Final Results

10 June 2014

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

Final Results for the year ended 31 December 2013

Masawara, an investment company focused on acquiring interests in companies based in Zimbabwe and the southern African region, is pleased to announce its audited results for the year ended 31 December 2013.

The Company's Annual Report and Accounts for the year ended 31 December 2013 will be posted to shareholders shortly and may also be viewed on, or downloaded from, the Company's website at www.masawara.com.

Contact details

Masawara plc

(Masawara Zimbabwe (Private) Limited, the Company's Investment Advisor in Zimbabwe)

Rutendo Maziva/Oliver Lutz

+263 4 751805

Cenkos Securities plc (Nominated adviser and broker)

Nicholas Wells/Ian Soanes/Max Hartley

 +44 20 7397 8900

CHAIRMAN'S STATEMENT

In Zimbabwe, where the majority of the Group's investments are held, the economy faced well-publicised challenges. The average GDP growth rate of 7.5% during the economic rebound of 2009 to 2012 is moderating due to liquidity constraints and structural bottlenecks (that include power shortages). The Group's investments in Botswana performed to expectation despite a depreciation of the Botswana Pula against the United States Dollar. The insurance investment in Uganda performed above expectation.

Notwithstanding this macroeconomic context, I remain confident about the prospects of the Group, its portfolio companies and the frontier investment case for Zimbabwe. These are not unprecedented times, the team at the Investment Advisor has invested through turbulent economic times successfully in the past. I am confident that they will continue to deploy capital in innovative and compelling ways to create enduring value for our shareholders, particularly in light of the pipeline of promising opportunities continually originated through our extensive networks.

Masawara Plc's financial performance for 2013 was below expectations. The Group incurred a loss after tax from continuing and discontinued operations of $10.8 million after recognizing the impairment of TA Holdings Limited's investment in associate Sable Chemical Industries Limited of $13.7 million (Group's share: $5.6 million) as well as $2 million fair value loss on the revaluation of the investment property. Despite the impairment loss, and the moderating macroeconomic fundamentals, TA Holdings Limited's performance improved significantly which reflects the impact of the portfolio optimisation strategy spearheaded by management in the current year and the "defensive growth" nature of the companies. Full details of the Group's financial performance are included in the Directors' Report.

Although not reflected in these financial statements, as this occurred subsequent to year end, the divestment from the petroleum distribution unit, Zuva Petroleum (Private) Limited, at a profit of $6.2 million has provided the group with critical liquidity. The board has identified and approved a number of new projects within our existing portfolio that are being pursued in 2014, that will be value enhancing for the group.

The Investment Advisor remains conscious of the economic slowdown in Zimbabwe. Numerous opportunities have been presented to the group outside of the existing portfolio, however the application of robust investment selection criteria has resulted in no new projects being pursued. Within the existing investment portfolio, the respective management teams are continually focused on mitigating the effects of the economic slowdown and ensuring that the businesses are positioned to harness their capacity to grow and generate cash and ultimately to unlock the business value in the portfolio.

During the first quarter of the year 2014, despite marginal growth in the Zimbabwean economy, all of the Group's underlying businesses registered growth in revenue and profitability.

Let me conclude by thanking my fellow Board members and the Group's staff for their sterling work in helping me to steer the Group during the year under review.

David Suratgar

Chairman

9 June 2014

DIRECTORS' REPORT

The Directors present the audited financial statements of the Group for the year ended 31 December 2013.

Principal activities

Masawara Plc is an investment company focused on acquiring interests in companies based in Zimbabwe and the Southern African region. The portfolio comprises of:

· an interest in Joina City, a premium, multi-purpose property, located in Harare's Central Business District, providing rental property for retail, entertainment and office space;

· an interest in TA Holdings Limited ("TA Holdings"), 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;

· an interest in Zuva Petroleum (Private) Limited ("Zuva"), a long established importer and distributor of petroleum products in Zimbabwe, which was disposed of subsequent to year end;

· an interest in Telerix Communications (Private) Limited ("Telerix"), a Zimbabwean broadband internet service provider which rolled-out a WiMAX network in Harare during the previous year;

· an interest in iWayAfrica Zimbabwe (Private) Limited ("iWayAfrica"), a broadband internet service provider; and

· an interest in Minerva Risk Advisors (Private) Limited (a company previously known as AON Zimbabwe (Private) Limited) that has operations in pensions consulting and administration, insurance risk advisory and reinsurance broking.

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, Masawara 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 in Zimbabwe on a day-to-day basis, with a view to achieving the Group's investment objective and strategy.

Business preference

The investment criteria adopted are:

· 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;

· investing in businesses with a clear growth potential;

· focusing on the creation of intrinsic value through the restructuring of the investment or a merger with complementary businesses; and

· emphasis on investment in cash generative businesses.

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

Business review

Principal risks and uncertainties

The Group's business activities together with the factors likely to affect its future development, performance and position are set out below. Note 31 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; its exposures to credit risk and liquidity risk; and other risks.

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 and ongoing monitoring of existing investments. The senior management of the Investment Advisor collectively has over 70 years of experience in identifying and concluding value accretive transactions and also monitoring of existing investments.

There is a risk that the illiquidity of the Zimbabwean equity and bond markets 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 6.1 and Note 16.

Due to losses incurred by Telerix and its cash flow constraints, there is a risk that the investment in Telerix, the debentures and the loan granted to Telerix may be further impaired in future. Refer to Note 15.1 and Note 15.5 regarding the debentures and loan receivable impairment analysis respectively.

The losses and cash flow constraints experienced by Telerix Communications (Private) Limited ("Telerix") cast doubt on the ability of Telerix to continue as a going concern without financial support. Accordingly, based on the 12 month cash flow projections of the business, on 28 March 2014 Masawara provided a letter of support pledging that it will, and is in a position to, at the request of Telerix, place sufficient funds up to a maximum of $3.6 million (2012: $1.4 million) to meet Telerix's obligations as and when they fall due during the 12 month forecast period.

There is also a risk that should the Group decide to dispose of its shares in TA Holdings Limited ("TA Holdings") on the Zimbabwe Stock Exchange, it will not realize a good return on the investment, due to the illiquidity on the stock exchange and the fact that the TA Holdings share price has declined significantly over the last three years. Refer to Note 17.1 for more details of the assessment carried out to determine whether the Group's investment in TA Holdings is impaired.

Going concern

Management prepared cash flow forecasts indicating there is adequate operating cash for the period to 30 September 2015. In assessing the ability of the Group to continue as a going concern, management carried out sensitivity analysis on the cash flow assumptions to reflect a range of other reasonably possible outcomes and concluded that Masawara will be able to continue as a going concern. Included in the forecast were the proceeds from the sale of Masawara Energy (Mauritius) Limited that were received subsequent to year end (Note 36). The Directors reviewed the cash flow forecasts prepared by management when assessing the ability of the Group to continue operating as a going concern. The Directors believe 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 financial statements have been prepared on the going concern basis.

