Half Yearly Report

23 September 2015

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

Interim results for the six month period ended 30 June 2015

Masawara, an investment company focused on acquiring interests in companies based in Zimbabwe and the southern African region, is pleased to announce its unaudited results for the six month period ended 30 June 2015.

The Company's interim financial statements for the six month period ended 30 June 2015 may 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

Financial review

The Directors present the interim unaudited results for the six-month period ended 30 June 2015.

Performance

The Group achieved a profit after tax of $6.1 million for the half year ended 30 June 2015 compared to a profit after tax of $4.4 million incurred during the same period last year. The composition of the Group's statement of comprehensive income for the six months ended 30 June 2015 is significantly different from the comparative results as in the prior period, TA Holdings Limited ("TA Holdings") was an associate hence the Group only accounted for its share of the results i.e. 41.04% of the TA Holdings results. From 1 December 2014, TA Holdings Limited became a subsidiary after the Group purchased additional shares from the minority shareholders, resulting in full consolidation of the TA Holdings results.

The net movement in profit after tax is attributable to mainly the following transactions:

· TA Holdings Limited contributed $9.0 million to the Group's profit after tax in comparison to prior period where only the share of profit of the associate of $1.5 million was accounted for in the Group results.

· In the prior period results, $6.7million was recognized as profit on disposal of Masawara (Energy) Mauritius Limited and gain on loss of control in Minerva Risk Advisors (Private) Limited. In the current period, $5.2 million was recognized as gain on bargain purchase on obtaining control in Sable Chemicals Industries, thus a 22% decrease in gains arising from equity transactions.

· Interest income charged on funds advanced to Telerix Communications (Private) Limited ("Telerix") increased from $0.7 million to $1.8 million in the current period. The increase from the previous period was as a result of the increase in amounts advanced to Telerix since 30 June 2014. The impairment loss recognized against these loans for the six months ended 30 June 2015 amounted to $1.2 million in comparison to $2.5 million recognized in the same period last year.

On 8 April 2015, Masawara Plc increased its ownership in TA Holdings from 75.74% to 100% after Masawara Holdings Mauritius Limited, a subsidiary of Masawara Plc, purchased the shares from the remaining shareholders.

The performance of the individual investee companies is summarized below.

TA Holdings Limited

TA Holdings Limited achieved a profit after tax for the six months ended 30 June 2015 of $9.0 million, in comparison to a profit of $3.4 million achieved during the same period in the prior year. The increase was largely attributable to the gain on bargain purchase of $5.2 million recognized on obtaining control over Sable Chemicals Industries Limited ("Sable Chemicals). On 25 June 2015, TA Holdings obtained control of Sable Chemicals Industries Limited after the intermediary companies within the fertilizer industry shareholding structure were liquidated, with no consideration paid to other shareholders, resulting in TA Holdings having a direct shareholding of 50.6%. Consequently, Sable Chemicals was consolidated effective 30 June 2015 and assets and liabilities were taken on and the gain on bargain purchase of $5.2 million recognized. Though Sable incurred a loss for the six months ended 30 June 2015, no share of the loss was recognized in the Group income statement because the investment in Sable was written down to $nil in 2013 in accordance with International Financial Reporting Standard, (refer to Note 3.3 for further details).

In addition, the improved results were due to the fact that all the companies within the TA Holdings Group achieved better than prior period results with the exception of Cresta Zimbabwe.

Telerix Communications (Private) Limited ("Telerix")

In the six months to 30 June 2015, Telerix incurred a loss after tax of $1.4 million (2014: $2.1 million). The Group did not recognize its share of losses of Telerix during the six month period ended 30 June 2015, as required by IAS 28 Investments in Associates and Joint Ventures, after the Group's investment in Telerix was reduced to $nil during the year ended 31 December 2012.

 The reduction in the loss incurred was a result of a decrease in the finance costs from $1.1milion in the prior period to $0.4 million in the six months ended 30 June 2015, following significant repayments of the loan facilities made since 30 June 2014. Operating costs and other overheads decreased by 8% from the prior period owing to cost cutting initiatives that were implemented by management.

