1 Lytton Road, Workington, P.O.

Box 2697, Harare, Zimbabwe

Telephone: (+263) 04 749458, 04 771981 / 5, 04 775324, 04 750339, 04 775330
Fax: (+263) 04 753854, 708573, Email: cottcoholdings@cottco.co.zw

Abridged Group Audited Results for the year ended 31 March 2014

CHAIRMAN’S STATEMENT

OVERVIEW
The financial year ended 31 March 2014 was a challenging
one for the Group and was characterised by macro-economic
uncertainties, increased volatility in the agri-commodity sector
and an acute decline in cotton production which was observed
across the Sub-Saharan Africa region. The liquidity challenges
that the economy has endured over the years persist.
In December 2013, we announced the unbundling of the
Group which received immense shareholder support and
successfully raised US$45 million. The net proceeds were
used to recapitalize the Cotton business in order to underwrite
its profitable growth and escalate cash flow generation. The
actions we took in this year were designed to ensure that
your company is well positioned for long-term growth while
delivering strong and consistent financial results.
Through pursuing improved agronomic practices and continued
investment in our farmers, agricultural policy and human
capital, The Group continues to maintain its market leadership
position. The Group continues to change lives and transform
communities for the better through its flagship contract farming
scheme which, over the years, has empowered the majority
of families in cotton producing areas. This has been done by
providing them with production means and access to cash
income. We continue to recognise the importance of our
Zimbabwean farmers to the growth of the cotton industry and
are committed to remaining their partner of choice.
OPERATIONS REVIEW
Continuing operations
Cotton
The year under review witnessed an acute decline in cotton
production in Zimbabwe and the region. National cotton
output declined from 250,000 tonnes in 2012/13 to 145,000
tonnes in 2013/14 season, a decrease of 42%. The decline
was attributed to a myriad of factors, chief among them: poor
rainfall distribution across the country and a reduction in
inputs support by the cotton industry on speculation of poor
industry compliance and excessive side-marketing. The Cotton
business recorded intake volumes of 35,000 tonnes.
Despite the Cotton business achieving lower than expected
intake volumes, inputs scheme recoveries improved by 9%
in line with expectation. Impairment losses attributable to the
inputs scheme therefore declined and a loss of US$2.8 million
recorded in the current year only represents an increase in
our provision on account of current year inputs scheme
receivables. Improvements in on-farm yields continue to
remain a focus area.
International lint prices firmed marginally from 80 US cents
per pound last year to an average of 89 US cents per pound.
The outlook for cotton prices remains bearish as production
is forecast to outpace global consumption for a fifth
consecutive year running. Demand for the Cotton business'
lint however remains strong.
Discontinued operations
Seed
The Seed business results for the first 10 months of the year
recorded an overall sales growth of 9% driven mainly by
growth in maize and wheat volumes - each grew by 16% and
11% respectively. Soya bean and cotton seed sales were
however negative with declines of 39% and 11% respectively.
Fast Moving Consumer Goods (FMCG)
The FMCG business' operating margins improved by 54%
which resulted in the business posting a small operating profit
for the 10 months to January 2014. The company's improved
financial performance was driven by changes to the business'
product mix.
FINANCIAL RESULTS
The Group's interests in Seed Co Holdings Limited (Seed Co)
and Olivine Holdings Limited (Olivine) were disposed of in
January 2014 as part of the Group's unbundling process. The
Group's financial performance for the year ended 31 March
2014 therefore only incorporates the results of Seed Co and
Olivine for the 10 months ended 31 January 2014, which was
the effective date of disposal. All assets and liabilities of both
Seed Co and Olivine were derecognised after this date.
Both entities are disclosed in the group statement of Profit
or Loss as discontinued operations.
Revenue from continuing operations amounted to US$42.0
million (March 2013: US$129.1 million), a decrease of 67%.
The decrease in revenue was mainly driven by a 77% decrease
in sales volumes recorded by the Cotton business, a direct
result of the reduced intake volumes recorded.
Group operating margins declined from an operating profit
of $5.9 million to an operating loss of US$22.3 million owing
to low production volumes and the resultant low cost
absorption. Margins also declined due to higher seed cotton
prices versus declining lint prices.
Group impairment charges at US$6.9 million (last year: US$14.2
million) were 51% lower than last year. The quantum of
increase in the allowance for credit losses was not repeated
in the current year as a notable improvement in inputs scheme
recoveries was achieved.
The Group realised a profit of US$37.2 million arising from
the disposal of its interests in Seed Co and Olivine.
Profit for the year amounted to US$14.9 million against a loss
of US$2.1 million last year.
The Group's net debt at 31 March 2014 amounted to US$41.6
million compared to US$126 million at 31 March 2013. Net
proceeds amounting to US$32.1 million which had been
received as at 31 March 2014 were applied to the Group's
borrowings. A further decline in borrowings is expected in
the coming financial year when the Group's recapitalisation
processes are concluded.
OUTLOOK
We have refocused the Group to drive resurgent performance
in the Cotton business driven by a stronger balance sheet
and complemented by reforms in the cotton industry's
regulations. The stipulation of minimum funding thresholds
for all ginners by the Agricultural Marketing Authority should
underpin an increase in cotton crop production. The
aforementioned national effort to resuscitate the cotton industry
is motivated by the fact that cotton remains a significant
foreign currency earner in the agricultural sector.
International lint prices are expected to continue to soften as
the world market responds to uncertainties on China's stock
policies. Despite the odds, the World Bank is projecting global
economic growth of 2.8 %. As cotton is a consumption crop
and not a food crop, its prospects are closely tied to the
health of the global economy.
Ongoing cost reduction measures in the Cotton business are
bearing fruit and will continue into the future.
With a significant portion of the Group's debt having been
eliminated, finance costs, which have in the past hamstrung
the Group's financial performance, will decline significantly.
The Group's funding model has also evolved and we will, in
the coming year, exploit available opportunities in supply
chain financing to further reduce the costs of financing.
DIRECTORATE
Following the restructuring of the Group the entire board
stepped down while Messrs Freeman Kembo, James Maposa,
Ayoob Adam, Collins Chihuri, Dr Douglas Ncube and Ms
Rufaro Maunze were appointed to the Board during the year.
My fellow Directors and I wish the outgoing board all the best
in their future endeavours and thank them most sincerely for
their valuable contribution to the Group's successful capital
raising initiatives.
DIVIDEND
In light of the on-going recapitalisation of the business, the
Directors have decided not to declare a dividend for the year
ended 31 March 2014.
APPRECIATION
On behalf of the Board, I would like to offer my heartfelt thanks
to the Cottco Holdings team for their loyalty, commitment
and tireless efforts in pushing the Group forward under difficult
conditions. I wish to also thank my fellow Directors on the
Board, our shareholders, business partners and stakeholders
for their unstinting support. We will continue to build on our
distinctive strengths and valuable experience gained through
tough times to deliver value to our shareholders.
F Kembo
Chairman
26 June 2014