Overview

The following were the key highlights for the year ended 31 December 2013:

· On 1 February 2013, the Group made the decision to dispose of its interest in Masawara Energy (Mauritius) Limited, the vehicle that holds the investment in Zuva Petroleum (Private) Limited, and classified this investment as held for sale. The sale was concluded subsequent to year end for a total consideration of $29.3 million (Note 36).

· On 10 October 2013 the Group concluded the acquisition of Minerva Holdings (Private) Limited ("Minerva Holdings"). On that date, Minerva Holdings owned 64.75% of Minerva Risk Advisors (Private) Limited's ("Minerva Risk Advisors") issued share capital. Prior to the completion of the acquisition of Minerva Holdings, Masawara (Mauritius) Limited and TA Holdings Limited commenced negotiations regarding the sale of 20.75% shareholding in Minerva Risk Advisors to TA Holdings Limited. This transaction had not been concluded at year end, therefore the investment in Minerva Risk Advisors was classified as held for sale, as the sale was expected to be completed within 12 months (Note 7).

Key highlights for the year ended 31 December 2013 (continued)

· During the year under review, the Group increased its shareholding in TA Holdings Limited from 39.22% as at 31 December 2012 to 41.04% as at 31 December 2013.

· In line with the commitment made, Masawara Plc continued to provide support to Telerix Investments (Private) Limited ("Telerix"), in the form of funding of $1.4 million and the provision of a guarantee, for a maximum amount of $1.5 million, for a bank loan advanced to Telerix.

· Joina City, Telerix and the TA Holdings Limited recorded improved performance at an operating level, compared to the previous year.

· TA Holdings Limited impaired its investment in Sable Chemical Industries Limited by $13.7 million (Group's share $5.6 million), which adversely affected the profit after tax reported by TA Holdings Limited and the Group but had no impact on the cash generated by TA Holdings Limited.

Performance

The results for the year ended 31 December 2013 are set out in the financial statements.

The Group incurred a loss after tax of $11.7 million compared to a loss after tax of $8.6 million incurred last year. The loss in the current year was mainly attributable to the impairment of TA Holdings Limited's investment in associate Sable Chemical Industries Limited, which amounted to $13.7 million (Group's share $5.6 million) (2012: $nil) and a $2.0 million (2012: $nil) fair value loss recorded on the Joina City investment property.

An overview of the performance of the individual underlying investments has been provided below.

TA Holdings Limited

TA Holdings Limited ("TA") incurred a loss after tax of $5.7 million (Group's share of loss $3.3 million), after accounting for a $13.7 million impairment loss against its investment in Sable Chemical Industries Limited. Excluding this impairment, TA recorded an increase in profit before taxation from $5.6 million in 2012 to $10.8 million in the year ended 31 December 2013. This improvement was principally driven by:

· A strong performance by the Zimbabwean short-term insurance operations;

· Fair value gains on investment property in the Zimbabwean life assurance business;

· Reduction in operating losses within TA's agro-chemical investments, and

· Improved performance in the insurance operations in Botswana (driven by investment income) and Uganda (as a result of growth in underwriting profit).

In line with IAS 36 Impairment of Assets, TA Holdings Limited recorded an impairment charge of $13.7 million against its investment in associate, Sable Chemical Industries Limited. The impairment arose due to uncertainty over future returns to be realized by TA Holdings Limited from this investment.

Joina City

Overall occupancy in Joina City was 71% as at 31 December 2013, a slight decline from the 73% level recorded in 2012. This reduction in overall occupancy was a result of lower occupancies in the retail section, following the termination of leases for defaulting tenants. Total debtors as at 31 December 2013 were $67,040 which was an improvement in comparison with a balance of $100,790 at 31 December 2012.

The Group's share of profit for the year, excluding fair value loss on investment property, was $100,860, compared to a loss of $100,790 incurred in the prior year. The improvement from the previous year was as a result of a 24% increase in revenue from $1.5 million last year to $1.8 million in the current year, while other property expenses remained at prior year levels. The Group's share of the fair value loss on the investment property was $2.0 million. The significant judgments and valuation inputs are included in Note 6.1 and Note 16.

Telerix Communications (Private) Limited ("Telerix")

Telerix continues to register strong growth in a challenging environment characterised by poor liquidity, increased company closures and reduced discretionary spending by consumers. Telerix achieved revenue growth of 46% year on year, driven by 107% revenue growth in uMax (home and small business retail broadband) and 30% revenue growth in Utande (wholesale and corporate bandwidth). Despite this revenue growth, the company has not yet achieved a break-even position. For the year ended 31 December 2013, EBITDA loss decreased by 41% to $2.1 million from an EBITDA loss of $3.6 million incurred in 2012. The Directors believe that Telerix will break-even during 2014. Masawara Plc will continue to provide financial support to Telerix Communications (Private) Limited, as the company focuses on consolidating its market share and increase its revenue base (Note 35).

In accordance with IAS 28 Investment in Associates, Masawara Plc discontinued recognising its share of further losses after the investment in Telerix was written off to $nil during the year ended 31 December 2012. Cumulative unrecoginsed share of losses at 31 December 2013 amounted to $2.2 million (2012: $368,570) (Note 17.2).

During the year, the Group provided a guarantee to Telerix, limited to a maximum of $1.5 million relating to a $2.5 million loan obtained by Telerix's wholly owned subsidiary, Dandemutande Investments (Private) Limited, from Central African Building Society ("CABS"). As at year end, the loan payable to CABS amounted to $2 million which reduced the maximum amount guaranteed by the Group to $1.2 million. In accordance with IAS 28 Investment in Associates, the Grouprecognised a liability amounting to $1.2 million and an expense of the same amount, which has been disclosed as share of loss of associate in the statement of comprehensive income.

Masawara Energy (Mauritius) Limited (discontinued operations)

On 1 February 2013, the Directors made a decision to dispose of the energy segment consisting of the Group's investment in Masawara Energy (Mauritius) Limited ("MEM") and, therefore, classified it as a disposal group held for sale. Consequently, the share of losses of MEM were only accounted for one month in the Group's results. The Group's share of loss of the discontinued operations amounted to $298,000 (2012: $2.3 million). Subsequent to year end, the Group concluded the disposal of its interest in Masawara Energy (Mauritius) Limited for a consideration of $29.325 million (Note 36) resulting in a profit on disposal of $6.2 million.

Minerva Risk Advisors (Private) Limited ("Minerva Risk Advisors")

On 10 October 2013 the Group concluded the acquisition of Minerva Holdings (Private) Limited ("Minerva Holdings"). On that date, Minerva Holdings owned 64.75% of Minerva Risk Advisors (Private) Limited's ("Minerva Risk Advisors") issued share capital. Prior to the completion of the acquisition of Minerva Holdings, Masawara (Mauritius) Limited and TA Holdings Limited commenced negotiations regarding the sale of 20.75% shareholding in Minerva Risk Advisors to TA Holdings Limited. This transaction had not been concluded at year end, therefore the investment in Minerva Risk Advisors was classified as held for sale, as the sale was expected to be completed within 12 months (Note 7).

