ZIMPAPERS (1980) LIMITED

UNAUDITED RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2013

CHAIRMAN'S STATEMENT
1.Overview It gives me great pleasure to present the unaudited financial results of Zimbabwe Newspapers (1980) Ltd (Zimpapers) for the half year ended 30 June 2013. The first half of 2013 continued to enjoy relative economic stability which was brought by the introduction of the multi-currency system in 2009. However, the economy still faces some challenges which include low industry capacity utilisation, company closures, low formal employment and also unreliable power and water supplies. Despite these challenges, the economy is estimated to grow by 3.4% in 2013, while year on year inflation declined to 1.87% in June 2013 from 2.91% in December 2012. The low levels of inflation were largely attributed to the generally weaker South African rand, which made imports into the country cheaper, and low demand as a result of limited levels of liquidity characteristic of the economy since dollarization. The Board of Directors and Management remain committed to high standards of good corporate governance. The Group's Audit and Finance Committee, and other committees, met regularly throughout the period under review to assess operations and adequacy of systems and procedures that safeguard the company's assets. 7. Corporate and Social investment The Group undertook various corporate social investment activities during the period under review. Some of the communities which benefited from the program are Robert Mugabe Orphanage in Mutare, Maungwa Community in Masvingo, Zororai Old Peoples Home in Mutare and Melfort Farm Old Peoples Home in Marondera. The Group remains committed to giving back to the community as it feels it has a role to play in improving and touching other people's lives. 8. Dividend The Directors saw it prudent not to declare a dividend in order to preserve the available resources for working capital, liquidating the debt, and also to complete its recapitalisation programme to ensure that the Group is properly repositioned for the future. 9. Outlook The Board and Management are upbeat about the future performance of the Group especially on the backdrop of the recapitalisation that is taking place like the new printing press. The new printing press is expected to usher in new revenue streams, and also bring competitive advantage of the Groups products through efficiency and quality. 10. Appreciation I would like to express my gratitude to our customers, advertisers, readers, listeners and all stakeholders for their support during the period under review. I would also like to take this opportunity to thank my fellow Directors, the Group Chief Executive, Mr. J.M. Mutasa, his management team, and all members of staff, for their continued dedication and commitment to the success of the company.

Abridged Consolidated statement of cash flows

for the half year ended 30 June 2013
Unaudited 6 months to June 2013 US$
Net cash flows from operations Net cash used in investing activities Net cash (used in)/ from financing activities NET DECREASE IN CASH AND CASH EQUIVALENTS 1,213,210 (1,160,714) (439,488) (386,992)

Unaudited 6 months to June 2012 US$

538,422 (1,038,207) 97,682 (402,103) (1,157,850) (1,559,953)

Dr. P. Chimedza

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD(2,157,008) CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (2,544,000)

The liquidity constraints have continued to affect the market's ability to buy newspapers or place adverts. Capacity utilisation of most companies has remained low thereby affecting their contribution to circulation and advertising revenue. However, sectors like retail are performing relatively well and are contributing significantly to the media industry in terms of circulation and advertising revenue. 2. Media industry operating environment The traditional print newspaper is under threat from the effects of technology advancements. There is a technological shift that has resulted in more usage of digital platforms which are cheaper and convenient. There are now more alternative sources of information ranging from social media platforms to on-line websites. Advertising platforms are also increasing resulting in more players in the industry. Sector magazines, e-mail advertising, and on-line advertising are some of the emerging products. 3. Competition Competition in the daily and weekly newspapers is increasing. Despite the competition, Zimpapers still maintains its market leadership especially as it is now an integrated media house. Zimpapers has been evolving its newspaper business model to incorporate multiple print and digital publishing products to reach new audiences and better satisfy the needs of a demanding media audience whose appetite for the traditional printed newspaper has been dwindling while the demand for new print and digital formats has been increasing. Inorder to remain relevant and grow the media business, the Zimpapers business model has evolved to include popular tabloids, magazines, radio and digital media based on a convergence policy that channels news content across all its platforms. 4. Operations Review 4.1 Capitalisation The installation of the Groups new printing press, and production and accounting system are on course, with the commissioning of the press expected at the end of September 2013. The recapitalisation has been a milestone achievement in the history of the Group considering the illiquid operating environment obtaining in the market. The recapitalisation is expected to improve capacity utilisation, operational efficiency and production of quality products to the benefit of readers and advertisers. 4.2 Digital Products The Group is continuously focusing on developing digital products compatible with mobile devices such as smart phones, tablets, and android devices as well as introducing on-line products like online classified adverts, e-mail advertising, and also coming up with advertising products that suit the informal sector. Zimpapers is also focusing on mobile and subscription products like breaking news, mobile classifieds, and mobile sports updates.