During the year ended 31 December 2013, the Group provided a guarantee to Telerix, limited to the value of $1,465,250, relating to a $2.5 million loan obtained by Telerix's wholly owned subsidiary, Dandemutande Investments (Private) Limited ("Dandemutande") from Central African Building Society ("CABS").

The amount owed to CABS as at 31 December 2013 was $2,036,709 and this resulted in the Group recognising a liability amounting to $1,193,715 and an expense of the same amount, which was disclosed as share of loss of associate in the statement of comprehensive income during the year ended 31 December 2013. As at 30 June 2015, the loan payable to CABS by Dandemutande was $712,000. Consequently, the Group reduced the liability relating to the guarantee by $242,000 and this adjustment was disclosed as part of share of profit of associates in the statement of comprehensive income.

Joina City

The Group's share of the results of its investment in Joina City was a profit of $211,000 (2014: $221,000).

As at 30 June 2015, the building's occupancy level was 62% which represented a 14% decrease in occupancy from the occupancy at 30 June 2014 of 72%. The office tower occupancy reduced to 43% in comparison with the occupancy level at 30 June 2014 of 52% and the retail occupancy level was 77% (2013: 87%). The decrease in the retail occupancy was due to termination of leases for defaulting tenants. The office occupancy decreased due to the termination of a lease by one of the tenants and the office space is yet to be taken up.

Investment property and Joina City

The carrying amount of the investment property as at 30 June 2015 has slightly increased from the value as at 31 December 2014 due to improvements to the building. The Directors assessed the potential changes to the inputs to the valuation and were of the opinion that there have been no material changes from the previous reporting period, 31 December 2014, therefore no valuations were performed at interim period, 30 June 2015. The fair values of the investment property, land and buildings as at 31 December 2014 was determined by Dawn Property Consultancy (Private) Limited and Bard Real Estate (Private) Limited. The valuers are registered with the Real Estate Institute of Zimbabwe and have experience in the category of investment property valued. An updated valuation will be incorporated into the accounts as at 31 December 2015.

Going concern

Management prepared cash flow forecasts indicating there is adequate operating cash for the period to 31 December 2016. In assessing the ability of the Group to continue as a going concern, the proceeds from the sale of a minority 40% interest in Masawara Investments Mauritius Limited (Note 16) were included in the forecast and 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. 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.

Cash flow for the six-month period

The Group recorded an overall increase in cash and cash equivalents of $5.7 million from the previous period. $2.8 million was generated from operating activities, $7.3 million was used in investing activities and $10.6 million was generated from financing activities.

Net cash flows used in investing activities was mainly attributable to the following investing activities:

· Cash outflow of $1.5 million purchase of property, plant and equipment, an outflow of $6.7 million for the purchase of non-controlling shares in TA Holdings Limited;

· $3.8 million cash inflow which represents net cash acquired on obtaining control of Sable Chemicals Industries Limited;

· cash outflow of $1.2 million relating to the payment of deferred consideration to Minet Group for purchase of Masawara's interest in Minerva Holdings (Private) Limited; and

· net cash outflow of $926,000 for purchase of financial instruments.

Net cash inflow of $10.6 million was the net of proceeds from borrowings of $11.5million, cash outflow of $788,000 for repayment of borrowings and outflow of $119,000 for dividends paid to non-controlling interests of the Group.

Financial position

Following the acquisition of Sable Chemicals Industries Limited, the non-current assets increased from $154.9 million as at 31 December 2014 to $163.7 million as at 30 June 2015 whilst the current assets increased by $52.7million. The Group had cash and cash equivalents of $24.0 million as at 30 June 2015 (31 December 2014: $18.3 million). Current liabilities increased from $83.0 million as at 31 December 2014 to $128.1 million as at 30 June 2015 primarily due to the acquisition of Sable Chemicals Industries Limited. Non-current liabilities increased by $17.3 million mainly due to loan notes amounting to $11.0 million that were issued by the Group as well as an increase in the insurance business which resulted in investment contracts increasing by $6.9 million.