Based on the provisional accounting for the acquisition of Minerva Holdings, the Group recorded a gain on bargain purchase of $241,000 (Note 7). Due to the fact that when Masawara acquired Minerva Risk Advisors it had the view to sale part of its shareholding in Minerva Risk Advisors to TA Holdings Limited investment in Minerva Risk Advisors has been classified as a discontinued operation. The results of Minerva Risk Advisors for the three month period ended 31 December 2013 (i.e. a loss of $883,000) have been included as part of loss from discontinued operations disclosed on the face of the statement of comprehensive income.

Cash flow for the year

The Group recorded an overall decrease in cash and cash equivalents of $2.0 million from 31 December 2012. The cash was utilized to fund $3.8 million in operating activities while $1 million was generated from investing activities and $760,000 generated from financing activities. The net cash generated in investing activities was after accounting for the $2.6 million deposit received for the disposal of Masawara Energy (Mauritius) Limited (Note 29). The other significant components of investing activities were $1.7 million paid in loans granted to related parties, and $491,000 loan repayments from related parties.

Financial position

Non-current assets decreased from $87.9 million as at 31 December 2012 to $62.9 million as at 31 December 2013, primarily as a result of the reclassification of the investment Masawara Energy (Mauritius) Limited ("MEM") to discontinued operations held for sale and the $2.0 million fair value loss on the Group's investment property. The Group had cash and cash equivalents of $50,000 at 31 December 2013 (31 December 2012: $2.1 million), and had not drawn down on the overdraft facility at Afrasia Bank (Note 20). The $4.7 million increase in current liabilities was primarily as a result of the $2.6 million deposit received for the MEM disposal, the $1.2 million provision for the guarantee provided on behalf of Telerix Investments (Private) Limited, and the $354,000 deferred consideration payment for the acquisition of Minerva Holdings.

The net asset value per share attributable to equity holders of the parent as at 31 December 2013 was $0.59 (31 December 2012: $0.67).

Outlook

TA Holdings Limited

Despite the continued tight liquidity conditions in Zimbabwe, the Zimbabwe insurance companies are expected to record growth in both premium and underwriting profits. In Botswana, strategies have been employed to regain market share and improve profitability, while in Uganda the strong performance achieved in 2013 is expected to continue.

Margins in the Zimbabwean hospitality businesses remain under pressure as a result of intense competition. To counter this, an aggressive cost containment exercise has been initiated. In Botswana, the hospitality business expects to regain market share (particularly in Gaborone), which will drive growth in revenue and profitability.

At Sable Chemical Industries Limited, the finalisation of a viable electricity tariff will enable the company to complete the refurbishment of its plant to facilitate increased production.

In Cresta Marakanelo, the two hotels that we opened during 2013 are expected to continue to increase their contribution to overall profitability of the group. Discussions are at an advanced stage for the company to lease a new hotel and conference centre in Botswana, construction is expected to commence during the third quarter of 2014.

Joina City

Continued attention has been placed on debtors' collections and finding suitable tenants in order to increase occupancy levels. These initiatives will provide further impetus for growth in cash available for distribution to the Joina City Co-owners.

Telerix Communications (Private) Limited ("Telerix")

Masawara Plc will continue to provide financial support to Telerix Communications (Private) Limited, as the company focuses on increasing its customer base in the retail, corporate and wholesale markets.

Subsequent to year end, Masawara converted all the Telerix debentures and loans receivable from Telerix into a new instrument, a loan note, which has variable interest rates over a period of 5 years. For more details refer to Note 36.

Post balance sheet events

On 31 January 2014, Masawara Plc concluded the disposal of its interest in Masawara (Energy) Mauritius Limited for $29.3 million (Note 36). The profit on disposal was $6.2 million.

On 18 February 2014 the Directors of the Company declared a special cash dividend of 3.25 US cents per ordinary share. The dividend amounting to approximately $4 million was paid on 5 March 2014 out of the Company's available cash. The balance of the proceeds will be invested by the Group in line with the investment strategy (Note 36). Details of other post balance sheet events have been included in Note 36.

New accounting policy

IFRS 10 Consolidated Financial Statements which became effective on 1 January 2014 in the European Union, introduced an investment entity exception confirming that an investment entity shall in general not consolidate its subsidiaries or apply IFRS 3 Business Combinations when it obtains control of another entity. Instead, an investment entity shall measure its investments at fair value through profit and loss. Only subsidiaries providing services that relate to the investment entity's investment activities should be consolidated.

The Directors have made a preliminary assessment of the impact of IFRS 10 and are aware that the results of the assessment may change particularly in light of recent IFRIC discussions. However, the Directors believe that they are in a position to apply the investment entity exception under IFRS 10 from 1 January 2014 and it is their intention to do so. On the basis of the belief that we will qualify for the investment entity exception, the following significant changes will be made to the financial statements:

· Investments in associates and joint ventures will no longer be equity accounted but will be carried at fair value.

· Masawara Plc shall not consolidate its subsidiaries or apply IFRS 3 when it obtains control of another entity. Instead, Masawara Plc will measure an investment in a subsidiary at fair value through profit or loss in accordance with IFRS 9.

By Order of the Board

Masawara Plc

Mr Julian Vezey

9 June 2014

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

Directorate

David Suratgar (Chairman)

Francis Daniels

Yvonne Deeney

Maureen Erasmus

Iqbal Rajahbalee

Shingai Mutasa

Julian Vezey

Stephen Folland (Appointed on 3 March 2014)

Jason Harel (Resigned on 13 March 2014) *

* Jason Harel will, however, continue to serve the Company as he has been appointed an alternate director to Iqbal Rajahbalee.

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 eight non-executive Directors, five 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 is assessed and confirmed annually.

The Investment Advisor

The Investment Advisor, Masawara 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 in Zimbabwe 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. The other Committee member is 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. 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 auditor at least twice a year.

Co-ownership Committee

Dubury Investments (Private) Limited (a sub-subsidiary of Masawara 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 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 review and monitor property management of Joina City.

The Committee meets quarterly 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 meets 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 are requested to attend as required. The Group's shareholders meet at least once every year, at the Annual General Meeting. The external auditor of the Group has unlimited access to the Board.

STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RELATION TO THE FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual 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;

· 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.

Total comprehensive loss attributable to:

MASAWARA PLC

Consolidated statement of financial position as at 31 December 2013

MASAWARA PLC

Consolidated statement of changes in equity for the year ended 31 December 2013

MASAWARA PLC

MASAWARA PLC

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

1. Corporate information

Masawara Plc ("the Company") is an investment company incorporated and domiciled in Jersey, Channel Islands, whose shares are publicly traded on the London Stock Exchange's AIM. The company is managed in Jersey and its registered office is located at Queensway House, Hilgrove Street in St Helier, Jersey.

