Brainworks 2012 Private Placement Memorandum

ZIMBABWE'S PRE-EMINENT PRIVATE EQUITy INVESTMENT COMPANy 

THIS DOCUMENT IS IMPORTANT AND REQUIRES yOUR IMMEDIATE ATTENTION 

This pre-IPO Private Placement Memorandum dated 26 November 2012, is issued for the purpose of providing certain information 

about an investment in Brainworks Capital Management (Private) Limited, a private company incorporated in the Republic of 

Zimbabwe. If you are in doubt as to the action you should take in relation to this document, please consult your stockbroker, banker, 

legal practitioner or other professional adviser immediately. If you are invited and wish to apply for Brainworks Capital Shares in 

terms of the Offer then you must complete the procedure for application and payment set out in this pre-IPO Private Placement 

Memorandum. 

PRE-IPO PRIVATE PLACEMENT 

of 300,000,000 Ordinary Shares with a nominal value of USD 0.0001 per share in BRAINWORKS CAPITAL MANAGEMENT (PRIVATE) 

LIMITED, a private equity investment firm focused on investing in Zimbabwe. 

BRAINWORKS CAPITAL MANAgEMENT (PRIVATE) LIMITED 

(Incorporated and Registered in Zimbabwe under Registration Number 523/2011) 

OffER PRICE: USD 0.10 per share 

PAyABLE IN fULL ON APPLICATION 

ACCEPTANCE PERIOD: from and including 26 November 2012 to and including 28 December 2012 16:30 (Harare Time) 

AUDITORS MAIN BANKERS LEgAL ADVISORS 

KPMG Chartered Accountants Ecobank Zimbabwe Limited Atherstone & Cook 

26 NOVEMBER 2012 

PRIVATE PLACEMENT MEMORANDUM 2012 www.brainworkscapital.com BRAINWORKS CAPITAL MANAgEMENT (PRIVATE) LIMITED 

A C

BRAINWORKS CAPITAL MANAgEMENT (PRIVATE) LIMITED www.brainworkscapital.com PRIVATE PLACEMENT MEMORANDUM 2012

DISCLAIMER 

This pre-IPO Private Placement Memorandum (this 

‘Memorandum’) has been issued by Brainworks Capital 

Management (Private) Limited (‘Brainworks Capital’ or 

the ‘Company’). This Memorandum is confidential and 

proprietary to Brainworks Capital. It is provided to the 

recipient in confidence and with the understanding that 

the recipient will observe and comply with the terms and 

conditions set forth in this paragraph and the paragraphs 

below. The recipient’s acceptance and retention of this 

Memorandum shall constitute an agreement to be bound by 

such terms and conditions, which agreement and terms and 

conditions shall be governed by Zimbabwean law. If such 

terms and conditions are not acceptable, the recipient shall 

promptly return this Memorandum to Brainworks Capital 

registered address contained herein. 

This Memorandum, the information and offer contained 

herein are for the exclusive use of the recipient and those 

involved in the recipient’s investment decisions for the sole 

purpose of evaluating the proposal herein and not to extend 

the offer. This Memorandum may not be photocopied, 

reproduced, provided or disclosed to third parties, apart 

from prospective investor’s professional advisers, or used for 

any other purpose, and upon request must be returned to 

Brainworks Capital. 

The information in this Memorandum may be supplemented, 

amended or modified prior to Closing by information in 

a supplemental information memorandum, in which event 

the information in this Memorandum shall be read as 

supplemented, amended or modified by such additional 

information. Prospective investors must rely on their own 

examination of the legal, taxation, financial and other 

consequences of an investment, including the merits of 

investing and the risks involved. 

Prospective investors should not treat the contents of this 

Memorandum as advice relating to legal, taxation or 

investment matters and are advised to consult their own 

professional advisers concerning the acquisition, holding or 

disposal of interests in Brainworks Capital. 

In the case of any discrepancy between the contents of this 

Memorandum and the legal documentation (the ‘Legal 

Documents’), the Legal Documents shall prevail. Prospective 

investors should review all Legal Documents carefully. None 

01 

of this Memorandum, the information contained in it or any 

other information supplied in connection with the Company 

(other than the Legal Documents, the investor’s subscription 

agreement and the confidentiality understanding contained 

herein) shall form the basis of any contract. 

No representation, warranty or undertaking, express or 

implied, made or information given in connection with or 

relevant to an investment in the Company may be relied 

upon as having been made or given with the authority of 

Brainworks Capital and no responsibility (except in the case 

of fraud) is accepted by Brainworks Capital, its subsidiaries 

or associates or any of their members, partners, directors, 

officers, employees or agents, for any direct, indirect or 

consequential loss or damage suffered by any persons as 

a result of their relying upon any statements or information 

contained in, or any omissions from, this Memorandum. 

Neither delivery of this Memorandum nor the placing of 

shares in the Company implies that the information herein is 

correct as at any time subsequent to the date hereof. 

All statements in this Memorandum are made as of 

31 October 2012 unless otherwise noted. 

Certain information contained in this Memorandum 

constitutes ‘forward-looking statements’, which can be 

identified by the use of forward-looking terminology such 

as “may”, “will”, “should”, “expect”, “anticipate”, “target”, 

“project”, “estimate”, “intend”, “continue”, or “believe”, 

or the negatives thereof, or other variations thereon or 

comparable terminology. All statements of opinion and/or 

belief contained in this Memorandum and all views expressed 

and all projections, forecasts or statements relating to 

expectations regarding future events or the possible future 

performance of the Investment represent Brainworks Capital’s 

own assessment and interpretation of information available 

to it as at the date of this Memorandum. No representation, 

warranty or undertaking, express or implied, is made or 

assurance given that such statements, views, projections or 

forecasts are correct or that the objectives of the Company 

will be achieved. Due to various risks and uncertainties, actual 

events or results or the actual performance of the Company 

may differ materially from those reflected or contemplated in 

such forward-looking statements. Prospective investors must 

determine for themselves what reliance (if any) they should 

PRIVATE PLACEMENT MEMORANDUM 2012 www.brainworkscapital.com BRAINWORKS CAPITAL MANAgEMENT (PRIVATE) LIMITED

place on such forward-looking statements, views, projections 

or forecasts and no responsibility (except in the case of 

fraud) is accepted by Brainworks Capital, its subsidiaries, 

or associates or any of their members, partners, directors, 

officers, employees or agents, in respect thereof. Prospective 

investors are strongly advised to conduct their own due 

diligence, including, without limitation, as to the legal and 

tax consequences to them of investing in the Company. 

Any prior investment results and returns contained in this 

Memorandum of the existing or previous investments 

managed by Brainworks Capital are provided for illustrative 

purposes only and are not necessarily indicative of the 

Company’s potential investment results. There can be no 

assurance that these or comparable investment results or 

returns will be achieved by the Company, that the Company 

will be able to avoid losses or that the Company will be able 

to make investments similar to the existing and historical 

investments of the existing or previous investments managed 

by Brainworks Capital due to, among other things, economic 

conditions and the availability of investment opportunities. 

Past performance is not indicative of future results. 

Certain of the information contained herein has been derived 

from published material prepared by other parties. Neither 

Brainworks Capital nor any other person has independently 

verified such information and therefore neither Brainworks 

Capital nor its subsidiaries and associates, nor any of their 

members, partners, directors, officers, employees or agents 

make any representation, warranty or undertaking, express 

or implied, as to, or assumes any responsibility for, the 

accuracy or completeness of such information. 

This Memorandum has been prepared on the assumption 

that the legal and tax structure required to conduct the 

activities of the Company has already been implemented 

and that all regulatory, tax and other clearances have been 

obtained. 

This Memorandum does not constitute an offer of shares in 

the Company unless specifically adjudged to do so under 

the laws of a particular jurisdiction. Further, it may not be 

used for purposes of and does not constitute an invitation to 

apply to participate in the Company by any person in any 

jurisdiction in which such offer or invitation is not authorized 

or in which the person endeavoring to make such offer 

DISCLAIMER 

or invitation is not qualified to do so or to any person to 

whom it is unlawful to make such an offer or invitation. 

It is the responsibility of prospective investors to satisfy 

themselves as to their own full compliance with the relevant 

laws and regulations of any territory in connection with 

any application to participate in the Company, including 

obtaining any requisite government or other consents and 

adhering to any other formality prescribed in such territory. 

The attention of prospective investors is drawn to the fact 

that the Company is likely to be making commitments to 

investments of a long-term and illiquid nature in companies 

whose shares may not be quoted or dealt in on any stock 

exchange. Such investments may be difficult to value and 

are likely to involve an above average level of risk. Similarly, 

there is no available public market for commitments in the 

Company and no such market is expected to develop in the 

future. There is also a risk that the value of interests will be 

affected by exchange rate fluctuations. 

Investments in the Company may involve significant risk and 

should only be undertaken by those who can make a longterm 

investment, can bear the risk of loss in their investment 

and have no need for liquidity in their investment. 

Before deciding to invest in the Company, prospective 

investors should pay particular attention to the conflicts 

of interest and risk factors contained in Part II to this 

Memorandum. Brainworks Capital Management (Private) 

Limited is a limited liability company registered in Zimbabwe 

(registration no. 523/2011). 

BRAINWORKS CAPITAL MANAgEMENT (PRIVATE) LIMITED www.brainworkscapital.com PRIVATE PLACEMENT MEMORANDUM 2012 

02

CONTENTS 

fORWARD LOOKINg STATEMENTS 4 

DIRECTORS AND ADVISORS 5 

TIMETABLE 6 

DEfINITIONS 7 

PART I – THE COMPANy 10 

1.1.1 INTRODUCTION 10 

1.1.1 COMPANy STRUCTURE 10 

1.1.2 OBjECTIVES 10 

1.1.3 KEy STRENgTHS 11 

1.1.4 SHAREHOLDINg 11 

1.1.5 INTERNATIONAL PARTNER – ADC 12 

1.2.1 STRATEgy 12 

1.3.1 gEOgRAPHIC AND SECTOR fOCUS 13 

1.3.1 CURRENT gEOgRAPHICAL fOCUS – 

1.4 ZIMBABWE 13 

1.3.2.1 SECTOR fOCUS 14 

1.3.2.1 fINANCIAL SERVICES 14 

1.3.2.2 MININg 14 

1.3.2.3 AgRICULTURE 15 

1.3.2.4 OIL DISTRIBUTION AND STORAgE 15 

1.4 INVESTMENT AND PORTfOLIO MANAgEMENT 

PAgE # 

1.3.2.3 APPROACH 15 

1.4.1 CURRENT PORTfOLIO 16 

1.4.2 PIPELINE OPPORTUNTIES 20 

1.5 ADVISORy SERVICES 21 

1.6 PRIVATE EQUITy fUND MANAgEMENT 22 

1.7 OVERALL BUSINESS PLAN 22 

1.8 CORPORATE gOVERNANCE 24 

1.9 PEOPLE 26 

1.10 EMPLOyEE INCENTIVES 30 

1.11 DIVIDEND POLICy 30 

1.12 CONfLICTS Of INTEREST 30 

1.13 BORROWINgS 30 

1.14 TAxATION 31 

1.15 fOREIgN ExCHANgE POLICy 31 

1.16 fUTURE ISSUE Of ORDINARy SHARES 31 

03 

PART II – THE OffERINg 32 

2.1.1 ISSUER – BRAINWORKS CAPITAL MANAgEMENT 

1.4 (PRIVATE) LIMITED (“BRAINWORKS CAPITAL” 

PAgE # 

1.4 OR THE “COMPANy”) 32 

2.2.1 SHARE CAPITAL 32 

2.3.1 METHOD Of OffER 32 

2.4.1 PURPOSE 32 

2.5.1 USE Of PROCEEDS 33 

2.6.1 UNITS Of SALE 33 

2.7.1 OffER PRICE 33 

2.8.1 OffER SIZE 33 

2.9.1 PAyMENT 33 

2.10 OPENINg DATE 33 

2.11 CLOSINg DATE 33 

2.12 STATUS 33 

2.13 PERSONS WHO MAy APPLy fOR THE ORDINARy 

SHARES UNDER THE OffER 34 

2.14 CLAIMS AND LITIgATIONS 34 

2.15 INDEBTEDNESS 34 

2.16 INfORMATION RIgHTS 34 

2.17 ExIT RIgHTS 34 

2.18 RATIONALE fOR THE OffERINg 35 

2.19 APPLICATION 35 

2.20 ALLOTMENT AND SIgNINg Of SHAREHOLDERS 

1.4AgREEMENT 36 

2.21 APPLICATION fUNDS 36 

2.22 SUBMISSION Of APPLICATION fORMS 

2.23 ALLOCATION Of SHARES IN THE EVENT Of 

37 

1.4 OVERSUBSCRIPTION 37 

PART III – RISK fACTORS 38 

PART IV – APPENDICES 

APPENDIx A – BACKgROUND TO ZIMBABWE 

ECONOMIC ENVIRONMENT 42 

APPENDIx B – PORTfOLIO COMPANIES 50 

APPENDIx C – PIPELINE TRANSACTIONS 67 

APPENDIx D – APPLICATION fORM 71 

APPENDIx E – AUDITED 2011 fINANCIAL STATEMENTS 74 


fORWARD LOOKINg STATEMENTS 

All statements other than statements of historical fact contained in this Document, including, without limitation, those 

regarding the Company’s financial position, business strategy, plans and objectives of management for future operations 

or statements relating to expectations in relation to shareholder returns, dividends or any statements preceded by, followed 

by or including the words “targets”, “believes”, “expects”, “aims”, “intends”, “plans”, “will”, “may”, “anticipates”, “would”, 

“could” or similar expressions or the negative thereof, are forward-looking statements. Such forward-looking statements 

involve known and unknown risks, uncertainties and other important factors beyond the Company’s control that could 

cause the actual results, performance or achievements of, or dividends paid by, the Company to be materially different 

from future results, performance or achievements, or dividend payments expressed or implied by such forward-looking 

statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and 

future business strategies and the environment in which the Company will operate in the future. These forward-looking 

statements speak only as at the date of this Document. 

The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forwardlooking 

statements contained herein in order to reflect any change in the Company’s expectations with regard thereto, 

any new information or any change in events, conditions or circumstances on which any such statements are based, unless 

required to do so by law or any appropriate regulatory authority. 

The potential investment opportunities referred to in this Document cannot be guaranteed and it may be the case that only 

some or even none of these come to fruition. 


04

DIRECTORS AND ADVISORS 

DIRECTORS 

Richard Godfrey Muirimi * Non-Executive Chairman 

Vulindlela Lester Ndlovu * Non-Executive Director 

Alwyn Erhardt Scholtz ** Non-Executive Director 

NanaAma Botchway-Dowuona **** Non-Executive Director 

Cornel Vermaak *** Non-Executive Director 

Dirk Harbecke ***** Non-Executive Director 

George Manyere * Managing Partner/Chief Investment Officer 

Walter Kambwanji * Partner/Chief Finance Officer 

Wayne Waterworth * Chief Mining Specialist 

* Zimbabwean 

** South African 

*** South African/Swiss 

**** Ghanaian/American 

***** German 

ALL OF WHOSE BUSINESS ADDRESS IS AT: 

4 Arden Road 

Newlands 

Harare 

Zimbabwe 

LEgAL ADVISERS 

ATHERSTONE & COOK 

Legal Practitioners 

7th Floor, Mercury House 

24 George Silundika Avenue 

Harare 

Zimbabwe 

AUDITORS 

KPMG CHARTERED ACCOUNTANTS 

Mutual Gardens 

100 The Chase (West) Emerald Hill 

Harare 

Zimbabwe 

BANKERS 

ECOBANK ZIMBABWE LIMITED 

2 Piers Road 

Sam Levy Office Park, Borrowdale 

Harare 

Zimbabwe 

05 


Issue of this pre-IPO Private Placement Memorandum 26 November 2012 

Opening of the Offer 26 November 2012 

Closing of the Offer 28 December 2012 

Allotment of Shares by 31 December 2012 

PLACEMENTS STATISTICS 

Placing price USD 0.10 per share 

Number of new ordinary shares being issued 300,000,000 

Number of shares currently in issue 302,966,736 

Number of shares in issue pursuant to the placement 602,966,736 

Percentage of share capital represented by new shares 49.75% 

Proceeds of the Placing USD 30,000,000 

DEPLOyMENT Of fUNDS 

SOURCES 

Private Placement 

USES 

USD 30,000,000 

Ecobank Zimbabwe Limited USD 5,000,000 

GetBucks Financial Services (Zimbabwe) Limited USD 5,000,000 

BCM Gold (Private) Limited USD 5,000,000 

FML Oil Company of Zimbabwe (Private) Limited 

DEAL PIPELINE 

USD 5,000,000 

Puma Energy Zimbabwe Limited USD 4,500,000 

Agriseeds Zimbabwe (Private) Limited USD 2,000,000 

New Deal Pipeline USD 3,500,000 

TIMETABLE 


06

DEfINITIONS 

THE fOLLOWINg DEfINITIONS APPLy THROUgHOUT THIS DOCUMENT, UNLESS THE CONTExT 

REQUIRES OTHERWISE: 

“Act” Companies’ Act of Zimbabwe (Chapter 24:03) 

“African Development Corporation” or “ADC” ADC, a Frankfurt Stock Exchange listed private equity company, 

with investments in sub-Saharan Africa 

“Application form” the application form to be used for the Offer 

“Applicable Laws” the laws of the Republic of Zimbabwe 

“Articles” or “Articles of Association” the Articles of Association of Brainworks Capital Management 

(Private) Limited 

“BCM gold” BCM Gold (Private ) Limited 

“Botswana” Republic of Botswana 

“Brainworks Capital” or “Company” Brainworks Capital Management (Private) Limited 

“Brainworks Life Assurance” Brainworks Life Assurance Company of Zimbabwe Limited 

“Central Bank” or “RBZ” Reserve Bank of Zimbabwe 

“Closing Date” the closing date of the Issue, being 28 December 2012 

“Currency” the United States Dollar and or any form of money that is in 

public circulation in Zimbabwe as approved by the Government 

of Zimbabwe 

“Document” this pre-IPO Private Placement Memorandum, which sets out the 

details of the proposed Transaction and incorporates all notices, 

letters and appendices relating to the Transaction 

“DRC” Democratic Republic of the Congo 

“Ecobank Transnational Incorporated” Ecobank Transnational Incorporated, a pan-African banking 

group headquartered in Togo and with full service banking 

operations in 32 countries across the African continent 

“Ecobank Zimbabwe” Ecobank Zimbabwe Limited 

“Ecobank Asset Management” Ecobank Asset Management Zimbabwe Limited 

“EIU” Economic Intelligence Unit 

“Exchange Control Department” Exchange Control Department of the Reserve Bank of Zimbabwe, 

governed by the Exchange Control Act (Chapter 22:05) 

“fML Oil” FML Oil Company of Zimbabwe (Private) Limited 

07 


“gDP” Gross Domestic Product 

DEfINITIONS 

“getBucks International” GetBucks International Limited, a Mauritius registered micro 

lender with operations in South Africa, Botswana and Kenya 

“getBucks Zimbabwe” GetBucks Financial Services Zimbabwe Limited 

“government of National Unity” or Zimbabwe’s current coalition government comprising President 

“government" Robert Mugabe’s Zimbabwe African National Union – Patriotic 

Front, Prime Minister Morgan Tsvangirai’s Movement for 

Democratic Change and Arthur Mutambara’s MDC 

“IEE Act” the Indigenisation and Economic Empowerment Act of Zimbabwe 

“IEE Regulations” the Indigenisation and Economic Empowerment Regulations of 

Zimbabwe 

“IfC” International Finance Corporation, the private sector arm of the 

World Bank Group 

“IfRS” International Financial Reporting Standards 

“IMf” International Monetary Fund 

“Income Tax Act” Income Tax Act (Chapter 23:06) of the Republic of Zimbabwe 

“Indigenous Zimbabwean” As per the Act, any person who, before the 18th of April 1980, 

was disadvantaged by unfair discrimination on the grounds of his 

or her race, and any descendent of such persons 

“IPO” Initial Public Offering 

“IRR” the annualised effective compounded rate of return on 

investment 

“Kenya” Republic of Kenya 

“Lower gweru Mines” Lower Gweru Mines (Pvt) Limited, a company with gold claims 

in the Gweru Mining district, on which BCM Gold is undertaking 

exploration. BCM holds a 77.5% call option in the company 

“Mauritius” Republic of Mauritius 

“Memorandum” this pre-IPO Private Placement Memorandum 

“Memorandum of Association” the Memorandum of Association of Brainworks Capital 

Management (Private) Limited 

“NAV” Net Asset Value or Shareholders Funds of the Company as 

disclosed in the financial statements 


08

DEfINITIONS 

“Opening Date” the opening date of the Issue, being 26 November 2012 

“Ordinary Shares” ordinary shares of USD 0.0001 each in the capital of the 

Company 

“Placing” the placing of 300,000,000 Ordinary Shares 

“Placing Price” USD 0.10 per share 

“Prospective Investors” pension funds, institutional investors and any other investors 

invited to subscribe to shares under this Offer 

“Puma Energy” Puma Energy International, a vertically integrated energy 

company with operations in over 32 countries 

“Puma Zimbabwe” Puma Energy Zimbabwe Limited 

“Register” the register of Shareholders kept at the registered office of the 

Company 

“RgTS” Real Time Gross Settlement system for Zimbabwe 

“Shareholders” holders and owners of Ordinary Shares in the Company 

“South Africa” Republic of South Africa 

“Transaction” the Issue of 300,000,000 Shares at USD 0.10 per Share 

“Target IRR” 30% is the target return by the Company on its investments 

annually, measured over the period of the investment and 

realised on exit 

“UNESCO” United Nations Educational, Scientific and Cultural Organisation 

“USD” United States dollar 

“Zambia” Republic of Zambia 

“Zimbabwe” Republic of Zimbabwe 

“Zimbabwean dollar” Zimbabwean dollar, replaced by foreign currencies with the 

United States dollar being predominantly used as the currency of 

the Republic of Zimbabwe in February 2009 

“ZimStat” Zimbabwe National Statistics Agency 

“ZSE” the Zimbabwe Stock Exchange 

09 


PART I – THE COMPANY 

1.1.1 Introduction 

PART I – THE COMPANy 

1.1 INTRODUCTION 

Brainworks Capital Management (Private) Limited is a private equity investment company, primarily operating in Zimbabwe. 

Further to its proprietary investments arm, it also has an active advisory business and has also built the infrastructure for a 

Brainworks private Capital equity Management fund management (Private) arm. Limited is a private equity investment company, primarily operating in Zimbabwe. 

Further to its proprietary investments arm, it also has an active advisory business and has also built the infrastructure for 

a private 1.1.1 equity fund Company management Structure arm. 

1.1.1 COMPANy STRUCTURE 

Since its launch in 2011, the Company has been primarily focused on four core segments: 

fINANCIAL SERVICES; 

MININg; 

AgRICULTURE; AND 

ENERgy. 

1.1.2 OBjECTIVES 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

One of the Company’s objectives is to enable broad economic participation by Zimbabweans in the chosen investment 

Since its launch in 2011, the company has been primarily focused on four core segments: 

sectors. This objective has been achieved through diversification of the Brainworks Capital shareholder base to include 

Zimbabwean pension funds and life insurance companies as well as individual indigenous Zimbabweans. 

• Financial services; 

The Company 

• 

intends 

Mining; 

to scale up its business on the African continent, whereby it will seek to take advantage of 

opportunities • primarily Agriculture; in the and same sectors in which it is investing in Zimbabwe. In that regard and pursuant to our shortmedium 

term • objective Energy. of achieving an IPO, the process of establishing a holding company that will be domiciled in 

Mauritius has commenced and this is subject to the relevant approval by the Reserve Bank of Zimbabwe. (The proposed 

corporate restructuring will be executed in such a way that the existing shareholders of the company will swap their 

shares 1:1 into the Mauritius holding company and the Mauritius holding company will be compliant with Zimbabwe’s 

Indigenisation laws). 

12 

The proposed incorporation in Mauritius, if successful, will enhance our ability to attract foreign capital and enjoy the tax 

incentives that Mauritius offers in investing in Private Equity on the African Continent. 


10 

�� 

�� 

�� 

�� 

�� 

�� 

��


1.1.3 KEy STRENgTHS 

Brainworks Capital differentiates itself from other private equity investment companies operating in the region by having 

the following: 

Clear vision and strategy; 

Strong and highly experienced team with a proven track record in: 

Deal origination; 

Deal structuring; 

Deal execution; 

Capital raising; and 

Operations management. 

Strong and well-established connections and network in Zimbabwe and sub-Saharan Africa; 

In depth knowledge of local market and deep pipeline of business opportunities in Zimbabwe; 

Strong links with regional and international providers of finance; and 

Indigenous founded and managed with shareholding compliant with IEE regulations. 

1.1.4 SHAREHOLDINg 

Brainworks Capital is majority owned by Zimbabwean indigenous shareholders. Through a private placement of shares 

undertaken in 2011, significant broad-based ownership of the Company was achieved by targeting and attracting local 

pension funds as shareholders of the Company. The shareholding of the Company was vetted by the Ministry of Youth 

Development, Indigenisation and Empowerment and was certified compliant with the Indigenisation regulations. 

# SHAREHOLDER SHAREHOLDINg % CLASSIfICATION 

1 ADC Financial Services and Corporate Development 28.23 Foreign 

2 Fintrust Pension Fund 20.20 Indigenous 

3 Zahra Investments Trust 8.14 Indigenous 

4 Matthew Daniels Trust 8.14 Indigenous 

5 TDC Investment Trust 5.92 Indigenous 

6 AWT Investment Trust 5.92 Indigenous 

7 Brainworks Investments Trust 4.29 Indigenous 

8 Green Valley Investment Trust 4.29 Indigenous 

9 Carnaudmetalbox Group Pension Fund 4.21 Indigenous 

10 Comarton Consultants (Private) Ltd 1.43 Indigenous 

11 Brainworks Capital Pension Fund 1.40 Indigenous 

12 PTC Self Insurance Plan 2.78 Indigenous 

13 Comarton Preservation Fund 1.13 Indigenous 

14 Metropolitan Bank Pension Fund 1.02 Indigenous 

15 Archer Clothing Manufacturers (Private) Limited Pension Fund 0.35 Indigenous 

16 Atchison Actuarial Company (Private) Ltd 0.26 Indigenous 

17 Christian Brothers College Pension Fund 0.48 Indigenous 

18 Comarton Consultants Pension Fund 0.34 Indigenous 

19 Jacob Bethel (Zimbabwe) Corporation Pension Fund 0.47 Indigenous 

20 Brands Africa Pension Fund 0.37 Indigenous 

21 United Styles Pension Fund 0.06 Indigenous 

22 Femina Pension Fund 0.09 Indigenous 

23 Style International Pension Fund 0.01 Indigenous 

24 Commercial and Industrial Holdings Pension Fund 0.49 Indigenous 

11 

TOTAL 100.00 


1.1.5 INTERNATIONAL PARTNER – ADC 

Brainworks Capital has a close co-operation with its foreign 

shareholder, African Development Corporation, which holds 

28.23% of the shares in issue. African Development Corporation 

(‘ADC’) (Bloomberg: AZC.GR, www.african-development.com) is a 

German stock exchange listed pan-African banking group focusing 

on sub-Saharan Africa’s banking markets as well as on proprietary 

investments in selected frontier markets. ADC was amongst the first 

international emerging market investors to be integrated into the 

insurance solution offered by the Multilateral Investment Guarantee 

Agency (“MIGA”), a member of the World Bank Group, primarily 

due to its strong operational approach and adherence to the highest 

ethical standards. 