Outlook

It is anticipated that the economic conditions in Zimbabwe will further deteriorate during the year, with the country's growth prospects having been revised down from 3.4% to 1.5%. The deterioration of the economic conditions has manifested itself in the declining financial results of some of the leading listed clients on the Zimbabwe Stock Exchange. In spite of the difficult operating environment, various initiatives are in place at the investee companies to remain sustainable and profitable.

Following the acquisition of TA Holdings in December 2014, the Group embarked on an in-depth strategic review and restructure of the entire Group portfolio. The restructure is ongoing and once complete, revenues and operations are expected to improve as a result of streamlining activities, consolidation of duplicated activities and engagement of strategic technical partners.

The insurance businesses have been growing and this growth is expected to continue in the next six months and budgets for the 2015 financial year are expected be met. This will be achieved through the implementation of aggressive growth strategies.

The Group is still optimistic that a viable electricity tariff will be finalized for Sable Chemicals. Sable Chemicals is currently engaging in studies to explore the use of Coal Bed Methane as an alternative feedstock in the manufacture of hydrogen. Increased revenue for Sable Chemicals is usually expected in the second half of the year as opposed to the first six months as more sales are made in the rainy season.

It is not expected that office occupancies at Joina City will increase as there is an increased trend in businesses moving out to industrial areas. Retail occupancies are expected to increase as more tenants take up space.

Price wars within the hospitality industry are expected to continue. Occupancies within the Cresta Zimbabwe hotels are expected to increase following the refurbishment of the Cresta Lodge.

Subsequent to 30 June 2015, regulatory approvals where obtained for the merger of the operations of Dandemutande,(a wholly owned subsidiary of Telerix Communications (Private) Limited), iWay Africa (an associate of the Group) and Africa Online, refer to note 16 for further details). The integrated business is expected to result in increased revenue owing to broader services offered and increased market penetration. Cost savings are also expected to result in improved results.

Principal risks and uncertainties

The principal risks and uncertainties affecting the business relate to the political and economic environment of Zimbabwe, where the investments are predominantly held. There is a further risk that investments made by the Group will not result in the envisaged cash generation or capital appreciation. This risk is managed by the careful evaluation of all proposed investments, with detailed due diligence work being undertaken, before any investments are made and ongoing 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.

Due to losses incurred by Telerix and its cash flow constraints, there is a risk that the loan notes granted to Telerix may be further impaired in future. However, improved results are expected following the merger transaction discussed above.

Following the implementation of the merger transaction in Dandemutande and the partial disposal of non-controlling interest in the Zimbabwe insurance companies, (further discussed in note 16), synergies expected may not be realised immediately.

Further details on Group's risk are discussed in the annual report for the 2014 financial year.

Unaudited interim consolidated statement of comprehensive income

for the six months ended 30 June 2015

Interim consolidated statement of financial position as at 30 June 2015

Interim consolidated statement of changes in equity

for the six months ended 30 June 2015

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2015

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), an associate called iWayAfrica Zimbabwe (Private) Limited (a broadband internet service company), and a joint venture called 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).

The Group interim financial statements consolidate those of the Company, its subsidiaries and the Group's interest in associates and a joint venture (together referred to as "the Group").

2 Basis of preparation

The interim consolidated financial statements for the six months ended 30 June 2015 have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting.

The interim consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's Annual Financial Statements for the year ended 31 December 2014. The interim consolidated financial statements have been drawn up using accounting policies and presentation consistent with those applied in the audited accounts for the year ended 31 December 2014 except as described as below.

IFRIC 21 'Levies'

The Group has adopted IFRIC 21 'Levies'. IFRIC 21 addresses the accounting for a liability to pay a levy if that liability is within the scope of IAS 37 'Provisions'. The interpretation addresses what the obligating event is that gives rise to pay a levy, and when a liability should be recognized. The Group is not currently subject to significant levies. The adoption of the interpretation has had no effect on the financial statements for the period ended 30 June 2015. The Group does not expect IFRIC 21 to have a significant effect on the results for the financial year ending 31 December 2015.

Other amendments to IFRS effective for the financial year ending 31 December 2015 are not expected to have a material impact on the Group.

Estimates

In preparing these condensed interim financial statements, the significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2014.