The investment portfolio of the Company includes Joina City (a multi-purpose property situated in Harare that earns rental income), TA Holdings Limited (a diversified investment company that holds investments in insurance, agro-chemical and hospitality businesses), iWayAfrica Zimbabwe (Private) Limited (a broadband internet service company), Telerix Communications (Private) Limited (a company that has a license that allows it to construct, operate and maintain a public data internet access and Voice Over IP network in Zimbabwe), Minerva Risk Advisors (Private) Limited (a company previously known as AON Zimbabwe (Private) Limited that has operations in Pensions Consulting and Administration, Insurance Risk Advisory and Reinsurance Broking) and Zuva Petroleum (Private) Limited (importer and distributor of petroleum products in Zimbabwe) which was disposed of subsequent to year end, refer to Note 36 for further information.

The Group financial statements consolidate those of the Company, its subsidiaries, its joint venture 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 2013 were authorized for issue in accordance with a resolution of the Directors on 9 June 2014.

2.1 Basis of preparation

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

The consolidated financial statements have been prepared on a historical cost basis, except for investment properties that have been measured at fair value. The consolidated financial statements are presented in United States Dollars and all values are rounded to the nearest dollar ($), except when otherwise indicated.

Going Concern

Management prepared cash flow forecasts indicating there is adequate operating cash for the period to 30 September 2015. In assessing the ability of the Group to continue as a going concern, management carried out sensitivity analysis on the cash flow assumptions to reflect a range of other reasonably possible outcomes and concluded that Masawara will be able to continue as a going concern. Included in the forecast were the proceeds from the sale of Masawara Energy (Mauritius) Limited that were received subsequent to year end (Note 36). The Directors reviewed the cash flow forecasts prepared by management when assessing the ability of the Group to continue operating as a going concern. The Directors believe 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 financial statements have been prepared on the going concern basis.

Principal risks and uncertainties

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 31 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.

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 and ongoing monitoring of existing investments. The senior management of the Investment Advisor collectively has over 70 years of experience in identifying and concluding lucrative transactions and also monitoring of existing investments.

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 6.1 and Note 16.

Due to losses incurred by Telerix and cash flow constraints, there is a risk that the investment in Telerix, debentures and the loan granted to Telerix may be further impaired in future. Refer to Note 15.1 and Note 15.5 for the debentures and loan receivable impairment analysis respectively.

The losses and cash flow constraints experienced by Telerix Communications (Private) Limited ("Telerix") cast doubt on the ability of Telerix to continue as a going concern without financial support. Accordingly based on the 12 month cash flow projections of the business, on 28 March 2014 Masawara provided a letter of support pledging that it will, and is in a position to, at the request of Telerix, place sufficient funds up to a maximum of $3.6 million (2012: $1.4 million) to meet Telerix's obligations as and when they fall due during the 12 month period from 28 March 2014.

There is also a risk that should the Group decide to sell its shares in TA Holdings Limited ("TA") on the Zimbabwe Stock Exchange, it will not realize a good return on the investment, due to the illiquidity on the stock exchange and also due to the fact that the TA share price has declined significantly over the last three years. Refer to Note 17.1 for more details on the assessment carried out to determine whether the Group's investment in TA is impaired. The Group's financial risk management objectives and policies are discussed in Note 31 to the financial statements.

2.2 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company, its associates and subsidiaries as at 31 December 2013.

Subsidiaries are fully consolidated from the date of acquisition, except when the investment in held for sale in which case it is accounted for in accordance with IFRS 5 Non-current assets held for sale and discontinued operations, 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. Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if that results in a deficit balance.

3 Summary of significant accounting policies

3.1 Investment in associates

An associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture. The Group's investment in its associates is accounted for using the equity method of accounting except when the investment in held for sale in which case it is accounted for in accordance with IFRS 5 Non-current assets held for sale and discontinued operations. Refer to Note 3.3 for more details on equity method of accounting.

3.2 Interests in joint ventures

A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control (i.e. when the strategic financial and operating policy decisions relating to the activities of the joint venture require the unanimous consent of the parties sharing control). The Group's investment in its joint venture is accounted for using the equity method of accounting except when the investment is held for sale in which case it is accounted for in accordance with IFRS 5 Non-current assets held for sale and discontinued operations. Refer to Note 3.3 for more details on equity method of accounting.

3.3 Equity method of accounting 

Under the equity method, the investments in the associates and joint ventures are carried on the statement of financial position at cost plus post acquisition changes in the Group's share of net assets of the associate or joint venture respectively less any impairment in the individual investments. Goodwill relating to an associate or joint venture is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. If an acquisition of an additional interest in an associate or joint venture is made in which control does not change such that it does not become a subsidiary, the additional purchase price paid is added to the existing carrying amount of the associate or joint venture and the existing interest in the associate or joint venture is not remeasured.

Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in the statement of comprehensive income.

The statement of comprehensive income reflects the Group's share of the results of operations of the associates and joint ventures. In the case of associates this is profit attributable to equity holders of the associates and therefore is profit after tax and non-controlling interest in the subsidiary of the associates. When there has been a change recognized directly in other comprehensive income or equity of the associates or joint ventures, 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 or joint ventures are eliminated to the extent of the interest in the associates or joint ventures.

The Group's share of profit/loss of the associates and joint ventures is shown on the face of statement of comprehensive income. This is profit/loss attributable to equity holders of the associates or joint ventures and therefore is profit after tax and non-controlling interests in the subsidiaries of the associates or joint ventures. Losses of an associate or a joint venture in excess of the Group's interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate or joint venture) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

The financial statements of the associates and joint venture are prepared for the same reporting period as the Group. 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 and joint ventures. The Group determines at each reporting date, whether there is any objective evidence that the investment in the associates and joint ventures is impaired.

If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associates or the joint venture and its carrying value and recognises the amount in the "share of profit/loss of an associate or share of profit/loss of joint venture" 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.

Upon loss of joint control the Group measures and recognises its remaining investment at its fair value. Any difference between the carrying amount of the former joint controlled entity upon loss of joint control and the fair value of the remaining investment and proceeds from disposal is recognised in the statement of comprehensive income. When the remaining investment constitutes significant influence, it is accounted for as an investment in an associate.

3.4 Foreign currency translation

The Group's financial statements are presented in United States Dollars ($), 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. In respect of transactions and balances:

· 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, are included in statement of comprehensive income 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.

3.5 Classification of financial instruments as debt

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.

3.6 Conversion of debt to equity

It is the Group's policy that when there is a conversion of debt to equity and the creditor is a shareholder acting in its capacity as such, then the equity issued is recorded at the carrying amount of the financial liability extinguished.

3.7 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, shareholder loan, financial guarantee contract 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.

Financial guarantee contracts

Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs because the specified debtor fails to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognized less, where appropriate, cumulative amortisation.

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 the statement of comprehensive income.

3.8 Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The Group has concluded that it is the principal in all of its revenue arrangements since it is the primary obligor in all the revenue arrangements, has pricing latitude and is also exposed to credit risks.

The specific recognition criteria described below must also be met before revenue is recognised.

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. Revenue is recognized when it is probable that the economic benefits will flow to the Group.

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.

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.