Consolidated statement of changes in equity

for the half year ended 30 June 2013
Non distributable reserve US$ 11,398,823 (400,000) 10,998,823 10,963,423 10,963,423 Accumulated loss US$ (3,730,944) (1,112,171) 400,000 (4,443,115) (3,233,358) 357,596 (2,875,762)

Share capital US$ Balance at 1 January, 2012 Total comprehensive income for the period Classification to retained earnings 57,600 57,600 57,600 57,600

Total US$ 7,725,479 (1,112,171) 6,613,308 7,787,665 357,596 8,145,261

Dr. P. Chimedza OUTGOING CHAIRMAN

Balance at 30 June, 2012 Balance at 31 December, 2012 Total comprehensive income for the period Balance at 30 June, 2013

Consolidated statement of comprehensive income

for the half year ended 30 June 2013
Unaudited 6 months to June 2013 US$
Revenue Cost of sales Gross profit Other operating income Operating expenses Selling and distribution expenses Administration expenses Profit/ (loss) from operations Net finance cost Exchange gain/(loss) Profit/ (loss) before tax Tax expense Profit /(loss) for the period Other comprehensive income Total comprehensive income for the period Number of shares in issue(000s) Basic earnings/ (loss) per share (cents) Diluted earnings/ (loss) per share (cents) 22,364,204 5,890,753 16,473,451 793,825 16,241,867 3,340,525 12,901,342 1,025,409 (523,658) 1,720 503,471 (145,875) 357,596 357,596 576,000 0.06 0.06

Unaudited 6 months to June 2012 US$

19,555,858 5,993,781 13,562,077 244,551 14,363,738 3,269,138 11,094,600 (557,110) (387,834) (43,349) (988,293) (305,718) (1,294,011) (1,294,011) 576,000 (0.22) (0.22)

Business segment report

for the half year ended 30 June 2013
The commercial printing segment is involved in the printing of books, labels, security documents, diaries, calendars and offering of origination services. The newspaper segment is involved in newspaper and magazine printing and publishing. The broadcasting segment is a commercial free-to-air radio station. The corporate segment comprises Head Office administrative operations. Newspapers Printing US$ Revenue Results Segment (loss)/ profit Net finance cost Profit on sale of fixed assets Exchange gain Tax expense Profit for the period Other information Segment assets Segment liabilities Deferred tax liability Capital expenditure Depreciation 1,185,519 419,703 108,996 53,389 67,562 20,236,640 13,109,855 7,375,275 4,098,420 1,746,499 820,940 1,582,789 1,891,678 30,941,203 19,920,893 2,875,049 1,238,908 596,261 19,105,827 Commercial Printing US$ 1,835,777 Broadcasting US$ 1,422,600 Corporate Consolidated US$ US$ 22,364,204

1,772,309

(151,584)

(179,778)

(417,463)

1,023,484 (523,658) 1,925 1,720 (145,875) 357,596

5. Financial Performance 5.1 Overall The Group recorded revenue of $22.4 million during the first half period compared to $19.6 million during the same period last year, which is a 14% growth. The gross profit also increased to $16.5 million from $13.5 million during the same period last year. The increase is mainly attributable to efficient purchasing of critical raw materials especially newsprint and inks. The Group also recorded a profit before tax of $503 471 compared to a loss of $988 293 during the same period last year. The profitability is mainly attributed to the effective implementation of strategies of revenue growth and cost containment that the company embarked on. However the Group experienced an increase in finance costs of $135 824 from $387 834 during the same period last year to $523 658. The increase in finance costs is a reflection of the expensive nature of short-term borrowings that the Group used to finance its much needed recapitalisation. The Board has resolved to dispose of non-core assets as a way of mitigating against huge borrowing costs and restructure its balance sheet. 5.2 Going Concern The directors have assessed the ability of the Group to continue operating as a going concern and believe that the preparation of the consolidated financial statements on a going concern basis is still appropriate. The Group posted a profit before tax of $503 471(2012: loss of $988 293) for the half year ended 30 June 2013. However, as of that date its current liabilities exceeded its current assets by $9 073 063 (December 2012: $8 471 230). The gearing ratio stood at 99.8% (December 2012: 103%), with a significant part of the borrowings being short term and expensive. The borrowings were used to purchase a new printing press and a new production and accounting system in order to replace the old equipment currently in use. The new equipment will be commissioned by end of September 2013. The Group is pursuing ways of restructuring its debt from short term to medium term in order to reduce cost of funds. The Group is in the process of identifying for disposal, noncore assets in order to liquidate some of the pressing statutory obligations and also enhance working capital. These initiatives, coupled with new revenue streams and operational efficiency to be achieved from the equipment, will ensure the Group achieves growth in revenue and profitability in 2013. It is on that basis that the consolidated financial statements have been prepared on a going concern basis. 5.3 Newspaper Division The newspaper division recorded an operating profit of $3.1 million before finance costs compared to $1.8 million the same period last year. The division continues to perform well despite the competition. The division is adopting new technology to fully exploit opportunities being offered by new media in order to mitigate the migration of readers from print to digital platforms. The division has also recently launched a new product called BH24. BH24 is a newsletter which provides premium business news targeting local business executives with information to make critical business decisions. BH24 is available as a mobile application or as a PDF file sent via e-mail. 5.4 Commercial Printing Division The Commercial printing division reduced its operating loss to $51 654 from $613 540 the previous year. The commercial printing division continues to be negatively affected by antiquated equipment and limited capacity, and also huge overheads and debt overhang which need to be liquidated. However the division continues to hold on to its market share despite the challenges. The division is managing to service its valued customers that include beverage manufacturers, food processors, publishers, and manufacturing companies. The Board is now looking into buying new machinery for the division, as it has now managed to recapitalise both the newspaper and broadcasting divisions. 5.5 Broadcasting Division The broadcasting division recorded an operating loss of $104 244 for the half year period. The division's performance is improving steadily as it continues to establish its brand in the radio market. The division has since installed new transmitters throughout the country in an effort to ensure nationwide coverage. The improvement in coverage is expected to attract increased advertising thereby improve the division's revenues and profitability. 6. Corporate governance