Abridged Group Statement of Profit or Loss Abridged Group Statement of Financial Position
for the year ended 31 March 2014 as at 31 March 2014
31 March 31 March
Restated 2014 2013
31 March 31 March US$'000 US$'000
2014 2013 ASSETS
US$'000 US$'000
Non-current assets
Revenue 42,001 129,072 Property, plant and equipment 29,867 103,321
Intangible assets 15 20
(Loss)/profit from operations (22,316) 5,858 Investment property - 332
Other financial assets 5 1,157
Investment income 67 274 Other receivables 808 997
Other gains and losses 1,419 (198) Total non-current assets 30,695 105,827
Gain on disposal of Group entities 37,227 -
Finance costs (13,409) (16,113) Current assets
Assets classified as held for sale 15,373 1,454
Profit/(loss) before taxation 2,988 (10,179) Other current assets 38,289 181,003
Total current assets 53,662 182,457
Income tax (expense)/credit (320) 507
Total assets 84,357 288,284
Profit/(loss) after tax from continuing operations 2,668 (9,672)
EQUITY AND LIABILITIES
Profit from discontinued operations 12,188 7,581
Capital and reserves
Profit/(loss) for the year 14,856 (2,091) Share capital 10,948 5,341
Capital reserves 26,513 21,190
Attributable to: Retained (loss)/earnings (5,883) 46,777
Equity holders of the parent 5,851 (6,711) Equity attributable to equity holders of the parent 31,578 73,308
Non-controlling interest 9,005 4,620
14,856 (2,091) Non-controlling interest - 39,944