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. Interest income is included in finance income in the statement of comprehensive income.

3.9 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.

3.10 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.

3.11 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.

3.12 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, loans receivable and debenture investments.

 Subsequent measurement

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, 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.

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.

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 transfers 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.

Embedded derivatives

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required.

3.13 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.

3.14 Property, plant and equipment

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:

· Computers: 3 years

· Office furniture and equipment: 5 -10 years

The assets' residual values, and useful lives and methods of depreciation 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 the statement of comprehensive income as an expense.

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.

3.15 Investment property

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses arising from changes in the fair values of investment properties are included in the statement of comprehensive income in the period in which they arise. Fair values are evaluated annually by an accredited external, independent valuer, applying a valuation model recommended by the International Valuation Standards Committee.

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 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.

3.16 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 the statement of comprehensive income 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 the statement of comprehensive income unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase.

3.17 Provisions

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 the statement of comprehensive income 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.

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.

3.18 Equity movements

Ordinary share capital

The Group has issued ordinary shares that are classified as equity.

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.

Treasury shares

Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group's own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognized directly in equity. Voting rights related to treasury shares are nullified for the Group and no dividends are allocated to them. Share options exercised during the reporting period are satisfied with treasury shares.

Non-distributable reserves

Non-distributable reserves of $695,244 represent the equity of the Masawara Zimbabwe (Private) Limited sub-group that arose on the change of the functional currency to United States Dollars effective from 1 January 2009.

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.

Group restructuring reserve

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

Distributions

Under Jersey Law, distributions can be made against any equity account with the exception of the share capital account or any capital redemption account.

3.19 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 except for awards where the vesting is conditional upon a market condition where they are treated as vesting irrespective of whether the market condition is met. 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 13).

3.20 Taxation

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 at the reporting date in the countries where the Group operates and generates taxable income.

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 the income statement.

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 the income statement. 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.

3.21 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.

3.22 Non-current assets held for sale and discontinued operations

The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. The criteria for held for sale classification is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations in the income statement. Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.

4. Changes in accounting policies and disclosures

New and amended standards and interpretations

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 2012, except for the following new and amended IFRS effective as of 1 January 2013:

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS. IFRS 13 defines fair value as an exit price. As a result of the guidance in IFRS 13, the Group re-assessed its policies for measuring fair values, in particular, its valuation inputs such as non-performance risk for fair value measurement of liabilities. IFRS 13 also requires additional disclosures. Application of IFRS 13 has not materially impacted the fair value measurements of the Group. Additional disclosures where required, are provided in the individual notes relating to the assets and liabilities whose fair values were determined.

IAS 1 Presentation of Items of Other Comprehensive Income - Amendments to IAS 1

The amendments to IAS 1 introduce a grouping of items presented in OCI. Items that will be reclassified ('recycled') to profit or loss at a future point in time (e.g. net loss or gain on AFS financial assets) have to be presented separately from items that will not be reclassified (e.g. revaluation of land and buildings). The amendments affect presentation only and have no impact on the Group's financial position or performance.

IAS 1 Clarification of the requirement for comparative information (Amendment)

These amendments clarify the difference between voluntary additional comparative information and the minimum required comparative information. An entity must include comparative information in the related notes to the financial statements when it voluntarily provides comparative information beyond the minimum required comparative period.

IAS 19 Employee Benefits (Revised)

The IASB has issued numerous amendments to IAS 19. These range from fundamental changes such as removing the corridor mechanism and the concept of expected returns on plan assets to simple clarifications and re-wording.. This accounting standard will however have no impact of the Group.

These improvements are effective for annual periods beginning on or after 1 January 2013.

5. Standards 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 of standards and interpretations issued are those that the Group reasonably expects to have an impact on disclosures, financial position or performance when applied at a future date. The Group intends to adopt these standards when they become effective.

IAS 27 Separate Financial Statements (as revised in 2011)

As a consequence of the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for subsidiaries, jointly controlled entities, and associates in separate financial statements. The Group does not present separate financial statements. The amendment becomes effective for annual periods beginning on or after 1 January 2014.

IAS 28 Investments in Associates and Joint Ventures (as revised in 2011)

As a consequence of the new IFRS 11 Joint Arrangements, and IFRS 12 Disclosure of Interests in Other Entities, IAS 28 Investments in Associates, has been renamed IAS 28 Investments in Associates and Joint Ventures, and describes the application of the equity method to investments in joint ventures in addition to associates. The revised standard becomes effective for annual periods beginning on or after 1 January 2014. The amendment has no impact on the Group.

IAS 32 Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32

These amendments clarify the meaning of "currently has a legally enforceable right to set-off". The amendments also clarify the application of the IAS 32 offsetting criteria to settlement systems (such as central clearing house systems) which apply gross settlement mechanisms that are not simultaneous. These amendments are not expected to impact the Group's financial position or performance and become effective for annual periods beginning on or after 1 January 2014.

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9, as issued, reflects the first phase of the IASB's work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. The standard was initially effective for annual periods beginning on or after 1 January 2013 but the effective date has been extended to 1 January 2018. The IASB has not communicated on the new mandatory effective date. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Group's financial assets, but will not have an impact on classification and measurements of financial liabilities. The Group will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

IFRS 10 Consolidated Financial Statements

IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation - Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities including special purpose entities. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled and therefore are required to be consolidated by a parent, compared with the requirements that were in IAS 27.

In October 2012, IFRS 10 was amended by Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27), which defined an investment entity and introduced an exception to consolidating particular subsidiaries for investment entities. It also introduced the requirement that an investment entity measures those subsidiaries at fair value through profit or loss in accordance with IFRS 9 Financial Instruments in its consolidated and separate financial statements. In addition, the amendments introduced new disclosure requirements for investment entities in IFRS 12 and IAS 27. This standard becomes effective for annual periods beginning on or after 1 January 2014. The Directors made a preliminary assessment of the impact of IFRS 10 and are aware that the results of the assessment may change particularly in light of the recent IFRIC discussions. However, the Directors believe that they will be in a position to apply the investment entity exception under IFRS 10 from 1 January 2014 and it is their intention to do so.

IFRS 11 Joint Arrangements

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities - Non-monetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation. Instead, JCEs that meet the definition of a joint venture must be accounted for using the equity method. The application of this new standard will not have an impact on the financial position of the Group as investments in joint ventures are equity accounted as opposed to proportionately consolidated. This standard becomes effective for annual periods beginning on or after 1 January 2014.

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity's interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required, but this standard has no impact on the Group's financial position or performance. This standard becomes effective for annual periods beginning on or after 1 January 2014.