Going Concern

Management prepared cash flow forecasts indicating that there is adequate operating cash for the period to September 2016. In assessing the liability 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 continue as a going concern. The Directors reviewed the cash flow forecasts prepared by management when assessing the ability of the Group to continue 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 the financial statements and accordingly, the financial statements have been prepared on the going concern basis.

3 Significant events

The following significant events that have a material effect on the financial statements of the Group took place during the six months period ended 30 June 2015.

3.1 Issue of debt instruments

On 9 February 2015 Masawara Holding Mauritius Limited ("MHML") (a wholly owned subsidiary of Masawara Plc) issued 10% fixed rate notes ("Notes") to FirstRand Bank Limited, AfrAsia Bank Limited and Sanlam Life Namibia Limited ("the debt investors") due 36 months after issue, in consideration of an aggregate amount of $11.0 million. The amount was used to fund part of the consideration payable to TA Holdings Limited's minority shareholders. As part of the financing agreement with the debt investors, Masawara Plc issued warrants to the debt investors which gives the debt investors the option but not the obligation to subscribe for, in aggregate, 1,402,500 shares in Masawara Plc at a strike price of £0.01.

The option to subscribe for the shares was accounted for as a derivative financial liability as the functional currency of the Group is US$ and the warrant instrument is denominated in £. The fair value of the embedded derivative at initial recognition, calculated using the intrinsic value method, amounted to $1.1million and is included under non-current financial liabilities. The carrying value of the debt at initial recognition was determined as the difference between the consideration received of $11million and the fair value of the embedded derivative of $1.1million i.e. $9.9 million.

The effective interest rate of this liability element on initial recognition was 14.2% per annum. The loan notes are secured by the Group's 100% shareholding in TA Holdings Limited and the Group's share in Joina City.

3.2 Increase in shareholding in TA Holdings Limited

On 8 April 2015 Masawara Plc increased its ownership in TA Holdings Limited "TA Holdings" from 75.74% to 100%. This took place when Masawara Plc, through its wholly owned subsidiary Masawara Holdings (Mauritius) Limited ("MHML", purchased 41,403,383 TA Holding's shares representing 24.26% of TA Holdings issued share capital for $10.4 million.

Notwithstanding the fact that the effective date of change in ownership interests was 8 April 2015, 1 April 2015 has been adopted as the date of change in ownership interest for accounting purposes. The exclusion of transactions that took place between 1 April 2015 and 8 April 2015 does not have a material effect on the interim consolidated financial statements.

The change in ownership interest was accounted for as an equity transaction and the carrying amounts of Masawara Plc interest and non-controlling interest were adjusted to reflect the changes in their relative interests. The difference between the amount by which the non-controlling interests were adjusted ($8.9 million) and the fair value of the consideration paid ($10.2 million) was recognized directly in retained earnings and attributed to Masawara Plc.

3.3 Business combination

On 25 June 2015, the Group, through its wholly owned subsidiary, TA Holdings Limited, obtained control of Sable Chemicals Industries Limited "Sable Chemicals". This was after the intermediary companies within the fertilizer industry shareholding structure were liquidated resulting in TA Holdings having a direct shareholding of 50.6%. Under the new shareholding structure, the Group has the ability to appoint the majority of the Board members using its direct shareholding of 50.6%. The Group is therefore in a position to direct the relevant activities of Sable Chemicals Industries Limited. The Group is exposed to variable returns from Sable Chemicals as the profitability of Sable affects the Group (through profit after tax). In addition, the Group is in a position to affect the returns from Sable Chemicals through determining its financial and operating policies. Consequently, Sables Chemicals has been consolidated effective 30 June 2015.

Notwithstanding the fact that the effective acquisition date of Sable Chemicals Industries Limited was 25 June 2015, 30 June 2014 as been adopted as the acquisition date for accounting purposes. The exclusion of transactions that took place between 25 June 2015 and 30 June 2015 does not have a material effect on the interim consolidated financial statements.

The acquisition for no consideration resulted in a gain on bargain purchase amounting to $5.2 million and this has been recognized in the interim consolidated statement of comprehensive income. The transaction resulted in a gain on bargain purchase because the provisional value of the net assets acquired was higher than the fair value of the previously held investment and minority interest value. As highlighted above, through having control of Sable Chemical Industries, the Group is able to determine operational polices which will improve returns thus justifying a gain on bargain purchase.