Total equity 31,578 113,252

Basic earnings/(loss) per share (US cents) 0.53 (1.26)
Diluted earnings/(loss) per share (US cents) 0.53 (1.21) Non-current liabilities
Borrowings 5,809 11,805
Deferred tax liabilities 331 14,144
Abridged Group Statement of Comprehensive Income Finance lease liabilities
Total non-current liabilities
-
6,140
314
26,263
for the year ended 31 March 2014
Current liabilities
Liabilities classified as held for sale 467 467
31 March 31 March
Other current liabilities 46,172 148,302
2014 2013
Total current liabilities 46,639 148,769
US$'000 US$'000

84,357 288,284
Profit/(loss) for the year 14,856 (2,091)

Other comprehensive income

Revaluation of property, plant and equipment (net of tax)
Exchange differences on translating foreign operations
(2,493)
(2,085)
897
(7,268)
Abridged Group Statement of Cash Flows
for the year ended 31 March 2014
Other comprehensive loss for the year (4,578) (6,371) 31 March 31 March
2014 2013
Total comprehensive income/(loss) for the year 10,278 (8,462) US$'000 US$'000

Total comprehesive income/(loss) attributable to: Cash flow from operating activities
Equity holders of the parent 2,926 (9,389) Operating cash flow before reinvesting in working capital 28,250 31,277
Non-controlling interest 7,352 927 Movement in working capital (10,578) 20,931
Net finance cost (20,878) (24,090)
10,278 (8,462) Net taxation paid (8,708) (5,433)
Net cash (utilised in)/generated from operations (11,914) 22,685

Net cash inflow/(outflow) from investing activities 63,225 (11,281)

Net cash outflow from financing activities (13,519) (5,422)
Effect of exchange rate fluctuations on cash held - (701)
Increase in cash and cash equivalents 37,792 5,281

Directors: F Kembo (Chairman), JP Maposa (Deputy Chairman), C Chihuri (Managing Director), AE Adam, D Ncube, RAM Maunze
 1 Lytton Road, Workington, P.O.Box 2697, Harare, Zimbabwe
Telephone: (+263) 04 749458, 04 771981 / 5, 04 775324, 04 750339, 04 775330
Fax: (+263) 04 753854, 708573, Email: cottcoholdings@cottco.co.zw

Abridged Group Audited Results for the year ended 31 March 2014

Group Statement of Changes in Equity 6. Results of discontinued operations

The analysis of assets, liabilities and performance of the discontinued operations is shown below.
for the year ended 31 March 2014
31 March 31 March
2014 2013
Attributable to equity holders of the parent Minority Total
US$'000 US$'000
Share Capital Retained Total Interest Equity
Capital Reserves Earnings
Property, plant and equipment 1,287 1,372
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Current assets 14 15
Total assets 1,301 1,387

Deferred tax 438 439

Balance at 31 March 2012 5,341 26,515 51,695 83,551 41,243 124,794
Current liabilities 28 28
Total liabilities 466 467
Changes in equity for 2013
Share based payments transactions - 97 - 97 86 183
Net assets 835 920
Acquisition of interest(s) in foreign
subsidiary/associate/joint venture - (45) (50) (95) 95 -
Revenue 130,635 134,850
Disposal of interest(s) in foreign
subsidiary/associate/joint venture - (2,454) - (2,454) (822) (3,276)
Dividend paid and received within the Group - - 1,598 1,598 - 1,598 Profit/(loss) from operations 24,991 (18,325)
Dividend paid - - - - (1,585) (1,585)
Total comprehensive (loss)/income Profit for the year 12,188 7,581
for the year (net of tax) - (2,923) (6,466) (9,389) 927 (8,462)
Balance at 31 March 2013 5,341 21,190 46,777 73,308 39,944 113,252 7. Supplementary Information

