividends

No dividend was declared during the period.

Corporate Governance

The Company's code on corporate practices and conduct is set out in the Statement on Corporate Governance.

Directors

At 31 December 2010 the directors are as follows:

Mr D Suratgar (Chairman)

Mrs M Erasmus

Mr F Daniels

Mr I Rajahbalee

Mr J Harel

Mr S Mutasa

Mr J Vezey

Litigation

The Directors are not aware of any pending litigation, which might have a material impact on the Group's financial position.

Auditors

Ernst & Young LLP was appointed as Auditor of the Company during this financial period. Ernst & Young LLP has expressed its willingness to continue in office and a resolution re-appointing Ernst & Young LLP as Auditors of the Group and Company and authorising the Directors to determine their remuneration will be proposed at the forthcoming Annual General Meeting.

Unaudited pro-forma statement of comprehensive income from the date of listing to 31 December 2010

The following unaudited pro-forma consolidated statement of comprehensive income for the Group has been prepared to show the results of the Group from the date of listing on 19 August 2010 to 31 December 2010. The results shown here are from the date of listing excluding the effects of the pre-listing Group Restructuring transactions detailed in Note 5 and Note 20, to show the Group's ongoing performance. The consolidated statement of comprehensive income, has been prepared using the pooling of interest method Note 4.19, and includes all the pre-listing transactions.

The unaudited pro-forma has been prepared by adjusting the audited consolidated statement of comprehensive income with transactions that pertained to the period before the listing. The adjustments were obtained from the underlying accounting records in the subsidiaries and associates, as explained in the footnotes.

Notes on adjustments made to the audited full year statement of comprehensive income, to arrive at the unaudited results for the period from the date of listing on 19 August 2010 to 31 December 2010:

1. Rental income from investment property and related property expenses for the period from 1 January 2010 to 31 August 2010 were excluded. These were extracted directly from the underlying accounting records in the subsidiary.

2. Share of the associate's loss for the year and share of other comprehensive income in associates were adjusted to exclude results from 1 January 2010 to 31 August 2010. These adjustments were based on the associate's unaudited year to date management accounts for the period ended 31 August 2010.

3. The dilution of interest in associate and loss on disposal of associate were both excluded in full as they relate to transactions that occurred prior to 19 August 2010.

4. For the purpose of the listing, an independent valuation of the investment property was undertaken by the independent valuer, CB Richard Ellis (Private) Limited, as at 1 March 2010. The adjustment shown is the fair value gain recognised, as the uplift in the value of investment property, for the period from 31 December 2009, (when an independent valuation was undertaken for the purposes of the 2009 financial statements) to 1 March 2010. This was after taking into account the costs capitalized to investment property for the period from 1 January 2010 to 30 June 2010. The tax adjustment is for the deferred tax arising on the fair value gain adjustment.

5. Even though the listing expenses were incurred prior to 19 August 2010, they have been included in the unaudited results from the date of listing, as they were directly related to the listing.

6. Expenses recorded in the underlying accounting records of the subsidiaries prior to 19 August 2010 were excluded.

7. A pro-rata portion of the accrued finance costs for August 2010 for the days prior to listing were calculated, and this, together with the finance costs to 31 July 2010 were excluded. The finance income was earned after 19 August 2010, and has therefore been included in full.

8. The non-controlling interest arises in Dubury Investments (Private) Limited, a subsidiary of the Group, in which the non-controlling interest is 36,12%. The adjustment reflected is the non-controlling interest's share of the entries passed to the Dubury Investments (Private) Limited full year audited results, to arrive at the unaudited pro-forma results from the date of listing.

By Order of the Board

Masawara Plc

J Vezey

for the Board

18 April 2011

STATEMENT OF CORPORATE GOVERNANCE

Good corporate governance is at the heart of the way in which the Directors of the Company discharge their duties. The Board is working towards complying with the Corporate Governance Guidelines for Smaller Quoted Companies, as issued by The Quoted Companies Alliance.

Values

The Board is always guided by the following core values:

·; integrity;

·; transparency;

·; promoting the best interests of the shareholders, employees and other stakeholders of the Company; and

·; compliance with the requirements of the legal and regulatory environment in which the Company operates.

Governance Structures

Board of Directors

The Board is the primary governance organ. One of its key functions is to develop, review and monitor the overall strategy and policies of the Group. It, therefore, considers and approves, among other things, all major investment decisions, the key risks to which the business is exposed, and measures to eliminate or minimize the impact of such risks, capital expenditure and the appointment of certain key executives.

The Board currently comprises seven (7) non-executive directors, four of whom are independent. Day to day management is devolved to the Investment Advisor who is charged with consulting the Board on all significant financial and operational matters. The independence of non-executive directors will be assessed and confirmed annually.

The Investment Advisor

The Investment Advisor, FMI Zimbabwe (Private) Limited (a subsidiary of the company), advises the Board on investment opportunities, acquisitions and sales, exit strategies and manages the Group's portfolio of investments on a day-to-day basis, with a view to achieving the Group's investment objective and strategy.

Management Engagement Committee

 Mr David Suratgar, an independent director, chairs the Management Engagement Committee. Other Committee members are Mr Francis Daniels and Mrs Maureen Erasmus. The Committee monitors, reviews and evaluates the performance of the Investment Advisor. The Committee also determines and agrees with the Board the framework for the remuneration of the employees of the Investment Advisor (including pension rights and compensation payments).

Audit Committee

The Audit Committee comprises of non-executive directors, two of whom are independent. The committee members are Mr David Suratgar, Mr Francis Daniels and Mrs Maureen Erasmus, (an independent director) chairs the Committee. The Committee, amongst other duties, monitors the integrity of the financial statements of the company, and any formal announcements relating to the company's financial performance, reviews significant financial reporting judgements contained in them and reviews the company's internal control and risk management systems. The Committee meets with the external auditors at least once a year. The Committee will review the need for an internal audit function on an annual basis, and make recommendations to the Board.

Co-ownership Committee

Dubury Investments (Private) Limited (a sub-subsidiary of FMI Zimbabwe (Private) Limited) and Cherryfield Investments (Private) Limited (a consortium of pension funds and an insurance company) are joint venturers (co-owners) in the Joina City building, which is governed by a Co-ownership Agreement.The Co-owners of the Joina City formed a Co-ownership Committee, which comprises all their shareholders. The Co-ownership Committee was delegated all the powers to make resolutions for and on behalf of the Co-owners.