As the acquisition date for accounting purposes is 30 June 2014, the Group's interim consolidated financial statements do not include the components of the statement of comprehensive income for Sable Chemicals Industries. If the business combination had taken place on 1 January 2015, the Group's gross revenue would have been $84.1 million and the Group's loss after tax would have been $11.0 million.

The following table summarises the acquisition for no consideration, the value of assets acquired, liabilities assumed and the non-controlling interest at the acquisition date.

Footnotes

a. The business combination was achieved without any transfer of consideration as direct control was obtained through the liquidation of the intermediary companies within the fertilizer industry shareholding structure.

b. In the 2013 financial year, the investment in Sable Chemicals Limited was impaired to $nil. As at the date of acquisition the previously recognized impairment losses had not been reversed. Consequently, the fair value in Sable Chemical Limited was maintained at $nil.

c. The fair value of non-controlling interest is the non-controlling interest's portion of the fair value of net assets on acquisition date.

d. Property was revalued as at 31 December 2014 by Bard Real Estate (Private) Limited and Dawn Properties (Private) Limited, professional valuers with recognized and relevant professional qualifications and with recent experience in the location and category of the property being valued. As at the acquisition date, there were no significant events that occurred that warrant changes to the value therefore the carrying amount of property approximates fair value.

e. Financial assets comprise of interest bearing deposits. The fair value of financial assets held at amortized cost approximated fair value at the date of the business combination due to the fact that the effective interest rate used to calculate the amortised cost approximated fair value.

f. Inventory is valued at the lower of cost or net realizable value using the weighted average cost method. The inventory balance as at 30 June 2015 approximated fair value.

g. Trade and other receivables carrying amount approximated fair value at 30 June 2015. Effect of discounting is immaterial due to the fact that trade and other receivables are expected to be recovered within one year.

h. Cash resources comprise cash at bank and cash on demand. The carrying amount of cash resources approximates fair value.

i. Financial liabilities comprise overdraft facilities and short term borrowings. The borrowings as at 30 June 2015 mature by 31 May 2016. Due to the short term nature of the borrowings, the effect of discounting is immaterial. The carrying amount approximates fair value.

j. Deferred tax liabilities were determined by applying appropriate tax rates on the temporary difference on assets and liabilities.

k. The carrying amount of trade and other payables approximated fair value because trade and other payables are short term in nature i.e. they are expected to be settled within one year.

Acquisition costs on the transaction were not significant.

4 Earnings per share

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

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 period 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:

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.

5 Investment properties

The carrying value of the investment properties as at 30 June 2015 has slightly increased from the carrying value as at 31 December 2014 due to improvements on the buildings. There were no changes due to valuation. Directors assessed the potential changes to the inputs to the valuation and were of the opinion that there have not been a material change from the previous reporting period. Fair valuation of investment properties as at 31 December 2014 were carried out by independent professional valuers, Dawn Property Consultancy (Private) Limited and Bard Real Estates (Private) Limited. The valuers are registered with the Real Estate Institute of Zimbabwe and have experience in the locations and categories of investment properties held by the Group.

There is a risk that the illiquidity of the Zimbabwean capital market may affect the valuation of the Group's investment properties in the short to medium term.

6 Investment in associates and joint venture

Investment in associates includes investments in iWayAfrica (Private) Limited ("iWayAfrica), Zimbabwe Fertiliser Company Limited, Cresta Marakanelo Limited and Continental Reinsurance Company Limited.

Sables Chemicals Industries Limited ceased to be an associate on 30 June 2015 when TA Holdings Limited obtained control (see note 3.3). No share of loss was recognized for the six months ended 30 June 2015 because the investment in Sable Chemicals was written down to $nil in 2013 in accordance with International Accounting Standards.

Investment in joint venture relates to investment in Telerix Communications (Private) Limited ("Telerix").

6.1 Investment in associates

Summarised financial information for the associates is shown below:

6.2 Investment in joint venture

Investment in Telerix was written off to $nil by share of losses during the year ended 31 December 2012.