1.2 STRATEgy 


Brainworks Capital aims to be the leading and preferred 1.2 private Strategy equity investment firm and local partner to foreign investors 

in Zimbabwe. Brainworks Capital believes in its ability to source, evaluate and execute investments that are well positioned 

to benefit from the continuing economic growth in Zimbabwe. The company co-invests with leading international operating 

partners in promising, high-growth sectors in Zimbabwe benefit from the while continuing taking economic a growth long-term in Zimbabwe. investment perspective with special 

emphasis on capital growth and preservation. The Company targets an IRR of 30% on its investments over a holding period 

of 3 to 5 years and applies a private equity model to investing. 

Brainworks Capital aims to achieve its set investment targets and returns through the following: 

(I) MEDIUM TO LONg TERM PRIVATE EQUITy INVESTMENT MODEL: 

3 to 5 year investment holding period. 

Target IRR of 30%. 

Structure and execute exits from our investments either through: 

disposal of our shares to our operating partners; buyers. 

disposal of our shares to other financial investors; 

IPO of our investments; or 

ultimately an IPO of the Company. 

(II) PRO-ACTIVE INVESTOR: 

1.1.4 International partner - ADC ADC fOOTPRINT ADC Footprint IN SUB-SAHARAN in Sub Saharan Africa AfRICA 

Brainworks Capital has a 

close co-operation with its 

foreign shareholder, African 

Development Corporation, 

which holds 28,23% of the 

shares in issue. African 

Development Corporation 

(‘ADC’) (Bloomberg: 

Kenya 

AZC.GR, www.africandevelopment.com) 

is a 

Rwanda 

German stock exchange listed 

pan-African banking group 

Nigeria 

Tanzania 

Mozambique 

focusing on sub-Saharan Equatorial Guinea 

Zambia 

Africa’s banking markets as 

well as on proprietary 

investments in selected Banking operations 

frontier markets. ADC was Proprietary stake 

Zimbabwe 

amongst the first international 

Botswana 

emerging market investors to 

South Africa 

be integrated into the insurance solution offered by the Multilateral Investment Guarantee Agency (“MIGA”), a member of the 

World Bank Group, primarily due to its strong operational approach and adherence to the highest ethical standards. 

Brainworks Capital aims to be the leading and preferred private equity investment firm and local partner to foreign investors in 

Zimbabwe. Brainworks Capital believes in its ability to source, evaluate and execute investments that are well positioned to 

The company co-invests with leading international partners in promising, high-growth companies in Zimbabwe while taking a 

long-term investment perspective with special emphasis on capital preservation. 

The Company targets an IRR of 30% on its investments over a holding period of 3 to 5 years and applies a private equity 

model to investing. The Company targets individual equity investments in its chosen sectors that are either unlisted or have 

strong growth potential. 

Brainworks Capital aims to achieve its set target through the following: 

(i) Medium to long term private equity style investor. 

• 3 to 5 year investment holding period with a focus on capital preservation. 

• Potential investments may be listed or unlisted companies with high growth prospects. 

• Target IRR of 30% achieved through attractive disposal price from extensive network of partners and potential 

(ii) Pro-active investor 

• Hold at least 2 board seats on the boards of investee companies. 

o Brainworks Capital currently has 9 directors nominated to the boards of its five investee companies. 

• Actively involved in the boards of investee companies. 

We aim to hold at least 2 board seats on the boards of our investee companies. 

Brainworks Capital currently has 9 directors nominated to the boards of its five investee companies. 

We aim to hold at least 25.1% shareholding in our investee companies so that we have influence. 

In instances where we hold less than 25.1%, we ensure that our investment structure provides that we still have 

influence. 


12 

14


(III) INVEST IN PARTNERSHIP WITH STRONg INTERNATIONAL OPERATORS 

We aim to invest in partnerships with strong international operators with technical know-how, financial capacity and 

experience. Below are the partnerships that we have already established: 

In Ecobank Zimbabwe, our international operating partner and co-shareholder is the pan-African group, 

Ecobank Transnational Incorporated (www.ecobank.com). Ecobank Group is active in 32 African countries. 

In GetBucks Zimbabwe, our international operating partner and co-shareholder is GetBucks (www.getbucks.com). 

GetBucks founders have over 15 years of experience in financial services and the company currently operates in 

South Africa, Botswana and Kenya. 

In BCM Gold, our international technical partner is SRK Consulting (www.srkconsulting.com). We are also at 

an advanced stage of discussions with a Canadian resource company whom we expect to become an international 

partner in BCM Gold. 

In FML Oil, an emerging oil distribution and logistics company in Zimbabwe, we are at an advanced stage of 

establishing a business relationship with leading global suppliers of petroleum products. 

In our investment activities, we have a strong working relationship with our foreign shareholder, ADC, and this 

allows us to tap into specialist skills and resources as well as access to international investors and partners. 

(IV) gROWTH Of OUR ADVISORy AND PRIVATE EQUITy fUND MANAgEMENT BUSINESS LINES 

Provide advisory services on selective conflict-free transactions, taking advantage of deal experience, global and local 

relationships to achieve results for clients. 

Growth in financial advisory and restructuring opportunities as Zimbabwe emerges from a decade of recession. 

Ability to leverage market knowledge and human capital to build a private equity fund management business in southern 

Africa. 

1.3 gEOgRAPHIC AND SECTOR fOCUS 

1.3.1 CURRENT gEOgRAPHICAL fOCUS – ZIMBABWE 

15 

10 

5 

0 

(5) 

(10) 

(15) 

(20) 

_ 

_ 

_ 

_ 

_ 

_ 

_ 

_ 

_ 

1997 

_ 

1998 

ZIMBABWE ANNUAL gDP gROWTH RATES (%) 

_ 

1999 

_ 

2000 

_ 

2001 

SOURCE: ZimStat 

_ 

2002 

_ 

2003 

_ 

2004 

_ 

2005 

_ 

2006 

_ 

2007 

_ 

2008 

_ 

2009 

_ 

2010 

_ 

2011 

13 

Positive developments in the political arena in recent years have 

helped to pull Zimbabwe out of a decade of recession caused 

by political instability, land reform and disastrous economic 

policies. In 2008 a Government of National Unity was formed 

to share power between the long-time President Robert Mugabe 

and Prime Minister Morgan Tsvangirai. The restoration of 

relative political stability helped to facilitate the adoption of a 

multi-currency system in February 2009, which effectively saw 

the Zimbabwean dollar being phased out of circulation and 

replaced by foreign currencies with the US dollar being the 

most widely used currency. 

In 2009 the country experienced positive economic growth for 

the first time in over a decade, going on to record real GDP 

increases of above 9% in 2010 and 2011. The Zimbabwe 

Ministry of Finance predicts real GDP to grow by 5.6% and 

6.5% in 2012 and 2013 respectively. With elections scheduled 

for the end of March 2013, many remain optimistic that the 

new government will implement progressive economic reforms 

that will boost the country’s GDP growth rate. 


1.3.2 SECTOR fOCUS 

Brainworks Capital invests in four of the most important sectors in the Zimbabwean economy: 

53% 

16% 

4% 

fINANCIAL SERVICES; 

MININg; 

AgRICULTURE; AND 

ENERgy. 


Together these sectors contribute 47% of the country’s GDP, and all exhibit unique 

opportunities for rapid growth in the near term. The government has announced 

that it plans to spend over half of the USD 212 million remaining IMF special 

drawing rights granted in 2009 on infrastructure investment. This should support 

all sectors of the economy, but in particular agriculture and mining through 

improved transport networks. 

20% 

MININg AND 

QUARRyINg 

1.3.2.1 fINANCIAL SERVICES 

18% 

AgRICULTURE 

Despite having a relatively developed financial market, over 60% of the population 

is not engaged in the formal financial system. Indeed, 40% are completely 

excluded from formal banking due to issues of accessibility, affordability and 

SOURCE: ZimStat 

appropriateness. There is an enormous opportunity to capture the USD 2 billion 

estimated by the Central Bank to be circulating outside of the formal banking 

sector. According to the RBZ, total banking assets grew 17% in the first half 

of 2012. Brainworks Capital currently has three investments in the financial sector, aimed at various levels of financial 

intermediation (from microfinance right through to asset management) and offering a range of banking and consumer 

finance products. 

1.3.2.2 MININg 

2011 gDP By SECTOR 

CONTRIBUTION 

OTHER 

TRANSPORT AND 

COMMUNICATION 

fINANCE AND 

INSURANCE 

The mining sector is a strategically important industry in Zimbabwe, contributing 20% to GDP in 2011 and accounting for 

60% of all foreign exchange earnings. According to ZimStat the industry, which suffered years of neglect during the years 

of hyperinflation, recorded growth rates of 13% and 25% in 2010 and 2011 respectively, well above the average GDP 

growth rate of 9% in those years. 

Gold production increased 129% in 2010 and 34.6% in 2011, according to ZimStat. Despite these recent improvements, 

ZimStat notes that gold production is still at 33% of its peak production of 1999. This represents significant upside 

potential. The Chamber of Mines Zimbabwe estimates that an investment of USD 1 billion is required in the gold sector 

alone within the next three to five years. This is expected to produce a 455% growth in gold output by 2015, higher than 

for any other mineral. Brainworks Capital owns 100% of BCM, which in turn owns a call option to purchase 77.5% in 

Lower Gweru Mines, a company with gold claims in the Gweru Mining district of Zimbabwe. 


14


1.3.2.3 AgRICULTURE 

Agriculture is the backbone of the Zimbabwean economy, being the second highest contributor to foreign exchange 

earnings. The main export crops are tobacco, cotton, sugar and coffee. Agricultural production grew at 11% in 2010, 

with growth dropping in 2011 to 8% due to persistent long dry periods during the rainy season 1. With persistent dry spells 

occurring more often due to changing weather patterns, there is an opportunity to invest in a business geared towards 

innovation in agriculture seeds that can withstand long dry periods and have short maturities. Brainworks Capital pipeline 

opportunity, Agriseeds, in which Brainworks Capital holds a call option to purchase 45% of the issued shares, is engaged 

in the production and marketing of grain seeds in Zimbabwe and runs a maize seed research station. 

1.3.2.4 OIL DISTRIBUTION AND STORAgE 

The continued turnaround of the Zimbabwean economy has resulted in an increase in the consumption of petroleum 

products. The market was traditionally dominated by international companies BP Shell, Total and Caltex. After the 

deregulation of the industry in August 2003, the sector saw the emergence of new local players and the liberalization of 

the market to a point where there are now over 80 registered fuel companies. 

Zimbabwe imports all its petroleum based energy products requirements. The country’s average fuel consumption is 120 

million litres every month at an industry capacity utilisation level of 44.2%. As the economy continues to recover there will 

be increasing demand for petroleum products and associated infrastructure. 

1.4 INVESTMENT AND PORTfOLIO MANAgEMENT APPROACH 

We engage in mutually beneficial transactions and aim to be the local investment partner of leading regional and global 

brands operating in or planning to operate in Zimbabwe and whose objective is achieving exceptional performance on 

their investments over time. 

We apply a rigorous investment approach which is consistent across all investment types and is under-pinned by extensive 

due diligence. 

Brainworks Capital’s investment approach is characterised by: 

Focus on growth capital for Zimbabwean companies in selected nationally important sectors; 

Active monitoring and performance analysis of portfolio companies; 

Acquisition of influential stakes; and 

Risk diversification through our multi sector investment approach. 

Brainworks Capital believes in investing in sectors in which we demonstrate the following: 

Strong understanding; and 

Potential to achieve our Target IRR. 

Brainworks Capital approach to Portfolio Management involves managing and monitoring our investments. This process 

also requires amongst others, various technical skills ranging from financial, risk management, business, devising and 

negotiating exit. 

Once we make an investment, the most effective members of our management team in that particular investee company 

sector will play an ongoing role as board members and strategic advisers to the business, to ensure that our investment 

thesis, which we develop at due diligence and execution phase, is properly executed. 

1 EIU data 

15 



Our team of professionals has significant experience in portfolio management and some of the activities that we undertake 

when managing or monitoring our investments include: 

Quarterly review of investee company’s financial performance with management; 

Review of investee companies performance against investment thesis; 

Participation in board/shareholder meetings; and 

Timing and execution of exit. 

1.4.1 CURRENT PORTfOLIO 

fINANCIAL SERVICES 

ECOBANK ZIMBABWE LIMITED (29.40%) 

COMMERCIAL BANKINg 

Formerly Premier Finance Group Zimbabwe (‘Premier Finance’), Ecobank Zimbabwe is a registered commercial bank 

operating in Zimbabwe. Premier Finance was established in 2002 and operated as a merchant bank. In December 

2010, the pan-African banking group Ecobank Transnational Incorporated, bought a controlling interest and set about 

transforming the bank to align it with its commercial banking model. Subsequently, Ecobank Zimbabwe now operates as 

a fully-fledged subsidiary of Ecobank Transnational and benefits from operational, technical and financial support from 

the Ecobank Group. 

Ecobank Zimbabwe was granted its commercial banking license by the Reserve Bank of Zimbabwe in May 2012. As of 

June 2012, the bank operated a total of 5 branches (4 in the capital Harare and 1 in the second largest city Bulawayo) 

and plans to open an additional 10 branches across the country in the next 12 months. The bank has total assets of 

USD 80.4 million and shareholder equity of USD 15.5million as at June 2012. 

The development of Ecobank Zimbabwe’s banking platform was underpinned by excellent growth during the first half year 

of 2012. Total assets grew by 35% to USD 80.4 million at the close of the period. This was driven by a 39% increase in 

customer deposits to USD 63.3 million and a 69% increase in loans to customers to USD 62.4 million. Year-on-year, net 

revenues grew by 164% off a low base to USD 5.0 million, outpacing increases in operating expenses which were up 35%. 

Profit after tax at the half year consequently improved by 112% to USD 0.18 million compared to a loss of USD 1.5m for 

the comparable period in 2011. This growth is mainly attributable to the following: 

Loan arrangement fees and interest income driven by 76% growth in the loan book since June 2011; 

Trade finance income from guarantees and letters of credit was up from USD 0.02 million to USD 0.51 million on 

the back of significant off-balance sheet syndicated trade finance deals consummated with the support of Ecobank 

Transnational; 

Increased fees and commissions backed by a more than three-fold increase in the number of customer accounts 

since June 2011. Customers have responded positively to Ecobank Zimbabwe’s value proposition and the 

increasingly diverse product offering; 

Reduced loan losses after the clean-up and restructuring of the legacy loan portfolio during the second half of 2011 

coupled with strict adherence to Ecobank Transnational’s robust risk management policies has resulted in quality 

loan portfolio growth; and 

Sustained cost containment as investment in the technology platform and related applications enhanced by better 

efficiencies attributable to shared services within Ecobank Transnational, have started yielding results. 


16


The Bank has been profitable on a month-to-month basis from the beginning of the second quarter and is confident that 

this performance will be sustained during the second half of the year given the momentum built to-date. While these 

results are positive, continued focus is on the effective execution of the Bank’s strategic plan as no one can afford to be 

complacent in this tough environment. In 2011 focus was on establishing a firm foundation for the Bank in its transition 

from a merchant bank to a commercial bank. In 2012 improvement of overall financial performance on the back of a 

wider product range and better service quality remains the target. Impetus achieved towards this objective is evident in the 

following achievements: 

Credit lines worth USD 25 million have been mobilized from Mashreq Bank and Afreximbank. Of this amount, 

USD 15 million is for off-balance sheet financing; 

USD 10 million lines of credit have been extended by other Ecobank Transnational affiliates to support regional trade 

finance; 

A new branch was opened in the Bulawayo city centre (Parkade Centre branch) to ensure that the Bank is more 

accessible to its customers. Preparatory work on several other locations has also started for roll-out before the end of 

the year; 

New and exciting product launches including Ecobank regional cards, Ecobank Rapid Transfer, Ecobank Western 

Union, Ecobank Retail Internet Banking, Ecobank Diaspora account, Ecobank Savings account, and Ecobank 

Advance account; 

In an effort to integrate e-channels into the Africa-wide product delivery program, the Bank has now linked the 

ATM network onto ZIMSWITCH and have launched a real-time straight-through-processing (“STP”) interface with the 

Zimbabwe Revenue Authority (“ZIMRA”) to eliminate the drudgery of tax payments for clients; 

Implementation of a faster credit approval process through the use of pre-approved credit programs for specific 

target customer segments. 

The Bank will continue to build upon these positive steps to ensure that it provides customers with convenient and reliable 

banking products and services. Shareholders injected USD 7.5 million into the Bank in March 2012 to bring the total fresh 

capital injected into the Bank to USD 19.8 million in the last one and a half years. 

Additional Investment Requirements 

In its recent Monetary Policy Statement, the Reserve Bank of Zimbabwe increased the minimum capital of banks from 

USD 12.5 million to USD 100 million. Compliance with the new directive will be in stages as follows: 

by 31 December 2012 – USD 25 million 

by 30 June 2013 – USD 50 million 

by 31 December 2013 – USD 75 million 

by 30 June 2014 – USD 100 million 

Further to the above, the board of Ecobank Zimbabwe have resolved to increase the bank’s current capital of USD 15 

million to USD 30 million during the 2nd Half of 2012. As a result, Brainworks Capital contribution will be USD 5 million. 

Brainworks Capital is also directly invested in the bank’s asset management business. Ecobank Asset Management is a 

registered asset manager operating in Zimbabwe. The company operates as a stand-alone fund manager independent of 

the commercial bank. As at June 2012, total funds under management amounted to USD 12 million. 

17 



gETBUCKS fINANCIAL SERVICES ZIMBABWE LIMITED (40%) 

CONSUMER fINANCE 


GetBucks Zimbabwe is a registered microfinance company whose short term objective is to convert into a Micro Finance 

Bank. The process of converting into a Micro Finance Bank is at an advanced stage and we expect completion in 2013. 

GetBucks vision is to change the Zimbabwe microfinance lending market through providing innovative tailor made loans 

while adhering to responsible lending. Brainworks Capital is in partnership with GetBucks, a Mauritius registered lender 

with operations in South Africa, Botswana and Kenya. 

The company started operations with one branch in Harare in August 2012. Over the last two months, GetBucks Zimbabwe 

has added 3 new branches being Bulawayo (1), Chinhoyi (1) and Marondera (1). Ten additional branches are expected to 

be opened over the next 12 months. 

GetBucks Zimbabwe has to-date achieved the following: 

Licencing by the Reserve Bank of Zimbabwe; 

Approved by the Ministry of Youth Development, Indigenisation and Economic Empowerment; 

Approval and issuance of a Government Deduction Code enabling the issuance of loans to Civil Servants; 

Opened its first branch in Harare in August 2012 and now has 4 branches; 

Capital injection of USD 1 million; and 

Signed up a private payroll of 1 800 staff members. 

GetBucks Zimbabwe is well positioned to lead the current financial lending market by example through its services and 

products, which are easily accessible to the public with a visible and reliable brand and with a vision to expand its footprint 

through the whole of Zimbabwe. GetBucks Zimbabwe employs a tailor made debtors system developed by professionals 

with more than 15 years’ experience in the South African consumer lending market, which provides the best service delivery 

and management tools. 

MININg 

BCM gOLD (PRIVATE) LIMITED (100%) 

gOLD ExPLORATION AND MININg DEVELOPMENT 

Gold mining has dominated Zimbabwe industry for more than a century and Zimbabwe has been one of Africa's largest 

gold producing countries amongst Tanzania, South Africa and Ghana. Brainworks Capital has sponsored the creation of a 

junior gold mining house, BCM Gold, which is engaged in exploration for and development of, multi-million ounce gold 

deposits through exploration in highly prospective under-explored areas in Zimbabwe. 

BCM Gold is currently focused on exploration in highly prospective under-explored areas in Zimbabwe. In conjunction with 

SRK Consulting, BCM Gold is currently prospecting on 1,892.13 Ha of valid gold claims in the Gweru mining district of 

Zimbabwe. Three anomalies were initially identified from the geochemical sampling and geological mapping. An anomaly 

is a geologic feature or structure that departs markedly from its surrounding environment with respect to composition, 

texture, or genesis. The analysis of geologic anomalies related to mineralization is based upon the specific geologic factors 

resulting in the special effects that were caused by the ore-forming processes. In other words, anomalies are areas of 

geological interest and are investigated to determine nature of the mineralisation occurring in the vicinity. 


18


The exploration program has reached the stage where the three anomalous areas have been trenched by back actor 

(approx1,500m), sampled and analyzed, with very interesting and attractive results to-date. 

The first anomaly, known as the Gretna Green Line, is a gravel resource of about 850 ounces contained in 55,000 cubic 

meters at a grade of 0.43 g/t. Before this resource can be signed off as JORC compliant, the trench sampling density 

should be increased from the current 400 meters. Beneath this gravel is a mineralized shear zone that has been intersected 

in trenches 1, 4 and 6 and which is presumed to be continuous over a distance of about 800 m. The grades are low about 

0.63 g/t and results in an estimated 4,801 ounces. Mineable widths range from 6 to 30 m up to a depth of 10 meters or 

more in some places. There is no doubt that this resource will be better defined with closer spaced trenching. 

The second anomaly, known as the Serpentinite Ridge, is a marked 0.4 g/t gold in soil anomaly covering an area 

measuring 800 m long by 50 m to100m wide. This is a significant anomaly and it was decided to chip sample those parts 

of the ridge which could not be trenched. Interesting grades and widths of gold mineralization were returned in the rock 

chip sampling in Trenches 11 and 13, the highest being 3 g/t over 2 meters. These trends will be tested with drilling. 

The budget for the next stage of the work will allow for testing of three resource areas as follows: 

The Gretna Green Line Shear Zone rubble to better define this resource with closer spaced trenching, 

The Gretna Green Line Shear Zone beneath the rubble. The mineralization will be tested by 500 meters of diamond 

drilling. 

The Serpentine Ridge. There are two quartz vein highs to test with diamond drilling and a small rubble deposit to 

trench. 

Further sampling around the third anomaly. 

In addition, there is need to carry out bulk testing of the gravels and to test other oxidized material especially from the 

Gretna Green Line Shear Zone. A small plant capable of processing 1 ton to 2 tons per hour of material is envisaged. 

This plant would be self-funding once set up and could have a screen feeding a rock duster (crusher-hammer mill) to a 

wet screen with over flow recycling and underflow to a gravity concentrator. There would be a number of benefits from 

this small plant including data gained on the geology, gold grades, metallurgy and empirical data for business modeling. 

BCM Gold is at an advanced stage of discussion with a Canadian Resource company and the outcome is expected to 

strengthen the activities of BCM Gold and create opportunities to tap into international capital markets. 

ENERgy 

fML OIL COMPANy Of ZIMBABWE (PRIVATE) LIMITED (100%) 

OIL PRODUCTS DISTRIBUTION 

FML is a petroleum products importer, distributor and provider of oil trucking services in Zimbabwe. FML is regulated and 

licensed by the Zimbabwe Energy Regulations Agency and is a holder of the following licenses: 

Importers License; 

Wholesale License; and 

Retail License. 

To-date the company has put in place appropriate financial and human capital resources to pursue its objectives. 

19 


1.4.2 PIPELINE OPPORTUNTIES 


On top of the existing portfolio companies, Brainworks Capital has already entered into discussions for two further 

opportunities, which are expected to materialize in the short term. 

ENERgy 

PUMA ENERgy ZIMBABWE (PRIVATE) LIMITED (30%) 

OIL PRODUCTS INfRASTRUCTURE 

Puma Zimbabwe is a Zimbabwe registered company whose shareholder is Puma Energy International (Mauritius). 

Brainworks Capital has entered into definitive agreements with Puma Energy International (Mauritius) whereby Brainworks 

Capital will become a 30% shareholder in Puma Energy Zimbabwe. The transaction has received all relevant regulatory 

approvals including Ministry of Youth Development, Indigenisation and Economic Empowerment. 

Puma Zimbabwe is an energy company focused on petroleum products infrastructure in Zimbabwe and is currently 

developing a storage tank farm with a total project cost of up to USD 21 million. Financing of the project has been 

arranged and registered with the relevant authorities in Zimbabwe and the first phase of the project shall cost USD 7.5 

million and an additional USD 2 million has already been invested in the acquisition of the land for development. The 

project is now at an advanced stage and development is expected to commence soon. The tank farm facility will store and 

handle white petroleum products (gasoil, gasoline). 

AgRICULTURE 

AgRISEEDS ZIMBABWE (PRIVATE) LIMITED (CALL OPTION TO ACQUIRE SHAREHOLDINg Of UP TO 45%) 

SEED fARMINg AND MARKETINg 

Company Overview 

Agriseeds is a seed company established in 1988 to produce and market hybrid and OPV seed maize varieties as well 

as sorghum, groundnuts and sugar beans within Zimbabwe through contract growing with both large-scale farmers and 

smallholders. The company’s’ factory processes and packs 80–100MT maize, 30–40MT small grains per day while 

20-30MT of groundnuts can be shelled, processed and packed in a day. Current storage is for up to 7,000MT of seed in 

company’s 15 depots spread across the country. 

Agriseeds varieties are mostly tailor-made to meet clients' needs. This emphasis has called for ingenuity and innovation 

that has been achieved via research and building long term business relations with customers. At the same time, trust is 

rapidly being developed, where the brand is associated with products that are meeting farmers’ needs. Agriseeds’ breeding 

team currently engages in major projects with the Government and other leading research institutes. 

Brainworks Capital has agreed an option to acquire up to 45% shareholding in Agriseeds subject to the completion of the 

due diligence and appropriate approvals. 

Agriseeds is led by Managing Director Walter Chigodora and Chairman Rob Kelly, who have several years of agriculture 

industry experience. The team has been able to spearhead product development and entrepreneurship within the 

organisation. 


20



BRAINWORKS LIfE ASSURANCE COMPANy Of ZIMBABWE LIMITED (100%) 

LIfE INSURANCE 

Brainworks Life Assurance is a start-up operation and is yet to commence trading, pending regulatory approvals and 

negotiation with a foreign entity on a strategic investment. A successful conclusion of the negotiations will result in 

Brainworks reducing its shareholding to 40% and the foreign entity holding 60%. The License application has been 

submitted to the Insurance and Pensions Commission. 

Investment attractions into the insurance sector are primarily based on: 

Low insurance penetration: The insurance penetration ratio in Zimbabwe is low with premiums written at 3% of GDP as 

at June 2011. The country’s insurance penetration ratio peaked at around 6% in 2001, reflecting a potential of the sector 

to grow by more than 2 times from current size. 

Economic Recovery: The economy is expected to continue recovering leading to resuscitation of the industry, higher 

employment rates and increased incomes per capita which will enhance uptake of insurance products. 

1.5 ADVISORy SERVICES 

As the Zimbabwean economy continues to turnaround, the company sees significant opportunities in financial advisory 

and restructurings. Through cultivating its extensive local and global relationships, Brainworks Capital continues to build 

a presence in this area. Currently, advisory services are provided on selective conflict-free transactions where Brainworks 

Capital taps into its intellectual capital and relationships to achieve results for its clients. 

In respect of Advisory Services, the Company has had the following achievements to-date: 

Successfully licensed by the Securities & Exchange Commission as a provider of financial advisory services in Zimbabwe. 

Advised a Toronto listed mining company in its successful compliance with Zimbabwe’s Indigenisation laws (transaction 

size USD 30 million). 

Advised ADC, a Frankfurt Stock Exchange listed company, in its successful USD 50 million underwriting of ABC Holdings 

Limited Rights Offer. 

Advised the Government of Zimbabwe and an unlisted Platinum producer in Zimbabwe in the execution of their 

Indigenisation transaction which had a value of USD 142 million 

Appointed as financial advisors in a USD 23 million debt restructuring by a Zimbabwe Stock Exchange listed company. 