Mr Shingai Mutasa sits on the Co-ownership Committee as the chairman. The Group relies on the Joina City Co-ownership Committee to deal with all matters of their investment. The powers of the Committee include the power to decide and pass resolutions on all matters which the Co-owners would themselves have power to jointly decide in respect of Joina City. The Co-ownership Committee's primary functions include:

·; to consider, review, and where necessary, approve capital expenditure; and

·; to receive, review and monitor progress of the construction of the Joina City.

The Committee meets every month and consists of six members, five of whom are representatives of the Co-owners and the chairman of the Committee, Mr Shingai Mutasa.

Governance Processes

The Board of Directors will meet at least four times a year or as often as the circumstances may determine. In addition to the Board members, professional advisors on corporate transactions and senior employees of the Investment Advisor will be requested to attend as required. The Group's shareholders meet at least once every year, at the Annual General Meeting. The external auditors of the Group have unlimited access to the Board.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RELATION TO THE FINANCIAL STATEMENTS

The directors are responsible for preparing the Report and the financial statements in accordance with applicable law and regulations.

Jersey Company law requires the directors to prepare financial statements for each financial period in accordance with any generally accepted accounting principles. The financial statements of the company are required by law to give a true and fair view of the state of affairs of the company at the period end and of the profit or loss of the company for the period then ended. In preparing these financial statements, the directors should:

·; select suitable accounting policies and then apply them consistently;

·; make judgments and estimates that are reasonable and prudent;

·; specify which generally accepted accounting principles have been adopted in their preparation; and

·; prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping accounting records which are sufficient to show and explain its transactions and are such as to disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements prepared by the company comply with the requirements of the Companies (Jersey) Law 1991. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the group's website. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF MASAWARA PLC

We have audited the financial statements of Masawara Plc for the year ended 31 December 2010, which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and the related notes 1 to 32. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards as adopted by the European Union.

This report is made solely to the company's members, as a body, in accordance with Article 113A of the Companies (Jersey) Law 1991. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

As explained more fully in the Directors' Responsibilities Statement set out below, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition we read all the financial and non-financial information in the Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Basis of qualified opinion on financial statements

The group operated under a hyperinflationary economy in 2008. The group changed its functional currency from Zimbabwe Dollars to United States Dollars with effect from 1 January 2009. The Consolidated Statement of Comprehensive Income and the Consolidated Statement of Cash Flows for year ended 31 December 2009 were not prepared in conformity with International Financial Reporting Standards as adopted by the European Union in that the requirements of IAS 29 - Financial Reporting in Hyperinflationary Economies and IAS 21 - The Effects of Changes in Foreign Exchange Rates were not complied with in converting the financial information during the period of hyperinflation into an applicable measurement base at the date of reporting for the following reasons:

·; the inability to reliably measure inflation because of the interaction of multiple economic factors which were pervasive to the Zimbabwean economic environment; and

·; the inability to adjust items that were recorded in Zimbabwe Dollars into United States Dollars at the date of change of functional currency.

The audit opinion on the group's Consolidated Statement of Comprehensive Income and Consolidated Statement of Cash Flows for year ended 31 December 2009 was modified accordingly and an unmodified opinion was given on the Consolidated Statement of Financial Position as at 31 December 2009. Our opinion on the current year's financial statements is also modified because of the possible effect of this matter on the comparability of the current year's figures and the corresponding figures.

Qualified opinion on financial statements

In our opinion, except for the possible effects on the corresponding figures of the matter described in the Basis of Qualified Opinion paragraph, the financial statements:

·; give a true and fair view of the state of the group's affairs as at 31 December 2010 and of its loss for the year then ended;

·; have been properly prepared in accordance with International Financial Reporting Standards as adopted by the European Union; and

·; have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies (Jersey) Law 1991 requires us to report to you if, in our opinion:

·; proper accounting records have not been kept, or proper returns adequate for our audit have not been received from branches not visited by us; or

·; the financial statements are not in agreement with the accounting records and returns; or

·; we have not received all the information and explanations we require for our audit.

Cameron Cartmell

for and on behalf of Ernst & Young LLP

London

18 April 2011

Notes:

1. The maintenance and integrity of the Masawara Plc web site is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site.

2. Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Total comprehensive loss attributable to:

Earnings per share: 10

·; Basic and diluted, on loss for the year attributable to ordinary

equity holders of the parent ($0.09) ($90.44)

MASAWARA PLC

Consolidated statement of financial position 

as at 31 December 2010

Mr Francis Daniels MASAWARA PLC

Consolidated statement of changes in equity

for the year ended 31 December 2010

MASAWARA PLC

MASAWARA PLC

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010

1. Corporate information

Masawara Plc ("the Company") is a limited company incorporated and domiciled in Jersey, Channel Islands, whose shares are publicly traded on London Stock Exchange's AIM. The registered office is located at Queensway House, Hilgrove Street in St Helier, Jersey. The principal activities of the Company and its subsidiaries are described in the Directors' Report, and the Company is managed from Unicorn Centre,18N Frère Felix de Valois Street, Port Louis in Mauritius. The Group financial statements consolidate those of the Company, its subsidiaries and the Group's interest in associates (together referred to as "the Group"). The financial statements of the Group for the year ended 31 December 2010 were authorized for issue in accordance with a resolution of the directors on 18 April 2011.

2.1 Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS), and in compliance with the requirements of the Companies (Jersey) Law 1991.

The Group's business activities together with the factors likely to affect its future development, performance and position are set out in the Directors' Report. Note 29 to the financial statements includes the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk and liquidity risk.

Going Concern

In March 2011 the Group entered into a loan agreement of $7,5 million to assist the funding of the acquisition of BP and Shell Marketing Services (Private) Limited ('BPSMS') which took place post year-end Note 32. This loan is repayable in March 2012. Other than this loan, the Group will effectively be debt free by the end of April 2011. The Directors are in negotiations for the setting up of new long-term loan facilities with Zimbabwean banks and are confident that these facilities will be made available. Management anticipates that the $7,5 million loan will be repaid from a combination of dividends received from the BPSMS investment and new facilities granted during the coming year. Management have prepared cash flow forecasts indicating there is adequate operating cash for the period to March 2012 and short-term facilities will be utilized to fund any operating cash flow deficit that may arise post March 2012. In addition, there is a capital raise planned for the second quarter of 2011, which will be used to finance new acquisitions during the year. Management are confident therefore that the Group will have sufficient resources to continue to trade as a going concern for a period of at least 12 months from the date of approval of these financial statements and accordingly, the Directors have prepared the financial statements on the going concern basis.