Consolidated statement of financial position

As at 30 June 2013
Unaudited 30 June 2013 US$
ASSETS Non-current assets Property, plant and equipment Intangible assets Long term investment Total non current assets Current assets Inventories Accounts receivable Investments at fair value through profit or loss Bank and cash balances

Notes to the consolidated unaudited financial statements

for the half year ended 30 June 2013
1. GENERAL INFORMATION 1.1 Nature of business Zimbabwe Newspapers (1980) Limited and its subsidiaries are incorporated in Zimbabwe. The Group's main business is that of newspaper proprietors, printers and publishers. The registration number of the company is 600/B280. 1.2 Currency The Group's functional and presentation currency is the United States dollar ("US$") 2. ACCOUNTING POLICIES

Audited 31 Dec 2012 US$

20,408,464 56,599 500,000 20,965,063

19,769,577 57,484 553,462 20,380,523

1,449,889 8,260,764 28,936 236,551 9,976,140 30,941,203

1,330,561 7,303,530 22,841 54,974 8,711,906 29,092,429

2.1 Basis of preparation This interim report complies with the requirements of IAS 34. The same accounting policies and methods of measurement and recognition as those applied in the 2012 annual financial statements have been followed in preparing this interim report.

Total assets EQUITY AND LIABILITIES Capital and reserves Share capital Non distributable reserve Accumulated loss

Unaudited 6 months to June 2013 US$

3. ACCOUNTS RECEIVABLE Trade receivables Other receivables less: allowance for credit losses 5,865,515 2,652,020 (256,771) 8,260,764

Unaudited 6 months to June 2012 US$

4,964,804 2,601,015 (262,289) 7,303,530

57,600 10,963,423 (2,875,762) 8,145,261

57,600 10,963,423 (3,233,358) 7,787,665

Non-current liabilities Long term loans Deferred tax Current liabilites Accounts payable Short term loans Related party balances Bank overdraft

871,691 2,875,049 3,746,740 4 5 7,009,809 4,477,443 4,781,399 2,780,551 19,049,202 22,795,942 30,941,203

1,392,454 2,729,174 4,121,628 6,471,647 4,396,166 4,103,341 2,211,982 17,183,136 21,304,764 29,092,429

4. ACCOUNTS PAYABLE Trade Other

435,030 6,574,779 7,009,809

685,974 5,785,673 6,471,647

5. RELATED PARTY PAYABLES Related party Zimpapers Medical Aid Society Zimpapers Pension Fund

Nature of relationship Guarantor Member

Balances due to related parties 1,223,522 315,165 3,557,877 3,788,176 4,781,399 4,103,341

Total liabilities Total equity and liabilities

Adolf A Majome (Mr) (Company Secretary)

Directors:

Dr Paul Chimedza* (Chairman), Mr Chakanyuka G. Karase (Vice Chairperson), Mr Justin M. Mutasa (Group Chief Executive), Dr. Charles M. B. Utete, Dr. Munyaradzi Kereke, Brig-Gen Epmarcus Kanhanga (Rtd)*, Dr. Nyasha Madzingira, Mr. Joseph S. Mandizha, Mr. Rungamo J. Mbire, Mr. Delma Lupepe, Mr Alexander Kanengoni

*Outgoing Directors

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