The reconciliation below shows the movement of unrecognized share of losses in Telerix Communications (Private) Limited:

During the year ended 31 December 2013, the Group provided a guarantee to Telerix amounting to $1,5million, in relation to $2.5 million loan obtained by Telerix's wholly owned subsidiary Dandemutande Investments (Private) Limited ("Dandemutande") from Central African Building Society ("CABS"). The amount owed by Dandemutande to CABS as at 30 June 2015 was $712,000 and this resulted in the Group reducing its liability relating to the financial guarantee from $666,000 as at 31 December 2014 to $424,000 at 30 June 2015.

The $242,000 that is disclosed as share of profit of Telerix in the statement of comprehensive income during the six month ended 30 June 2015 relates to the unwinding of the financial guarantee liability.

7 Financial assets

 The Group recognized impairment losses amounting to $1,2million (2014: $2.5million) relating to the Telerix loan

 notes and this is disclosed in the statement of comprehensive income. An impairment test was carried out due to the

 fact that Telerix has recurring losses and may not have adequate resources on maturity to settle the loan notes.

8 Financial liabilities

8.1 Financial liabilities - non-current

8.2 Financial liabilities - current

9 Cash generated from operating activities

June 2015 June 2014

10 Segment information

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

· The Joina City, referred to as "Investment Property" in the prior year interim consolidated financial statements, segment leases retail and office space at the Joina City building partly owned by the Group.

· TA Holdings Limited, ("TA Holdings") a subsidiary, is a diversified investment company that holds stakes in insurance, agro-chemical and hospitality businesses across sub-Saharan Africa. TA Holdings has been treated as one operating segment because the chief operating decision maker, Masawara, views TA Holdings as one segment when deciding how to allocate resources and in assessing performance. Intersegment revenue of $2.1 million was eliminated within TA Holdings.

· The Group's interest in Minerva Risk Advisors (Private) Limited ("Minerva Risk Advisors") has been accounted for as part of TA Holdings 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.

· 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.

· Comparative figures include Energy segment which represents the Group's interest in the Energy segment that was disposed on 31 January 2014.

Management monitors the operating results of its business units separately for the purposes 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.

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 offer services in Zimbabwe, therefore all revenues and assets are from Zimbabwe.

iWayAfrica

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

TA Holdings Limited

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

11 Related party disclosures

The financial statements include the financial statements of Masawara Plc, the subsidiaries, joint venture and associates. Except for the change in interest in TA Holdings Limited (See note 3.2) and acquisition of a subsidiary Sable Chemicals Industries Limited which was previously and associate (See note 3.3), the related party relations have not changed from the previous reporting period, i.e. as at 31 December 2014.

The following table provides the total amount of transactions that have been entered into with related parties during the six month period ended 30 June 2014 and 30 June 2015.

Terms and conditions of transactions with related parties

The sales and purchases from related parties are made at terms equivalent to those that prevail in arm's length transactions. Outstanding balances as at 30 June 2015 are unsecured and settlement occurs in cash.

As detailed per the 31 December 2014 annual report, credit risk from loans receivable from associates is managed by the Group Treasury Manager.

Directors' loans

There were no changes to the terms and conditions on directors' loans that existed as at the last reporting date.

Directors' remuneration

Directors' interests in shares

 S Mutasa, through a family trust that controls FMI Holdings (Private) Limited, which owns the shares in Masawara Plc.

12 Financial risk factors

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk, credit risk, liquidity risk, operational risk, and start-up risk. The interim consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 31 December 2014

There have been no changes in the risk management department or in any risk management policies since year end.

13 Fair values of financial assets and financial liabilities

The carrying amounts and fair value of the Group's financial instruments are reasonable approximations of fair values with because the interest rates charged are market related rates with the exception of debentures held with Cherryfield Investments (Private) Limited "Cherryfield Investment".

The following table shows a comparison of the carrying amounts of the fair value debentures held with Cherryfield Investments with the carrying amounts. The fair value disclosed in the table was determined by using the DCF method using a discount rate of 16% which reflects the fair market rates at the end of the reporting period.