Group restructuring

During 2010, the FMI Zimbabwe (Private) Limited group was restructured so as to create a new Jersey holding company for the Group called Masawara Plc which was incorporated on 28 June 2010. Masawara Plc issued shares to the existing shareholders of FMI Zimbabwe (Private) Limited in exchange for shares already held in that entity. This transaction falls outside of the scope of IFRS 3 (Revised) Business Combinations, and so the pooling of interests method has been applied, where the consolidated financial statements of Masawara Plc are presented as a continuation of the existing group.

Where the pooling of interests method is applied, as the consolidated financial statements of Masawara Plc are effectively presented as a continuation of the FMI Zimbabwe (Private) Limited Group, the previous reserves of the FMI Zimbabwe (Private) Limited Group will continue to be reflected in the consolidated financial statements. Refer to Note 4.19 for further details.

Non-compliance with IAS 29 (Financial Reporting in Hyperinflationary Economies) and IAS 21 (The Effect of Foreign Exchange Rates) in respect of the prior year statement of comprehensive income, and the statement of cash flows

The Zimbabwean economy was effectively dollarized on 29 January 2009 following authorization by monetary and fiscal authorities to use multiple currencies for trading in Zimbabwe. As a consequent of the dollarization, the

Group changed its functional and presentation currency from Zimbabwean Dollar (Z$) to United Stated Dollar (US$). The effective date has been deemed to be 1 January 2009 for the Group. The functional currency of local entities was also changed from Zimbabwean Dollars to United States Dollars. The functional currencies of entities outside Zimbabwe under an associate remained unchanged from the previous year.

In light of the dollarization of the Zimbabwean economy, the Public Accounts and Auditors Board ("PAAB"), Zimbabwe Accounting Practices Board ("ZAPB") and the Zimbabwe Stock Exchange ("ZSE") jointly provided a guidance ("the Financial Reporting Guidance") to determine a foreign currency opening statement of financial position on the date of change in functional currency from Z$ to US$.

The Group chose to report all its transactions in US$ because it was the new functional currency applicable to all current transactions. The Group was not able to comply with the requirements of IAS 21 because this standard requires that all transactions that are in the currency of a hyperinflationary economy to be adjusted to a unit of measure current at the measurement date before conversion to an alternative presentation currency.

Prior year restatements

There have been prior year restatements as discussed in Note 15, Note 23 and Note 24. IAS 8 -Accounting Policies, Changes in Accounting Estimates and Errors would ordinarily require an entity to restate the amount of the correction at the beginning of the earliest period presented in the financial statements (ie: as at 1 January 2009) unless retrospective restatement is impracticable for a particular period.

The financial statements for FMI Zimbabwe (Private) Limited for year ended 31 December 2009 did not present any comparative information as required by IAS 1 because the Directors of FMI Zimbabwe (Private) Limited believed the information would be misleading. This is because the prevailing economic environment meant it was not possible to convert financial statements into US Dollars in a manner consistent with IAS 21 and IAS 29 until the Monetary and Fiscal authorities authorised the use of multiple foreign currencies for trading in Zimbabwe on 29 January 2009, as discussed above. Accordingly, the Directors believe it is impracticable for the amount of the corrections to be presented for the prior period(s) and accordingly have corrected the errors as at 1 January 2010.

Principal risks and uncertainties

The principal risks and uncertainties affecting the business relate to the political and economic environment of Zimbabwe, where the investments are predominantly held. There is a further risk that investments made by the Group will not result in the envisaged cash generation or capital appreciation. This risk is managed by the careful evaluation of all proposed investments, with detailed due diligence work being undertaken, before any investments are made. The senior management of the Investment Advisor collectively has over 65 years of experience in identifying and concluding good transactions.

There is a risk that the illiquidity of the Zimbabwean capital market may affect the valuation of the Group's investment in investment property in the short to medium term. Significant judgments, estimates and assumptions made when valuing the investment property are detailed in Note 3.1 and Note 14. There is a further risk that should the Group decide to sell its shares in TA Holdings Limited on the Zimbabwe Stock Exchange, that it will not realize a good return on the investment, due to the illiquidity on the stock exchange. The Group's financial risk management objectives and policies are discussed in Note 29 to the financial statements.

2.2 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2010.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, income and expenses, unrealised gains and losses and dividends resulting from intra-group transactions are eliminated in full. Non-controlling interests represent the portion of profit or loss and net assets not held by the Group and are presented separately in the statement of comprehensive income and within equity in the consolidated statement of financial position, separately from shareholders' equity. Losses within a subsidiary are attributed to the non-controlling interest even if that results in a deficit balance.

A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

·; Derecognises the assets (including goodwill) and liabilities of the subsidiary

·; Derecognises the carrying amount of any non-controlling interest

·; Derecognises the cumulative translation differences, recorded in equity

·; Recognises the fair value of the consideration received

·; Recognises the fair value of any investment retained

·; Recognises any surplus or deficit in profit or loss

·; Reclassifies the parent's share of components previously recognised in other comprehensive income

to profit or loss or retained earnings, as appropriate.

Investments in associates have been accounted for using the equity accounting method as explained in Note 4.1below.

The consolidated financial statements are presented in United States Dollars and all values are rounded to the nearest dollar (US$) except when otherwise indicated.

2.3 Significant accounting policies

The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2009, except for the adoption of new standards and interpretations as of 1 January 2010, noted below:

·; IFRS 2 Share-based Payment - Group Cash-settled Share-based Payment Transactions

The standard has been amended to clarify the accounting for group cash-settled share-based payment transactions. This amendment also supersedes IFRIC 8 and IFRIC 11. The adoption of this amendment did not have any impact on the financial position or performance of the Group.

·; IFRS 3 (Revised) Business Combinations and IAS 27 (Amended) Consolidated and Separate Financial Statements

The revised standards are effective prospectively for business combinations effected in financial periods beginning on or after 1 July 2009. IFRS 3 (Revised) introduces a number of changes in the accounting for business combinations that will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and future reported results. This will impact the Group in the future, as new busineses are acquired.