Appointed as financial advisor in the negotiations between the Government of Zimbabwe and a Johannesburg Stock 

Exchange listed manufacturing company in the formulation and implementation of its Indigenisation plan. 

Appointed as financial advisor in the negotiations between the Government of Zimbabwe and an Australian Stock 

Exchange listed company in the formulation and implementation of its Indigenisation plan. 

Appointed as financial advisor in the negotiations between the Government of Zimbabwe and an unlisted mining 

company in the formulation and implementation of their Indigenisation plans. 

The Company sees significant growth in Advisory business in the medium term and part of our strategy is to become the 

leading advisory firm in Zimbabwe. We also expect to start providing advisory services to other corporates in sub-Saharan 

Africa and significant efforts are being made in developing a healthy pipeline of deals. 

21 


1.6 PRIVATE EQUITy fUND MANAgEMENT 


Brainworks Capital has already built the infrastructure to set-up a private equity fund management in southern Africa in 

the medium term future. Currently, the human capital is focused on building out the proprietary investments and advisory 

arms. Brainworks Capital believes it has a strong platform to expand these arms into private equity fund management. 

1.7 OVERALL BUSINESS PLAN 

A business plan has been prepared showing forecast for the company’s core investments in Ecobank Zimbabwe, GetBucks 

Zimbabwe, FML Oil and BCM Gold. Additional revenue coming from pipeline opportunities and advisory service business 

has also been incorporated. 


22


The table below shows the actual income statement and balance sheet for 2011 and forecast numbers for 2012 to 2017. 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

NOTE TO BRAINWORKS CAPITAL MANAgEMENT - fINANCIALS: 

(A) Actual Forecast financials on the Company financial statements have been prepared by the Directors in accordance with the Company’s 

(F) forecast investment financials targets. Total Assets are forecast to grow from USD17,34 million in 2011 to USD97,68 million by 2017, showing a 

(P) Projected financials 

Cumulative Average Growth Rate (CAGR) of 33%. 

Forecasts of the Company’s financial performance have been prepared by the Directors in accordance with the Company’s 

investment 

Return 

targets. 

on Equity 

Total 

will 

Assets 

be lower 

are 

in 

forecast 

the early 

to 

years 

grow 

as 

from 

more 

USD 

capital 

17.34 

is spent 

million 

in establishing 

in 2011 

the 

to USD 

primary 

97.68 

operations 

million 

of 

by 

the 

2017, 

showing business, a Cumulative but is forecast Average to increase Growth to 26,4% Rate (CAGR) by 2016 and of 33%. 27,8% by 2017. 

Return 

Assumed 

on Equity 

Dividend 

will be 

Policy 

lower 

from 

in the 

Portfolio 

early 

Investments 

years as more capital is spent in establishing the primary operations of the 

business, but is forecast to increase to 26.4% by 2016 and 27.8% by 2017. 

23 


25

ASSUMED DIVIDEND POLICy fROM PORTfOLIO INVESTMENTS 


It is Management’s aim and investment philosophy to invest in businesses that generate sufficient cash-flow and pay 

dividends. Based on the forecasts, Management is confident that the businesses will be implementing the following 

dividend policies: 

gUIDINg VALUATION 

BRAINWORKS CAPITAL MANAgEMENT - VALUATION 

Management has prepared high level valuation based on forecast information. Using two methods, Dividend Discount 

Model and Discounted Cash-flow Model, management estimate that the value of the shares range between USD 0.14 to 

USD 0.15. 

The table below shows a breakdown of management forecasts on the internal rate of return for the individual projects: 

1.8 CORPORATE gOVERNANCE 

DIVIDEND POLICy PAT 

Ecobank Zimbabwe 50% 

GetBucks Zimbabwe 50% 

BCM Lower Gweru 0% 

FML Oil 50% 

METHOD EQUITy VALUE (USD 000,000) PRICE PER SHARE (USD) 

Dividend Discount model 77.02 0.14 

Discounted Cash-flow model 85.51 0.15 

PORTfOLIO IRR 

Ecobank Zimbabwe 36% 

GetBucks Zimbabwe 37% 

BCM Lower Gweru 45% 

FML Oil 49% 

The Directors recognize the importance of sound corporate governance and the Company complies with the provisions 

of the Companies Act (Chapter 24:03). The Board comprises nine directors, including five independent non-executive 

directors, one non-independent non-executive director and three executive directors. This balanced representation ensures 

that no one individual or small group can dominate decision making. The depth of experience and diversity of the Board 

ensures that robust and forthright debate on all issues of material importance to the Company can take place. 

The roles of Chairman and Managing Partner are separate and no individual has unfettered control over decision making. 

The Chairman is a non-executive director appointed by the Board. The Board is responsible to shareholders for setting the 

strategic direction of the company, monitoring operational performance and management, risk management processes 

and policies, compliance and setting authority levels, as well as selecting new directors. The Board is also responsible 

for the integrity and quality of communication with stakeholders, including employees, regulators and shareholders. The 

Directors hold quarterly meetings and at any other time as and when required. 


24


The Board is assisted in discharging its responsibilities by a number of sub-committees. Sub-committees are accountable 

to the Board, with minutes of sub-committee meetings circulated and reported on at the following Board meeting. Senior 

executives are invited to attend meetings as appropriate. Board committees may make use of external professional advisers 

when necessary to discharge specific tasks. The Company has established three Board sub-committees namely, the Audit 

Committee, the Investment Committee and the Remuneration and Nominations Committee with formally delegated duties 

and responsibilities. 

INVESTMENT COMMITTEE – The Investment Committee is a Board sub-committee and its role is to review and approve the 

Company’s investment strategy, approve recommended investments by management, oversee the effective implementation 

of portfolio management strategies of management in line with the Company’s investment policy. 

AUDIT COMMITTEE – The Audit Committee is a Board sub-committee and its role is to oversee the nature and scope of the 

annual audit, management’s reporting on internal accounting standards and practices, financial information, accounting 

systems, procedures and the Company’s financial reporting statements. The Audit Committee’s objectives include assisting 

the Directors in meeting their responsibilities with respect to the Company’s continuous financial disclosure obligations and 

overseeing the work of the Company’s external auditors. 

REMUNERATION AND NOMINATION COMMITTEE – The Remuneration and Nomination Committee is a Board subcommittee 

and makes recommendations to the Board regarding the remuneration policy that applies to Executive Directors 

and senior employees and is responsible for identifying and nominating candidates to fill vacancies on the Board, as and 

when they arise. 

COMPANy POLICIES 

The Company seeks to ensure that it engages in activities which do not jeopardize the health and safety of its employees, 

taking into account the industrial sectors concerned. The Company encourages the businesses it supports to adopt 

appropriate health and safety measures and to comply, within a reasonable period, with local legislative requirements 

concerning occupational health and safety. 

The Company’s directorate and management recognize that sustainable development depends on a positive balance 

between economic development and environmental protection. The Company believes that conserving the global 

environment is the responsibility of every individual, and as a good corporate citizen it strives to fulfill its responsibility 

to society by working towards realizing a sustainable environment. Accordingly, the Company will endeavor to pursue 

best practice in environmental management and will put in place guidelines and procedures to ensure that projects are 

undertaken in accordance with the relevant local, national and international standards with regard to environmental and 

social regulations. 

EMPLOyEES 

As at the date of this document, Brainworks Capital had five full time professional staff who are employed in Harare 

and a total staff compliment of 8. Brainworks Capital furthermore through its strong strategic partnership with African 

Development Corporation has the opportunity to source senior investment professionals from ADC on a deal-by-deal 

basis. It is intended that Brainworks Capital will employ additional people as and when required. 

Brainworks Capital has an engaged board, with two legal professionals and four investment professionals, who are always 

available to provide legal or investment advice on a deal-by-deal basis. 

25 


1.9 PEOPLE 

ExECUTIVE DIRECTORS 


gEORgE MANyERE 

ZIMBABWEAN | MANAGING PARTNER/CHIEF INVESTMENT OFFICER 

george Manyere is the Managing Partner/Chief Investment Officer and founder of 

Brainworks Capital Management. Prior to founding Brainworks Capital in 2008, George 

was an investment professional with the International Finance Corporation (IFC), 

headquartered in Washington DC. While at IFC, he invested in excess of USD 600 million 

in sub-Saharan Africa, managed a portfolio of investments in excess of USD 400 million 

and represented IFC on several investee company boards. 

George led the structuring and acquisition of a 28% controlling stake in Premier Finance 

Group Limited and was seconded to the bank to undertake the restructuring and 

recapitalization. He was successful in attracting foreign shareholders in a USD 6 million transaction with African 

Development Corporation (ADC) and KMQ Enterprises (a Mauritius investment firm), as well as restructuring the 

governance and balance sheet. A USD 10 million transaction with Ecobank Transnational Incorporated ensured the 

bank was fully recapitalized, rebranded and positioned for significant growth. George holds a Bachelor of Accounting 

Science and Honors in Accounting Science from the University of South Africa. He also holds a Certificate in Theory 

of Accounting from the University of South Africa and has completed various international courses in finance, strategy 

and investment banking. 

WALTER KAMBWANjI 

ZIMBABWEAN | CHIEF FINANCIAL OFFICER 

Walter Kambwanji co-founded Brainworks Capital Management and is the company’s 

Chief Financial Officer. He is a Chartered Accountant with significant experience in 

finance and operations in Zimbabwe and internationally. Prior to co-founding Brainworks 

in 2008, he was a professional in the finance department of HSBC in London. 

Walter has previously been Finance Director of various institutions in Zimbabwe including 

Bank ABC Zimbabwe Limited, Renaissance Merchant Bank Limited and Murray & Roberts 

Zimbabwe Limited. Walter was seconded to Premier Bank in April 2009 to undertake the 

restructuring and strengthening of the banking group’s operations. Notable achievements at Premier Bank include the 

successful rationalization of operations and staff, restructuring of the balance sheet and containment of costs. Walter 

holds a Bachelor of Accounting Science from the University of South Africa and a Postgraduate Diploma in Applied 

Accounting from the University of Zimbabwe. He is a member of the Institute of Chartered Accountants of Zimbabwe. 

He has completed various international courses in finance, strategy and banking. 


26


WAyNE WATERWORTH 

ZIMBABWEAN | CHIEF MINING SPECIALIST 

An engineer by profession, Wayne Waterworth has significant experience in the mining 

sector in Zimbabwe. Prior to joining Brainworks Capital Management in 2008, Wayne 

was the Managing Director of Falcon Gold Limited; a ZSE listed gold mining company. 

At Falgold, Wayne managed a total of four gold mines with over 500 employees. He 

has worked in Europe and in various African countries including South Africa, Kenya, 

Zimbabwe and Tanzania. He is a highly experienced professional with more than 20 

years’ experience in senior general and technical management roles. He has a proven 

track record in a variety of industrial and commercial and turnkey projects in the mining, petrochemicals and large 

and small scale construction sectors. He has specialist systems experience of project and contract management, 

energy and environmental management, electrical and mechanical engineering, medium and high voltage power and 

control systems, energy and building management and control systems. 

He is a holder of a Bachelor of Science in Electrical Engineering and holds numerous professional qualifications for 

engineers. Wayne was the Chairman of the Chamber of Mines Technical Committee, on the Electricity and Power 

Development Committee and is a member Standards Association of Zimbabwe Technical Committee. 

NON-ExECUTIVE DIRECTORS 

RICHARD MUIRIMI 

ZIMBABWEAN | CHAIRMAN 

Richard Muirimi has significant experience in pension and employee benefits services. In 

1995 he founded Comarton Consultants (Private) Limited and is currently the Managing 

Director. Comarton is a leading pension fund administrator in Zimbabwe, administering 

at least 30 pension funds. Richard was the Non-Executive Chairman of Kingdom Financial 

Holdings Limited (“KFHL”) on its formation in 1995 until he resigned from the board 

in 2005. During that period as Chairman of KFHL, he guided KFHL through the initial 

capitalization through private placement, the IPO of KFHL on the ZSE, the establishment 

of subsidiaries in asset management, merchant banking, commercial banking and stock 

broking and regional expansion. Richard was previously the Chairman of the Zimbabwe Association of Pension Funds 

from April 2002 to February 2004. He has been the Deputy Chairman of the Insurance and Pensions Commission 

since November 2005. Richard has also previously held senior positions in Zimnat Life Assurance Company 

(1995 - 1998) and AON/Minet Insurance Brokers (1982 - 1995). In 1987 he graduated as a fellow of the Executive 

Development Program with the University of Zimbabwe. 

27 


VULINDLELA NDLOVU 

ZIMBABWEAN 


Vuli Ndlovu is a former Partner at KPMG Zimbabwe who started the KPMG Corporate 

Finance Practice in the country in 1997. After KPMG he worked for the African Banking 

Corporation (ABC) where his last position was Managing Director for the Zimbabwe 

operations. Vuli left ABC at the end of 2004 to set up Lufuno Capital, an investment 

banking firm involved in financial advisory, private equity and proprietary investments. 

Lufuno is currently promoting its first Private Equity Fund, the Lufuno Southern Africa 

SME fund, a €30 million fund that will invest in Malawi, Zambia and Zimbabwe. Vuli 

has previously worked in senior financial management roles at the Financial Gazette, a 

Harare-based weekly financial newspaper, and Tedco Ltd, a ZSE listed furniture and retail clothing group. He holds a 

Bachelor of Accountancy degree from the University of Zimbabwe and is a Chartered Accountant (Zimbabwe). He is 

a past President of the Institute of Chartered Accountants of Zimbabwe. 

ALWyN SCHOLTZ 

SOUTH AFRICAN 

Alwyn Scholtz is the founding partner of Scholtz Attorneys, a Pretoria based firm 

specializing in commercial law and corporate finance. Alwyn has advised a Hong Kong 

listed company on the USD 300 million acquisition of a majority interest in a platinum 

mining company in South Africa. Alwyn has also advised international IT Group operating 

from the United States and Switzerland on various proposed take-overs and financing 

transactions, along with a Zambian zinc and copper company on its proposed AIM listing. 

Alwyn currently acts as the Company Secretary for a major shareholder in one the largest 

commercial agricultural companies in South Africa listed on the JSE. He was previously a 

Partner at Glyn & Marais Inc. (previously Jowell Glyn & Marais Inc.), a law firm in Johannesburg, South Africa. Alwyn 

has significant advisory experience of corporate deals, capital raising and listing on stock exchanges. Alwyn is a holder 

of a BCom Law and an LLB from the University of Pretoria. 

CORNEL VERMAAK 

SOUTH AFRICAN/SWISS 

Cornel Vermaak is currently Chief Executive Officer of Clearwater Investments, a 

Switzerland-based and regulated financial services company specializing in asset 

management, wealth planning and structuring. Prior to founding Clearwater, Cornel was 

a senior professional within the Credit Suisse Group of companies, servicing the Swiss 

private banking arena. Cornel has worked in many jurisdictions globally in the trust and 

financial planning arena, fulfilling the role as Trustee and being responsible for regulatory, 

management and other issues. He practiced law as an admitted attorney of the Supreme 

Court of South Africa and is a holder of a B.Com Law, LLB and Hdip Tax degrees. He is 

also a qualified Estate and Trust Practitioner. 


28


NANAAMA BOTCHWAy-DOWUONA 

GHANAIAN 

NanaAma Botchway-Dowuona has significant experience in Legal and Private Equity, 

having worked as an M&A lawyer in New York prior to returning to Ghana in 2002. She 

has practiced in Accra as a corporate lawyer advising large corporate clients on foreign 

direct investments in Ghana. 

Most recently she worked as the Chief Operating Officer of the Kingdom Zephyr Africa 

Management Company, a premier African private equity management company, which 

manages two pan-African private equity funds with over USD 600 million in capital 

commitments. NanaAma currently consults as a legal and strategic advisor in West Africa. 

DIRK HARBECKE 

GERMAN 

Dirk Harbecke has more than 15 years’ experience as a senior executive, entrepreneur 

and investor. He is the CEO and Founder of the African Development Corporation (ADC), 

a Frankfurt listed investment company focused primarily on investing in the banking sector 

in Africa. Dirk is responsible for ADC’s strategy, the investment screening and decision 

process, the success of the investments and is the key representative of the company. 

Before joining ADC, Dirk worked as a Manager at Boston Consulting Group (BCG), 

focusing on the restructuring and set-up of financial services institutions in Europe and 

the Middle East. He has extensive international experience in developed and emerging markets having worked in 

Germany, France, UK, US, China, Tunisia, Egypt and numerous sub-Saharan African countries. 

Prior to working as a consultant, Dirk set-up two companies in the financial services and ICT sectors, successfully 

launched an online financial network with 120 employees and developed it to market leadership in Germany. 

Dirk has a joint honors degree in Journalism (Master) and Economics (Bachelor) from the University of Dortmund/ 

Germany and an MBA from St. Gallen University in Switzerland. He is a trained editor who speaks fluent German, 

English and French. Dirk sits on several boards in Germany and Africa. 

29 


1.10 EMPLOyEE INCENTIVES 


The Directors believe that the success of the Company will depend to a significant degree on the quality of its human 

capital. The Directors also recognize the importance of the employees being well motivated and identifying closely with 

the success of the Company. 

As an investment company, managers are incentivized on the performance of investments in line with standard international 

practice. In that regard, below are the details of how management are remunerated and incentivized for performance: 

1. Management have a minimum service contract of 5 years with the Company. 

2. Management have a fixed salary which is subject to review on the 5th anniversary of employment. 

3. Management are not provided with company cars or any financial assistance. 

4. No other financial benefits are paid by the Company, aside from the fixed salary, except for pension contributions which 

4. are in line with industry standards. 

5. Management is entitled to a performance bonus equivalent to 20% on capital gains realized above an internal rate of 

4. return of 10% on the Company’s investments (“Performance Bonus”). The Performance Bonus is calculated and paid 

4. on an investment-by-investment basis as and when the Company has successfully exited the investments. 

No fees were paid to non-executive directors during the year 2011 to allow the business to grow and consummate all the 

target deals in the pipeline. The non-executive directors have further resolved to waive their fees until 2013. 

1.11 DIVIDEND POLICy 

It is the intention of the Board to start paying dividends to its shareholders within the medium term. 

1.12 CONfLICTS Of INTEREST 

The largest shareholder of Brainworks Capital, ADC, is a significant shareholder in ABCH which operates a commercial 

bank and asset management in Zimbabwe. These operations are in competition with Ecobank Zimbabwe, in which 

Brainworks Capital holds a 29.4% stake. 

1.13 BORROWINgS 

The Company may use overdraft and short term borrowing facilities to satisfy short term working capital needs, including 

meeting any expenses or fees payable by the Company. The Company anticipates that borrowings may be utilised for 

investment purposes with the prior approval of the Board. The amount due to ABC Holdings Limited matures on 31 

December 2021 and attracts interest at 15% per annum. Interest is payable half yearly in arrears. The facility is secured 

by the CEO’s and CFO’s residential properties. The amount due to Ecobank Transnational Incorporated matures on 6 

May 2013 and attracts interest at 10% per annum. Interest is payable half yearly in arrears. The facility is secured by 

70,000,000 shares in Ecobank Zimbabwe. Brainworks Capital holds 246,324,078 Ecobank Zimbabwe shares in total and 

the balance is unencumbered. The Company’s Memorandum of Association and the Articles of Association do not contain 

any limitation on the authority of the Company to borrow. 


30


1.14 TAxATION 

ALL AMOUNTS ARE IN USD jUNE 2012 DECEMBER 2011 

ABC Holdings 1,683,366 1,562,458 

Ecobank Transnational Incorporated 3,536,210 3,364,444 

Brainworks Capital is a Zimbabwe resident for tax purposes and is levied an effective tax rate 25.75%. In 2011 the 

Company calculated an initial tax payable of USD 50,393 but received an income tax credit of USD 215,413. Dividends 

for companies that are listed in Zimbabwe is taxed at 10% while non-listed companies are taxed at 15%. In 2011 the 

Company received USD 38,052 in dividends. 

Capital Gains Tax (Chapter 23:01) is charged at 15%, chargeable on gains from the sale of immovable property. For 

marketable securities (excluding listed shares) bought before 1 February 2009, the charge is 5% and bought after 1 

February 2009 are charged at 20% with a 2.5% inflation allowance. The Company did not pay any Capital Gains Tax in 

2011 but recognized a tax liability on fair value gains. 

1.15 fOREIgN ExCHANgE POLICy 

Brainworks Capital measures the valuations of all its investments in US Dollars. To-date all its investments have been 

US Dollar denominated, and as such a perfect match against its funding. In case the Company expands regionally, 

the Company may enter into currency arrangements to hedge currency risks if such arrangements are desirable and 

practicable, but there can be no assurance that such arrangements will be available on economic terms or at all. 

1.16 fUTURE ISSUE Of ORDINARy SHARES 

The Company is as yet not listed on any stock exchange but there is a driving commitment to do so when market conditions 

are considered conducive. We have been pro-active in dealing with the prospects of the Company’s IPO as we believe 

that achieving an IPO will unlock the value that we are currently building and will also provide liquidity of the Company’s 

shares. Brainworks Capital plans to undertake an IPO in 2013. 

31 


PART II – THE OffERINg 

THE fOLLOWINg INfORMATION SHOULD BE READ IN CONjUNCTION WITH THE fULL TExT Of 

THIS PRE-IPO PRIVATE PLACEMENT MEMORANDUM, fROM WHICH IT IS DERIVED. 

2.1 ISSUER – BRAINWORKS CAPITAL MANAgEMENT (PRIVATE) LIMITED (“BRAINWORKS CAPITAL” OR THE 

“COMPANy”) 

Brainworks Capital is Zimbabwe’s pre-eminent private equity and Indigenisation compliant Investment Company primarily 

focused on investing in the financial services, mining, agriculture and energy sectors. Brainworks Capital also has a strong 

advisory arm. 

Brainworks Capital believes in its ability to source, evaluate and execute investments that will be positioned to benefit from 

the current re-emergence of economic growth in Zimbabwe. The Company targets an IRR of 30% on its investments over 

a holding period of 3 – 5 years and applies a private equity model to investing. 

Brainworks Capital is certified by the Minister of Youth Development, Indigenisation and Empowerment as compliant with 

Section 3 (1) (a) of the Indigenisation and Economic Empowerment Act (Chapter 14:33). 

2.2 SHARE CAPITAL 

The Company‘s share capital is made up as follows: 

Authorized Share Capital USD 100,000 comprising 1,000,000,000 Ordinary Shares of USD 0.0001 each. 

Issued Share Capital USD 30,297 comprising 302,966 736 Ordinary Shares of USD 0.0001 each issued and 

fully paid 

NOW BEING OFFERED: 

New shares USD 30,000 comprising 300,000,000 Ordinary Shares of USD 0.0001 at USD 0.10 each 

POST-OFFER: 

Issued Share Capital: USD 60,297 comprising 602,966,736 Ordinary Shares of USD 0.0001 each 

2.3 METHOD Of OffER 

Offer for Sale 

2.4 PURPOSE 

The Offer is being undertaken to give existing shareholders as well as further Pension Funds and institutional investors 

in Zimbabwe an opportunity to become shareholders of Brainworks Capital. The Offer will also enable the Company to 

finance the growth of its portfolio companies and the execution of its concrete pipeline. 


32


2.5 USE Of PROCEEDS 

Proceeds from the Offer will be used to finance the growth of its portfolio companies and the execution of concrete pipeline 

opportunities. Current concrete funding needs exist as follows: 

Ecobank Zimbabwe Limited: USD 5,000,000 | Support business growth 

getBucks financial Services (Zimbabwe) Limited: USD 5,000,000 | Support business growth 

BCM gold (Private) Limited: USD 5,000,000 | Commence mine development 

fML Oil Company of Zimbabwe (Private) Limited: USD 5,000,000 | Support business growth 

Puma Energy Zimbabwe Limited: USD 4,500,000 | Capitalisation of company 

Agriseeds Zimbabwe (Private) Limited: USD 2,000,000 | Exercise of call option and inject cash into 

the business to support growth 

New Deals being pursued: USD 3,500,000 

Management cannot guarantee that all these opportunities will reach execution stage. Remaining proceeds shall be 

utilised for executing the pipeline or any other investments in line with Brainworks Capital’s strategy. Brainworks Capital 

is managed by professionals under the supervision of its Board. 

Further, Brainworks Capital is subject to a number of regulatory checks and balances as stipulated in its regulatory 

environment. Therefore, the management shall ensure that the funds raised via this private placement shall be utilised only 

towards satisfactory fulfillment of the objects of the issue. 

2.6 UNITS Of SALE 

Minimum of 1,000,000 Ordinary Shares and multiples of 500,000 Ordinary Shares thereafter. The Directors reserve the 

right to accept a subscription of shares under the stated minimum of 1,000,000 Ordinary Shares under the Offer. 

2.7 OffER PRICE 

USD 0.10 per share 

2.8 OffER SIZE 

USD 30,000,000 

2.9 PAyMENT 

In full upon application 

2.10 OPENINg DATE 

26 November 2012 

2.11 CLOSINg DATE 

28 December 2012 

2.12 STATUS 

The shares being offered rank pari-passu in all respects with the other existing issued Ordinary Shares of the Company 

33 


2.13 PERSONS WHO MAy APPLy fOR THE ORDINARy SHARES UNDER THE OffER 


Pension Funds in Zimbabwe registered under Pension and Provident Funds Second Amendment Act, 2010, selected local 

institutional investors and selected foreign investors. 

2.14 CLAIMS AND LITIgATIONS 

The Company does not currently have any outstanding claims or litigation and is not aware of any pending and or 

threatened claims and litigations involving the Company. 

2.15 INDEBTEDNESS 

As at 30 June 2012, the Company had secured banking facilities to finance its investing activities amounting to 

USD 5,219,576.00. Details of the facilities are in note 1.13. 

2.16 INfORMATION RIgHTS 

Upon execution of the Shareholders Agreement, and thereafter for so long as a Shareholder holds at least 5% of the 

ordinary shares in the Company, the Company will deliver to the Shareholder: 

Within 90 days after the end of each fiscal year, audited financial statements for the Company on a consolidated basis, 

and for each of its key subsidiaries, prepared in accordance with International Financial Reporting Standards (IFRS); 

Within 45 days after the end of each interim period, unaudited interim financial statements for the Company on a 

consolidated basis, and for each of its key subsidiaries, prepared in accordance with IFRS; and 

Copies of all management letters of accountants and notification of material litigation. 

Shareholders holding 5% or more shareholding shall also be entitled to inspection and visitation rights, including rights to 

discuss the affairs of the Company directly with its auditors. 

2.17 ExIT RIgHTS 

RIgHT Of fIRST REfUSAL: 

If any of the Shareholders wishes to sell/transfer any of the shares of the Company it owns, it will first offer the shares to 

the remaining shareholders for purchase on a pro-rata basis at the price that is offered to it by a third party. 

PERMITTED TRANSfER: 

Any Shareholder shall have the right to transfer its shares in the Company to one of its wholly-owned affiliates, providing 

that there is no change in the ultimate beneficial ownership of those shares as a result of such transfer. A Permitted Transfer 

will not trigger a Right of First Refusal described above. 

AN IPO: 

To create liquidity for shareholders in the Company and further broaden the Company’s shareholding structure and afford 

individual indigenous shareholders an opportunity to participate in the growth of the Company, the Company plans to list 

on an internationally recognized stock exchange by 2013, subject to complying with all listing requirements. To continue 

its Indigenisation compliant status, the shares can only be traded with other indigenous shareholders or brokered through 

the Company until the 31st of December 2015. Afterwards the stocks will be freely traded on the stock exchange. 