Annual Improvements December 2013

These improvements will not have an impact on the Group, but include:

IFRS 2 Share-based Payment

Amends the definitions of 'vesting condition' and 'market condition' and adds definitions for 'performance condition' and 'service condition'

IFRS 3 Business Combinations

Require contingent consideration that is classified as an asset or a liability to be measured at fair value at each reporting date

IFRS 8 Operating Segments

Requires disclosure of the judgements made by management in applying the aggregation criteria to operating segments, clarify reconciliations of segment assets only required if segment assets are reported regularly

IFRS 13 Fair Value Measurement

Clarify that issuing IFRS 13 and amending IFRS 9 and IAS 39 did not remove the ability to measure certain short-term receivables and payables on an undiscounted basis (amends basis for conclusions only)

IAS 16 Property Plant and Equipment

Clarify that the gross amount of property, plant and equipment is adjusted in a manner consistent with a revaluation of the carrying amount

IAS 24 Related Party Disclosures

Clarify how payments to entities providing management services are to be disclosed

IAS 38 Intangible Assets

Clarify that the gross amount of intangible assets is adjusted in a manner consistent with a revaluation of the carrying amount

These improvements are effective for annual periods beginning on or after 1 January 2014.

6. 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.

6.1 Valuations of property

The determination of the fair value of investment properties requires 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. Joina City is the newest development in the Harare CBD and the only one of 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 2012 and 31 December 2013, 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 16.

Technique used for valuation of investment property

The investment property had an occupancy level of 71% as at 31 December 2013 (31 December 2012: 73%). The valuation of the building by the independent valuer has been based on the assumption that the building will be fully occupied at 31 December 2017 whereas the valuation performed in the previous year was based on the assumption that the building was fully occupied.

In arriving at the market value of the property, the valuer used the Income Approach based on capitalization of income. This approach is based on the principle that the value of a property reflects the quality and quantity of the income it is expected to generate over time. Income-producing properties are typically purchased for investment purposes, and thus a property's ability to earn income is the critical element affecting its value from a market point of view. Hence given the estimate of income produced by a property, its value can be estimated.

This approach requires careful estimation of future benefits and the application of investor yield or return requirements. The rental estimates were based on actual rentals achieved on occupied retail and office spaces and comparable rentals, inferred from retail and office spaces within the locality of the property in the Harare central business district and surrounding areas, were used for unoccupied retail and office spaces. The estimated future rental income streams were discounted in order to determine the fair value of the investment property, refer to Note 16 for more details on inputs used in the valuation.

6.2 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, market interest rate applied and also whether or not the financial assets are recoverable. Refer to Note 6.7 for details of judgments applied in respect of the recoverability of amounts granted to related parties.

6.3 Significant influence in an associate

Masawara Plc accounts for iWayAfrica Zimbabwe (Private) Limited ("iWayAfrica") as an associate even though it owns less than 20% of the issued share capital because it has significant influence in iWayAfrica arising from the fact that it has one representative on the iWayAfrica Board of Directors which is made up of five members.

6.4 Negative goodwill

Negative goodwill on acquisition of additional interest in an associate

Negative goodwill on acquisition of additional interest in TA Holdings Limited ("TA") arose due to the fact that the additional interest in TA was acquired at less than the fair value of net assets acquired. The Directors believe that the net assets are equal to the fair value. The best estimate of the fair value of net assets acquired was determined as TA's audited net assets value at 31 December 2012 plus profit/(loss) up to the date of acquisition of the additional interest multiplied by the additional interest acquired during 2013.

6.5 Functional currency

Management used its judgment to determine the functional currency that most accurately 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 Company.

6.6 Impairment assessment of investments in associates and joint ventures

The Group determines at each reporting date, whether there is any objective evidence that the investment in the associates and joint venture is impaired. This requires an estimation of recoverable amount of the investment in associate or joint venture 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 or joint venture and also to choose a suitable discount rate in order to calculate the present values of those cash flows.

6.7 Recoverability of loans granted to investee companies

The Group assesses the recoverability of loans granted to investee companies at each reporting date and where appropriate an impairment loss is recognized against loans that are deemed to be irrecoverable or those that will be recoverable over extended periods i.e. periods that are longer than the periods as per the original agreements.

The Group reviews the investee company's financial performance and also reviews the capital as well as interest payment pattern by the investee company in order to come up with estimations of how much of the loans granted will be recoverable and also over what time frame. There were significant judgments involved in determining the Telerix Communications (Private) Limited ("Telerix") cash flow forecasts due to the fact that Telerix is in a start up phase, consequently impairment computations related to Telerix are very judgmental. Refer to Note 15.1 and Note 15.5 for the detailed impairment tests on investment in Telerix debentures and the loans granted to Telerix respectively.

6.8 Rent and other receivables

Rent and other receivables are recognized at their original invoiced value and when it is probable that the economic benefits will flow to the Group. 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. There is a risk that the illiquidity of the Zimbabwean capital market may affect the valuation of the Group's rent and other receivables in the short to medium term.

6.9 Accounting for the investment in Masawara Energy (Mauritius) Limited as a joint venture

Masawara Plc, through its subsidiary Masawara Energy Zimbabwe (Private) Limited owned 100% of the shares in Zuva Petroleum (Private) Limited ("Zuva"). The transaction was financed through the cash resources of Masawara Plc as well as a funding arrangement with a third party, Alveir Management Limited ("AML"), which thereby established joint control over Masawara Energy (Mauritius) Limited ("MEM"), which held the investment in Masawara Energy Zimbabwe (Private) Limited. The Directors concluded that MEM was a joint venture up to the date it was classified as held for sale (1 February 2013, which is the date that the board of Directors approved the disposal) and has therefore equity accounted for 51% of MEM's results for the one month period ended 31 January 2013.

On 7 March 2013, AML converted its loan in MEM to equity. Subsequent to the conversion, Masawara Plc, through its wholly owned subsidiary Masawara (Mauritius) Limited, owned 51% of equity interest in MEM and AML owned 49% although Masawara Plc continued to jointly control MEM.

With effect from 1 February 2013, the investment in MEM was classified as a discontinued operation as the carrying amount will principally be recovered through sale. Refer to Note 21 for more details. Management believe that the carrying value of investment in MEM at the date of classification as non-current asset held for sale and thereafter is lower than the fair value less cost to sale based on the fact that the selling price of the investment in MEM is significantly higher than its carrying amount.

6.10 Treatment of potential voting rights in Telerix Communications (Private) Limited ("Telerix")

The Telerix convertible debentures "the debentures" represent potential ordinary shares that have potential voting rights. Detailed disclosures on the convertible debentures are included in Note 15.1. The Directors considered whether the debentures are currently exercisable as that would determine whether Masawara Plc controls Telerix or if it only exerts significant influence. The provisions of the Telerix shareholders' agreement stipulate that all Telerix shareholders have an equal opportunity to participate in the conversion of the debentures into ordinary shares, in order to avoid dilution. Based on the aforementioned factors stipulated in the Telerix shareholders' agreement, the Directors concluded that although the debentures are currently exercisable, Masawara Plc does not control Telerix because it does not only consider its potential voting rights but also considers the potential voting rights of the other shareholders in Telerix i.e. if Masawara Plc exercised its rights, then the other shareholders would also have the ability to exercise their rights to avoid dilution. Consequently, Masawara Plc continues to account for Telerix as an associate as it does not control Telerix.