IAS 27 requires that a change in the ownership interest of a subsidiary (without loss of control) be accounted for as an equity transaction. Therefore, such a transaction would no longer give rise to goodwill, nor give rise to a gain or loss. The adoption of this amendment did not have any impact on the financial performance of the Group.

·; IAS 39 Financial Instruments: Recognition and Measurement - Eligible Hedged Items

The amendment addresses the designation of a one-sided risk in a hedged item, and the designation of inflation as a hedged risk or portion in particular situations. The amendment had no effect on the financial position or performance of the Group.

·; IFRIC 17 Distribution of Non-cash Assets to Owners

This interpretation provides guidance on accounting for arrangements whereby an entity distributes noncash assets to shareholders either as a distribution of reserves or as dividends. The interpretation had no effect on the financial position or performance of the Group.

·; IAS 17 Leases -amendment

This amendment is effective for financial periods beginning on or after 1 January 2010. This amendment deletes much of the wording in the standard to the effect that all leases of land (where title did not pass) were operating leases. The amendment requires that in determining whether the lease of land (either separately or in combination with other property) is an operating or finance lease, the same criteria are applied as for any other asset. The Group does not have leases of land as lessor or lessee therefore this change has no impact on 2009 or 2010.

2.4.1 New and amended Standards and IFRIC Interpretations issued but not yet effective

Standards issued but not yet effective up to the date of issuance of the Group's financial statements are listed below. This listing is of standards and interpretations issued, which the Group reasonably expects to be applicable at a future date. The Group intends to adopt those standards when they become effective.

IAS 24 Related Party Disclosures (Amendment)

The amended standard is effective for annual periods beginning on or after 1 January 2011. It clarified the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. The revised standard introduces a partial exemption of disclosure requirements for government related entities. The Group does not expect any impact on its financial position or performance.

IAS 32 Financial Instruments: Presentation - Classification of Rights Issues (Amendment)

The amendment to IAS 32 is effective for annual periods beginning on or after 1 February 2010 and amended the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity's non-derivative equity instruments, or to acquire a fixed number of the entity's own equity instruments for a fixed amount in any currency. This amendment will have no impact on the Group after initial application in the financial year ending 31 December 2011.

IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments

IFRIC 19 is effective for annual periods beginning on or after 1 July 2010. The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The equity instruments issued are measured at their fair value. In case that this cannot be reliably measured, the instruments

are measured at the fair value of the liability extinguished. Any gain or loss is recognized immediately in profit or loss. The adoption of this interpretation will have no effect on the financial statements of the Group.

Improvements to IFRSs (issued in May 2010 and December 2010)

The IASB issued Improvements to IFRSs, an omnibus of amendments to its IFRS standards. The amendments have not been adopted as they become effective for annual periods on or after either 1 July 2010 or 1 January 2011. The amendments are listed below:

·; IFRS 3 Business Combinations

·; IFRS 7 Financial Instruments: Disclosures

·; IAS 1 Presentation of Financial Statements

·; IAS 27 Consolidated and Separate Financial Statements

·; IFRIC 13 Customer Loyalty Programmes

The Group, however, expects no impact from the adoption of the amendments on its financial position or performance.

Amendments to IFRS 1- Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters

In December 2010 an amendment to IFRS 1- Severe hyperinflation and the removal of fixed dates for first time adopters was issued specifically in response to the hyperinflation situation that has been encountered in Zimbabwe, which is applicable for annual periods beginning on or after 1 July 2011 with earlier application permitted. The EU has not yet endorsed this amendment, and the Group has therefore been unable to early adopt the revised standard.

3. Significant accounting judgments, estimates and assumptions

The preparation of financial statements in conformity with IFRS requires the use of certain accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions are changed. Management believes that the underlying assumptions are appropriate and that the Group's financial statements therefore fairly present the financial position and results.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The areas involving a higher degree of judgments or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in the relevant notes to the financial statements.

The following are the critical judgments, estimates and assumptions that management has made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in the financial statements:

3.1 Valuations of Property

Investment property is valued at fair value as determined by independent real estate valuation experts, except if such values cannot be reliably determined.

The fair value of investment properties is determined using either Discounted Cashflow or the Residual Method.

The determination of the fair value of investment properties require the use of estimates such as future cash flows from assets (such as lettings, tenants' profiles, future revenue streams, capital values of fixtures and fittings, plant and machinery, any environmental matters and the overall repair and condition of the property) and discount rates applicable to those assets. These estimates are based on local market conditions existing at the reporting date.

The continuing volatility in the global financial system is reflected in the turbulence in commercial real estate markets across the world. The significant reduction in transaction volumes continued this year. Joina City is the newest development in the Harare CBD and the only one its kind built in the last ten years in the Zimbabwean market. It is therefore difficult to get comparable data for similar properties. The lack of liquidity in the Zimbabwean market also means that, if it was intended to dispose of the property, it may be difficult to achieve a successful sale of the investment property in the short term. Therefore, in arriving at their estimates of market values as at 31 December 2009 and 31 December 2010, the valuers have used their market knowledge and professional judgment and have not only relied solely on historic transactional comparables.

In these circumstances, there is a greater degree of uncertainty than which exists in a more active market in estimating market values of investment property.

The significant methods and assumptions used by the valuers in estimating the fair value of investment property are set out in note 14. 

Technique used for Valuation of Investment Property

The investment property has an occupied retail section, and several organizations have signed letters of intent for leases of the office section. In arriving at the market value of the property the valuer used the Implicit Investment Approach based on capitalization of income. This method is based on the principle that rents and capital values are inter-related. Hence given the income produced by a property, its value can be estimated. Actual rentals are used for the let out sections, and estimates are used for the sections that have not been let out yet as there is uncertainty with regards to when they will be let out, and the rent that will be received. The rental estimates are based on comparable rentals, inferred from offices and industrials within the locality of the property in the Harare central business district, based on use, location, size and quality of finishes. Therefore the valuer's adjusted rental figures based on comparables are outlined in the capitalization methodology. The rentals are annualized and a capitalization factor then applied to give a market value of the property.

3.2 Deferred tax assets

Deferred tax assets are recognised in respect of tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Judgment is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits, together with future tax planning strategies.

3.3 Financial instruments at amortised cost

The value of financial assets and financial liabilities held at amortised cost are based on the expected cash flows under consideration of a market interest rate. The judgments include considerations of inputs such as expected cash flows, amortisation period and market interest rate applied.