34


2.18 RATIONALE fOR THE OffERINg 

The main purpose of the Offer is: 

To afford local pension funds and institutional investors the opportunity to participate in “once off” investment 

opportunities unfolding from the implementation of the Zimbabwe’s Indigenisation Act: Implementation of the 

Country’s Indigenisation laws is gathering momentum and this has resulted in a number of “once off’ attractive 

investment opportunities emerging. 

Underpinned by its broad based beneficial ownership (in excess of 11,000 beneficiaries) and Indigenisation 

Compliance Clearance from the Minister of Indigenisation, Brainworks Capital has strategically positioned itself to 

be a key player in concluding some of the countries attractive investment opportunities. To-date Brainworks Capital 

has arranged attractive opportunities for investment. 

To participate in the Company’s growth curve prior to undertaking an IPO: The Company’s investment strategy 

is showing strong signs of success. The packaging and resources of the Company have to-date been successful in 

attracting strong operating and foreign financial partners with capacity to support co-investments in Zimbabwe with 

Brainworks Capital. The Board and current shareholders of the Company are committed to undertaking an IPO of 

the Company in the near future. 

2.19 APPLICATION 

a. Prospective Investors to whom this pre-IPO Private Placement Memorandum is addressed to are hereby invited to apply 

a) for the shares directly to Brainworks Capital Management (Private) Limited. 

b. Application for the ordinary shares being offered must be made by correctly completing the Application Form herein. 

c. The Application List will be open to each Prospective Investor for twenty-one (21) working days from the date of this 

a) pre-IPO Private Placement Memorandum or subject to such earlier closing date as specified in the covering letter to the 

a) Prospective Investor. Late applications will not be accepted. Applications will be for a minimum of 1,000,000 (one 

a) million) ordinary shares and in multiples of 500,000 (five hundred thousand) ordinary shares thereafter. The number 

a) of shares for which an application is made and the value and details of the electronic funds transfer attached should 

a) be entered in the boxes provided. 

d. Applicants should sign the form and write their full name, address and daytime telephone numbers in the boxes 

a) provided. Joint applicants must all sign the application form. The Applicant should also state incorporation number 

a) and affix the incorporation seal in the signature box. 

35 



e. Each application should be forwarded together with payment in form of an electronic funds transfer for the full amount 

a) of the cash purchase price, made payable to the following account details: 

LOCAL SUBSCRIBERS 

BANK: Ecobank Zimbabwe Limited 

BENEfICIARy’S INfORMATION: Atherstone & Cook - Trust Account 

ACCOUNT NUMBER: 0018017600328701 

BRANCH: Borrowdale 

ACCOUNT TyPE: Current 

REfERENCE: Brainworks Capital pre-IPO Private Placement 

fOREIgN SUBSCRIBERS 

CORRESPONDENT BANK 

BANK: Commerzbank AG 

BANK: Theodor-Heuss-Allee 50, D-60301 

BANK: Frankfurt am Main, 

BANK: Germany 

SWIfT CODE: COBADEFF 

ACCOUNT NUMBER: 400881804900USD 

ACCOUNT TyPE: United States Dollars (USD) 

BENEfICIARy 

ACCOUNT NAME AND ADDRESS: Ecobank Zimbabwe Limited 

ACCOUNT NAME & ADDRESS: Sam Levy's Office Park 

ACCOUNT NAME & ADDRESS: Block A, 2 Piers Road 

ACCOUNT NAME & ADDRESS: Borrowdale, Harare 

ACCOUNT NAME & ADDRESS: Zimbabwe 

SWIfT CODE: ECOCZWHX 

BENEfICIARy: Atherstone & Cook - Trust Account 



2.20 ALLOTMENT AND SIgNINg Of SHAREHOLDERS AgREEMENT 

a. The Directors of Brainworks Capital Management (Private) Limited reserve the right to accept or reject any application, 

a) in whole or in part, without stating any reason. All irregular applications will be rejected. 

b. It is intended that the shares be allotted on a first-come, first-served basis. 

2.21 APPLICATION fUNDS 

All application monies will be retained in the bank account indicated in 2.19 (e) above pending Allotment. If any 

application is not accepted, or accepted for fewer shares than the number applied for, a bank transfer for the full amount 

or the balance of the amount paid (as the case may be) will be made within seven working days from Allotment. Share 

certificates will subsequently be delivered to successful Applicants. 


36


2.22 SUBMISSION Of APPLICATION fORMS 

Duly completed application forms for the proposed investment in Brainworks Capital Management (Private) Limited should 

be delivered to The Company Secretary at the following address or scanned and emailed to: 

wkambwanji@brainworkscapital.com 

Brainworks Capital Management (Private) Limited 

4 Arden Road 

Newlands 

Harare 

Zimbabwe 

Ref: Brainworks Capital pre-IPO Private Placement Share Offer 

2.23 ALLOCATION Of SHARES IN THE EVENT Of OVERSUBSCRIPTION 

The allocation of Offer Shares will be subject to the discretion of the Board, which has, as its primary objective, the 

achievement of a broad and balanced shareholder base. In the event of an oversubscription of the Offer Shares, the Board 

reserves the right to issue more shares. 

37 


PART III – RISK fACTORS 

IN ADDITION TO ALL OTHER INfORMATION SET OUT IN THIS DOCUMENT, THE fOLLOWINg 

SPECIfIC RISK fACTORS SHOULD BE CONSIDERED CAREfULLy By PROSPECTIVE INVESTORS 

IN EVALUATINg WHETHER TO MAKE AN INVESTMENT IN THE COMPANy. THE INVESTMENT 

DESCRIBED IN THIS DOCUMENT MAy NOT BE SUITABLE fOR ALL RECIPIENTS. 

Prospective investors should carefully consider the risks described below and ensure that they have read this Document 

in its entirety before making a decision to invest in the Company. In addition to the other information contained in this 

Document, the Directors believe that the following risk factors are the most significant for Prospective Investors and should 

be considered carefully in evaluating whether to make an investment in the Company. If any of the risks described in this 

Document actually occur, the Company may not be able to conduct its business as currently planned and its financial 

condition, operating results and cash flows could be seriously harmed. In that case, the market price of the Ordinary 

Shares could decline and all or part of an investment in the Ordinary Shares could be lost. However, the risks listed do not 

necessarily comprise all those associated with an investment in the Company or with its operations. Additional risks and 

uncertainties not presently known to the Directors, or which the Directors may currently deem immaterial, may also have 

an adverse effect on the Company. In particular, the Company’s performance may be affected by changes in market or 

economic conditions and in legal, regulatory and tax requirements within the country in which the Company operates. The 

risks listed below are not set out in any particular order of priority. 

In addition to the information set out in this Document, the following risk factors should be considered carefully in 

evaluating whether to make or retain an investment in the Company. These factors do not purport to be an exhaustive list 

or explanation of all the risk factors involved in investing in the Company and they are not set out in any order or priority. 

Additionally, there may be risks of which the Board is not aware or believes to be immaterial which may, in the future, 

adversely affect the Company’s business and the market price of the Ordinary Shares. 

If yOU ARE IN ANy DOUBT ABOUT THE ACTION yOU SHOULD TAKE BEfORE MAKINg A fINAL 

DECISION, yOU SHOULD CONSULT A PROfESSIONAL ADVISER WHO SPECIALISES IN ADVISINg 

ON THE ACQUISITION Of SHARES. 

gENERAL RISKS 

An investment in the Ordinary Shares is high-risk and only suitable for investors who are capable of evaluating the 

merits and risks of such an investment, or other investors who have been professionally advised with regard to making 

investments in shares, and who have sufficient resources to be able to bear any losses which may arise therefrom. 

VOLATILITy Of THE VALUE Of THE ORDINARy SHARES AND LACK Of LIQUIDITy 

Investors should be aware that the value of the Ordinary Shares may be volatile and may go down as well as up and the 

price at which investors may dispose of their Ordinary Shares in the Company may be influenced by a number of factors, 

some of which may pertain to the Company. These factors could include the performance of the Company’s operations, 

absence of liquidity in the Ordinary Shares, currency fluctuations, legislative, regulatory or taxation changes and general 

economic conditions. The value of the Ordinary Shares will therefore fluctuate and may not always reflect the Company’s 

underlying asset value. 

INVESTINg RISK 

The Company invests in unlisted companies whose securities should be considered to be illiquid. Such illiquidity may 

adversely affect the ability of the Company to acquire or dispose of the investments. These investments may be difficult to 


38


value and to sell or otherwise liquidate and the risk of investing in such companies is much greater than the risk of investing 

in publicly traded securities. However on account of the inherent uncertainty of valuation, the estimated values may differ 

from the values that would be used had a ready market for investment existed. 

HUMAN CAPITAL RISKS AND DEPENDENCE UPON DIRECTORS AND ADVISERS 

The success of the Company’s investments will, to a large extent, depend on the skills of its human capital and its Directors 

and advisers. The inability to identify, recruit or retain such skilled employees may adversely affect the success of these 

investments and the loss of any member of the Board or advisers could harm or delay the business whilst management 

time is directed to finding suitable replacements or if no suitable replacement is available. In either case, this could have a 

material adverse effect on the future of the Company’s business and could negatively affect the price of Ordinary Shares. 

While the Company has entered into employment contracts with its management and service agreements with each of its 

Directors and advisers, the retention of their services cannot be guaranteed. 

ADDITIONAL REQUIREMENTS fOR fUNDINg 

Although the Directors believe that, following the Transaction, the Company will have sufficient working capital for its 

current requirements, it may be necessary for the Company to raise further funds in the future, in order to support growth. 

There can be no assurance that additional funds will be available on a timely basis, or on favorable terms, or at all. 

The Company may raise funds by way of issue of Ordinary Shares, which would result in a dilution of the interests of 

Shareholders at that time of such issue. If the required funds are not available, the Company may have to scale down its 

investment and operational activities, which could negatively affect the price of the Ordinary Shares. 

gEARINg 

The Company may use borrowings in relation to its investments. The extent of the borrowings and the terms thereof 

will depend on the Company’s ability to obtain credit facilities. Any delay in obtaining or failure to obtain suitable or 

adequate financing from time to time may impair the Company’s ability to invest in suitable opportunities and achieve its 

intended portfolio size within the projected timeframe or at all, which may impact negatively on the Company’s investment 

performance and the return to shareholders. The Company’s borrowings will generally be secured against some or all of 

the assets held within the Company. 

gROWTH AND STRATEgy RISKS 

In order to expand its investment portfolio, the Company may seek to make additional investments. Its success in making 

these additional investments will depend on a number of factors, including, but not limited to: 

Negotiating acceptable terms with the seller(s) of the business or asset(s) to be acquired; 

Obtaining approval from regulatory authorities in the jurisdiction for the business or asset(s) to be acquired, as 

applicable; 

Assimilating the operations of an acquired business or asset(s) in a timely and efficient manner; 

Maintaining the Company’s financial and strategic focus while integrating the acquired business or asset(s); and 

To the extent that the Company makes an acquisition outside of markets in which it has previously operated, 

conducting and managing operations in a new operating environment. 

Any problems experienced by the Company in making an acquisition as a result of one or more of these factors could 

have an adverse effect on its business, operating results and financial condition. 

39 


DIffICULTy Of LOCATINg SUITABLE INVESTMENTS 

The activity of identifying, completing and realizing attractive investments may from time to time be competitive and involve 

a high degree of uncertainty. The Company will be competing for investments with other investment vehicles, as well as 

individuals, financial institutions and other institutional investors. There can be no assurance that the Company will be able 

to locate and complete investments that satisfy its Target IRR objective or realize their values. 

COMMERCIAL RISK 

The Company’s operations may be affected by new technology, changing commercial circumstances and new entrants to 

the markets in which the Company or its investee companies operate. 

Although the Directors believe that any major technical or operational issues with any investments made by the Company 

will be overcome, there can be no guarantee that as yet unforeseen issues will not arise which could affect adversely the 

ongoing technical development, growth and business performance of the Company and the business, property or other 

assets in which the Company invests. 

MARKET LIQUIDITy RISK 

The proposed investment herein is in an unlisted company and this can make it difficult for an investor to sell their 

investments. However, subject to meeting all listing requirements, the Company has committed to achieving an Initial Public 

Offering in the short to medium term and this will result in the shares being tradable on a stock exchange. 

COUNTRy SPECIfIC RISK 

A slowdown in economic growth in Zimbabwe could cause the Company’s investments to suffer. The growth of the 

Company’s investments is dependent on the health of the Zimbabwean economy. A downturn in the Zimbabwean economy 

could cause the value of the Company’s investments to decrease. 

LEgAL RISK 

Changes in the Zimbabwean regulatory and legal framework or the introduction of new laws could adversely affect the 

Company’s business. The Company’s investment activities in Zimbabwe are subject to various regulations and laws, some 

of which could materially impact on its business activities. 

POLITICAL RISK 


A government’s political inexperience or the instability of the political system increases the risk of short-term, fundamental 

shifts in a nation’s economy and politics. The consequences for an investor can include the confiscation of investee 

company assets with no compensation, the restriction of investor rights to dispose investee company assets, or other 

government-imposed controls. State intervention in specific sectors of industry can result in a dramatic fall in the value of 

investments in those sectors. 


40


ECONOMIC RISK 

Developing economies like Zimbabwe are more sensitive to changes in interest and inflation rates, which are in any case 

subject to greater swings than in the developed nations. The focus of such economies is often relatively narrow, allowing 

single events to have a magnified impact. In addition, developing nations generally have smaller capital markets. 

CURRENCy RISK 

The currencies of developing nations like Zimbabwe are subject to unpredictable fluctuations in value. Some countries limit 

the export of their currency or can impose short-term restrictions, or stop pegging their currency to a reference currency 

such as the USD. Hedging can help limit losses resulting from currency swings, but they can never be entirely eliminated. 

Since the introduction of a multi-currency regime in Zimbabwe, currency fluctuations have been within international 

standards. 

INfLATION RISK 

Large fluctuations in the value of the currency and an insufficiently developed financial market can make it difficult for a 

developing nation’s central bank to stick to its inflation targets. As a result, inflation may fluctuate frequently. Since the 

introduction of a multi-currency regime in Zimbabwe, inflation has reduced drastically and has stabilized at single digit 

level. 

Certain information in this section has been sourced from third parties. The Directors believe that this information has 

been accurately reproduced and, as far as the Directors are aware and are able to ascertain from information published 

by such third parties, no facts have been omitted that would render the reproduced information inaccurate or misleading. 

41 


APPENDIx A – BACKgROUND TO ZIMBABWE ECONOMIC ENVIRONMENT 

APPENDIX A – BACKGROUND TO INVESTMENT REGION 

Certain information in this section has been sourced from third parties. The Directors believe that this information has been 

accurately reproduced and, as far as the Directors are aware and are able to ascertain from information published by such third 

parties, no facts have been omitted that would render the reproduced information inaccurate or misleading. 

COUNTRy HIgHLIgHTS 

Revised GDP growth forecast of 5.6% in 20122. One of the highest literacy rates in Africa at 92% 3, providing an educated workforce. 

Stable and low inflation, post adoption of the multi-currency regime in 2009. 

Mining output increased by 46% between 2010 and 20114 and major mining companies have started to approve 

capital expenditure programs. 

Agriculture, once the backbone of the economy, has showed strong signs of growth in the last few years, recovering 

to pre-2000 production levels. 

Developed financial services sector but 70% 5 of the population has no bank account. 

Good communication infrastructure and a mobile penetration rate of 79% 6, 

Country highlights 

• Revised GDP growth forecast of 5,6% in 2012 

one of the highest in sub-Saharan Africa. 

2 

• One of the highest literacy rates in Africa at 92% 3 , providing an educated workforce 

• Stable and low inflation, post adoption of the multi-currency regime in 2009 

• Mining output increased by 46% between 2010 and 2011 4 and major mining companies have started to approve 

capital expenditure programs 

• Agriculture, once the backbone of the economy, has showed strong signs of growth in the last few years, recovering 

to pre-2000 production levels 

• Developed financial services sector but 70% 5 of the population has no bank account 

• Good communication infrastructure and a mobile penetration rate of 79%, one of the highest in Sub Sahara Africa 6 

BACKgROUND 

Background 

Zimbabwe Zimbabwe is a is landlocked a landlocked country located in Southern southern Africa. It is It bordered is bordered by South by South Africa Africa to the south, to the Botswana south, Botswana to the to 

the south west, Zambia Zambia and and a tip a of tip Namibia of Namibia to the north to the west north and Mozambique west and Mozambique to the east. The to country the east. gained The its independence 

country gained its 

independence in April 1980. in April Since 1980. then the Since country then has the been country ruled by has the been current ruled President, by the Robert current G Mugabe. President, Robert G Mugabe. 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

� � � �� 

�� 

�� 

�� 

� � � �� 

�� 

�� 

�� 

�� 

�� 

�� 

NOTE TO ECONOMIC HIgHLIgHTS: 

(A) Actual 

(F) forecast 

(P) Projected 

2 

Zimbabwe Ministry of Finance 

3 

UNESCO, 2010 data 

2 

4 

Zimbabwe Zimbabwe Ministry of Chamber Finance of Mines 

3 UNESCO, 5 

Labor 2010 and dataEconomic 

Development Research Institute, Zimbabwe, 2012 

4 Zimbabwe 6 Chamber of Mines 

5 Labour and Postal Economic and telecommunications Development Research Institute, Regulatory Zimbabwe, Authority 2012 of Zimbabwe, Q1 2012 

6 

7 

Postal and World telecommunications Bank Data and Regulatory African Authority Economic of Zimbabwe, Outlook 

Q1 2012 

7 World Bank Data and African Economic Outlook 

* Hyper inflation economic situation 

43 


42 

�


ECONOMIC BACKgROUND 

The country is returning to growth after a decade of economic decline, which dates back to 14 November 1998, (Black 

Friday). The Zimbabwean currency fell 71.5% against the US Dollar on the back of an announcement to pay compensation 

to freedom fighters and the decision to intervene in the war 

ZIMBABWE ANNUAL gDP gROWTH RATES in the DRC. At the time, Zimbabwe was the second largest 

economy in southern Africa, with Agriculture contributing 40% 

_ 

15,00 

of the exported goods. The country’s economic woes deepened 

in the period 2002 to 2008 on the back of further international 

isolation resulting from the land reform program and political 

_ 

10,00 

unrest in the country. Since 2008 the country has stabilized 

under a negotiated Government of National Unity between 

_ 

5,00 

the two large political parties, Zanu PF, led by the current 

President Robert G Mugabe, and the MDC, led by the current 

Prime Minister Morgan Tsvangirai. This stability facilitated the 

0,00 

recovery of the economy, with the country registering growth 

rates of 8.1% in 2010 and 9.3% in 2011. Growth is forecasted 

to be in the region of 5.6% by the Ministry of Finance. 

_ 

(5,00) 

The country officially adopted a multi-currency system in 

_ 

February 2009, which effectively saw the Zimbabwean dollar 

(10,00) 

being phased out of circulation. Through the use of the 

multicurrency system, the USD has emerged as the main 

_ 

(15,00) 

currency in use both by the public and private sectors. 

(%) 

_ 

_ 

1997 

_ 

1999 

_ 

2001 

2003 

_ 

2005 

_ 

The main drivers of Zimbabwe’s economy are mining, 

_ 

(20,00) 

agriculture and tourism. The mining sector recovered strongly, 

SOURCE: World Bank 

posting a gain of 107% between 2009 and 2011. This growth 

was underpinned by improved production in gold, platinum 

and the newly discovered diamond fields in Marange. The 

Marange diamond fields, discovered in 2006, are considered one of the biggest daimond finds in over a century. 

Agriculture, once the backbone of the country, is slowly making 

significant recovery, with production for major export crops tobacco 

and cotton making positive improvements. An improvement in the 

perceived political stability of the country has seen increasing 

numbers of tourists. Zimbabwe will co-host the 2013 World 

Tourism Conference together with Zambia in the resort town of 

Victoria Falls. This event will further boost the country’s image 

and sustain the positive trend in tourist arrivals. Since 2008 all 

sectors have registered positive growth, with exception of in 2011, 

when growth slowed due to liquidity constraints in the banking 

sector. 

After the adoption of the multi-currency regime in 2008, the 

Central Bank’s function as lender of last resort was temporarily 

halted. The bank currently has debts of USD 1.1 billion and is 

negotiating with the Ministry of Finance to take over the debt. This 

2007 

_ 

2009 

_ 

2011 

_ 

43 


(%) 

20,00 

10,00 

0,00 

_ 

(10,00) 

(20,00) 

(30,00) 

_ 

_ 

_ 

_ 

_ 

_ 

_ 

2000 

_ 

2001 

_ 

2002 

_ 

2003 

AgRICULTURE (% REAL CHANGE PA) 

INDUSTRy (% REAL CHANGE PA) 

MANUfACTURINg (% REAL CHANGE PA) 

SERVICES (% REAL CHANGE PA) 

SOURCE: EIU 

_ 

2004 

_ 

2005 

_ 

2006 

_ 

2007 

_ 

2008 

_ 

2009 

_ 

2010 

_ 

2011

1000 

500 

0 

_ 

_ 

_ 

_ 

2000 


_ 

2001 

_ 

2002 

_ 

2003 

has left the banking market operating without liquid support. 

The liquidity shortfall has seen most banks reduce their loans 

and preserving liquidity on the balance sheet. Most loans are 

short term, putting a further strain on borrowers. The Central 

Bank announced in the Mid Term Monetary Policy of July 2012 

that it, together with the Ministry of Finance, is working on 

establishing a USD 150 million fund to be used as a lender of 

last resort. Private investors are expected to contribute USD 120 

million. 

LENDINg INTEREST RATE (%) The government is currently under pressure to implement 

DEPOSIT INTEREST RATE (%) 

spending cuts to counteract excess spending on public sector 

MONEy MARKET INTEREST RATE (%) wages and pensions, which account for 58% of the total budget. 

SOURCE: EIU 

This may prove politically difficult, however, in the run-up to 

elections scheduled for the first half of 2013. The concern is 

that the “wage overruns” will instead be financed by increasing 

domestic arrears. In order to plug the gap, the government may also rely more on loans from countries such as China, 

as well as increasing diamond sales. Over half of the remaining IMF special drawing rights from 2009 will be allocated 

to infrastructure investment. This should boost the economy by providing the infrastructure to support businesses, as well 

as creating jobs in the construction sector. 

fINANCIAL SERVICES SECTOR 

Zimbabwe has 18 registered commercial banks, 2 merchant banks, 4 building societies and 1 savings bank. Total banking 

sector assets grew by 17.3% from USD 4.74 billion as at 31 December 2011 to USD 5.56 billion as at 30 June 2012 8. 

During the first half of 2012, the banking sector went through a turbulent phase characterized by mild liquidity challenges, 

bank closures, waning confidence and lack of clarity regarding the impact of the IEE Act on the sector. 

The Central Bank has announced measures to implement the Basel II framework. The framework, to be finalized before the 

end of the year, will ensure banks adopt the Modified Standard Approach (MSA) for credit risk and alternative standardized 

approach for operational risk. 

Despite a developed financial market, the country still has 

about 40% of the adult population not using the financial 

system or any banking product 9. The main source of 

exclusion from formal banking was cited as accessibility, 

with only 5% of the rural population having access to a bank 

within 30 minutes reach. Affordability and appropriateness 

contributed to the high number of people who could not 

have a bank account. Issues of affordability included bank 

charges for transactions and high minimum balances 

demand by banks. Bank target people with a regular salary 

in a country with only 18% formally employed. According 

to the Central Bank, an estimated USD 2 billion is currently 

circulating outside the formal banking system to finance 

transactions in the informal sector. 

8 Reserve Bank of Zimbabwe: Mid Term MPS 2012 

9 Finmark Trust Study: Zimbabwe 2011 

_ 

PRE MULTI-CURRENCy ADOPTION 

2004 

_ 

2005 

_ 

2006 

_ 

2007 

_ 

2008 

_ 

2009 

_ 

2010 

_ 

2011 

_ 

ZIMBABWE 


44 

fINANCIAL INCLUSION 

BANKED OTHER fORMAL NON-BANK 

INfORMAL ONLy ExCLUDED 

LESOTHO 

SWAZILAND 

NAMIBIA 

SOUTH AfRICA 

24 14 22 40 

38 23 20 19 

44 6 13 37 

62 3 4 31 

63 5 5 27


The total value of card based transactions rose from USD97 million in July 2011 to USD169 million in July 2012. Of the card 

_ 

payments, Given the 76.6% hard were cash processed liquidity through constraint ATMs, faced whilst by 23.4% the economy were processed as through Point of Sale machines. The total DEPOSITS 

a whole, the government is increasingly trying to encourage non- 

LOANS 

_ 

value of mobile and internet based transactions increased from USD44 million in July 2011 5 to USD136 million in July 2012. 

cash payments. 190,000 transactions were processed through the 

_ 

RTGS system in July 2012. The value of transactions increased from 4 

By and large, intermittent liquidity challenges have forced banks to slow down their lending activities. In addition, the rising 

_ 

level USD of 2.8 non-performing billion in July loans 2011 (NPLs) to USD has 3.3 forced billion banks in to July become 2012. more careful in extending 3 credit to customers. Against this 

_ 

background, the industry-wide loan to deposit ratio (LDR) declined from 88.9% in Dec-11 2 to 86.2% in Jun-12. The decline in 

The total value of card based transactions rose from USD 97 million 

LDR is also in line with the effort by banks to meet the Central Bank’s prudent liquidity _ratio, 

which has progressively been 

in July 2011 to USD 169 million in July 2012. Of the card payments, 1 

reviewed upwards from 20% to 30% as of end of Jun-12. The high liquidity ratio is meant to cushion banks from rising credit 

76.6% were processed through ATMs, whilst 23.4% were processed 

and through liquidity Point risks of Sale in the machines. banking sector. The total According value of to mobile the IMF, and international internet best practices 0 among dollarized economies 

2009 2010 2010 2011 2012 

generally based transactions require a minimum increased liquidity from ratio USD of 25% 44 or million higher. in July 2011 to 

DEC jUN DEC jUN jUL 

USD 136 million in July 2012. 

Total market deposits stood at USD4,02 billion as of July 2012 

(representing By and large, a growth intermittent of 31,8% liquidity from challenges December 2011), have while forced loans banks to slow down their lending activities. In addition, the rising 

are level currently of non-performing USD3,27 billion loans (representing (NPLs) has a growth forced of banks 18,5% to from become more careful in extending credit to customers. Against 

December this background, 2011). Despite the industry-wide the growth in loan loans to and deposit deposits ratio over (LDR) the declined from 88.9% in December 2011 to 86.2% in June 

last 2012. 3 years, The decline the economy in LDR is still is also experiencing in line with liquidity the effort constrains, by banks to meet the Central Bank’s prudent liquidity ratio, which 

with has demand progressively for credit been estimated reviewed to be upwards USD15 billion. from 20% to 30% as of end of June 2012. The high liquidity ratio is meant to 

cushion banks from rising credit and liquidity risks in the banking sector. According to the IMF, international best practices 

The among demand dollarized is driven economies by companies generally in need require of an a infrastructure minimum liquidity ratio of 25% or higher. 

upgrade after a decade of no investment in capital expenditure. In 

Total market deposits stood at USD 4.02 billion as of July.2012 (representing a growth of 31.8% from December 2011), 

2011, 

while 

total 

loans 

loans 

are 

to 

currently 

individuals 

USD 

and 

3.27 

the private 

billion 

sector 

(representing 

amounted 

a 

to 

growth of 18.5% from December 2011). Despite the growth 

15% in loans and 83%, and respectively. deposits over Mortgage the last loans 3 years, make up the only economy 0,14% of is still experiencing liquidity constrains, with demand for credit 

the estimated total lending to be and USD loans 15 to billion. the mining sector account for 6.4%. Despite the challenge of high illiquidity and subsequent 

curtailed lending, the sector offers a number of opportunities for banks to benefit from high interest spreads by lending to 

highly The demand profitable is blue-chip driven by companies who actively in need seek of financing. an infrastructure upgrade after a decade of no investment in capital 

expenditure. In 2011, total loans to individuals and the private sector amounted to 15% and 83%, respectively. Mortgage 

Sector loans Percentage make up only Distribution 0.14% of of Credit the total lending and loans to the mining sector account for 6.4%. Despite the challenge 

of high illiquidity and subsequent curtailed 

lending, the sector offers a number of 

�� 

�� 

�� 

�� 

�� 

�� 

opportunities for banks to benefit from 

high interest spreads by lending to highly 

�� 

�� 

�� 

�� profitable blue-chip companies who 

�� actively seek financing. 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

Source: SOURCE: Reserve Reserve Bank of Zimbabwe Bank of Mid Zimbabwe Term Monetary Mid-Term Policy Statement, Monetary July Policy 2012 Statement, July 2012 

The financial sector was severely affected 

by hyperinflation between 2002 and 2008. 