6.11 Accounting for Minerva Holdings' interest in Minerva Risk Advisors (Private) Limited ("Minerva Risk Advisors")

On 28 February 2013, Masawara (Mauritius) Limited ("MML"), a 100% wholly owned subsidiary of Masawara Plc, entered into an agreement with the Minet Group to acquire 100% of the shares of a company called Minerva Holdings (Private) Limited "Minerva Holdings". Minerva Holdings, had a 64.75% interest in Minerva Risk Advisors (Private) Limited ("Minerva Risk Advisors") (previously known as AON Zimbabwe (Private) Limited) while the Employee Share Trust had a 5% interest in Minerva Risk Advisors and TA Holdings owned the remaining 30.25% of the share capital of Minerva Risk Advisors. The effective date of the transaction was 10 October 2013, which is the date when MML received the final regulatory approvals on the transaction. However, for accounting purposes, 1 October 2013 has been used as the effective date of the transaction.

When Masawara Plc acquired Minerva Holdings, it had the intention to sell 20.75% of Minerva Risk Advisors' issued share capital to TA Holdings Limited, and TA Holdings had agreed to the intended sale. The intended sale of 20.75% of Minerva Risk Advisors' issued share capital met the non current asset held for sale criteria included in IFRS 5 Non-current Assets Held for Sale and Discontinued Operations and was classified as such as this is a subsidiary that has been acquired with the view to sale. The sale is expected to be completed within nine months after year end i.e. within twelve months from the date of classification as non-current asset held for sale.

6.12 Valuation of contingent consideration relating to the purchase of Minerva Holdings (Private) Limited ("Minerva Holdings")

The purchase price for the acquisition of Minerva Holdings was based on future earnings of Minerva Risk Advisors. The Directors applied judgment in respect of the future earnings and the discount rate used to discount the estimated future earnings before interest, depreciation and amortisation figures. Refer to Note 7 for more details.

7 Acquisition of Minerva Holdings (Private) Limited

On 28 February 2013, Masawara Plc through its wholly owned subsidiary, Masawara (Mauritius) Limited ("MML"), entered into an agreement with the Minet Group to acquire a 100% shareholding in Minerva Holdings (Private) Limited ("Minerva Holdings"). The effective acquisition date of Minerva Holdings was 10 October 2013, which is the date when MML obtained final regulatory approvals in respect of the acquisition of Minerva Holdings. However, 1 October 2013 has been used as the acquisition date for accounting purposes. The exclusion of transactions that took place between 1 October 2013 and 10 October 2013 does not have a material effect on the Consolidated Financial Statements. On the date that MML acquired Minerva Holdings, Minerva Holdings owned 64.75% of Minerva Risk Advisors (Private) Limited's (Minerva Risk Advisors) issued share capital.

Masawara acquired Minerva Holdings because Minerva Risk Advisors has operations in Pensions Consulting and Administration, Insurance Risk Advisory and Reinsurance Broking which provides synergies with the insurance companies within the TA Holdings Group, which Masawara has an interest in.

The fair values of identifiable assets and liabilities were provisional because as at the date of signing of these financial statements, not all information in relation to the fair values of identifiable assets and liabilities had been obtained. The provisional fair values of identifiable assets and liabilities were as follows:

The gain on bargain purchase arose due to the fact that Minerva Holdings was acquired at less than the provisional fair value of its net assets.

Footnotes

The process of fair valuation of net assets was carried out at Minerva Holdings level and the resulting fair value adjustments were accounted for in the Minerva Holdings financial statements. Refer to the footnotes below for the detailed fair valuation process.

a. The fair value of the property, plant and equipment was determined by Knight Frank Zimbabwe (Private) Limited, an accredited independent valuer with recognized and relevant professional qualifications and with recent experience in the location and category of the property, plant and equipment being valued.

b. This represents 64.75% share of Minerva Risk Advisors (Private) Limited's identifiable assets. The carrying amount of Minerva Holdings' share of identifiable assets estimates the provisional fair value. Due to the fact that when Minerva Holdings was acquired, Masawara had the view of selling part of its shareholding in Minerva Risk Advisors, and that met the criteria in IFRS 5, the Minerva Risk Advisors assets have been reclassified to the non-current assets held for sale category, refer to Note 21.2 for more details.

c. This represents 64.75% share of Minerva Risk Advisors (Private) Limited's identifiable liabilities. The carrying amount of Minerva Holdings' share of identifiable liabilities estimates the provisional fair value. Due to the fact that when Minerva Holdings was acquired, Masawara had the view of selling part of its shareholding in Minerva Risk Advisors, and that met the criteria in IFRS 5, the Minerva Risk Advisors liabilities have been reclassified to the non-current liabilities held for sale category, refer to Note 30 for more details.

d. This represents Minerva Risk Advisors (Private) Limited's non-controlling interest. As documented in footnotes "a" and "b" above, the carrying amounts of Minerva Holdings' share of identifiable assets and liabilities estimates the provisional fair value. Consequently, the carrying amount of the non controlling interest estimates the provisional fair value. Due to the fact that when Minerva Holdings was acquired, Masawara had the view of selling part of its shareholding in Minerva Risk Advisors, and that met the criteria in IFRS 5, the Minerva Risk Advisors non controlling interest has been reclassified to the held for sale category under non controlling interest, refer to Note 26 for more details.

e. The consideration payable, which ranges from a minimum of $1 up to maximum of $2.8 million, will be the sum total of 80% of earnings before interest, tax, depreciation and amortization ("EBITDA") of Minerva Risk Advisors for the years ending 31 December 2013, 31 December 2014 and 31 December 2015 and will be payable over the 3 years on 30 April 2014, 30 April 2015 and 30 April 2016. The total acquisition related costs, which were due diligence costs amounting to $52,300, were recognised in the statement of comprehensive income as required by IFRS 3 Business Combinations. In terms of the agreement, the consideration transferrable has been determined as follows:

· The first instalment, which is 80% of Minerva Holdings' EBITDA for financial year ended 31 December 2013 which amounted to $354,110, payable no later than 30 April 2014. For accounting purposes, the first instalment is stated at $337,838 (this includes interest expense of $13,096 that reflects the unwinding effect of the liability during the period 10 October 2013 to 31 December 2013). The amount recognised in the statement of financial position is lower than the $354,110 which was paid to Minet Group on 30 April 2014 because the amount recognized in the statement of financial position is discounted in order to take into account of the time value of the amount paid on 30 April 2014.

· Second instalment of 80% of Minerva Holdings' EBITDA for financial year ending 31 December 2014, payable no later than 30 April 2015 which is estimated at $1,009,022.

· Third instalment of 80% of Minerva Holdings' EBITDA for financial year ending 31 December 2015, payable no later than 30 April 2016 which is estimated at $872,857.

2013 EBITDA is the actual EBITDA figure for Minerva Holdings achieved for the year ended 31 December 2013 and in determining the EBITDA of Minerva Holdings for 2014 and 2015, the probability-weighted average payout approach was used, and a discount rate of 16% was applied to the projected cashflows stipulated in the periods above to determine the fair value of the consideration. The discount rate is the interest rate at which Masawara would obtain a loan from its bankers in Zimbabwe.