3.4 Functional Currency

Management used its judgment to determine the functional currency that most faithfully represented the economic effects of the underlying Group transactions, events and conditions. As part of this approach, management considered the following information relating to the Group:

·; The currency that mainly influences sales prices for goods and services;

·; The currency that mainly influences labour, material and other costs of providing goods or services; and

·; The currency in which receipts from operating activities were normally retained.

The United States Dollar was determined to be the functional currency of the Group.

3.5 Impairment of Associates

The Group determines at each reporting date, whether there is any objective evidence that the investment in the associates is impaired. This requires an estimation of recoverable amount of the investment in associate by reference to the value in use. A value in use calculation requires the Group to make an estimate of the expected future cash flows from the associate and also to choose a suitable discount rate in order to calculate the present values of those cash flows.

3.6 Rent and other receivables

Rent and other receivables are recognized at their original invoiced value. Where the time value of money is material, receivables are carried at amortised cost. Provision is made when there is objective evidence that the Group will not be able to recover balances in full. Balances are written off when the probability of non-payment is assessed to be more likely than not.

4. Summary of significant accounting policies

4.1 Investment in associates

The Group's investment in its associates is accounted for using the equity method of accounting. An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture.

Under the equity method, the investment in the associate is carried in the statement of financial position at cost plus post acquisition changes in the Group's share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. If an acquisition of an additional interest in an associate is made in which control does not change to it being a subsidiary, the additional purchase price paid is added to the existing carrying amount of the associate and the existing interest in the associate is not remeasured.

The statement of comprehensive income reflects the share of the results of operations of the associates. When there has been a change recognized directly in other comprehensive income or equity of the associates, the Group recognises its share of any changes and discloses this, when applicable, in other comprehensive income or in the statement of changes in equity. Unrealised profits and losses resulting from transactions between the Group and the associates are eliminated to the extent of the interest in the associates.

The share of profit of the associates is shown on the face of statement of comprehensive income. This is profit attributable to equity holders of the associates and therefore is profit after tax and non-controlling interests in the subsidiaries of the associates.

The financial statements of the associates are prepared for the same reporting period as the parent company. Where necessary, adjustments are made to bring their accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognize an additional impairment loss on the Group's investment in associates. The Group determines at each reporting date, whether there is any objective evidence that the investment in the associates is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associates and its carrying value and recognises the amount in the "share of profit of an associate" in the statement of comprehensive income.

Upon loss of significant influence over the associate, the Group measures and recognises any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retaining investment and proceeds from disposal is recognized in the statement of comprehensive income.

4.2 Currencies

The Group's financial statements are presented in United States Dollars (US$), which is the functional and presentation currency of the Company. The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency) in terms of IAS 21.

·; Transactions in currencies other than the entity's functional currency are initially recorded at the rates of exchange prevailing on the dates of the transaction.

·; At each reporting date, monetary items denominated in foreign currencies are translated at the rates of exchange prevailing on the reporting date.

·; Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, is included in profit or loss for the period. As at the reporting date non-monetary items that are measured in

terms of historical cost in a foreign currency are translated using the exchange rate at the date of the initial transaction. Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rate when the fair value was determined.

·; Exchange differences arising on the translation of non-monetary items carried at fair value are included in other comprehensive income.

4.3 Classification of financial instruments between debt and equity

A financial instrument is classified as debt if it has a contractual obligation to:

·; Deliver cash or another financial asset to another entity; or

·; Exchange financial assets or financial liabilities with another entity under conditions that are potentially unfavorable to the Group.

If the Group does not have an unconditional right to avoid delivering cash or another financial asset to settle its contractual obligation, the obligation meets the definition of a financial liability.

4.4 Financial liabilities

Initial recognition and measurement

All financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.

The group's financial liabilities include trade and other payables, shareholders loans and bank loans.

Subsequent measurement

Obligations for loans and borrowings (including shareholders loans) are recognised when the Group becomes party to the related contracts and are initially recognised at the fair value of consideration received less directly attributable transaction costs.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Derecognition of financial liabilities

Financial liabilities are derecognised when the obligation under the liability is discharged, cancelled or expired.

When the existing liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

4.5 Investment income

4.5.1 Interest income

Interest income is accrued on a time basis, using the effective interest rate method, by reference to the principal outstanding and effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount.

4.5.2 Rental income

Rental income receivable from operating leases, is recognized on a straight-line basis over the term of the lease, except for contingent rental income which is recognized when it arises.

Incentives for lessees to enter into lease agreements are spread evenly over the lease term, even if the payments are not made on such a basis. The lease term is the non-cancellable period of the lease, together with any further term for which the tenant has the option to continue the lease, where at the inception of the lease, the directors are reasonably certain that the tenant will exercise that option.

Amounts received from tenants to terminate leases or to compensate for dilapidations are recognised in the income statement as they arise.

4.5.3 Service charges and expenses recoverable from tenants

Income arising from expenses recharged to tenants is recognized in the period in which the expense can be contractually recovered. Service charges and other such receipts are included gross of the related costs in revenue, as the directors consider that the Group acts as principal in this respect.

4.6 Realised gains and losses

Realised gains and losses recorded in profit or loss on investments include gains and losses on financial assets.

Gains and losses on the sale of investments are calculated as the difference between net sales proceeds and the carrying amount and are recorded on occurrence of the sale transaction.

4.7 Finance cost

Imputed interest on interest free loans is recognised in profit or loss as it accrues and is calculated by using the effective interest rate method. Accrued interest is included within the carrying value of the interest bearing financial liability.

4.8 Events after the reporting date

The financial statements are adjusted to reflect events that occurred between the reporting date and the date when the financial statements are authorised for issue, provided they give evidence of conditions that existed at the reporting date. Events that are indicative of conditions that arose after the reporting date are disclosed, but do not result in an adjustment of the financial statements themselves.

4.9 Financial assets

Initial recognition and measurement

All financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, available-for-sale financial assets or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus, in the case of investments not at fair value through profit and loss, directly attributable transaction costs.

The Group's financial assets include cash and short-term deposits, trade and other receivables and debenture investments.

Subsequent measurement

4.9.1 Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included in finance income in the income statement. The losses arising from impairment are recognized in the income statement in finance costs.

4.9.2 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less in the statement of financial position.