The Central Bank recently announced new 

measures to strengthen bank balance 

sheets through phased capital increases 

to USD 100 million by 2014. Banks are 

required to have reached USD 25 million 

by year end 2012, USD 50 million by June 

2013, USD 75 million by December 2013 

and USD 100 million by 2014. 

The financial sector was severely affected by hyperinflation between 2002 and 2008. The Central Bank recently announced 

new measures to strengthen bank balance sheets through phased capital increases to USD100 million by 2014. Banks are 

required to have reached USD25 million by year end 2012, USD50 million by June 2013, USD75 million by December 2013 

and USD100 million by 2014. 

45 


USD BILLION 

_ 

_ 

_ 

_ 

_ 

_

MININg SECTOR 

Zimbabwe’s mining industry consists of a wide range of medium to small scale mining companies. The sector is strategically 

important with contribution amounting to 20% of GDP in 2011, up from 9% in 2010 and 2009 10. Zimbabwe is host to a 

diverse range of mineral deposits as 60% of land surface is ancient rock bearing gold, diamonds, coal, platinum, chrome, 

uranium and iron ore. 

The mining sector accounts for nearly 60% of all foreign exchange earnings, with gold and platinum being the biggest 

contributors. During the first half of 2012 gold production reached 7,000kgs representing year-on-year growth of 28%. 

KgS 

40,000 

20,000 


_ 

_ 

0 _ 

2002 

Between 2001 and 2007, when the world was experiencing a boom in commodity prices and increased capital and 

exploration expenditure, the Zimbabwean mining industry was suffering a reversal of fortunes. Production in most 

commodities was down, with little expenditure going towards recapitalization and exploration. This was despite the country 

boasting some of the best resources in platinum and gold. Compared to South Africa, Zimbabwe has gold that is cheaper 

to exploit as it does not require deep level mining and its platinum is also closer to the surface. 

Gold production was significantly affected by the economic downturn, with most marginal miners shutting down and 

big miners cutting down on production. Costs were significantly higher and the industry lacked sufficient capital to boost 

production and lower costs. Despite recent improvement in production, with an increase of 129% in 2010 and 34.6% in 

2011, gold production is still at 33% of its peak production in 1999 11. This represents a significant upside potential. 

Zimbabwe is a strategic platinum producer, contributing 4.5% to the world’s output. Most Zimbabwean mines sit on the 

lower end of the cost curve, making Zimbabwe’s platinum mines highly profitable. Platinum production remained resilient, 

marginally increasing from 2003 to 2008. This was on the back of continued support from international mining companies 

Anglo and Impala and continued capital expenditure. A survey carried out by the Chamber of Mines estimates that the 

mining sector requires between USD 3-5 billion dollars to increase capacity to an average of over 80% within the next 

three to five years. The table below shows funding requirements by mineral 12. 

10 ZimStat Digest Quarter 2 

11 ZimStat Quarter 2 

12 Chamber of Mines Zimbabwe 

_ 

2003 

_ 

2004 

_ 

2005 

_ 

MINERAL 

gOLD PRODUCTION (KgS) 

2006 

_ 

2007 

_ 

2008 

_ 

2009 

_ 

2010 

_ 

2011 

_ 

MINIMUM fUNDINg 

REQUIREMENT (USD BILLION) 

ExPECTED gROWTH IN OUTPUT By 

2015 If INVESTMENT IS TIMELy 

Gold 1.00 455% 

Platinum Group Metals 1.20 40% 

Ferrochrome 0.25 160% 

Nickel 0.11 400% 

Coal 0.28 218% 

Diamonds (Kimberlite only) 0.30 100% 

KgS 


20,000 

10,000 

46 

_ 

_ 

0 _ 

2000 

_ 

2001 

_ 

2002 

_ 

2003 

_ 

2004 

_ 

PLATINUM PRODUCTION (KgS) 

2005 

_ 

2006 

_ 

2007 

_ 

2008 

_ 

2009 

_ 

2010 

_ 

2011 

_


AgRICULTURE SECTOR 

Agriculture is considered the backbone of the Zimbabwean economy. The sector was the second highest contributor to 

foreign exchange, with the main export crops being tobacco, cotton, sugar and coffee. Animal husbandry also played a 

significant role, with the beef industry considered a major export product. The collapse of the sector in 2000 on the back 

of the land redistribution program saw new farmers struggling to access capital and various inputs for production. 

In 2000, 237 million kilograms of tobacco were produced. By 2008, this number had dropped to 47 million kg 13. A slow 

recovery saw the number increase to about 123 million kg 14 of flu-cured tobacco in 2011. In 2012, although tobacco 

production remained broadly flat compared to 2011, its contribution to foreign currency earnings was quite significant. 

The value of flue cured tobacco sold at auction floors by the end of May 2012 (for a season ending in July) amounted to 

USD 411m, compared with USD 360m realized in 2011 15. 

Zimbabwe is the only cotton producing country that still hand picks 100 per cent of its cotton, considered to be of high 

quality because it has very long fibers 16. Approximately 80 per cent of Zimbabwe's cotton is exported as raw ginned 

cotton and only five percent is exported as fabric. The sector has also been affected by unpredictable weather changes. 

Agricultural output for 2011 was lower than expected as a result of persistent long dry periods during the rainy season. 

With very few agro-processing facilities, there is little value addition in the agriculture sector as most production is exported 

as raw produce. Opportunities exist in the market as the industry is expected to grow and have continued government 

support. Challenges persist with regards to funding from banks. Financial institutions are constrained by a liquidity shortfall 

and are still lending on a short term basis, have been reluctant to fund agricultural production. 

OIL DISTRIBUTION AND STORAgE 

The continued turnaround of the Zimbabwe economy is increasing the consumption of petroleum products. The market 

has traditionally been dominated by international companies such as BP Shell, Total and Engen. With deregulation of the 

industry in August 2003, the sector has seen the emergence of new local players. 

BP Shell sold its assets in 2011 to Masawara Plc, a local private equity firm operating in Zimbabwe. Before disposing its 

assets in Zimbabwe, BP Shell had 87 retail outlets with a storage capacity of more than 60 million liters and a blending 

capacity of 30 million liters a year. 

Zimbabwe is an important hub for trans-shipment of product to DRC, Zambia, Malawi and Botswana. Currently, pipeline 

product is being trans-shipped by rail from Msasa to Botswana and the Botswana government is actively exploring the 

option of extending the pipeline from Msasa to Francistown. 

REgULATORy ENVIRONMENT 

INDIgENISATION 

In March 2008, the President signed the Indigenisation and Economic Empowerment Act (The IEE Act) into law. The 

IEE Act mandates that at least 51% of the shares of every public company and other business be owned by indigenous 

Zimbabweans. The IEE Act defines “indigenous Zimbabwean” as any person who, before the 18 th April 1980, was 

disadvantaged by unfair discrimination on the grounds of his or her race, and any descendant of such person, and 

includes any company, association, syndicate or partnership of which indigenous Zimbabweans form the majority of the 

members or hold the controlling interest. Under this definition, Brainworks fully complies with the law. 

13 New Agriculturist: Zimbabwe 



16 Ibid 8 

47 


Pursuant to section 21 of the IEE Act, the IEE Regulations were gazetted on 29 January 2010 and came into force on 1 

March 2010. The IEE Regulations currently cover any business, which under the IEE Act means any company, association, 

syndicate or partnership whose object is the acquisition of gain. On 25 March 2011, the Zimbabwean government 

published new regulations under the Indigenisation and Economic Empowerment Act, which required 51% of the shares 

of mining companies in Zimbabwe with a net asset value above USD 1 to be ceded to indigenous Zimbabweans. Under 

the previous regulations, companies with a net asset value of less than USD 500,000 were exempt from this requirement. 

The IEE Regulations enable the Minister of Indigenisation and Economic Empowerment (the “Minister”) to lower this 

percentage where certain criteria apply, such as importing technology or carrying out training programs. The government 

has moved aggressively in 2012 to implement the Act, with the mining sector having been the first targeted for full 

compliance. The mining sector has implemented the regulations across the board, with major mining houses such as 

Anglo Platinum and Impala implementing indigenous programs that will incorporate local communities and other private 

companies in their shareholding structures. 

In an effort to expand the laws on Indigenisation, the Minister recently published General Notice 280/2012, requiring 

businesses in other sectors to comply with the Indigenisation laws within one year. The affected sectors are finance, tourism, 

education and sport, arts, entertainment and culture, engineering and construction, energy, services, telecommunications, 

transport and motor industry. 

TAKEOVER CODE 

There is no written takeover code in Zimbabwe to-date, or a comprehensive set of rules governing the substantial 

acquisition of shares. The Zimbabwe Stock Exchange, however follows the guidelines of the City Code in London and 

those of the Johannesburg Securities Exchange in South Africa. In addition, Zimbabwe Stock Exchange has issued some 

regulations aimed at protection of minority shareholders. Takeovers and other significant changes in shareholding are also 

subject to approval by the Ministry of Youth Development, Indigenisation and Empowerment under the IEE Act. 

The acquisition of 35% or more of the issued share capital of a listed company constitutes an acquisition of control. On 

such an acquisition, the acquirer must make an offer of an identical nature to all the other shareholders of the target 

company. The offer must be approved by the Zimbabwe Stock Exchange. The rule empowers the Zimbabwe Stock Exchange 

Committee to require the party acquiring control to make an offer to the holders of the remaining equity share capital 

within a reasonable time. The offer to the remaining shareholders must be in cash or in the same listed security which 

was used to acquire control or in a combination of these two. Where the shares used to acquire control were not listed 

then there must be a cash alternative. The Zimbabwe Stock Exchange Committee has a wide discretion as to how or if it 

will enforce these requirements. 

TAx 


Taxes are levied in under the Income Tax Act (Chapter 23.06), which is administered by the Zimbabwe Revenue Authority. 

Resident corporations in Zimbabwe are taxed at 25% plus an additional 3% AIDS levy imposed on corporate tax, which 

brings the effective tax rate to 25.75%. A lower rate can be paid under certain government incentive schemes. Dividends 

for companies that are listed in Zimbabwe is taxed at 10%, while non-listed companies are taxed at 15%. Capital Gains 

Tax (Chapter 23:01) is charged at 15% on gains from the sale of immovable property. For marketable securities (excluding 

listed shares) bought before 1 February 2009, the charge is 5% and marketable securities bought after 1 February 2009 

are charged at 20% with a 2.5% inflation allowance. 

Zimbabwe operates a mining royalty regime based on revenue. As at September 2012, the mining rates for the major 

mineral resources of diamonds, gold and platinum are 15%, 7.5% and 5% respectively. 


48


DIVIDEND 

According to the Companies Act, dividends can only be paid from profits made by the company and cannot be from 

capital. Foreign shareholders are allowed to remit all dividends earned in Zimbabwe subject to approval from the Central 

Bank. 

ECONOMIC RISK fACTORS AND MITIgATION 

The outlook for 2013 is underpinned by two major events, which are the adoption new constitution and the general 

elections scheduled for March 2013. The continued implementation of the IEE Act has caused uneasiness with some 

international investors. Brainworks Capital operates as a fully compliant firm under the country’s indigenous laws and has 

a strong local shareholding support that will continue to underpin its growth. 

The economy is not immune to the major global economic slowdown which has resulted in a low demand for commodities 

and downward pressure on prices. The country’s export earnings are mainly composed of mineral exports, which constitute 

about 60% of total exports in 2012. Of these minerals, more than 50% are from Platinum Group of Metals (PGMs). 

Further risks to the mining sector remain with the Government imposing high mining fees and revising upwards mining 

royalties for all commodities. In February 2012 the Ministry of Mining announced that registration of diamond mining 

licenses will rise to USD 5 million from USD 1 million, while an application for a platinum mining license increased to 

USD 500,000 from USD 200. The license to operate a platinum mine will rise to USD 2.5 million from USD 500 per year. 

This will put further negative pressure on a sector that is yet to fully recover from the decade long downturn. 

A successful agriculture season is impacted by controllable factors such as land preparation, input distribution and funding 

from both private and public sectors. However, it is also heavily dependent upon other uncontrollable factors such as 

weather. The 2011 agriculture season was affected by poor rains and long dry spells. Consequently the yields were below 

expectation. 

Persistent economy wide liquidity constrains and high interest rates have made it unsustainable for companies to either get 

funding or be able to service high interest charges. In July 2012, the Central Bank announced that the weighted average 

lending rate ranged between 14% and 20% during the last four months, with loans being of a short term tenure. Banks 

financed individuals more (18% of total loans) than agriculture, which had 15% of total bank loans as at July 2012. 

Zimbabwe suffers from persistent power outages that continue to have negative effects on efforts to achieve sustainable 

economic growth in the medium to long term. Domestic power generation capacity has fallen far below demand as a 

result of under investment in new generating capacity and no maintenance in aging generation plants, transmission and 

distribution facilities. Only 1,000 Megawatts out of the 2,000 Megawatts of installed generation capacity is currently 

available, resulting in intermittent power supplies. Industry is producing below capacity as a result of lack of power during 

certain periods of the day. However, this has also given rise to demand for power generator units running on fuel and gas. 

Aside from perceived political risk and global economic challenges, the Zimbabwean market presents very attractive 

opportunities, due to its skilled labour force, financially literate (although under-banked) population and an increasing 

middle class. This is reflected in the continued confidence by foreign banks to invest in the country’s undercapitalized 

banks in order to gain access to the market. In 2012, AfriAsia Bank Limited invested in Kingdom Bank Limited and African 

Development Corporation invested in BancABC. Despite the uncertainty surrounding elections in 2013, the Zimbabwean 

economy is expected to continue to grow and offer attractive investment opportunities for medium to long-term investors. 

49 


APPENDIX B – PORTFOLIO COMPANIES 

ECOBANK ZIMBABWE LIMITED 

HISTORy 

Ecobank Zimbabwe Limited 

APPENDIx B – PORTfOLIO COMPANIES 

History 

The bank was established in 2002, originally as Premier Finance Group, a merchant bank. By the end of 2011, Ecobank 

The bank was established in 2002, originally as Premier Finance Group, a merchant bank. By the end of 2011, Ecobank 

Transnational Incorporated had completed the shareholder transformation process, taking controlling interest in Premier 

Transnational Incorporated had completed the shareholder transformation process, taking controlling interest in Premier 

Finance Group. In January 2011, Premier Finance Group, the Bank and the Asset Management Company commenced 

Finance Group. In January 2011, Premier Finance Group, the Bank and the Asset Management Company commenced 

operations as subsidiaries of Ecobank Transnational, and were named Ecobank Zimbabwe Limited and Ecobank Asset 

operations as subsidiaries of Ecobank Transnational, and were named Ecobank Zimbabwe Limited and Ecobank Asset 

Management (Private) Limited respectively. In order to maintain the strategic structure of other affiliates of the Ecobank 

Management (Private) Limited respectively. In order to maintain the strategic structure of other affiliates of the Ecobank 

Group, Ecobank Zimbabwe was transformed from a merchant bank to a commercial in early 2012. 

Group, Ecobank Zimbabwe was transformed from a merchant bank to a commercial in early 2012. 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

Ecobank Zimbabwe Ecobank Zimbabwe offers a offers wide a array wide array of commercial of commercial banking products to retail to retail and wholesale and wholesale clients. Using clients. the Using Ecobank the Ecobank 

Transnational Transnational model, the model, bank the bank offers offers personal banking, microfinance, business business banking banking and corporate and corporate banking. The banking. Bank is The Bank 

is making making inroads inroads in expanding in expanding its its branch distribution channel, channel, currently currently at 5, and at aims 5, and to invest aims in significantly to invest in over significantly the next over the 

next years. years. The The bank bank expects to to open open 6 more 6 more branches branches before the before end of the the year end 2012 of and the reaching year 2012 a total of and 22 by reaching year end 2013. a total of 22 by 

year end 2013. 

Ecobank Capital is the capital markets and investment banking division within Ecobank Zimbabwe. It provides premium 

services to corporate, governmental, parastatal and SME clients. The Treasury sector provides integrated solutions tailored for 

Ecobank Capital is the capital markets and investment banking division within Ecobank Zimbabwe. It provides premium 

corporate and institutional clients. The Investment Banking division includes a variety of services including commodity/trade 

services to corporate, governmental, parastatal and SME clients. The Treasury sector provides integrated solutions tailored 

finance, equity offerings, mergers and acquisition advisory and funding, and project finance. 

for corporate and institutional clients. The Investment Banking division includes a variety of services including commodity/ 

trade finance, Ecobank equity Asset offerings, Management mergers services include and acquisition portfolio management, advisory collective and funding, investments and and project buy-side finance. advisory services. 

Ecobank Asset Half year Management 2012 performance services include portfolio management, collective investments and buy-side advisory services. 

Total assets grew by 38% to USD80.4 million at the close of the period. A 39% increase in customer deposits to $63.2 million 

HALf yEAR 2012 PERfORMANCE 

in addition to a 69% increase in loans to customers to USD62.4 million significantly fostered the growth in total assets. 

Total assets A grew 39% increase by 38% in to customer USD 80.4 deposits million to USD63.2 at the million close of in addition the period. to a 69% A 39% increase increase in loans in to customer customers deposits to USD62.4 to USD 63.2 

million in addition million significantly to a 69% fostered increase the growth in loans in total to assets. customers to USD 62.4 million significantly fostered the growth in total 

assets. 

Year-on-year, net revenues grew by 164% to USD5.0 million, surpassing increases in operating expenses which were up 35%. 

A 39% increase Profit after in customer tax consequently deposits increased to USD by 112% 63.2 to million USD0.2 in million addition this half to year, a 69% compared increase to a loss in loans of USD1.5 to customers million at the to USD 62.4 

million significantly first half of 2011. fostered This growth the growth can be in accredited total assets. to: 

a) Loan arrangement fees and interest income fueled by a 76% growth in the loan book; 

b) An increase to USD.0.51 million from USD0.02 million in trade finance income; 

51 

�� 

�� 


50 

�� 

�� 

�


Year-on-year, net revenues grew by 164% to USD 5.0 million, surpassing increases in operating expenses which were up 

35%. Profit after tax consequently increased by 112% to USD 0.2 million this half year, compared to a loss of USD 1.5 

million at the first half of 2011. This growth can be accredited to: 

a. Loan arrangement fees and interest income fueled by a 76% growth in the loan book; 

b. An increase to USD 0.51 million from USD 0.02 million in trade finance income; 

c. Increased fees and commissions through positive customer responses to Ecobank Zimbabwe’s value proposition and 

c) diversification of products; 

d. Reduces loan losses after restructuring of the ‘legacy loan’ portfolio during the second half of 2011; and 

e. Sustained costs containments through enhanced technology platform investments and related application. 

Ecobank Asset Management Company recorded good growth. Managed funds have grown by 58% since December 2011 

to-date and by 31% year-on-year. 

gROWTH STRATEgy 

Ecobank Zimbabwe has significantly performed year-on-year and during this first half of 2012. The bank will continue to 

focus on extending the Bank’s visual and accessible presence. The Bank will open 6 new branches in strategic locations 

before year end 2012, deploy more Ecobank Transnational integrated ATMs and Point of Sale devices, and continue to 

introduce new e-banking products. 

The Bank aims to increase its funding base with a goal of enlarging its capacity to underwrite new business as well as 

support branch expansions. To this end, USD 10 million lines of credit have been extended by other Ecobank Transnational 

affiliates to support regional trade finance. 

The Bank’s growth strategy also includes growing its customer base. The Bank will target key growth sectors such 

as telecoms, mining, retail/distribution and agriculture. Local and regional corporates’, multinationals, international 

organisations, public sector, schools, churches, salaried employees and SMEs are also targeted customers. The Bank will 

continue to support products introduced during the first half of this year and also introduce new products such as: 

a. Asset financing; 

b. Mortgage financing; 

c. Card Initiatives (Ecobank regional cards, prepaid cards, and MasterCard) 

d. Remittances Initiatives (Ecobank Rapid transfer, Ecobank Western Union) 

e. Ecobank Retail Internet Banking, Ecobank Diaspora account, Ecobank Savings account, and Ecobank Advance account; 

f. Project financing; 

g. Consumer Loans; 

h. Letters of Credits, Guarantees, and Financial Exchange switches. 

In efforts to become a market leader in regional trade finance, the Bank will strive towards leveraging regional trade 

corridors through collaboration with Ecobank affiliates. 

51 


fINANCIALS AND 5 yEAR PROjECTION 


�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

� 

�� 

� � � � � � � 

�� 

�� 

�� 

�� 

� � � � � � � � 

� � � � � � � � 

�� 

�� 

�� 

� 

�� 

�� 

� 

�� 

�� 

� 

�� 

�� 

� 

�� 

�� 

� 

�� 

�� 

� 

�� 

�� 

� 

�� 

�� 

� 

�� 

�� 

� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

� 

�� 

� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

� 

NOTE TO ECOBANK ZIMBABWE - fINANCIALS: 

(A) Actual The financials numbers provided in the financial statements and projections contain actual for 2010 and 2011 before the bank was 

(F) forecast transformed financials into a commercial bank. Included in the financials, is the actual 2012 half year numbers for the income statement 


and forecast for full year 2012 to 2016. Despite the overall condition of the Zimbabwean economy, Ecobank Zimbabwe 


53 

52


The numbers provided in the financial statements and projections contain actual for 2010 and 2011 before the bank 

was transformed into a commercial bank. Included in the financials, is the actual 2012 half year numbers for the income 

statement and forecast for full year 2012 to 2016. Despite the overall condition of the Zimbabwean economy, Ecobank 

Zimbabwe achieved growth during the first half of 2012. Total assets grew by 7% in 2011 to USD 58.2million and forecast 

to increase by 220% by year end 2012. This is largely on the back of investment in commercial banking products. Total 

deposits are projected to be at USD 135million in December 2012. 

gOVERNANCE 

Ecobank Zimbabwe strives to comply with international best practices and creating a sound corporate governance 

necessary to create and sustain shareholder value. The Bank adopted IFC principles and methodology to guide its 

corporate governance framework. Practices are also aligned to Basel Committee Starts. In addition to the Main Board and 

the Board Credit Committee, which meet quarterly, there are various other committees. The Audit and Risk Committee and 

Governance Committee meet at least quarterly. The Board Loans Review Committee meets once a month. Ecobank also 

has in place the Management Committee, the Bank Credit Committee and the Assets and Liabilities Committee. 

PEOPLE 

Below is a summary of the directors and management of Ecobank. 

ExECUTIVE DIRECTOR 

DANIEL NII KWEI-KUMAH SACKEy | MANAGING DIRECTOR 

Dan holds a Masters in Business Administration, with specialisation in International Banking and Finance, from the 

University of Birmingham, United Kingdom. He also holds a Bachelor of Science in Administration (Accounting Option), 

from the School of Administration, University of Ghana, Legon. 


DAVID A WHATMAN | CHAIRMAN 

David Whatman is a registered legal practitioner after obtaining a Bachelor of Law (Honours) degree from the University 

of Zimbabwe. He started his career as a Magistrate in 1982, leaving the Ministry of Justice after rising to the position of 

Provincial Magistrate. He spent two years as a partner in a firm of legal practitioners before joining the Nedlaw Group 

where he held a number of senior positions within the manufacturing businesses in that Group and then joined Deloitte 

& Touché Management Consultants as Principal Management consultant. He briefly joined Tedco Industries as MD 

before joining Pelhams Limited, Zimbabwe's largest furniture retailer, where he was Chief Executive for 10 years until his 

promotion to Group Chief Executive of the holding company In this role David oversaw businesses spanning 25 retail 

furniture outlets, construction, insurance and manufacturing businesses . Subsequently he joined the Tarcon Group as 

Group Chief Executive Officer a position he left to pursue private interests and as legal practitioner until today . David has 

been a Fellow of the Chartered Institute of Arbitrators (UK) since 1995 and sits on several boards. 

EVELyNE MARIE fRANCOISE BERNADITE fATOU TALL | NON-EXECUTIVE 

Evelyne Tall is currently Deputy Group Chief Executive Officer / Group Chief Operating Officer of the Ecobank Group. 

Prior to that she was the Executive Director for Domestic Banking. She started her banking career in 1981 with Citibank in 

Dakar. She left Citibank to join Ecobank Mali as Deputy Managing Director in 1998, and was made Managing Director 

in 2000. She was later transferred to Ecobank Senegal as Managing Director. She was appointed Regional Head of the 

Francophone West Africa Region in October 2005. Evelyne Tall holds a Bachelor’s degree in English (Dakar) and a diploma 

in International Trade, Distribution and Marketing from the Ecole d’Administration et de Direction des Affaires, Paris. 

53 


fORTUNATE CHISANgO | NON-EXECUTIVE 

Fortune holds a Bachelor of Accounting Science degree and a Masters in Business Leadership both obtained with the 

University of South Africa. He is a member of the Institute of Chartered Accountants of Zimbabwe. He is currently managing 

Director of Decor Builders Warehouse a company he founded. He has over 14 years experience in the construction industry. 

He was formerly Finance Director of PG Industries Zimbabwe. Before joining PG Industries he worked in the corporate 

finance department of Universal Merchant Bank. He has had vast experience of re-modelling businesses to effectively 

compete against the best in the industry. He chairs the Audit and Risk Committee of the Bank. 

LLOyD M MHISHI | NON-EXECUTIVE 

Lloyd is a registered legal practitioner and estate administrator. He is one of the core founders of Dube, Manikai and 

Hwacha Commercial Law firm. Lloyd is a former professional assistant at the Harare law firm, Honey and Blackenberg. 

He was admitted to practice law in March 1994. Although he has experience in general practice, Lloyd has a special 

interest in conveyancing including registration of transfers and mortgage bonds and other deeds with the Deeds Office. 

He is currently a partner in Mhishi Legal Practice a firm of Lawyers which he founded. 

RICHARD CHIMUKA | NON-EXECUTIVE 

Richard is a partner at Synovus Capital Partners in Zimbabwe. He has 17 years of experience in banking, having worked 

at NMB Bank, Standard Chartered and Interfin Bank Limited. Richard holds a BBS Honours in Business and Accounting 

and a Masters in Business Leadership from UNISA . 

gEORgE MANyERE | NON-EXECUTIVE 

George Manyere is the Managing Partner/Chief Investment Officer and founder of Brainworks Capital Management. 

George holds a Bachelor of Accounting Science and Honors in Accounting Science from the University of South Africa. He 

also holds a Certificate in Theory of Accounting from the University of South Africa and has completed various international 

courses in finance, strategy and investment banking. 