Changes in equity for 2014 7.1 Profit from operations is stated after the following impairment losses
Share based payments transactions - (1,705) - (1,705) - (1,705)
Disposal of interests in local Impairment Losses by Operating Segment
subsidiary and joint venture - - 2,662 2,662 (47,296) (44,634) Operating Segment Cotton Other Total
Realisation of revaluation reserve - (9) 9 - - - 31 March 2014 31 March 2014 31 March 2014
Issue of shares 5,607 9,532 - 15,139 - 15,139 US$'000 US$'000 US$'000
Dividends paid - - (60,752) (60,752) - (60,752)
Total comprehensive (loss)/income Investment in subsidiaries - 52,621 52,621
for the year (net of tax) - (2,495) 5,421 2,926 7,352 10,278 Trade and other receivables 1,380 - 1,380
Balance at 31 March 2014 10,948 26,513 (5,883) 31,578 - 31,578 Inputs scheme receivables 2,841 - 2,841
Inventories 2,682 - 2,682
Total 6,903 52,621 59,524

Notes to the financial statements Charged to equity - 25,079 25,079

Charged to profit or loss 6,903 27,542 34,445
1. Presentation
The financial statements are presented in United States dollars, which is the Group's functional currency. The financial
31 March 31 March
information presented in United States dollars has been rounded off to the nearest thousand.
2014 2013
US$'000 US$'000
2. Accounting policies
Accounting policies have been applied consistently with those used in the Group financial statements of Cottco Holdings
7.2 Depreciation 3,274 8,376
Limited (formerly AICO Africa Limited) for the year ended 31 March 2013.

7.3 Capital expenditure 676 10,931

3. Basis of preparation
The basis of preparation of these financial statements is the International Financial Reporting Standards (IFRS).
7.4 Commitments for capital expenditure
Contracted for 103 -
4. Statement of compliance
Approved by the Directors but not yet contracted for 3,320 16,875
The financial statements have been prepared in accordance with International Financial Reporting Standards.
Total 3,423 16,875

5. Group unbundling and capital raise

8. Included in 'assets classified as held for sale' are assets worth US$8.3 million relating to the Cotton business.
In January 2014, the Group raised US$45.0 million for the recapitalisation of its subsidiary, The Cotton Company of Zimbabwe
Limited. This was done through a series of transactions as follows:
9. Audit of the financial statements
These financial statements have been audited by the Group’s external auditors, KPMG, and have been extracted from
i) A portion of the Group's interest in Seed Co Limited (Seed Co) was disposed of to third parties for US$30.5 million. Of this
the Company's annual report. KPMG has issued an unmodified opinion.
amount, 7 million shares valued at US$7.1 million were in the process of being disposed of as at 31 March 2014. These shares
are recognised at fair value in current assets held for sale.
10. Cautionary statement
ii) The remaining Seed Co shares were distributed to Cottco Holdings Limited shareholders through a dividend in specie.
Cottco Holdings Limited advises its shareholders that the Company is engaged in negotiations which, if successfully
iii) The Group raised US$15.1 million through a rights issue.
concluded, will have a significant impact on its operations and share price. Shareholders are accordingly advised to
iv) The Group warehoused its interest in Olivine Holdings (Private) Limited (Olivine) in a trust for the benefit of its shareholders.
exercise caution when dealing in the Company's securities until a further announcement is made.

As a result of the above transactions, the Group unbundled and Cottco Holdings Limited remains with one operating subsidiary,
The Cotton Company of Zimbabwe Limited. Seed Co and Olivine are therefore reported as discontinued operations.

The Group realised a profit on disposal of US$37.2 million on the above transactions as the net fair values of the disposed
entities exceeded their net asset values.

Directors: F Kembo (Chairman), JP Maposa (Deputy Chairman), C Chihuri (Managing Director), AE Adam, D Ncube, RAM Maunze