For the purpose of the consolidated cash flow, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

4.9.3 Impairment of financial assets

The Group assesses at each reporting date whether there is any objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred 'loss event') and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

4.9.4 Derecognition of financial assets

A financial asset (or, when applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

·; The rights to receive cash flows from the asset have expired

·; The Group retains the right to receive cash flows from the asset, or has assumed an obligation to pay them in full without material delay to a third party under a 'pass-through' arrangement and either:

·; The Group has transferred substantially all the risks and rewards of the asset, or

·; The Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

4.10 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's

recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs to sell and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets.

Impairment losses of continuing operations are recognised in profit or loss in those expense categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of recoverable amount. A previous impairment loss is reversed only if there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.

4.11 Provisions

4.11.1 General

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and 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 amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in profit or loss net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

4.11.2 Onerous contracts

A provision is recognised for onerous contracts in which the unavoidable costs of meeting the obligations under the contract exceed the expected economic benefits expected to be received under it. The unavoidable costs reflect the least net cost of exiting the contract, which is the lower of the cost of fulfilling it and any compensation or penalties arising from failure to fulfill it.

4.12 Equity movements

4.12.1 Ordinary share capital

The Group has issued ordinary shares that are classified as equity. Incremental external costs that are directly attributable to the issue of these shares are recognised in equity, net of tax.

4.12.2 Dividends on ordinary share capital

Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Group's shareholders. Interim dividends are deducted from equity when they are paid. Dividends for the year that are approved after the reporting date are dealt with as an event after the reporting date.

4.12.3 Share premium

The difference between the issue price and the par value of ordinary share capital, is allocated to share premium. The transaction costs incurred for the share issue are accounted for as a deduction from share premium, net of any related income tax benefit, to the extent they are incremental costs directly attributable to the share issue that otherwise would have been avoided.

4.12.4 Non-distributable reserves

Non-distributable reserves represent the equity of the Group on the change of the functional currency to United States Dollars effective from 1 January 2009.

4.12.5 Revaluation reserve

The revaluation reserve is the Group's share of the associate's revaluation reserve. The Group accounts for all impairments and revaluation surpluses accounted for by the associate, in this reserve.

4.12.6 Group restructuring reserve

The group restructuring reserve arose on consolidation, under the pooling of interests method.

4.13 Plant and equipment

4.13.1 Recognition

Plant and equipment is initially stated at cost, excluding the costs of day-to-day servicing, and subsequently, less accumulated depreciation and accumulated impairment losses.

Replacement or major inspection costs are capitalised when incurred and if it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured reliably.

Depreciation is provided on a straight line basis over the useful lives of the following classes of assets:

·; Equipment: 3 years

The assets' residual values, and useful lives and method are reviewed and adjusted if appropriate at each financial year-end.

Impairment reviews are performed when there are indicators that the carrying value may not be recoverable. Impairment losses are recognised in profit or loss as an expense.

4.13.2 Derecognition

An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

4.14 Investment property

Investment property, including investment property under development, is initially recognized at cost, and subsequently, at fair value. Investment property comprises property held to earn rentals or for capital appreciation or both.

Gains or losses arising from changes in the fair value are included in the statement of comprehensive income in the year in which they occur.

Investment properties are derecognised when either they have been disposed of, or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal.

Any gains or losses on the retirement or disposal of an investment property are recognised in the statement of comprehensive income in the year of retirement or disposal. Gains or losses on the disposal of investment property are determined as the difference between net disposal proceeds and the carrying value of the asset in the previous full period financial statements.

Transfers are made to investment property only when there is a change in use evidenced by the end of owner-occupation or commencement of an operating lease to another party. Transfers are made from investment property only when there is change of use as evidenced by commencement of owner occupation or commencement of development with a view to sell. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use.

If owner occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of the change in use.

4.15 Share-based payment transactions

Employees (including senior executives) of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration for equity instruments.

In situations where equity instruments are issued and some or all of the goods or services received by the entity as consideration cannot be specifically identified, the unidentified goods or services received (or to be received) are measured as the difference between the fair value of the share-based payment transaction and the fair value of any identifiable goods or services received at the grant date. This is then capitalised or expensed as appropriate.

The cost of equity-settled transactions is recognised, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The income statement expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in staff costs.

No expense is recognised for awards that do not ultimately vest. Where the terms of an equity-settled transaction award are modified, the minimum expense recognised is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. All cancellations of equity-settled transaction awards are treated equally.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share (Note 10).

4.16 Taxation

4.16.1 Current tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current income tax relating to items recognised directly in other comprehensive income or equity is recognised in other comprehensive income or equity and not in profit or loss.

4.16.2 Deferred tax

Deferred income tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences, except:

·; Where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

·; In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

·; where the deferred income tax assets relating to the deductible temporary difference arise from the  initial recognition of an asset or liability in a transaction that is not a business combination and, at time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

·; In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred income tax relating to items recognised directly in other comprehensive income or equity is recognised in other comprehensive income or equity and not in profit or loss. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

4.17 Value Added Tax (VAT)

Revenue and expenses are recognised net of the amount of VAT except:

·; When the VAT incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case, the VAT is recognised as part of the cost of acquisition of the assets or as part of the expense item as applicable; and

·; For receivables and payables that are stated with the amount of VAT included.

The net amount of VAT recoverable from, or payable, to the taxation authorities is included as part of receivables or payables in the statement of financial position.

4.18 Listing expenses

Transaction costs of the IPO are accounted for as a deduction from equity, net of any related income tax benefit. Transaction costs arising on the issue of equity instruments, however, do not include indirect costs, such as the costs of management time and administrative overheads, or allocations of internal costs that would have been incurred had the shares not been issued. Marketing costs for an IPO do not meet the definition of directly attributable expenses and are therefore expensed through profit or loss, together with the indirect costs related to the IPO.

4.19 Business Combinations

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any

non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration, which is deemed to be an asset or liability, will be recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. If the contingent consideration is classified as equity, it should not be remeasured until it is finally settled within equity.

Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities assumed.

If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of

 the Group's cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

When a new company is incorporated and inserted at the top of an existing group, with the new company issuing shares to the existing shareholders of the acquired company in exchange for shares already held in that entity, with no changes to the shareholder group, the transaction is outside the scope of IFRS 3. The pooling of interests method is therefore applied. Where the pooling of interests method is applied, as the consolidated financial statements of the new group are effectively presented as a continuation of the pre-existing group, the previous reserves of the group will continue to be reflected in the consolidated financial statements.