Minerva Risk Advisors full year revenue was $7,380,255 and full year profit after tax was $191,920 whilst revenue since acquisition was $1,265,572 and loss after tax since acquisition was $883,203. Cash and cash equivalents amounted to $3,825,096 on the date that Masawara acquired Minerva Risk Advisors and it was $3,982,528 at year end.

8. Segment information

For management purposes, the Group is organised into business units based on their products and services and has five 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. The Group's interest in Minerva Risk Advisors (Private) Limited ("Minerva Risk Advisors") has been accounted for as part of TA Holdings Limited for segment reporting purposes. This is because the financial performance of Minerva Risk Advisors is reported to Masawara Plc on a monthly basis as part of TA Holdings Limited, due to the fact that TA Holdings exercises management control over the operations of Minerva Risk Advisors.

· Telerix Communications (Private) Limited, an associate, is a company that is licensed to construct, operate and maintain public data internet access and Voice Over network in Zimbabwe.

· iWayAfrica Zimbabwe (Private) Limited, an associate, is a broadband internet service company in Zimbabwe.

· Energy segment, which incorporates Masawara Energy (Mauritius) Limited with a wholly owned subsidiary, Zuva Petroleum (Private) Limited, which is a long established importer and distributor of petroleum products in Zimbabwe. Masawara Energy (Mauritius) Limited was a joint venture of the Group which is classified as a non-current asset held for sale as at 31 December 2013 hence the energy segment is wholly comprised of discontinued operations.

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 segment profit or loss, and is measured consistently with operating profit or loss in the consolidated financial statements.

Segment assets for the Investment Property segment represent the Group's share of the Joina City building

($30,947,400), debenture investment ($1,761,908), tenant receivables ($67,040) and other assets ($168,528). Segment liabilities represent deferred capital gains tax liability ($1,364,685) on fair value gains on the Joina City building, shareholder loan ($6,004,938) and other payables ($352,036).

Geographical information

Investment property

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

Telerix

Telerix Communications (Private) Limited is situated in Harare and only offers services in Zimbabwe, therefore all revenues and assets are from Zimbabwe.

iWayAfrica 

iWayAfrica Zimbabwe (Private) Limited is situated in Harare and only offers services in Zimbabwe, therefore all revenues and assets are from Zimbabwe.

Energy

Masawara Energy (Mauritius) Limited's significant assets that generate revenue are located in Zimbabwe through its wholly owned subsidiary, Zuva Petroleum (Private) Limited. Zuva Petroleum (Private) Limited imports and distributes petroleum products across Zimbabwe hence all revenues and assets of the energy segment have been deemed to be 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:

9. 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. Future minimum rentals receivable under non-cancellable operating leases were as follows:

Operating lease commitments - Group as lessee

The Group entered into a 5 year lease relating to the rental of its corporate office space on 1 June 2011. There are no restrictions placed upon the Group by entering into this lease.

Future minimum rentals payable under the non-cancellable operating lease as at 31 December are as follows:

10. Other operating expenses  

Staff costs and directors remuneration include share option expense amounting to $734,351 (2012: $387,823) (Note 24).

11. Finance costs and income

11.1

11.2

Interest on bank deposits and other short term loans comprise of interest on bank deposits amounting to $21,000 (2012: $86,000), interest on short term loans granted to Masawara Energy (Mauritius) Limited amounting to $48,000 (2012: $149,000), Dandemutande Investments (Private) Limited $94,000 (2012: $93,000), TA Holdings Limited $8,000 (2012: $13,000), Turklane Investments Private Limited $27,000 (2012: $23,000) and staff $32,000 (2012: $26,000).

12. Income taxes

The major components of income tax credit/(expense) for the years ended 31 December 2013 and 31 December 2012 were:

Statement of comprehensive income

The Group has tax losses of $1.8 million which arose in Zimbabwe. Deferred tax assets have not been recognized in respect of these losses as they may not be used to offset taxable profits elsewhere in the Group and they have arisen in subsidiaries that have been making losses for some time. Permanent differences represent net income/(loss) that is not taxable.

13. 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:

The performance conditions for the 8,333,916 share option scheme disclosed in Note 24 had not been met as at year end. Consequently, 8,333,916 share options will only have a dilutive effect in future when the performance conditions are met.

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.

14. Property, plant and equipment

15. Financial assets

The total impairment loss on financial assets amounting to $260,688 (2012: $541,231) that is disclosed on the face of the statement of comprehensive income is made up of an impairment loss on the debenture investment amounting to $218,073 (2012: $200,962) (Note 15.1), an impairment loss on preference shares of $nil (2012: $327,589) (Note 15.2) and an impairment loss of $42,615 (2012: $12,680) (Note 15.5) on a working capital loan granted to Telerix Communications (Private) Limited. The impairment losses recognised in the current year arose due to the fact that the tenure of the debenture and the loans granted to Telerix Communications (Private) Limited was extended following the conversion of debentures and working capital loan, subsequent to year end (Note 36), into a new instrument "loan note" with a final maturity date of 30 May 2019.

15.1 Debenture investments

The debenture investments are made up of the debentures in Cherryfield Investments (Private) Limited, a co-owner of the Joina City $1,761,908 (2012: $1,742,193) and Telerix Communications (Private) Limited of $7,258,973 (2012: $4,535,063).

Cherryfield Investments (Private) Limited ("Cherryfield") debentures

Masawara Zimbabwe (Private) Limited, through its subsidiary Melville Investments (Private) Limited, holds debentures in Cherryfield Investments (Private) Limited, a co-owner of 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 16).

The debentures are unsecured and earn interest at a coupon rate of 2% beginning 1 January 2013. The debentures are repayable five years after the completion of the Joina City i.e. February 2016, and the repayable amount is $1,742,193.

Telerix Communications (Private) Limited ("Telerix") debentures

On 4 May 2012, Masawara Plc subscribed for 45,041 convertible debentures in Telerix Communications (Private) Limited, ("Telerix"), at US$ 100 per debenture. Of the 45,041 debentures subscribed for, 17,041 emanated from a short-term loan that had previously been advanced to Telerix. The debentures are redeemable 731 days from the date of issue at par, bearing a coupon rate of 12% per annum, payable quarterly and they are convertible into ordinary shares at a rate of 10 new ordinary shares per $1,000 of debentures.

Subsequent to year end, all the amounts that had been advanced to Telerix Communications (Private) Limited i.e. debentures and the short term loans were repackaged and converted into a new instrument "loan note". The loan note will bear interest at variable interest rates and the capital plus interest will be repayable on 30 May 2019. Refer to the table below that shows variable interest rate that will be charged on the loan note.

The basis of the impairment loss computation for the debentures at year end was the terms of the new loan note as highlighted above i.e. the estimated future cash flows based on the terms of the new loan were discounted at the original effective interest rate.

Below is a reconciliation of the investment in Telerix debentures.