WALTER KAMBWANjI | NON-EXECUTIVE 

Walter Kambwanji co-founded Brainworks Capital Management and is the company’s Chief Financial Officer/Partner. 

Walter holds a Bachelor of Accounting Science and Honors in Accounting Science from the University of South Africa and 

is a Chartered Accountant (Zimbabwe). He has completed various international courses in finance, strategy and banking. 

RISKS 


There are various risks Ecobank Zimbabwe faces, similar to many Zimbabwean-based banks of its size and nature. The 

economic challenges within Zimbabwe, creates an adverse environment for banks imposing significant limitations. Slowing 

global developments in addition to Zimbabwe’s domestic lack of liquidity, limited offshore credit, power outages, and high 

debt depressed projected GDP growth for 2012. Although the company achieved growth thus far this financial year, despite 

the country’s economic conditions, Ecobank Zimbabwe’s financial risk management has diversified governance policies 

and committees to manage risk as best as possible. 

Ecobank Zimbabwe’s risk management includes specialist risk management divisions as well as strategies for day-to-day 

management of banking operations. Ecobank Zimbabwe’s risks are managed through an enterprise wide risk management 

framework that includes processes of business risk policy formulation, risk tolerance limits setting, risk identification and 

measurement and reporting at Board level. Internal Audit and Risk Management divisions also encompass identification, 

qualification, monitoring and reporting on the various business risks. 

Ecobank Zimbabwe has instituted a risk management framework in order to combat strategic risks, in which consequences 

in the environment could have adverse impact on the banks dealings. Ecobank Zimbabwe’s Board of Directors along with 


54


the holding company Board, have put in place a Bank strategic plan and operational strategy framework which schedules 

periodic Board and executive management meetings to review research to implement strategy when necessary. 

Ecobank Zimbabwe’s capital management strategy is to ensure that the entity complies with regulatory capital requirements 

outlined by the Reserve Bank of Zimbabwe (“RBZ”), achieves strong credit ratings and maintains sufficient capital ratios 

in order to support business and maximize shareholder value. Ecobank Zimbabwe has maintained capital adequacy in 

regulation with the new capital requirements implemented by RBZ. 

Lack of liquidity and credit are major risks for the majority of Zimbabwean banks, including Ecobank Zimbabwe. In order 

to attenuate the risks, the Bank has various policies and practices which include setting counterpart/borrowers limits, taking 

collateral and setting covenants on lending, adequately providing for loans and using a credit scoring model to screen 

potential borrowers. Ecobank Zimbabwe also has put in place an Early Warning, Remedial and Recoveries (“EWRR”) 

unit, to identify credits showing signs of distress and take remedial action. The Delinquency and Doubtful Loans Recovery 

Committee (“DDRC”), the Loans Alert Committee, and a Board Loans Review Committee are also in place monitor credit 

risk. 

Ecobank Zimbabwe method to managing liquidity is to ensure, as far as possible, that liabilities are matched with assets 

in terms of maturity profiles to ensure sufficient liquidity to meet its liabilities, under normal and stressed conditions. 

Assets and Liabilities Management Committee (“ALCO”) manages The Banks market risks. ALCO formulates balance sheet 

strategies, uses techniques such as Gap Analysis, Stress Testing and Back Testing to combat risks identified in markets in 

which The Bank is actively trading. 

Currency risk, which arises through changes in exchange rates and mismatches between values of assets and liabilities 

denominated in different currencies, isn’t a significant risk of The Bank. The Bank did not have any financial instruments 

denominated in any currency besides the USD at the reporting date. 

gETBUCKS fINANCIAL SERVICES ZIMBABWE LIMITED 

GetBucks International is an influential player in the South African financial services sector, with a highly profitable online 

salary loan business backed by a tailor-made debtors system. The founders, who own a 60% stake in GetBucks Zimbabwe, 

have on average 15 years’ experience with high profile microfinance operators such as Blue Financial Services and Africa 

Financial Services. Drawing upon this network and expertise, GetBucks products have been successfully rolled out in Kenya, 

Botswana and now Zimbabwe. 

GetBucks Zimbabwe offers payroll deduction loans to customers, providing flexible and easily accessible products to 

borrowers that need cash immediately. With its state-of-the-art IT system and streamlined credit approval process, GetBucks 

Zimbabwe is able to disperse loans in a matter of days rather than weeks, as required for a typical bank loan. Interest 

rates are lower than traditional street moneylenders and borrowers also have the assurance of a reliable brand name. 

GetBucks Zimbabwe seeks to change the lending market by providing more accessible loans and acting as a model 

for responsible lending. Over the next few years the company aims to create more partnerships with companies and 

government departments to increase its potential customer base and improve access to financial services. The company 

plans to expand its network of branches and employer relationships in a controlled and systematic manner to become a 

pan-Zimbabwe financial services provider. 

GetBucks Zimbabwe grants loans of up to USD 1,000 for 3 or 6 months as part of a company or government payroll 

agreement. Potential customers present three months of original payslips for verification by branch staff, which ensures that 

55 


orrowers have the income to repay the loan and have not already taken out a loan against the same income. Repayment 

is deducted directly from the employee’s salary. 

GetBucks Zimbabwe relies on wholesale funding in the form of local currency bank loans, rather than deposits. This 

enables the company to actively manage maturity, foreign exchange and interest rate risk. Credit risk limited to the event 

that the company or government cannot pay the employee’s salary, or the employee loses his or her job. 

The business has been operational since August 2012. In the first month of operations the company exceeded its targets 

by granting 60 loans for a total amount of c.USD 55,000. GetBucks Zimbabwe budgets for a 10% credit loss, although 

given the security of the payroll deduction mechanism it is likely that actual non-performing loans will be lower than 10%. 

The company plans to aggressively expand its branch network by rolling out 10 new branches over the next year, whilst 

ensuring controlled loan growth and focusing on maintaining sound lending practices. GetBucks Zimbabwe can control 

loan growth by changing the interest rate to match demand, and also increasing scrutiny of documentation to limit lending 

to the customers with the best credit rating. The company plans to include a 12-month loan into its product mix over the 

next year. It is also currently negotiating a payroll agreement with the government, which would add 100,000 employees 

to its potential customer base. 

PEOPLE 

Below is a summary of the directors and management of GetBucks Zimbabwe. 

ExECUTIVE DIRECTOR 

gERRIE fOURIE | MANAGING DIRECTOR 

Gerrie has been part of the microfinance industry for the past 10 years and has been employed at two leading South Africa 

microfinance institutions (MFIs): Kagisano Financial Services later known as Credit-U and Blue Financial Services. After his 

success within Blue in the South African credit department and ensuring the MFI’s compliance throughout Africa, he was 

employed as country manager for Blue Uganda. Gerrie contributing success factors are as a result of developing strategies 

to optimize growth and he draws on his training in business and risk management to identify trends and opportunities 

with an emphasis on compliance. 



RICHARD g. MUIRIMI | CHAIRMAN 

Richard Muirimi has significant experience in pension and employee benefits services. In 1995 he founded Comarton 

Consultants (Private) Limited and is currently the Managing Director. Comarton is a leading pension fund administrator 

in Zimbabwe, administering at least 30 pension funds. Richard was the Non-Executive Chairman of Kingdom Financial 

Holdings Limited (“KFHL”) on its formation in 1995 until he resigned from the board in 2005. During that period as 

Chairman of KFHL, he guided KFHL through the initial capitalization through private placement, the IPO of KFHL on the 

ZSE, the establishment of subsidiaries in asset management, merchant banking, commercial banking and stock broking 

and regional expansion. Richard was previously the Chairman of the Zimbabwe Association of Pension Funds from April 

2002 to February 2004. He has been the Deputy Chairman of the Insurance and Pensions Commission since November 

2005. Richard has also previously held senior positions in Zimnat Life Assurance Company (1995-1998) and AON/ 

Minet Insurance Brokers (1982-1995). In 1987 he graduated as a fellow of the Executive Development Program with the 

University of Zimbabwe. 


56


jOHAN jONCK | DEPUTY CHAIRMAN 

Johan Jonck was one of the pioneers in the microfinance industry in South Africa. His efforts resulted in the formation 

of the Micro Lenders Association (MLA), which eventually became the National Credit Regulator (NCR), the country’s 

current credit industry regulator. Johan, a chartered accountant, was also the founder of Unity Financial Services, of which 

Boland Bank was a shareholder. Unity Financial Services ultimately became African Bank, one of the largest microfinance 

institutions in Africa. Recently, Johan has been investing in building systems as well as services that enhance the financial 

inclusion market globally. 

DAVE VAN NIEKERK | NON-EXECUTIVE 

Dave van Niekerk entered the micro-finance industry 16 years ago. Dave has held shareholding and management 

positions in various Micro Finance companies including African Bank. Dave has extensive experience in the financial 

services industry and in African expansion. Dave founded pan-African Micro Financial Services Company Blue Financial 

Services in 2001. Dave then listed Blue in 2006 served as CEO and Chairman for 3 years. During his time at Blue Dave 

raised more than R 1,5 billion in investment and grew the business into 14 countries on the African continent. Dave is 

passionate about the impact of micro finance and its ability to make an impact in emerging markets such as Africa and is 

often called upon to speak on the Micro Finance Industry and on doing business in Africa. 










DANIEL jONCK | NON-EXECUTIVE 

Daniel holds a bachelor of Accounting Science obtained with University of South Africa. He was Finance Director of Nedfin 

Limited Zambia an unsecured short term loan business, established in 2005. He then moved to consulting at Blue Financial 

Services – Financial Services, South Africa (2009). He joined Wells Fargo as a Trader based in London before joining LLB 

as Trader based in Switzerland. He is currently Business Development Director at GetBucks (Pty) Limited in South Africa. 

VULINDLELA NDLOVU | NON-EXECUTIVE 

Vuli Ndlovu is a former Partner at KPMG Zimbabwe who started the KPMG Corporate Finance Practice in the country in 

1997. After KPMG he worked for the African Banking Corporation (ABC) where his last position was Managing Director for 

the Zimbabwe operations. Vuli to set up Lufuno Capital, an investment banking firm involved in financial advisory, private 

equity and proprietary investments. Vuli has previously worked in senior financial management roles at the Financial 

Gazette, a Harare-based weekly financial newspaper, and Tedco Ltd, a ZSE listed furniture and retail clothing group. He 

holds a Bachelor of Accountancy degree from the University of Zimbabwe and is a Chartered Accountant (Zimbabwe). He 

is a past President of the Institute of Chartered Accountants of Zimbabwe. 

57 


fINANCIALS Income statement 

� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 


�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

Get Bucks Zimbabwe is a Registered Microfinance Institution and approval was granted by the Ministry of Youth 

NOTE TO Development, gETBUCKS ZIMBABWE Indigenisation - fINANCIALS: and Economic Empowerment for its indigenization plan. 


Get Bucks Zimbabwe has been operational since August 2012, led by the experienced country manager Gerrie Fourie. He is 

GetBucks supported Zimbabwe by Credit/Collections, is a Registered Operations, Microfinance Marketing Institution and Accounting and functions approval based was in Harare. granted Gerrie by has the been Ministry part of the of Youth 

Development, 

microfinance 

Indigenisation 

industry for the 

and 

past 

Economic 

10 years 

Empowerment 

and has been employed 

for its Indigenisation 

at two leading 

plan. 

South Africa microfinance institutions 

(MFIs): Kagisano Financial Services later known as Credit-U and Blue Financial Services. After his success within Blue in the 

59 


58


GetBucks Zimbabwe has been operational since August 2012, led by the experienced country manager Gerrie Fourie. He 

is supported by Credit/Collections, Operations, Marketing and Accounting functions based in Harare. Gerrie has been 

part of the microfinance industry for the past 10 years and has been employed at two leading South Africa microfinance 

institutions (MFIs): Kagisano Financial Services later known as Credit-U and Blue Financial Services. After his success within 

Blue in the South African credit department and ensuring the MFI’s compliance throughout Africa, he was employed as 

country manager for Blue Uganda. Gerrie contributing success factors are as a result of developing strategies to optimise 

growth and he draws on his training in business and risk management to identify trends and opportunities with an 

emphasis on compliance. 

Key risks arise from: 

Failure to negotiate agreements with additional companies or government departments, hence lack of scale-up of 

operations 

Failure in implementation of projected rollout of branches 

Exogenous economic shock that results in large scale redundancies in the private and public sectors 

Unexpected adverse regulatory changes 

BCM Gold (Private) Limited 

BCM gOLD (PRIVATE) LIMITED 

BCM Gold (Private) Ltd. (“BCM Gold”) is a junior mining house engaged in exploration for, and the development of, multimillion 

ounce gold deposits. BCM Gold focuses on exploration in highly prospective under-explored areas in Zimbabwe. The 

company is currently exploring within the Gweru mining district, specifically working on the claims held by Lower Gweru 

Mines. 

Brainworks Capital is the sole shareholder of BCM Gold which is a private corporation incorporated in 2012. BCM Gold 

holds an Option to acquire 77.5% of the mineral rights and claims incorporated under Lower Gweru Mines, as well as all 

related exploration data, mining rights, equipment and other assets related to the Property. The option is exclusive, and can be 

exercised any time up to and including the expiry date on 23 rd BCM Gold (Private) Ltd. (“BCM Gold”) is a junior mining house engaged in exploration for, and the development of, multimillion 

ounce gold deposits. BCM Gold focuses on exploration in highly prospective under-explored areas in Zimbabwe. 

The company is currently exploring within the Gweru mining district, specifically working on the claims held by Lower 

Gweru Mines. 

Brainworks Capital is the sole shareholder of BCM Gold which is a private corporation incorporated in 2012. BCM Gold 

holds an Option to acquire 77.5% of the mineral rights and claims incorporated under Lower Gweru Mines, as well as all 

related exploration data, mining rights, equipment and other assets September related to 2013. the Property. BCM Gold The paid option an is option exclusive, premium and of can 

be exercised USD100,000 any time and up the to exercise and including price will the be expiry the code date compliant on 23rd inferred September resources 2013. multiplied BCM by Gold USD8 paid multiplied an option by premium 77,5% 

of USD and 100,000 less the and option the premium exercise already price paid. will be the code compliant inferred resources multiplied by USD 8 multiplied by 

77.5% and less the option premium already paid. 

�� 

�� 

�� 

Brainworks Capital Management 

�� 

�� 

�� 

�� 

59 

�� 

�� 


�

Lower Gweru Mines owns, inter alia, 1,892.13 Ha of valid gold claims in the Gweru mining district. The claims are 

bordered by claims belonging to Falcon Gold (a subsidiary of New Dawn Mining Corporation listed on the TSX) and 

contain historic mines such as the Shamrock Mine and Gretna Green Mine. 

LIST Of MININg CLAIMS AND LOCATION 

Myth BM 7929 

Myth 2 BM 7930 





Gretna Green BM 7927 

Gretna Green 2 BM 7928 



Gold Prince BM 7931 




Sonny Boy 2 BM 7939 

Sonny Boy 3 BM 7940 

Gretna Green/Myth Gold Dump 

BCM Gold has just completed the second phase of exploration before the third, and final phase, which would be drilling. 

During phase two of the exploration programme, three anomalous areas were trenched by back actor and sampled. The 

results were optimal in two specific areas, encouraging additional exploration to better define the grade of resources 

already exposed. SRK Consultants, which conducted the tests and delivered the final report upon conclusion of phase two, 

has no doubt that the resource can be better defined with closer spaced trenching. After this step, the areas will be ready 

for drilling. 

gROWTH STRATEgy 


As BCM Gold growth prospects continue to rise, the Company’s growth strategy includes a transaction currently under 

negotiations, which if successful will result in a series of transactions with a private corporation incorporated under the 

Business Corporations Act of British Columbia. The proposed transaction would reduce Brainworks Capital shareholding 

as BCM Gold and a private Canadian corporation would potentially create a new public company, listed, reporting and 

trading on the Toronto Stock Venture Exchange (TSXV). 

This transaction would give BCM Gold the ability for further expansion and exposure to foreign markets and thus capital. 

The conclusion of this transaction is subject to all regulatory approvals. 


60 

GWERU 

HARARE


PEOPLE 

Below is a summary of the directors and management of BCM Gold. 

DIRECTORS 

gEORgE MANyERE | CHAIRMAN 









WAyNE WATERWORTH | MANAGING DIRECTOR 

An engineer by profession, Wayne Waterworth has significant experience in the mining sector in Zimbabwe. Wayne was the 

Managing Director of Falcon Gold Limited; a ZSE listed gold mining company. At Falgold, Wayne managed a total of four 

gold mines with over 500 employees. He has worked in Europe and in various African countries including South Africa, 

Kenya, Zimbabwe and Tanzania. He is a highly experienced professional with more than 20 years’ experience in senior 

general and technical management roles. He has a proven track record in a variety of industrial and commercial and 

turnkey projects in the mining, petrochemicals and large and small scale construction sectors. He has specialist systems 

experience of project and contract management, energy and environmental management, electrical and mechanical 

engineering, medium and high voltage power and control systems, energy and building management and control systems. 

He is a holder of a Bachelor of Science in Electrical Engineering and hold numerous professional qualifications for 

engineers. Wayne was the Chairman of the Chamber of Mines Technical Committee, on the Electricity and Power 

Development Committee and is a member Standards Association of Zimbabwe Technical Committee. 

SENIOR MANAgEMENT 

PETER BOURHILL | GEOLOGIST 

Peter has 40+ years’ experience and is a respected geologist with experience in mapping, diamond drill core logging, 

sampling, manual and computerized reserve/resource calculations/estimation, geotechnical control in open pits and mine 

design. His core experience includes: Managing Director at Rockover Resources – a well-known regional exploration 

company, Technical Director at Delta Gold, Mine Manager at Ashanti Gold. Peter has successfully run several operations 

on a large and medium scale. 

BEN LOUW | TECHNICAL CONSULTANT 

Ben has 20+ years’ experience as a mining engineer with experience in underground, opencast and managerial 

mining positions. He has first-rate practical knowledgeable in the design and planning of underground and opencast 

mining operations. His core experience includes: Overall management of production for Davis Granite and Premier 

Stone Quarries, comprising opencast operations in all major cities in Zimbabwe and the largest stone providers for the 

construction industry, roads and railways. In addition Ben has extensive hands-on knowledge of mining equipment and 

suppliers and extensive experience as an underground and opencast miner. 

61 


�� 

�� 

fINANCIALS 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

� 

Corporate Governance 


NOTE TO BCM gOLD - fINANCIALS: 

(F) forecast financials 


BCM Gold boasts a strong board and an experienced mining and exploration management team, combined with strong 

Zimbabwe and international institutional shareholders and partners. BCM Gold strives to comply with international best 

practices by following sound corporate governance necessary to create and sustain shareholder value. BCM Gold seeks to 

delivering credible results in mineral resource estimation by applying internationally accepted techniques to its geological and 


62


CORPORATE gOVERNANCE 

BCM Gold boasts a strong board and an experienced mining and exploration management team, combined with strong 

Zimbabwe and international institutional shareholders and partners. BCM Gold strives to comply with international best 

practices by following sound corporate governance necessary to create and sustain shareholder value. BCM Gold seeks 

to deliver credible results in mineral resource estimation by applying internationally accepted techniques to its geological 

and assaying information to yield reliable tonnage/grade estimates using geo-statistical, statistical, analytical and 

manual methods in order to obtain estimates which are classified and reported in accordance with one of the accepted 

international reporting standards (e.g. JORC, SAMREC, NI 43/101, Reporting Code). BCM Gold have engaged SRK 

Consulting as the Competent / Qualified Person validate the credibility of resource estimation at all stages. SRK consulting 

is an independent, international consulting group providing focused advice and solutions for all mining and exploration 

challenges, established in 1974, employing more than 1000 staff in over 40 offices in 19 countries on six continents with 

over 150 internationally recognized associates complementing their team. 

RISKS 

As an exploration company BCM Gold, face risks due in part to the inherent risks associated with exploration and also the 

various impediments facing the Zimbabwean Economy. 

The risk facing BCM Gold, during the exploration stage, is that some areas may not meet initial expectations of productivity, 

quantity, and grade of resources. This is countered by executing extensive testing on various areas, detailed reports, and 

the inclusion of consultancy expertise. BCM Gold has undergone such processes in efforts to mitigate these potential risks, 

and efforts have been positively reinforced in the SRK Consultant Phase Two Report. 

At this stage of exploration, the Company does not face a number of risks that can affect mining corporations within 

Zimbabwe, such as credit, liquidity, or currency risks. However, the Company is faced with market risk. Although the 

mining industry is crucial to the Zimbabwean economy, the sector has significantly suffered. Despite dismal growth over 

the last couple of “recession” years, the mining sector has begun to rebound. The mining sector contributed 20% to GDP 

in 2011 and accounting for 60% of all foreign exchange earnings, with growth rates of 13% and 25% in 2010 and 2011 

respectively. 

Gold production specifically, has exhibited significant increase in growth in the last two years, with an increase in 

production to 129% in 2010 and 34.6% in 2011. However, according to ZimStat gold production is only at 33% of its peak 

production over a decade ago. While this means that there is exceptional room for growth, this also means that there are 

a number of factors that could impede growth. Infrastructure, access to capital, and political factors could either promote 

or deter the potential growth. The Chamber of Mines Zimbabwe estimates that an investment of USD 1 billion is required 

in the gold sector within the next three to five years. This is expected to produce a 455% growth in gold output by 2015, 

higher than for any other mineral. 

Nonetheless Brainworks Capital is well positioned to continue various explorations and also put in place systems that will 

allow BCM Gold to fully capitalize on the prospective rapid growth in the gold mining industry. 

63 


fML OIL COMPANy Of ZIMBABWE LIMITED 

FML is primarily engaged in the retailing and bulk trading of petroleum products in Zimbabwe. To-date the company has 

been developing a growing pipeline of contacts for procurements and sales of petroleum products and these are currently 

undergoing various stages of review. FML holds fuel importation, wholesale and retail licenses. 

The company has the following facilities to be used in the wholesale and retail fuel sales: 


Sanyati Service Station (mining and agricultural rich area of Zimbabwe with significant fuel needs); 

Two fuel tankers (30,000 and 56,000 liter respectively) 

Fuel supply book of approx. 860,000 liters per month to various corporate clients. 

A 10 year renewable lease on an fuel depot in Graniteside, Harare with 0.45 million storage capacity and room to 

double or triple the capacity; 

A 10 year renewable lease on Norton service stations (Norton, about 20km out of Harare, with about 61,250 liters 

storage capacity); 

Two paraffin outlets in Harare. 

The existing tanks, pipework and infrastructure at Graniteside have being cleaned and refurbished as required at the cost 

of the landlord as part of the rental agreement. A builder is also providing a quotation for refurbishing the office block, 

which will also be on the landlords account. 

FML also hires out its fleet to fuel companies, to deliver petroleum products to retail fuel stations. An opportunity exists 

to expand this logistics opportunity within the company which will also compliment the fuel storage and wholesaling 

capabilities of the company. An analysis of the current demand for quality and reliable transportation in the fuel industry, 

together with the maximisation of the existing staff and capabilities, has led to a model with the following assumptions 

and anticipated results:- 

Purchase of 10 new horses and associated trailers at a cost of almost USD 2 million. 5 trailers being 30,000 litre 

capacity, 5 trailers being 50,000 litres capacity. 

Interest rates are assumed to be 18% per annum. Financing is leveraged from Brainworks balance sheet and assets. 

The loan is assumed to be over 5 years. 

There is a demand for short haul (within 100km of Harare) and long haul (up to 500km from Harare). Transport to 

neighbouring countries has not been factored in as it is assumed that there will be sufficient local demand for 

transport. 

Standard industry charges of USD 1c per litre carried per 100km travelled is applied. 

The trucks are assumed to have a utilisation of 20 days per month. 


64


PEOPLE 

Below is a summary of the directors and management of FML Oil. 

DIRECTORS 

VULINDLELA LESTER NDLOVU | CHAIRMAN 

Vuli Ndlovu is a former Partner at KPMG Zimbabwe who started the KPMG Corporate Finance Practice in the country in 

1997. After KPMG he worked for the African Banking Corporation (ABC) where his last position was Managing Director for 

the Zimbabwe operations. Vuli left ABC at the end of 2004 to set up Lufuno Capital, an investment banking firm involved in 

financial advisory, private equity and proprietary investments. Lufuno is currently promoting its first Private Equity Fund, the 

Lufuno Southern Africa SME fund, a €30 million fund that will invest in Malawi, Zambia and Zimbabwe. Vuli has previously 

worked in senior financial management roles at the Financial Gazette, a Harare-based weekly financial newspaper, and 

Tedco Ltd, a ZSE listed furniture and retail clothing group. He holds a Bachelor of Accountancy degree from the University 

of Zimbabwe and is a Chartered Accountant (Zimbabwe). He is a past President of the Institute of Chartered Accountants 

of Zimbabwe. 










CyRIL MOyO | MANAGING DIRECTOR 

Cyril has extensive experience in the petroleum sector. He was previously the Managing Director of MAG Petroleum, a 

petroleum products company he established as a joint venture with TSX-listed, MAG Industries Corporation of Canada. 

He spearheaded the rapid growth of the business in South Africa, Zambia, Mozambique, Botswana, and Zimbabwe. 

Cyril marketed petroleum products across southern Africa, managed port operations and inland logistics in partnership 

with several of the largest petroleum distributors in southern Africa. Cyril gained extensive experience in negotiating and 

implementing a diverse range of petroleum procurement contracts, including through-put and storage contracts, off-take 

agreements, joint venture and partnership agreements, consulting agreements, agency/distributor agreements and trade 

finance agreements. He conducted market research and developed and implemented market penetration strategies for 

several major petroleum distributors seeking entry into southern African markets. 

65 


Financials�� 

fINANCIALS 

�� 

�� 

�� 

�� 

� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

� � � � � � � 

�� 

� � � � � � 

�� 

�� 

�� 

�� 

� 

�� 

� 

�� 

� 

�� 

� 

�� 

� 

�� 

� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

� 

�� 

�� 

�� 

�� 

� 

�� 

� 

�� 

� 

�� 

�� 

� 

�� 

�� 

� 

�� 

�� 

� 

�� 

�� 

�� 

�� 

�� 

NOTE TO fML OIL - fINANCIALS: 




68 


66

APPENDIx C – PIPELINE TRANSACTIONS 

PUMA ENERgy ZIMBABWE (PRIVATE) LIMITED 

COMPANy OVERVIEW 

Puma Zimbabwe is a Zimbabwe registered company whose shareholder is Puma Energy International (Mauritius). 

Brainworks Capital has entered into definitive agreements with Puma Energy International (Mauritius) whereby Brainworks 

Capital will become a 30% shareholder in Puma Energy Zimbabwe. The transaction has received all relevant regulatory 

approvals including Ministry of Youth Development, Indigenisation and Economic Empowerment. 

Puma Zimbabwe is an energy company focused on petroleum products infrastructure in Zimbabwe and is currently 

developing a storage tank farm with a total project cost of up to USD 21 million. Financing of the project has been 

arranged and registered with the relevant authorities in Zimbabwe and the first phase of the project shall cost USD 7.5 

million and an additional USD 2 million has already been invested in the acquisition of the land for development. The 

project is now at an advanced stage and development is expected to commence soon. The tank farm facility will store and 

handle white petroleum products (gasoil, gasoline). 

Puma Zimbabwe’s storage tank farm will be engaged in the storage and handling terminal of petroleum products for 

customers in Zimbabwe and neighboring countries including Zambia, Democratic Republic of Congo and Botswana. The 

company has strategically chosen Msasa area in Harare to build the facility and it believes this will a key inland storage 

hub to support its regional customers. 

EQUITy fINANCINg 

To-date, Puma Zimbabwe has been capitalized to the tune of USD 2 million, this having been used to acquire the land for 

development including other preparatory works and approvals. 

PROjECT fINANCINg 

The funding for the proposed tank farm has been arranged in full and requisite approvals have been received from the 

Reserve Bank of Zimbabwe Exchange Control Regulations. Below is a summary of the terms of financing that has been 

raised: 

fINANCIER: Puma Energy LLC 

AMOUNT: USD 21 million 

INSTRUMENT: Shareholder Loan 

TENOR: 10 years 

INTEREST RATE: 0% 

AgRISEEDS ZIMBABWE (PRIVATE) LIMITED 

(Call option to acquire shareholding of up to 45%) 

COMPANy OVERVIEW 

Agriseeds is a seed company established in 1988 to produce and market hybrid and OPV seed maize varieties as well 

as sorghum, groundnuts and sugar beans within Zimbabwe through contract growing with both large-scale farmers and 

smallholders. The company’s’ factory processes and packs 80–100MT maize, 30–40MT small grains per day while 

20-30MT of groundnuts can be shelled, processed and packed in a day. Current storage is for up to 7,000MT of seed in 

company’s 15 depots spread across the country. 

67 



Agriseeds varieties are mostly tailor-made to meet clients' needs. This emphasis has called for ingenuity and innovation 

that has been achieved via research and building long term business relations with customers. Concomitantly, trust is 

rapidly being developed, where the brand is explained and linked to products that are meeting farmers’ needs. Agriseeds’ 

breeding team currently engages in major projects with the Government and other leading research institutes. 

MARKET SHARE ANALySIS 

Agriseeds current market share is 15% but is set to 

grow with the introduction of ZM309, the shortest 

maturity maize variety in Zimbabwe that has already 

adapted well in most provinces. 

DIVERSIfIED PRODUCT RANgE AND 

ADAPTABILITy 

Agriseeds has a wide product offering of: maize 

and small grain seeds. The seeds are resistant to 

diseases and highly adaptable to the changing climatic 

conditions. An example is the new, top-yielding virus 

resistant maize variety ZMS623 best suited for a wide 

range of growing areas. 

INDEPENDENT QUALITy CONTROL DEPARTMENT 

Agriseeds quality control process points to good management practices aimed at ensuring continuous delivery of products 

and supporting services that meet customer quality requirements, needs and expectations. 

ExPERIENCED MANAgEMENT 

Agriseeds is led by Walter Chigodora – Managing Director and Rob Kelly – Chairman, who together have decades of 

agriculture industry experience. The team has been able to spearhead product development and entrepreneurship within 

the organisation. 

HIgH EMPLOyEE PRODUCTIVITy LEVELS 

Agriseeds business is highly optimized as the current 10 managerial staff, 20 technical staff and 62 worker/supervisory 

employees are able to handle an additional 120% increase in production volumes. 

AfRICA’S MALNUTRITION STATISTICS 

Others 

NTS 

Agriseeds 

Pannar 

Pioneer 

SeedCo 

SOURCE: Agriseeds 

Food and Agricultural Organisation (FAO) has said the number of undernourished people in the world has been increasing 

steadily for a decade. FAO estimates the number of under-nourished people globally at 1 Billion with one quarter (265 

Million) of this number resident in sub-Saharan Africa (SSA). Millennium Development Goal (MDG) Number 1 is to halve, 

between 1990 and 2015 the proportion of people who suffer from hunger. 

In the face of an ever growing population and increasing demand for high nutrition foods, there is an enormous pressure 

on the food production system to fulfil this demand; therefore suggesting consumption of maize, wheat, soya beans and 

other small grains will rise quickly as well. 


_ 

_ 

_ 

_ 

_ 

_ 

_ 

0 10 20 30 40 50 

68 

_ 

_ 

_ 

_ 

_


NEW MARKETS fOUND OUTSIDE ZIMBABWE 

An international company (with investments in South Africa and Zambia) has shown interest in tomato production projects 

with Agriseeds. Agriseeds has knowhow to produce these quality tomatoes and has so far identified 2 new dormant 

factories in Zimbabwe. Additionally, as a medium term project the company has identified growing interest in guar beans 

and the potential in South Africa alone is 30, 000MT. 

Below is a summary of the directors and management of Agriseeds. 

DIRECTORS 

ROB KELLy | CHAIRMAN 

Dr Kelly founded Agriseeds in 1988 as a small grains, pulse and oilseed producer and marketer. He has an extensive 

network of business colleagues that has helped him sustain the business, especially through the 2007–2009 Zimbabwe 

dollar period of economic instability. Shareholding was extended to other investors, which has strengthened Agriseeds to 

what it is today. He holds a Bachelor of Science Honours degree from the University of KwaZulu Natal and a PhD from 

the University of London. Dr Kelly spent 7 years as a research officer with the Zimbabwean Ministry of Agriculture before 

entering the commercial world as the manager for the Horticulture Department of Farmers Co-op (precursor to today’s 

CFI group) where one of his main briefs was to resurrect Agseeds, a Farmers Co-op owned company. After 4 years at 

Farmers Co-op he joined Agritrade, an agricultural input supply company, which provided him with commercial experience 

and exposed him to the business forum for 2 years, prior to starting Agriseeds. 

WALTER CHIgODORA | MANAGING DIRECTOR 

Walter is the Managing Director of Agriseeds after joining in 2005. Before that he spent 12 years at Seed Co where he 

was the National Sales Manager. He has led Agriseeds from a zero maize market base to number 2, (by commercial 

market sales). He was instrumental in establishing the distribution structures needed as the vital sales platform to provide a 

reliable service delivery to the trade. Prior to joining Seed Co, Mr. Chigodora was a sales representative with a distribution 

company where he gained vast marketing experience. He is currently chairman of the Zimbabwe Seed Trade Association 

to which all seed companies in Zimbabwe belong. Walter holds a Masters in Business Administration and a Bachelor of 

Arts in English and Communication obtained with Nottingham University. 

TAfADZWA CHIgUMBU | NON-EXECUTIVE 

Tafadzwa founded Redan Petroleum in 2002 and currently is the Chief Executive Officer. Tafadzwa who is a fellow of the 

Chartered Institute of Management Accountants worked as Divisional Accountant at Anglo American in 1998, before 

moving to Hunyani Holdings in 1999 as Group Accountant. He later joined Africom as Finance Executive before leaving 

to start Redan Petroleum. 

gEORgE MANyERE | MANAGING PARTNER/CHIEF INVESTMENT OFFICER (TO BE APPOINTED POST EXCERCISE OF 

CALL OPTION) 





WALTER KAMBWANjI | NON-EXECUTIVE (TO BE APPOINTED POST EXCERCISE OF CALL OPTION) 




69 


fINANCIALS 

Financials 

Below Below is an is abridged an abridged income statement of of the the company company for the for period the 2012 period – 2015: 2012 – 2015: 

� 

�� 

Walter Kambwanji (to be 

appointed post exercise of 

Call Option) 

Non-Executive 

�� 

Walter Kambwanji co-founded Brainworks Capital Management and is the company’s 

Chief Financial Officer. Walter holds a Bachelor of Accounting Science and Honors in 

Accounting Science from the University of South Africa and is a Chartered Accountant 

(Zimbabwe). He has completed various international courses in finance, strategy and 

banking. 

� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

�� 

NOTE TO AgRISEEDS - fINANCIALS: 

(A) Actual financials 




73 


70

APPENDIx D – APPLICATION fORM 

PROCEDURE fOR APPLICATION AND ALLOTMENT Of ORDINARy SHARES 

APPLICATION 

a. Prospective Investors to whom this pre-IPO Private Placement Memorandum is addressed are hereby invited to apply for 

the shares directly to Brainworks Capital Management (Private) Limited. 

b. Application for the ordinary shares being offered must be made by correctly completing the Application Form herein. 

c. The Application List will be open to each Prospective Investor from the date of this pre-IPO Private Placement Memorandum 

or subject to such earlier closing date as specified in the covering letter to the Prospective Investor. Late applications will 

not be accepted. Applications will be for a minimum of 1,000,000 (one million) ordinary shares and in multiples of 

500,000 (five hundred thousand) ordinary shares thereafter. The number of shares for which an application is made and 

the value and details of the electronic funds transfer attached should be entered in the boxes provided. 

d. Applicants should sign the form and write their full name, address and daytime telephone numbers in the boxes 

c) provided. Joint applicants must all sign the application form. The Applicant should also state incorporation number 

c) and affix the incorporation seal in the signature box. 

e. Each application should be forwarded together with payment in form of an electronic funds transfer for the full 

c) amount of the cash purchase price, made payable to the following: 

LOCAL SUBSCRIBERS 

BANK: Ecobank Zimbabwe Limited 

BENEfICIARy’S INfORMATION: Atherstone & Cook - Trust Account 


BRANCH: Borrowdale 

ACCOUNT TyPE: Current 


fOREIgN SUBSCRIBERS 

CORRESPONDENT BANK 

BANK: Commerzbank AG 

BANK: Theodor-Heuss-Allee 50, D-60301 

BANK: Frankfurt am Main, 

BANK: Germany 

SWIfT CODE: COBADEFF 

ACCOUNT NUMBER: 400881804900USD 

ACCOUNT TyPE: United States Dollars (USD) 

BENEfICIARy 

ACCOUNT NAME AND ADDRESS: Ecobank Zimbabwe Limited 

ACCOUNT NAME & ADDRESS: Sam Levy's Office Park 

ACCOUNT NAME & ADDRESS: Block A, 2 Piers Road 

ACCOUNT NAME & ADDRESS: Borrowdale, Harare 

ACCOUNT NAME & ADDRESS: Zimbabwe 

SWIfT CODE: ECOCZWHX 

BENEfICIARy: Atherstone & Cook - Trust Account 



71 


ALLOTMENT AND SIgNINg Of SHAREHOLDERS AgREEMENT 

APPENDIx D – APPLICATION fORM 

a. The Directors of Brainworks Capital Management (Private) Limited reserve the right to accept or reject any application, in 

whole or in part, without stating any reason. All irregular applications will be rejected. 

b. It is intended that the shares be allotted on a first-come, first-served basis. 

APPLICATION fUNDS 

All application funds will be retained in the bank account indicated above pending Allotment. If any application is not 

accepted, or accepted for fewer shares than the number applied for, a bank transfer for the full amount or the balance 

of the amount paid (as the case may be) will be done within seven working days from Allotment. Share certificates will 

subsequently be delivered to successful Applicants. 

SUBMISSION Of APPLICATION fORMS 

Duly completed application forms for the proposed investment in Brainworks Capital Management (Private) 

Limited should be delivered to The Company Secretary at the address below or scanned and emailed to 

wkambwanji@brainworkscapital.com: 

Brainworks Capital Management (Private) Limited 

Arden Road 

Newlands, Harare 

Zimbabwe 

Ref: Brainworks Capital pre-IPO Private Placement Share Offer 


72

APPLICATION fORM 


a private equity investment firm focused on investing in Zimbabwe 

(Incorporated in the Republic of Zimbabwe, Registration Number is 523/2011) 

(“Brainworks Capital” or “the Company”) 

Application form (“Form”) for the right to allotment for _________________________________ Shares in the stated share 

capital of Brainworks Capital by way of a Private Placement, as set out in the pre-IPO Private Placement Memorandum 

issued by the Company dated 26 November 2012. The Directors of Brainworks Capital (“the Directors”) reserve the right 

to reject an application if the conditions contained in the pre-IPO Private Placement Memorandum and the instructions on 

this Form are not complied with. Multiple applications in the same name will be rejected. 

PLEASE COMPLETE THIS fORM IN BLOCK CAPITALS AND IN INK. 

FULL NAME OF ENTITY: _______________________________________________________________________________________________ 

NATURE OF ENTITY (ASSOCIATION/ SOCIETY/COMPANY/ PENSION FUND/OTHER LEGAL ENTITY): ___________________________ 

_____________________________________________________________________________________________________________________ 

REGISTERED OFFICE: __________________________________________________________________________________________________ 

PRINCIPAL PLACE OF BUSINESS: ________________________________________________________________________________________ 

COUNTRY OF INCORPORATION/REGISTRATION: _________________________________________________________________________ 

POSTAL ADDRESS (PO BOX/PRIVATE BAG): _______________________________________________________________________________ 

TELEPHONE NUMBER (IN CASE OF QUERY): ___________________________E-MAIL ADDRESS: __________________________________ 

We irrevocably offer to purchase___________________________ (_____________________________________________ ) (amount in words) 

Shares in the Stated Share Capital of the Company, at a price of USD0.010 per Brainworks Capital Share on the terms and conditions 

set out in the pre-IPO Private Placement Memorandum, and we enclose proof of electronic funds transfer in favor of “Brainworks Capital 

Private Placement” in the sum of USD ______________________ ( ___________________________) (amount in words). Applications must 

be for a minimum of 1,000,000 (one million) Shares and thereafter must be in multiples of 500,000 (five hundred thousand) Shares. 

Bank account details for refunds, if applicable, and payment of any future dividends __________________________________________ 

NAME OF BANK: _____________________________________ BRANCH NAME: ________________________________________________ 

BRANCH CODE: _________________________________ ACCOUNT NUMBER: _________________________________________________ 

WE DECLARE THAT WE: 

1. Are properly formed and registered in accordance with the laws of the country where we are registered. 

2. Are empowered in terms of the Constitution or other constitutional document to acquire shares in the Company. 

3. Duly authorize the person(s) signing on our behalf to do so. 

4. Agree to accept the same or smaller number of Shares in respect of which this application may be accepted upon the terms of the pre-IPO Private 

Placement Memorandum and subject to the Constitution of the Company. 

5. Acknowledge that the Directors of the Company may accept or reject the whole or any part of our application, for whatever reason, in their absolute 

discretion. 

6. Acknowledge that our application(s) is/are irrevocable and may not be withdrawn. 

7. Acknowledge that we shall not be entitled to any interest in respect of any refund or excess application money held by the Company. 

8. Authorize you to send us a certificate for the number of Shares in respect of which this application is accepted together with proof of electronic funds 

transfer for any money refundable, by post at our postal address herein set out, and to procure our names to be placed on the register of shareholders 

of the Company as the holders of the Shares so purchased by us. 

9. Confirm that we have read and understood all the conditions of this issue, upon which our offer is based. 

10. Confirm that all the information supplied by us is true and correct. 

SIGNATURE: __________________________________________________________________ 

DATE: ________________________________________________________________________ 

FULL NAMES: _________________________________________________________________ 

CAPACITY: ____________________________________________________________________ 

COMPANY: ___________________________________________________________________ 

FUND/INVESTOR STAMP: 

73 


TO THE MEMBERS Of BRAINWORKS CAPITAL MANAgEMENT (PRIVATE) LIMITED 

We have audited the accompanying financial statements of Brainworks Capital Management (Private) Limited (“the Company”), 

which comprise the statement of financial position as at 31 December 2011, the statement of comprehensive income, the 

statement of changes in equity and the cash flow statement for the period then ended, and notes to the financial statements, 

which include a summary of significant accounting policies and other explanatory notes as set out on pages 75 to 100. 

DIRECTORS’ RESPONSIBILITy fOR THE fINANCIAL STATEMENTS 

The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with 

International Financial Reporting Standards, and in the manner required by the provisions of the Zimbabwe Companies 

Act (Chapter 24:03) and for such internal control as Directors determine is necessary to enable the preparation of financial 

statements that are free from material misstatement, whether due to fraud or error. 

AUDITORS’ RESPONSIBILITy 

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in 

accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and 

plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material 

misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial 

statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement 

of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control 

relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that 

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s 

internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of 

accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 

OPINION 

In our opinion, the financial statements present a true and fair view of the financial position of the Company as 

at 31 December 2011, and of the Company’s financial performance and cash flows for the period then ended 

in accordance with International Financial Reporting Standards in the manner required by the Companies Act 

(Chapter 24:03). 

KPMg Chartered Accountants (Zimbabwe) 

Harare 

17 April 2012 

APPENDIx E – AUDITED 2011 fINANCIAL STATEMENTS 

INDEPENDENT AUDITOR'S REPORT 


74


STATEMENT Of fINANCIAL POSITION 

AS AT 31 DECEMBER 2011 

ASSETS 

NOTE 2011 

USD 

Cash and cash equivalents 11 513 153 

Financial instruments held at fair value through profit and loss 12 475 000 

Other assets 15 774 201 

Investments in subsidiaries 13 368 000 

Investments in associates 14 14 923 014 

Property and equipment 17 70 374 

Deferred tax asset 16 215 413 

TOTAL ASSETS 17 339 155 

SHAREHOLDERS’ EQUITy 

Share capital 21 30 130 

Share premium 21 11 321 120 

Retained profit 411 115 

SHAREHOLDERS’ EQUITy 11 762 365 

LIABILITIES 

Borrowings 18 5 266 902 

Balances due to stockbrokers 19 289 727 

Other liabilities 20 20 161 

TOTAL LIABILITIES 5 576 790 

TOTAL EQUITy AND LIABILITIES 17 339 155 

.......................................... .......................................... 

Walter Kambwanji Vulindlela Ndlovu 

Chief Finance Officer/Company Secretary Audit Committee Chairman 

17 April 2012 17 April 2012 

75 



STATEMENT Of CHANgES IN EQUITy 

fOR THE SEVEN MONTHS ENDED 31 DECEMBER 2011 

NOTE 2011 

USD 

Interest income 31 663 

Dividend income 38 052 

Net gain from financial instruments at fair value through 

profit and loss 7 1 219 360 

TOTAL REVENUE 1 289 075 

Directors’ fees - 

Transaction costs 84 473 

Audit and legal fees 20 880 

Other operating expenses 8 643 898 

TOTAL OPERATINg ExPENSES 749 251 

OPERATINg PROfIT BEfORE fINANCE COSTS 539 824 

Finance costs 9 344 122 

PROfIT BEfORE TAx 195 702 

Tax credit 10 (215 413) 

PROfIT AfTER TAx 411 115 

Other comprehensive income - 

TOTAL COMPREHENSIVE INCOME 411 115 


76


STATEMENT Of CASHfLOWS 


CASH fLOWS fROM OPERATINg ACTIVITIES 

PROfIT BEfORE TAxATION 195 702 

2011 

USD 

Adjust for: 

Depreciation 10 001 

Unrealised gains (32 476) 

Interest received (31 663) 

141 564 

Changes in payables 309 888 

Changes in receivables (774 201) 

Cash utilised in operations (322 750) 

Interest received 31 663 

Net cash from operating activities 291 086 

CASH fLOWS fROM INVESTINg ACTIVITIES 

Unlisted investments (15 291 014) 

Listed investments (442 524) 

Purchase of property and equipment (80 374) 

Net cash used in investing activities (15 813 912) 

CASH fLOWS fROM fINANCINg ACTIVITIES 

Proceeds from issue of shares 11 351 250 

Proceeds from long-term borrowings 7 508 159 

Repayment of liabilities (2 241 257) 

Net cash from financing activities 16 618 152 

Bank and cash balances at beginning of period - 

Net increase in cash and cash equivalents 513 153 

Bank and cash balances at end of period 513 153 

77 


TOTAL COMPREHENSIVE INCOME fOR THE PERIOD 


STATEMENT Of CHANgES IN EQUITy 


SHARE SHARE RETAINED 

CAPITAL PREMIUM PROfITS TOTAL 

USD USD USD USD 

Profit - - 411 115 411 115 

TOTAL COMPREHENSIVE INCOME fOR THE PERIOD - - 411 115 411 115 

TRANSACTIONS WITH OWNERS Of THE COMPANy 

RECOgNISED DIRECTLy IN EQUITy 

Issue of shares 30 130 11 321 120 - 11 351 250 

TOTAL CONTRIBUTIONS By OWNERS 30 130 11 321 120 - 11 351 250 

BALANCE AT 31 DECEMBER 2011 30 130 11 321 120 411 115 11 762 365 


78


NOTES TO THE fINANCIAL STATEMENTS 


1. INCORPORATION AND NATURE Of BUSINESS 

The Company is a Zimbabwean indigenous controlled and managed private equity investment firm which invests in companies 

with operations in Zimbabwe focused primarily in the following sectors: (i) Financial Services; (ii) Mining; (iii) Agriculture, and 

(iv) Energy. 

The Company is incorporated and domiciled in Zimbabwe with its registered offices at 4 Arden Road, Newlands in Harare. 

The Company is primarily involved in private equity investment activities, fund management and advisory. 

2. BASIS Of PREPARATION 

2.1 STATEMENT Of COMPLIANCE 

These separate financial statements are prepared in accordance with International Financial Reporting 

Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). 

The financial statements are not consolidated as the only subsidiary, Brainworks Petroleum (Private) Limited is 

immaterial to the financial statements. Furthermore, the company intends to dispose of the majority of its 

investment during the financial period ended 31 December 2012 resulting in a further reduction in its 

materiality. 

The financial statements were authorised for issue by the Board of Directors on 17 April 2012. 

2.2 BASIS Of MEASUREMENT 

The financial statements are prepared on the historical costs basis except for financial instruments at fair value 

through profit or loss that are measured at fair value. 

2.3 fUNCTIONAL CURRENCy 

These financial statements are presented in United States Dollars (“USD” or “US$”) which is the Company’s 

functional currency. 

2.4 USE Of ESTIMATES AND jUDgMENT 

The preparation of financial statements in compliance with IFRS requires management to make judgments, 

estimates and assumptions that affect the application of accounting policies and the reported amounts of 

assets, liabilities, income and expenses. Actual results may differ from these estimates. 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates 

are recognised in the period in which the estimates are revised and in any future period affected. 

Information about significant areas of estimation, uncertainty and critical judgements in applying accounting 

policies that have the most significant effect on the amounts recognised in the financial statements are 

described in note 2.4.1. 

79 


2.4.1 SIgNIfICANT ESTIMATES AND jUDgEMENT 

Key sources of estimation uncertainty include: 

Determination of fair values of financial assets and determination of discount rates, cash flow 

projections and price earnings ratios for use in valuing unquoted equities. 

Determination of useful lives and residual values used in the calculation of depreciation expense 

3. SIgNIfICANT ACCOUNTINg POLICIES 

The accounting policies set out below have been applied consistently to all periods presented in these financial statements. 

3.1 fINANCIAL INSTRUMENTS 




The Company recognises financial assets or financial liabilities on its statement of financial position when it 

becomes a party to the contractual provisions of the financial instrument. 

The Company’s principal financial instruments comprise all assets and liabilities carried on the statement of 

financial position with the exception of share capital, reserves and minority interests in subsidiary companies, 

tangible and intangible non-current assets, inventories and deferred tax assets and liabilities. 

3.1.1 NON-DERIVATIVE fINANCIAL ASSETS 

The Company initially recognises loans and receivables on the date that they are originated. All other 

financial assets (including assets designated as at fair value through profit or loss) are recognised 

initially on the trade date, which is the date that the Company becomes a party to the contractual 

provisions of the instrument. 

The Company derecognises a financial asset when the contractual rights to the cash flows from the 

asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which 

substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest 

in such transferred financial assets that is created or retained by the Company is recognised as a 

separate asset or liability. 

Financial assets and liabilities are offset and the net amount presented in the statement of financial 

position when, and only when, the Company has a legal right to offset the amounts and intends either 

to settle on a net basis or to realise the asset and settle the liability simultaneously. 

financial assets at fair value through profit or loss 

A financial asset is classified as at fair value through profit or loss if it is classified as held for trading 

or is designated as such on initial recognition. Financial assets are designated as at fair value through 

profit or loss if the Company manages such investments and makes purchase and sale decisions 

based on their fair value in accordance with the Company's documented risk management or 

investment strategy. Attributable transaction costs are recognised in profit or loss as incurred. Financial 

assets at fair value through profit or loss are measured at fair value and changes therein, which takes 

into account any dividend income, are recognised in profit or loss. 

Financial assets designated as at fair value though profit and loss comprise equity securities that o 

therwise would have been classified as available for sale. 


80




Loans and receivables 

Loans and receivables are financial assets with fixed or determinable payments that are not quoted 

in an active market. Such assets are recognised initially at fair value plus any directly attributable 

transaction costs. Subsequent to initial recognition, loans and receivables are measured at amortised 

cost using the effective interest method, less any impairment losses 

Cash and cash equivalents 

Cash and cash equivalents comprise cash balances and call deposits with maturities of three months 

or less from the acquisition date that are subject to an insignificant risk of changes in their fair value, 

and are used by the Company in the management of its short-term commitments 

3.1.2 NON-DERIVATIVE fINANCIAL LIABILITIES 

The Company initially recognizes debt securities issued and subordinated liabilities on the date that 

they are originated. All other financial liabilities are recognized initially on the trade date, which is the 

date that the Company becomes a party to the contractual provisions of the instrument. 

The Company derecognizes a financial liability when its contractual obligations are discharged, 

cancelled or expire. The Company classifies non-derivative financial liabilities into the other financial 

liabilities category. Such financial liabilities are recognized initially at fair value less any directly 

attributable transaction costs. Subsequent to Initial recognition, these financial liabilities are measured 

at amortized cost using the effective interest method. 

Other financial liabilities comprise borrowings, bank overdrafts, and other liabilities. 

Bank over drafts that are repayable on demand and form an integral part of the Company’s cash 

management are included as a component of cash and cash equivalents for the statement of cash flows. 

3.1.3 DERECOgNITION Of fINANCIAL LIABILITIES 

The Company derecognises financial liabilities when, and only when, the Company's obligations are 

discharged, cancelled or expire. 

3.1.4 fAIR VALUE Of fINANCIAL ASSETS AND LIABILITIES 

The valuation technique used depends on the nature of the financial instrument. 

fair value hierarchy 

IFRS 7 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation 

techniques are observable or unobservable. Observable inputs reflect market data obtained from 

independent sources; unobservable inputs reflect the Company’s market assumptions. These two 

types of inputs have created the following fair value hierarchy: 

LEVEL 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. This level includes listed equity 

securities traded on the Zimbabwe Stock Exchange. 

LEVEL 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly 

(that is, as prices) or indirectly (that is, derived from prices). 

LEVEL 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs). This level 

includes equity investments and debt instruments with significant unobservable components. This level includes 

non listed equity investments. 

81 


The hierarchy requires the use of observable market data when available. The Company considers 

relevant and observable market prices in its valuations where possible. 

The table below summarises the various assets and liabilities measured at fair value and the level on 

the fair value hierarchy. 

LEVEL 1 

USD 

LEVEL 2 

USD 

LEVEL 3 

USD 


TOTAL 

USD 

Assets at fair value through profit and loss 475 000 - - 475 000 

The Company had no other financial assets and liabilities that were carried at fair value, as at 31 

December 2011. 

3.1.5 SHARE CAPITAL 

Ordinary shares 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary 

shares are recognised as a deduction from equity, net of any tax effects. 

3.2 INVESTMENTS IN ASSOCIATES AND SUBSIDIARIES 

Subsidiaries are entities where the Company has control. Associates are those entities in which the Group has 

significant influence, but not control, over the financial and operating policies. Significant influence is 

presumed to exist when the Company holds between 20% and 50% of the voting power of another entity. 

Investments in associates and subsidiaries are accounted for at cost. 

3.3 PROPERTy AND EQUIPMENT 




3.3.1 RECOgNITION AND MEASUREMENT 

Items of property and equipment are measured at cost less accumulated depreciation and accumulated 

impairment losses. 

Cost includes expenditure that is directly attributable to the acquisition of the asset. 

Any gain or loss on disposal of an item of property and equipment is recognised in profit or loss. 

The company capitalizes subsequent expenditure when it is probable that economic benefits will flow 

to the company as a result of expenditure. 

82




3.3.2 DEPRECIATION 

Items of property and equipment are depreciated on a straight-line basis in profit or loss over the 

estimated useful lives of each component. 

Items of property and equipment are depreciated from the date that they are installed and are 

ready for use. The estimated useful lives for the current and comparative years of significant items of 

property and equipment are as follows: 

Leasehold improvements 5 years 

Motor Vehicles 5 years 

Computer equipment 5 years 

Office equipment 5 years 

Furniture and Fittings 5 years 

Depreciation methods, useful lives and residual values are reviewed at each reporting date and 

adjusted if appropriate. 

3.4 LEASED ASSETS 

Operating leases are not recognised in the Company’s statement of financial position. 

3.5 IMPAIRMENT 

3.5.1 NON-DERIVATIVE fINANCIAL ASSETS 

A financial asset not classified as at fair value through profit or loss is assessed at each reporting date 

to determine whether there is objective evidence that it is impaired. A financial asset is impaired if 

there is objective evidence of impairment as a result of one or more events that occurred after the 

initial recognition of the asset, and that loss event(s) had an impact on the estimated future cash flows 

of that asset that can be estimated reliably. Objective evidence that financial assets are impaired 

includes default or delinquency by a debtor, restructuring of an amount due to the Company on 

terms that the Company would not consider otherwise, indications that a debtor or Issuer will enter 

bankruptcy, adverse changes in the payment status of borrowers or issuers, economic conditions 

that correlate with defaults or the disappearance of an active market for a security. In addition, for an investment 

in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence 

of impairment. 

financial assets measured at amortised cost 

The Company considers evidence of impairment for financial assets measured at amortised cost at 

both a specific asset and collective level. All Individually Significant assets are assessed for specific 

Impairment. Those found not to be specifically impaired are then collectively assessed for any 

Impairment that has been incurred but not yet identified. Assets that are not individually significant 

are collectively assessed for impairment by grouping together assets with similar risk characteristics 

default, the timing of recoveries and the amount of loss incurred, adjusted for management's 

judgment as to whether current economic and credit conditions are such that the actual losses are 

likely to be greater or less than suggested by historical trends. An impairment loss in respect of a 

financial asset measured at amortised cost is calculated as the difference between its carrying amount 

and the present value of the estimated future cash flows discounted at the asset's original effective 

83 


3.6 TAx 

interest rate. Losses are recognised in profit or loss and reflected in an allowance account against 

loans and receivables. Interest on the impaired asset continues to be recognised. When an event o 

ccurring after the impairment was recognised causes the amount of impairment loss to decrease, the 

decrease in impairment loss is reversed through profit or loss. 

3.5.2 NON-fINANCIAL ASSETS 

The carrying amounts of the Company's non-financial assets, are reviewed at each reporting date 

to determine whether there is any indication of impairment. If any such indication exists, then the 

asset's recoverable amount is estimated. An impairment loss is recognised if the carrying amount of 

an asset exceeds its recoverable amount. 

Exploration and Evaluation assets are assessed for impairment if (i) sufficient data exists to determine 

technical feasibility and commercial viability, and (ii) facts and circumstances suggest that the carrying 

amount exceeds the recoverable amount. Losses are recognised in profit or loss. 

3.5.3 EMPLOyEE BENEfITS 




Post employment benefits 

The company’s employees are on a defined contribution plan. Obligations for contributions to the 

defined contribution plan are recognised as an employee benefit expense in profit or loss in the 

periods during which related services are rendered by employees. 

Short-term benefits 

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed 

as the relevant service is provided. A liability is recognised for the amount expected to be paid under 

short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive 

obligation to pay this amount as a result of past service provided by the employee and the obligation 

can be estimated reliably. 

Tax expense comprises current and deferred tax. Current tax and deferred tax is recognised in profit or 

loss except to the extent that it relates to a business combination, or Items recognised directly in equity or in 

other comprehensive income. 

Current tax is the expected tax payable or receivable on the taxable income or loss for the year using tax rates 

enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of 

previous years. Current tax payable also includes any tax liability arising from the declaration of dividends. 

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and 

liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not 

recognized for: 

temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business 

combination and that affects neither accounting nor taxable profit or loss 

temporary differences related to Investments in subsidiaries and jointly controlled entities to the extent that it is 

probable that they will not reverse in the foreseeable future and; 

taxable temporary differences arising on the initial recognition of goodwill. 


84




Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they 

reverse, using tax rates enacted or substantively enacted at the reporting date. 

In determining the amount of current and deferred tax the Company takes into account the impact of uncertain 

tax positions and whether additional taxes may be due. The Company believes that it’s accruals for tax 

liabilities are adequate for all open tax years based on Its assessment of many factors, including interpretations 

of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series 

of judgments about future events. New information may become available that causes the Company to 

change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact 

tax expense in the period that such a determination is made. 

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities 

and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different 

tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and 

liabilities will be realised simultaneously. 

A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to 

the extent that it is probable that future taxable profits will be available against which they can be utilised. 

Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer 

probable that the elated tax benefit will be realised. 

3.7 REVENUE RECOgNITION 

3.7.1 DIVIDEND INCOME 

Dividend income is recorded when the Company’s right to receive the payment is established. 

3.7.2 NET gAIN fROM fINANCIAL INSTRUMENTS AT fAIR VALUE THROUgH PROfIT AND LOSS 

The net gain from financial instruments held at fair value through profit or loss includes all realised 

and unrealised fair value changes, but excludes interest and dividend income on short positions. The 

Company uses the first-in, first-out method to determine the gain on disposal. 

3.7.3 INTEREST 

Interest income and expense, are recognised in profit or loss using the effective interest method. 

The effective interest rate is the rate that exactly discounts the estimated future cash payments and 

receipts through the expected life of the financial asset or liability (or, where appropriate, a shorter 

period) to the carrying amount of the financial asset or liability. When calculating the effective interest 

rate, the Company estimates future cash flows considering all contractual terms of the financial 

instrument, but not future credit losses. The calculation of the effective interest rate includes all fees 

and points paid or received that are an integral part of the effective interest rate. Transaction costs 

include incremental costs that are directly attributable to the acquisition or issue of a financial asset 

or liability. 

Interest is presented in the following lines in the statement of comprehensive income: 

Interest receivable in “interest income” line; 

Interest payable in “finance costs” line. 

85 


3.8 ExPLORATION AND EVALUATION COSTS 

Exploration and valuation costs, including the costs of acquiring licenses, are capitalised as exploration and 

evaluation assets (E&E assets) on a project by-project basis pending determination of the technical 

feasibility and commercial viability of the project. The capitalised costs are presented as intangible 

E&E assets. When a project is abandoned, the related costs are recognised in profit or loss immediately. 

E&E assets are assessed for impairment if (i) sufficient data exists to determine technical feasibility 

and commercial viability, and (ii) facts and circumstances suggest that the carrying amount exceeds 

the recoverable amount (see impairment, note 3.4). 

The technical feasibility and commercial viability of extracting a mineral resource is considered to be 

determinable when proven reserves are determined to exist. Upon determination of proven reserves, 

intangible E&E assets are transferred to a separate category within tangible assets. 

Expenditure deemed to be unsuccessful is recognised in profit or loss immediately. 

3.9 RELATED PARTIES 

Parties are considered to be related if one party has the ability to control the other party or exercise significant 

influence over the other party in making financial and operating decisions. 

4. fINANCIAL INSTRUMENTS AND ASSOCIATED RISK 

4.1 CURRENCy PROfILE 

The Company’s financial assets and liabilities are denominated in United States Dollars (“USD”). 

4.2 ASSOCIATED RISKS 

The Company’s investment activities would expose it to various types of risk that are associated with the 

financial instruments in which it would invest in. The following is a summary of the main risks. 

4.3 CREDIT RISK 

Credit risk is the risk to the Company if a customer or a counterparty to a financial instrument fails to meet 

its contractual obligations and arises principally from the groups receivables. 

4.4 POLITICAL, ECONOMIC AND SOCIAL RISK 




Political, economic and social factors, changes in countries laws, regulations and the status of those countries’ 

relations with other countries may adversely affect the value of the Company’s assets. 


86




4.5 LIQUIDITy RISK 

Liquidity is the risk that the company will encounter difficulty in meeting the obligations associated with its 

financial liabilities that are settled by delivering cash or another financial asset. 

4.6 MARKET RISK 

Market risk is the risk that changes in markets prices, such as interest rates, equity prices, foreign exchange 

rates and credit spreads (not relating to changes in the obligor/issuer’s credit standing) will affect the 

company’s income or the fair value of its holdings of financial instruments. The objective of market risk 

management is to manage and control market risk exposures within acceptable parameters, while optimising 

the return. A risk management framework is reviewed regularly by the board and the audit comittee. 

Sensitivity Analysis – equity price risk 

The Company’s listed equity investments are on the Zimbabwe Stock Exchange. For such assets listed as at fair value 

through profit and loss, a 1% increase in the share price would have increased equity by USD 31,000 and a 1% 

change in share price in the opposite direction would have decreased equity by the same amount. 

5. NEW STANDARDS AND INTERPRETATIONS ISSUED NOT yET ADOPTED 

A number of new standards, amendments to standards and interpretations in issue were not yet effective as at 1 January 

2011, and have not be applied in preparing the financial information. The company does not plan to adopt these standards 

early. 

IAS 12, Deferred Tax: Recovery of Underlying Assets (effective from 1 january 2012 ) – this amendment introduces an 

exception to the general measurement requirements of IAS 12 Income Taxes in respect of investment properties measured 

at fair value. The measurement of deferred tax assets and liabilities, in this limited circumstance, is based on a rebuttable 

presumption that the carrying amount of the investment property will be recovered entirely through sale. The presumption can 

be rebutted only if the investment property is depreciable and held within a business model whose objective is to consume 

substantially all of the asset’s economic benefits over the life of the asset. IAS 12 will be adopted for the first time for the 

year ending 31 December 2012 and will be applied retrospectively. There is no expected impact on the financial statements. 

IAS 1, Presentation of Items of Other Comprehensive Income (effective from 1 july 2012) – this amendment requires 

that an entity present separately the items of other comprehensive income (OCI) that would be reclassified to profit or loss 

in the future if certain conditions are met from those that would never be reclassified to profit or loss; and change the title 

of the statement of comprehensive income to the statement of profit or loss and other comprehensive income. However, an 

entity is still allowed to use other titles. 

IAS 1 will be adopted for the first time for the year ending 31 December 2013. There is no significant impact on the financial 

statements as this amendment will only require additional disclosure. 

IfRS 10, Consolidated financial Statements (effective from 1 january 2013 – this standard introduces a new approach 

to determining which investees should be consolidated and provides a single model to be applied in the control analysis 

for all investees. An investor controls an investee when it is exposed or has rights to variable returns from its involvement 

with that investee, it has the ability to affect those returns through its power over that investee and there is a link between 

power and returns. Control is reassessed as facts and circumstances change. IfRS 10 supersedes IAS 27 (2008) and SIC-12 

Consolidation - Special Purpose Entities. 

87 





IfRS 10 will be adopted for the first time for the year ending 31 December 2013. The impact on the financial statements has 

not yet been estimated. 

IfRS 12, Disclosure of Interests in Other Entities (effective from 1 january 2013) – this standard combines, in a 

single standard, the disclosure requirements for subsidiaries, associates and joint arrangements, as well as unconsolidated 

structured entities. The required disclosures aim to provide information to enable user to evaluate the nature of, and risks 

associated with, an entity’s interests in other entities and the effects of those interests on the entity’s financial position, financial 

performance and cash flows. 

The adoption of the new standard in 2013 will increase the level of disclosure provided for the entity’s interests in subsidiaries, 

joint arrangements, associates and structured entities. This standard may impact the disclosure to be provided by the 

Company, but will have to be assessed based on IfRS 10 and IfRS 11 conclusions. 

IfRS 13, fair value Measurement (effective 13 january 2013) – this standard introduces a single source of guidance 

on fair value measurement for both financial and non-financial assets and liabilities by defining fair value as an exit price, 

establishing a framework for measuring fair value and setting out disclosures requirements for fair value measurements. 

IfRS 13 will be adopted for the first time for the year ending 31 December 2013. The impact on the financial statements has 

not yet been estimated. 

IAS 27 Separate financial Statements (2011) supersedes IAS 27 (2008) will be adopted in the year 2013 and is effective 

for year-ends commencing on or after 1 January 2013. IAS 27 (2011) carries forward the existing accounting and disclosure 

requirements for separate financial statements, with some minor clarifications. There will be no material impact on the 

financial statements. 

IAS 28 Investments in Associates and joint Ventures (2011) supersedes IAS 28 (2008) will be adopted for the 2013 

financial year and is effective for year-ends commencing on or after 1 January 2013. IAS 28 (2011) makes the following 

amendments: (i) IfRS 5 applies to an investment, or a portion of an investment, in an associate or a joint venture that meets 

the criteria to be classified as held for sale; and (ii) on cessation of significant influence or joint control, even if an investment 

in an associate becomes an investment in a joint venture or vice versa, the entity does not remeasure the retained interest. 

No material impact is expected on the financial statements. 

IfRS 9 financial Instruments issued in November 2009 introduces new requirements for the classification and 

measurement of financial assets. IfRS 9 amended in October 2010 includes the requirements for the classification and 

measurement of financial liabilities and for derecognition. 

IfRS 9 requires all recognised financial assets that are within the scope of IAS 39 financial Instruments: Recognition 

and Measurement to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held 

within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are 

solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end 

of subsequent accounting periods. All other debt investments and equity investments are measured at their fair values at the 

end of subsequent accounting periods. 


88




IfRS 11 joint Arrangements issued on 12 May 2011 provides for a more realistic reflection of joint arrangements by 

focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case). The standard 

addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in 

jointly controlled entities. The effective date of IfRS 11 is for annual periods beginning on or after 1 January 2013. Earlier 

application is permitted. If an entity applies IfRS 11 earlier, it must disclose that fact and apply IfRS 10, IfRS 12, IAS 27 

Separate financial Statements and IAS 28 Investments in Associates and joint Ventures at the same time. The Company 

does not intend to early adopt IfRS 11 and no impact is expected on the financial statements as the Company is not engaged 

in any joint arrangements at present. 

6. DETERMINATION Of fAIR VALUES 

A number of the Company's accounting policies and disclosures require the determination of fair value, for both financial 

and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based 

on the following methods. When applicable, further information about the assumptions made in determining fair values is 

disclosed in the notes specific to the assets or liability. 

6.1 EQUITy AND DEBT SECURITIES 

The fair value of equity and debt securities is determined by reference to their quoted closing bid price at 

the reporting sate, or if unquoted, determined using a valuation technique. Valuation techniques employed 

included market multiples and discounted cash flow analysis using expected future cash flow and a market- 

related discount rate. 

6.2 TRADE AND OTHER RECEIVABLES 

The fair value of trade and other receivables is estimated at the present value of future cash flows, 

discounted at the market rate of interest at the reporting date. This fair value is determined for disclosure 

purposes. 

89 


7. NET gAIN fROM INSTRUMENTS AT fAIR VALUE 

THROUgH PROfIT AND LOSS 


2011 

USD 

Gains on listed investments 695 799 

Gains on unlisted investments 523 561 

8. OTHER OPERATINg ExPENSES 

1 219 360 

Contributions to a defined contribution pension plan 6 260 

Pre-Incorporation expenses 130 567 

Social security contributions 1 020 

Other staff costs 244 220 

Office rental 21 000 

Administration costs 230 830 

Depreciation 10 001 

9. INTEREST ExPENSE 

643 898 

Interest on ABC Holdings facility (see Note 18) 179 678 

Interest on Ecobank Transnational Incorporated facility (see Note 18) 164 444 

10. TAx CREDIT 




344 122 

Current tax expense - 

Deferred tax asset movement 215 413 

TAx CREDIT 215 413 

90




10.1 TAx RATE RECONCILIATION 


2011 

USD 

Profit before tax 195 702 

Tax calculated at 25.75% (50 393) 

Tax effect of: 

Items taxed at different rates 2 471 

Expenses not deductible for income tax purposes 263 335 

INCOME TAx CREDIT 215 413 

11. CASH AND CASH EQUIVALENTS 

Cash and bank balances 513 153 

12. fINANCIAL INSTRUMENTS HELD AT fAIR VALUE 

THROUgH PROfIT AND LOSS 

Quoted investments 475 000 

13. INVESTMENT IN SUBSIDIARy 

Investment in Brainworks Petroleum (Private) Limited 368 000 

The Company acquired 100% of this fuel trading company in November 2011. 

14. INVESTMENT IN ASSOCIATE 

Investment in Ecobank Zimbabwe 14 923 014 

The Company increased its shareholding in Ecobank Zimbabwe to a significant 

interest from 12.9% to 36.91% on 31 December 2011. This is an unlisted investment 

in a retail bank and an asset management company. The investment is held at cost. 

91

15. OTHER ASSETS 


2011 

USD 

Lower Gweru Project 137 389 

Receivables 636 812 

16. DEfERRED TAx 

DEfERRED TAx ARISINg fROM 




774 201 

Fair value on listed investments (1 624) 

Fair value on unlisted investments (26 167) 

Leasehold improvements (132) 

Property and equipment (2 339) 

Tax loss 245 675 

DEfERRED TAx ASSET 215 413 

92




17. PROPERTy AND EQUIPMENT 

COST 

LEASEHOLD MOTOR COMPUTER OffICE fURNITURE 

IMPROVEMENTS VEHICLES EQUIPMENT EQUIPMENT & fITTINgS TOTAL 

USD USD USD USD USD USD 

Opening balance - - - - - - 

Additions 5 500 16 150 10 032 16 748 31 944 80 374 

DEPRECIATION 

5 500 16 150 10 032 16 748 31 944 80 374 

Opening balance - - - - - - 

Charge for the period (367) (1 884) (1 286) (2 119) (4 345) (10 001) 

ACCUMULATED DEPRECIATION (367) (1 884) (1 286) (2 119) (4 345) (10 001) 

NET CARRyINg AMOUNT 5 133 14 266 8 746 14 628 27 600 70 374 

93 


18. BORROWINgS 


2011 

USD 

ABC Holdings Limited - 18.1 1 562 458 

Ecobank Transnational Incorporated (ETI) - 18.2 3 364 444 

Deferred payments - 18.3 340 000 

18.1 The amount due to ABC Holdings Limited matures on 

31 December 2021 and attracts interest at 15% per annum. 

Interest is payable half yearly in arrears. The facility is 

secured by director’s residential properties. 

18.2 The amount due to Ecobank Transnational Incorporated 

matures on 6 May 2013 and attracts interest at 10% per 

annum. Interest is payable half yearly in arrears. The facility 

is secured by 70 000 000 shares in Ecobank Zimbabwe. 

18.3 Amounts relates to the balance that remained for shares 

purchased under a deferred payment structure. The balance 

was cleared in the first two months of 2012 and was unsecured. 

19. BALANCES DUE TO STOCKBROKERS 

5 266 902 

Due to stockbrokers 289 727 

The amounts were settled in January 2012 and related to listed 

share purchases in the ordinary course of business. 

20. OTHER LIABILITIES 




289 727 

Audit fees 12 000 

Other 8 161 

94 

20 161




21. CAPITAL AND RESERVES 


2011 

USD 

21.1 AUTHORISED 

1 000 000 000 ordinary shares of USD 0.0001 each 100 000 

21.2 ISSUED AND fULLy PAID 

301 300 070 ordinary shares of USD 0.0001 each 30 130 

21.3 SHARE PREMIUM 

Premium on ordinary shares 11 321 120 

All shares rank equally with regard to the Company’s residual assets. The 

holders of ordinary shares are entitled to one vote per share at meetings of 

the Company. The unissued shares are under the control of the directors. 

22. OPERATINg LEASES 

The Company has operating leases for its office premises. The lease term is for one 

year renewable. The minimum lease payments under the operating lease were: 

No later than one year 9 000 

23. RELATED PARTIES 

Directors secured the ABC Holdings Limited facility to the company through their 

residential properties see note 18. No other related party transaction apart from 

normal remuneration for services as executive directors occurred. 

23.1 RELATED PARTy BALANCES 

Receivables due from group companies 

Brainworks Petroleum (Private) Limited 82 962 

Borrowings obtained from related party companies 

Ecobank Transnational Incorporated 3 364 444 

23.2 RELATED PARTy TRANSACTIONS 

Interest on loan from Ecobank Transnational Incorporated 164 444 

95

23.3 COMPENSATION Of KEy MANAgEMENT PERSONNEL 


2011 

USD 

Short-term employee benefits 192 500 

Post employment pension and medical aid benefits 5 250 

Other long-term benefits - 

Termination benefits - 

TOTAL COMPENSATION 197 750 

24. fINANCIAL RISK MANAgEMENT 

24.1 LIQUIDITy RISK 

Definition 

Liquidity risk arises in the general funding of the Company's activities and in the management of positions. 

It includes the risk of being unable to fund assets at appropriate maturities and rates and the risk of being 

unable to liquidate an asset at a reasonable price and in an appropriate time frame. 

Identification techniques 

This risk is identified through gap and maturity analyses. 




Measurement methods 

Liquidity risk is measured using the gap analysis techniques and the term structure of assets and liabilities 

Monitoring and controlling mechanisms 

The funding gap is monitored through a number of management reports, including maturity profiles. The 

Company continually assesses risk by identifying and monitoring changes in funding required to meet 

business objectives and targets set in terms of the overall Company strategy. 

Adequacy and effectiveness of risk management systems 

The liquidity risk management and control mechanisms in place are adequate, effective and are adhered to by all staff 

members. 

96




24.1 LIQUIDITy RISK...CONTINUED... 

LIQUIDITy gAP ANALySIS 

As at 31 December 2011 

ASSETS 

UP TO 1 2 TO 6 7 TO 12 ABOVE 12 

MONTH MONTHS MONTHS MONTHS OTHER TOTAL 

USD USD USD USD USD USD 

Cash and cash equivalents 513 153 - - - - 513 153 

Financial instruments at fair value 475 000 - - - - 475 000 

Other assets - - 774 201 - - 774 201 

Investments in subsidiaries - - - - 368 000 368 000 

Investment in associate - - - - 14 923 014 14 923 014 

Property and equipment - - 70 374 - - 70 374 

Deferred taxation - - - - 215 413 215 413 

LIABILITIES 

988 153 - 844 575 - 15 506 427 17 339 155 

Borrowings - 620 383 280 383 280 383 4 085 753 5 266 902 

Balances due to stockbrokers 289 727 - - - - 289 727 

Other liabilities - 20 161 - - - 20 161 

Total Equity - - - - - 11 762 365 

289 727 640 544 280 383 280 383 4 085 753 17 339 155 

Sensitivity gap 698 426 (640 544) 564 192 (280 383) 11 420 674 - 

Cumulative gap 698 426 57 882 622 074 341 691 11 762 365 - 

97 


24.2 MARKET RISK 

Market risk arises from adverse movements in the market place which cause interest rate, foreign exchange 

rate and equity price fluctuations in the markets that the Company operates. 

INTEREST RATE RISK 

Definition 

The Company's operations are subject to the risk of interest rate fluctuations to the extent that interest- 

earning assets and interest bearing liabilities mature or reprice at different times or in differing amounts. 

Risk management activities are aimed at optimising net interest income, given market interest rate levels 

consistent with the Company's business strategies. 


Interest risk is identified using the term structure of assets and liabilities. 


Rate sensitive assets and liabilities are analysed and a maturity profile exhibited. 

IMPACT EVALUATION 

The Company has evaluated this risk as low. At present it does not have any variable rate assets or liabilities 

Strategies for management/mitigation 

The board of directors reviews the gap analyses and appropriate action is taken to keep risk within set limits. 

fOREIgN ExCHANgE RISK 

Definition 

Foreign exchange risk is the risk that arises from adverse changes in foreign exchange rates and emanates 

from a mismatch between foreign currency inflows and outflows. 


The risk is identified through the analysis of the Company's open foreign exchange positions. 


The risk is measured through the Company's open foreign exchange positions. 

Impact evaluation 

The Company has evaluated this risk as low in view of the fact that at present it does not have any open 

foreign exchange positions. 


The risk is managed through market analysis techniques. 




Monitoring and controlling mechanisms 

The risk is controlled through the use of limits set by the board on the overall foreign exchange position. 


98




Adequacy and effectiveness of risk management system 

Management is confident that the foreign exchange risk management systems in place are adequate, effective 

and are complied with in all material respects by all staff members. 

EQUITy PRICE RISK 

Definition 

Equity price risk is the possibility that equity prices will fluctuate affecting the fair value of equity investments 

that derive their value from a particular equity investment of index of equity prices. 


The Company tracks the performance of all its equity investments using the price lists issued by members of 

the Zimbabwe Stock Exchange. 


Based on the price lists from the members of the Zimbabwe Stock Exchange, the Company quantifies the risk. 


Equity price risk is assessed as high as the Company’s equities are in a single counter. 


The Company manages its exposure to equity price risk by monitoring and evaluating stock performances. 

Adequacy and effectiveness of risk management system 

The risk management system has proved adequate and effective in managing equity price risk. 

Sensitivity analysis 

A 5% increase/decrease in the value of listed shares as at 31 December 2011 would have resulted in an 

increase/decrease of USD 23 750 to the reported Company’s profit and an increase/decrease in the 

statement of financial position of USD 23 750. 

24.3 CREDIT RISK 

Definition 

Credit risk is the risk that a counter party will not honour its obligations to the Company as and when they 

become due. 


The company assesses prospective customers or investees prior to granting credit facilities to them. 


The risk is measured through assessing the risk of default through investigations of the counterparty’s credit 

worthiness. 


Credit risk is rated low in the Company as the systems for identification measurement and controlling the risk 

are effective. 

99 



The Company has a credit risk management process which operates through authorization limits. 

Exposure to credit risk 

The carrying amounts of the financial assets represent the maximum credit exposure. The maximum exposure 

at reporting date was as follows: 

NOTE CARRyINg 

AMOUNT 

Receivables 15 636 812 

Receivables due from group companies 23.1 82 962 

25. CAPITAL COMMITMENTS 

719 774 

During the year the Company signed a memorandum of understanding with Senwes International Holdings (Proprietary) 

Limited, a South African agri-business company, for the set up of an agri-business trading company in Zimbabwe, Senwes 

Zimbabwe. The set up of the company will require USD 1 000 000 capitalisation. Brainworks share of this commitment is 

USD 400 000 to be paid during 2012. 

During the year the Company lodged an application with IPEC for a life assurance license. The business will be capitalised 

through a combination of existing investments and cash. The immediate capital commitment for this venture is a cash injection 

of USD 500 000 to be paid during 2012. 

During the year the Company lodged an application with Reserve Bank of Zimbabwe for a micro-finance institution license 

which was granted on 19 March 2012. The Company signed a memorandum of understanding with GetBucks Limited, a 

Mauritius registered financial services group, for the set up of a consumer finance business in Zimbabwe. The set up of the 

company will require USD 1 000 000 capitalisation. Brainworks share of this commitment is USD 450 000 to be paid during 

2012. 

26. SUBSEQUENT EVENTS 

There were no major events subsequent to the reporting period. 





100


PRE-IPO PRIVATE PLACEMENT 


4 Arden Road 

Newlands 

Harare 

Zimbabwe 

TEL : +263 4 782 849 

fAx : +263 4 782 855 

EMAIL : enquiry@brainworkscapital.com 

WEBSITE : www.brainworkscapital.com 

DESIgN, LAyOUT & PRODUCTION : www.mantaraydesign.co.za 

BRAINWORKS CAPITAL MANAgEMENT (PRIVATE) LIMITED www.brainworkscapital.com PRIVATE PLACEMENT MEMORANDUM 2012

Brainworks 2012 Private Placement Memorandum

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?