The pooling of interests method involves the following:

·; The assets and liabilities of the combining entities are reflected at their carrying amounts;

·; No 'new' goodwill is recognized as a result of the combination;

·; The income statement reflects the results of the combining entities for the full year, irrespective of when the combination took place; and

·; Comparatives are presented as if the entities had always been combined.

5. Group Restructuring

FMI Holdings (Private) Limited entered into a Group restructuring exercise which resulted in the listing of its subsidiary, Masawara Plc, on the London Stock Exchange's AIM on 19 August 2010. Masawara Plc was incorporated in Jersey on 28 June 2010 as a 100% subsidiary of FMI Holdings (Private) Limited.

FMI Holdings (Private) Limited and the Esi Wilhemina Daniels Memorial Trust had a 100% interest in FMI Zimbabwe (Private) Limited which as at 30 June 2010 had the following investments:

·; 57.31% share of Joina City (through its subsidiary Dubury Investments (Private) Limited);

·; 27.87% interest in TA Holdings Limited through its wholly owned subsidiaries Tencled Incorporated (Private) Limited and FMI Investments (Private) Limited; and

·; 24.225% interest in FMI Securities (Private) Limited, a stock broking business.

5.1 On 1 July 2010, Tencled Incorporated (Private) Limited transferred all its shares in TA Holdings Limited to FMI Investments (Private) Limited. The entire share capital of Tencled Incorporated (Private) Limited (which was now a shell company), was then transferred from FMI Zimbabwe (Private) Limited to FMI Holdings (Private) Limited.

5.2 On 12 August 2010, Beshog Investments (Private) Limited, a subsidiary of FMI Holdings (Private) Limited, transferred 3,513,704 TA Holdings Limited shares to FMI Investments (Private) Limited at a consideration of US$1,054,191, which was the market value of the TA Holdings Limited shares on the day of transfer. The share of net assets of TA Holdings Limited at the date of transfer was $1,276,461 and the difference of $222,270 has been included as income in determination of the Group's share of TA Holdings Limited's loss in the year. This transaction had the effect of increasing FMI Investments (Private) Limited's interest in TA Holdings Limited from 27.87% to 30%.

5.3 On 12 August 2010, the investment in FMI Securities (Private) Limited was transferred from FMI Zimbabwe (Private) Limited to FMI Holdings (Private) Limited at a fair value of $13,370, for no consideration.

Full details of the remainder of the Group restructuring, which took place from 1 July 2010, are included in Note 20.

6. Operating leases- Group as lessor

The Group has entered into leases on its property portfolio. The commercial property leases typically have lease terms of three years and include clauses to enable bi-annual upward revision of the rental charge. As at 31 December 2010, lease agreements had not yet been signed for the office space, as the building was 99% complete.

The building was completed at the end of January 2011, handed over to the property manager for leasing and full occupation is expected by the end of the third quarter of 2011.

Future minimum rentals receivable under non-cancellable operating leases for the retail space as at 31 December are as follows:

Group Group

2010 2009

US$ US$

Within 1 year 681,574 -

After 1 year, but not more than 5 years 1,195,907 -

More than 5 years - -

1,877,481 -

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2010 (continued)

7. Other operating expenses

2010 2009

US$ US$

Non-audit fees paid to Ernst and Young include fees for agreed upon procedures related to new acquisitions, as well as other agreed upon procedures work. Non-audit fees paid to Ernst and Young that related to the IPO that were allocated against share premium included $359,648 for pre-listing due diligence, $116,070 for tax consultancy and $486,168 for advisory services.

8. Finance costs and income

2010 2009

8.1 Finance costs US$ US$

8.2 Finance Income 2010 2009

9. Income taxes

The major components of income tax expense for the years ended 31 December 2010 and 31 December 2009 are:

Masawara Plc is tax resident in both Jersey (standard tax rate is 0%) where the Company is incorporated and Mauritius (standard tax rate is 15%) where the Company is managed and controlled. In 2009, prior to the Group Restructuring which resulted in the formation of a new parent company for the Group, the parent company was FMI Zimbabwe (Private) Limited, which is tax resident in Zimbabwe, and the tax rate was 30.9% in 2009.

10. Earnings per share

Basic earnings per share amounts are calculated by dividing net profit or loss for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

The following reflects the income and share data used in the basic and diluted earnings per share computations:

2010 2009

US$ US$

Basic and diluted earnings per share (0.09) (90.44)

There were no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.

11. Segment information

For management purposes, the group is organised into business units based on their products and services and has two reportable segments as follows:

·; The investment property segment leases retail and office space at the Joina City building partly owned by the Group.

·; TA Holdings Limited, an associate, is a diversified investment company that holds stakes in insurance, agro-chemical and hospitality businesses across sub-Saharan Africa and is listed on the Zimbabwe Stock Exchange.

Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated based on operating profit or loss, and is measured consistently with operating profit or loss in the consolidated financial statements.

Group finance costs and finance income, administrative and other operating expenses are not reported to the Board on a segment basis.

Segment assets for the Investment Property segment represents the Group's share of the Joina City building, and receivables from tenants.

Additional information on the TA Holdings Limited segment is as follows:

2010 2009

US$ US$ Share of the associate's statement of financial position:

11. Segment information (continued)

Geographical information

Investment property

The Joina City building is situated in Harare and therefore all revenues and assets are from Zimbabwe.

TA Holdings Limited

TA Holdings Limited has operations in Zimbabwe, Botswana, South Africa and Uganda. The Group's share of TA Holdings Limited's revenues and non-current assets is split as follows:

12. Plant and Equipment

13. Financial Assets

Financial assets comprise the following:

13. Financial Assets (continued)

13.1 Debenture investment

2010 2009

US$ US$

The debenture investment is measured at amortised cost. FMI Zimbabwe (Private) Limited through its subsidiary Melville Investments (Private) Limited, holds debentures in Cherryfield Investments (Private) Limited, a co-owner of the Joina City. These debentures represent a further interest in Joina City, in addition to the 57.31% share of Joina City which the Group holds through its subsidiary Dubury Investments (Private) Limited (see Note 14).

In 2009 and 2010, the Group made further investments in the Joina City through the debenture interest in Cherryfield Investments (Private) Limited. The investments made in 2010 were non-cash as they were settled through intercompany loans.

The disposal in 2010 represents the funds received from the disposal by Melville Investments (Private) Limited of part of its debenture interest in Cherryfield Investments (Private) Limited, to the other debenture holders in Cherryfield Investments (Private) Limited. Part of the proceeds from the disposal were non-cash as they were offset against intercompany liabilities, arising on contributions owed for the completion of the investment property (Note 14).

The co-owners agreed the debenture amount repayable of $2,579,995 at the date of change of functional currency to US dollars. The debentures are currently interest-free as the building is not complete. On completion of the Joina City the debenture loans will earn a coupon rate of 2% or 0.288 times dividend cover whichever is higher. The debentures are repayable five years after the completion of the Joina City, and the amount repayable after accounting for the new investments and releases during the period, is $1,739,510. The debentures are unsecured.

In line with International Financial Reporting Standards, interest has been imputed at the open market rate of 10%. Based on managements' best estimate it has been assumed that interest will become payable around December 2011. The debentures were previously being amortized to 31 December 2010, this was changed and are now being amortized to 31 December 2011. As a result of the re-evaluation of when the debenture interest will start being received, there is a debit to finance income due to the extension of the amortization period by one year.

13.2 Loans and receivables

2010 2009

US$ US$

Further details of loans to directors are included in Note 30. Loans to directors and employees are charged interest of 6% per annum.

13. Financial Assets (continued)

13.3 Short-term bank deposits

2010 2009

US$ US$

In October 2010, a six-month deposit was made with Stanbic Bank of Zimbabwe Limited, earning interest at a fixed rate of 6% per annum.

14. Investment Property

2010 2009

US$ US$

The non-cash capitalized costs relate to contributions made through the debenture (Note 13.1),which were settled through intercompany loans.

The investment property is the Group's share of 57.31% joint ownership in Joina City. This is held through Dubury Investments (Private) Limited (a subsidiary of FMI Zimbabwe (Private) Limited) which owns 57,31% of Joina City.  The Group's share of rentals received and operating expenses have been shown above.

The Group has contractual obligations for on-going repairs, maintenance and enhancements, which are then recoverable from tenants as part of the service levy charge. As it is a recently constructed building, the Group is responsible for repairs arising out of any identified latent defects from the construction of the building.

The fair value of investment has been determined on a market value basis in accordance with International Valuation Standards, as set out by the International Valuation Standards Council (IVSC). The valuation is prepared on an aggregated ungeared basis. In arriving at their estimates of market values the valuers have used their market knowledge and professional judgment and not only relied on historical transactional comparables. The valuers had reference to the relevant professional guidelines and statements issued under the Royal Institution of Chartered Surveyors Appraisal and Valuation Manual (the "Red Book"), IVSC and the REIZ (Real Estate Institute of Zimbabwe) Standards. More details about the significant accounting judgments and estimates related to the valuation are included in Note 3.1.

14. Investment Property (continued)

The valuation was performed by CB Richard Ellis (Private) Limited (Zimbabwe), an accredited independent valuer with recognized and relevant professional qualifications and with recent experience in the location and category of the investment property being valued.

The development is in Zimbabwe and the significant assumptions made relating to the valuation are set out below:

2010 2009

The other significant assumptions made were that the building was fully occupied as at the date of the valuation, and that there will be no voids in the future.

Sensitivity Analysis

The table below presents the sensitivity of the Group's share of the valuation to changes in the most significant assumptions underlying the valuation of completed investment property.

  Increase/(decrease) in valuation

2010 2009

US$ US$

Increase in capitalisation/yield rate of 5 basis points (2,117,031) (2,148,527)

Decrease in rentals rate by 10% (3,175,546) (3,007,938)

Decrease in capitalisation/yield rate of 5 basis points 2,442,728 2,506,615

Increase in rentals rate by 10% 3,175,546 3,007,938

Increase in voids by 1% (317,555) (300,794)

15. Investment in Associates

Aggregate Group Investments in Associates

US$ US$

As part of the Group rearrangement prior to listing, Beshog Investments (Private) Limited, a subsidiary of FMI Holdings (Private) Limited transferred 3,513,704 shares held in TA Holdings Limited to FMI Investments (Private) Limited on 12 August 2010. This increased FMI Investments (Private) Limited shareholding in TA Holdings Limited to 30%. The transfer value of $1,054,191 was the market value of the shares on the date of transfer, and was offset against intercompany loans. The share of net assets of TA Holdings Limited at the date of transfer was $1,276,461 and the difference of $222,270 has been included as income in the determination of the Group's share of TA Holdings Limited's loss in the year.

The share of other movements in reserves relates to the sale of shares in a subsidiary by TA Holdings Limited during the period.

Prior year adjustments

The share of prior year adjustments in associate relate to restatements to the opening statement of financial position made by TA Holdings Limited, as well as corrections to prior period errors. $1,503,605 (Group's share $419,055) relating to the conversion from Zimbabwe Dollars (Z$) to United States Dollars on 29 January 2009 was reallocated from Non Distributable Reserves to subsidiaries and debtors, in the TA Holdings Group. An additional adjustment of $835,728 (Group's share $232,917) was made for the inclusion of an employee share trust not previously consolidated. These adjustments are reflected in Other Capital Reserves (Note 22).

IAS 8 -Accounting Policies, Changes in Accounting Estimates and Errors would ordinarily require an entity to restate the amount of the correction at the beginning of the earliest period presented in the financial statements (ie: as at 1 January 2009) unless retrospective restatement is impracticable for a particular period.

The financial statements for FMI Zimbabwe (Private) Limited for year ended 31 December 2009 did not present any comparative information as required by IAS 1 because the Directors of FMI Zimbabwe (Private) Limited believed the information would be misleading. This is because the prevailing economic environment meant it was not possible to convert financial statements into US Dollars in a manner consistent with IAS 21 and IAS 29 until the Monetary and Fiscal authorities authorised the use of multiple foreign currencies for trading in Zimbabwe on 29 January 2009 as discussed in Note 31 of the financial statements. Accordingly, the Directors believe it is impracticable for the amount of the correction to be presented for the prior period(s) and accordingly have corrected the error as at 1 January 2010.

15.1 Investment in TA Holdings Limited

The Group has a 30% (2009: 27.87%) interest in TA Holdings Limited which is an investment holding company listed on the Zimbabwe Stock Exchange whose principal strategic investments are in insurance, agro-chemicals, and hospitality and leisure.

The following table illustrates summarized financial information of the Group's investment in TA Holdings Limited:

 2010 2009

US$ US$ Share of the associate's statement of financial position: