ABRID GED 201 3 YE AR E ND AUDI TE D RE SULTS

Registered Office: Palm Grove House, P.O. Box 3186, Wickhams Cay1 Road Town, Tortola British Virgin Islands IBC Number: 243845

Regional Office: 202 Seke Road, Graniteside, Harare Zimbabwe

CHAIRMANS STATEMENT
OVERVIEW I am pleased to report ARTs 2013 results, achieved under a considerably difficult operating environment. The liquidity conditions in the market continued to deteriorate and consequently turnover achieved by the Group remained at the same levels as recorded last year. In line with the Group strategy, the operations were able to maintain margins and improve cashflow. FINANCIAL The Group recorded revenue of US$33.7 million, registering a marginal decline from 2012 revenue of US$34.1 million. Margins remained firm at 33% (2012: 33%), with resultant earnings of US$399,000 compared to US$433,000 achieved last year. Overall capacity utilization increased by one percentage point to 65%, but sales revenues were lower across all the business units, with an average volume decline of 2% in batteries and tissue operations. Operating expenses increased by US$431,000 (4.8%) compared to last year, mainly as a result of increased product promotional expenditure incurred in order to improve product visibility on the back of significant onslaught from imported competition. Borrowings declined from US$9,655 million in 2012 to US$8,379 million as a result of cash generated from non-core asset disposals and internal cash generation, and as a consequence, interest cost savings of US$221,000 were realized. Although cash of US$3,353million was generated from operations, limited capital expenditure of US$598,000 was incurred as a significant amount of cash was applied to servicing debt cost. OPERATIONS Demand for the Groups products throughout the operations was constrained by the poor liquidity in the economy as well as the intense competition emanating from imports. In addition, the devaluation of the South African Rand by 22% in the year rendered locally manufactured product uncompetitive, with tissue being the most affected. Exports were also constrained by competition in the traditional Southern African markets of Zambia, Malawi and Mozambique. However, our product brands; namely Exide battery, Softex tissue and Eversharp pen remained dominant in the local market as well as Zambia in respect of the batteries. Battery Manufacturing and Distribution Division The divisions turnover at US$20.375million decreased by 1.14% when compared to 2012,mainly arising from lower trading volumes. The business unit experienced volume decline in the second half of the year as a result of the tight liquidity conditions as well as competition from imported brands. Consequently market prices were reduced in order to activate demand. The divisions earnings for the year however firmed to US$1.304million from US$1.261million in 2012 on the back of tighter cost controls and higher margins in the Zambia market. Capacity utilization in the Chloride factory improved from 65% in 2012 to 67%. The investments in factory equipment made in 2012 as well as a better working capital position resulted in improved factory efficiencies and higher productivity. The equipment replacement programme, although constrained by inadequate funding, has continued in the current year with the installation of a new battery mould targeted at reducing warranties. The lead pricing on the London Metal Exchange declined from US$2,300 per tonne in 2012 to US$2,100 per tonne at September 2013, however the lead smelter operation carried a comfortable manufacturing margin. The automotive factory remains behind current technological advancements in battery manufacture, and there is a need to capitalize the factory and upgrade it to modern standards. The current programme of recapitalization from the limited internal resources is not sustainable and may not be able to restore competitiveness and enable timely response to market trends. The industrial business unit, constituting 5% of the factorys turnover, recorded a 35% decline in volumes. This unit is being remodelled as it cannot compete effectively given the scale of operation. In Battery Express, the Zimbabwe distribution unit volumes declined by 4% mainly impacted by local and imported competition, with the situation exacerbated by the declining purchasing power in the economy. In the latter part of the year market prices were reduced in response to competition, resulting in lower margins .Consequently the unit recorded lower earnings when compared to 2012. The unit also experienced stock outs in the solar and imported stock ranges as a result of inability to access credit from suppliers. The Battery Express distribution model is being reviewed in order to streamline operations and ensure efficient distribution of our Exide brand into the market. Battery volumes in the Zambia market declined by 2%, with intense competition being registered as barriers to entry in that economy are low. However, the business benefited from increased margins arising from procurement efficiencies, with earnings increasing by 14% compared to 2012. The Zambia economy remained relatively stable in the year, although demand was also affected by the decline in copper prices as well as the 4% devaluation of the Zambia kwacha against the United States dollar. The Exide brand has remained dominant in both Zambia and Zimbabwe markets. During the year, your company entered into negotiations for a strategic partnership in the battery business with a South African company. Regrettably, as advised in the cautionary statement to shareholders on 4 June 2013, the negotiations did not result in a transaction. Paper and stationery division The divisions performance deteriorated in the year with turnover remaining largely unchanged when compared to 2012, while a loss of US$672,000 was recorded compared to a loss of US$268,000 in 2012. Kadoma Tissue contributed US$352,000 to the loss, while ARTs 50% share of Softexs loss was US$242,000. The Kadoma Tissue factory recorded a decline in production and sales volumes of 4% and 2% respectively. The business faced stiff competition in both local and export markets due to loss of competitiveness on both quality and pricing. In addition while consumer trends have shifted from colour to white tissue, the mill has not been able to respond to market requirements timely as a result of poor capitalization and funding. The devaluation of the South African Rand placed significant pressure on local pricing, and as a result selling prices were being consistently adjusted to align to South African import parity. The lack of liquidity in the economy further compounded the situation, and the mill carried significant debtors and stocks at year end. Local collections of premium waste paper have continued to decline over the years in line with reduced printing activity in the economy. In this regard, volumes of paper waste collected at National Waste Collections in the year grew by 3%. The poor performance of the mill affected operations at National Waste Collections as this is a cash driven business. While the mill is being repositioned to respond to market trends, there still remains a need to capitalize the business in order to improve product quality and reduce cost. However the instability of the South African Rand will continue to be a threat to local manufacturing whose costs are denominated in United States dollars. Although Softex tissue production volumes grew by 8% when compared to 2012, sales volumes and turnover declined by 1% and 3% respectively. Margins declined from 22% to 18%, while operating costs increased by 11%, resulting in the business reporting a loss. The business continued to face intense competition from both local and foreign brands, as plans to reposition the Softex brands in the market were not implemented as timely as had been anticipated. The future of the business lies in streamlining the factory operation to reduce product cost, as well as refocusing the market model to align to market trends. The Eversharp business recorded a breakeven result, which was a significantly improved performance compared to a loss of US$457,000 recorded in 2012. Production and sales volumes grew by 7% and 5% respectively, while margins improved from 26% in 2012 to 31%.Although the factory was affected by intermittent shortages of raw material due to low funding, the business recorded higher capacity utilization with improved machinery performance. The cap mould installed in 2012 provided stability in the factory. The Eversharp brand enjoys a significant market share, and it is expected that this position will be further strengthened by increasing the brands market share in our export markets. The future of the brand lies in reducing the product cost through recapitalization of the factory and adequately funding the factory inputs in order to procure competitively. The business still has opportunities in trading in Fleximail and other scholastic products which can be fully exploited with access to the necessary funding. Plantations The estates operation posted a strong performance in the year, exceeding expectation. While volumes recorded were 90% of 2012 levels, the lower volumes are in line with the strategy to convert timber to a saw log regime, and consequently, market sales in the interim period will be lower. The silviculture work was on target and conversion of the trees to saw log rotation progressed well. The market for timber became more competitive in the year and as a result market prices remained at the same level as last year. The cost of the fire which occurred in October 2012 was $101,000, with $35,000 of this cost recovered from salvage sales. During the year, a demining exercise was carried out on previously inaccessible land, recovering $147,000 worth of overgrown timber planted on 26hectares. Discontinued Operations The Mutare mill land and buildings remain listed for disposal but the process of disposal has been affected by the poor liquidity position in the economy. The board however remains committed to the disposal Rental income grew by 19%; compared to 2012 and achieving a yield of 9% compared to 8% in 2012.At year end the occupancy rate stood at 66%. Although the operation recorded an operating profit of US$71,000, the earnings were eroded by the interest cost arising from the historical loan, resulting in a loss of US$112,000. HUMAN RESOURCES Group manpower levels remained high when compared to productivity in the operations. As a result the Group was not able to allocate adequate resources to skills development. The Groups future capitalization plans will prioritize alignment of manpower levels to productivity and enhancing the skills levels. DIRECTORATE In October 2013, Messrs Lovemore W. Tapera, Ndabezinhle N. Moyo and Kiritkumar Naik advised of their intentions to resign from the Board with effect from 31 December 2013. On behalf of the Board, I extend my sincere appreciation to Messrs Tapera, Moyo and Naik for their contribution to the Board over the years. Mr Abisai Maxie Chingwecha was appointed to the Board on 1 October 2013. I welcome him to ART and look forward to his contribution to the Board. DIVIDEND The Group is not in a position to declare a dividend as it is necessary to retain cash in the business in order to stabilize the operations. OUTLOOK The business has shown much resilience in the year, registering a marginal profit in a difficult trading environment while still carrying high debt levels. In the short term period, the liquidity constraints in the economy are forecast to persist into the coming year and as a result trading conditions are expected to be challenging. In order to protect the business assets, resources will be directed at cash optimizing initiatives, and cost control measures will be tightened further to minimize cash outflow. The Board will also critically evaluate the viability of the paper chain operation in view of the scale of operation of the tissue mill and the external factors affecting its profitability. In the medium term, there is need to modernize processes in all the productive factories in order to remain competitive in a fast changing global economy. ART still carries significant and valuable brands, which if correctly supported, will deliver long term shareholder value. The Board will continue with initiatives to find appropriate funding and technology partners for the business. The initiatives include working with our bankers to restructure the current short term debt into long term, and reduction in cost of debt. The Board is also engaged in discussions with other financers for the funding of capital projects. I would like to thank my fellow board members, the team at ART and all our stakeholders for their contribution and support to the Group.

GROUP STATEMENT OF COMPREHENSIVE INCOME 2013

Revenue Cost of sales Gross profit Other income Operating expenses Operating profit before fair value adjustments and impairments Impairment of assets Fair value adjustments on biological assets Operating profit before interest and tax Finance income Finance costs Profit before tax Income tax credit/(expense) Profit for the year from continuing operations DISCONTINUED OPERATIONS Loss after tax from discontinued operations Profit for the year OTHER COMPREHENSIVE INCOME Items that will not be reclassified subsequently to profit or loss: Surplus on revaluation of property plant and equipment (net of tax) Items that may be reclassified subsequently to profit or loss Translation of foreign subsidiaries Impairment of property plant and equipment (net of tax) Fair value adjustment on available for sale investments(net of tax) Other comprehensive profit for the year net of tax Total comprehensive profit for the year Earnings/(loss) per share (cents) Basic earnings per share from continuing operations Basic loss per share from discontinued operations Basic earnings per share Diluted earnings per share from continuing operations Diluted loss per share from discontinued operations Diluted earnings per share US$ 000 33 711 (22 571) 11 140 60 (9 416) 1 784 (126) 441 2 099 6 (1 763) 342 140 482 (83) 399

GROUP STATEMENT OF CHANGES IN EQUITY

2012 US$ 000 34 069 22 693) 11 376 17 (9 051) 2 342 (44) 333 2 631 27 (2 048) 610 (136) 474 (41) 433
Share Capital US$000 NonShare Distributable Distributable Reserves Premium Reserves US$000 US$000 US$000 Total US$000

At 1 October 2011 Profit for the period Other comprehensive income Total comprehensive income At 30 September 2012 Profit for the period Other comprehensive income Amortisation of share options expense Total comprehensive income Transfer from revaluation reserve on asset disposal At 30 September 2013

47 - - - 47 - - - - - 47

4 378 - - - 4 378 - - - - - 4 378

13 024 - 78 78 13 102 - 121 36 157 (797) 12 462

(7 286) 433 - 433 (6 853) 399 - - 399 797 (5 657)

10 163 433 78 511 10 674 399 121 36 556 11 230

GROUP SEGMENT RESULTS

Battery Paper & manufacture & Central Discontinued Adjustments & stationery operations eliminations retail Plantations administration US$000 US$000 US$000 US$000 US$000 US$000 Group US$000

263 (141) - (1) 121 520 0.11 (0.02) 0.09 0.11 (0.02) 0.09

108 143 (191) 18 78 511 0.10 (0.01) 0.09 0.10 (0.01) 0.09

Revenue External customer 11 974 20 375 1 361 1 Inter-segment 2 064 6 886 - - 14 038 27,261 1,361 1 Operating (loss)/ profit before impairments and fair value adjustments (373) 1,673 376 108 Finance income Finance cost Segment assets 2 (293) 9 521 4 (273) 10 264 - (7) 5 676 17 (1 207) 362

- - -

- (8 950) (8 950)

33 711 33 711

71 1 (184) 2 581

- 1 855* (17) 17 3 359 7* (1 947)* 31 763

Segment liabilities 4 025 4,299 206 7 115 745 4 144 20 533 Capital expenditure 78 393 54 73 - - 598 Depreciation 416 313 92 37 4 - 862 * SOCI line items exclude discontinued operations.

SUPPLEMENTARY INFORMATION
1. Basis of preparation  The consolidated financial statements have been prepared on a historic cost basis except for land and buildings, financial assets and biological assests that have been measured at fair value. 2. Currency of reporting The financial statements are presented in United States Dollars (US$). 3. Statement of accounting policy The accounting policies adopted in the preparation of the 2012 annual financial statements  have been followed consistently in the preparation of these financial statements. 4. Statement of compliance  The abridged financial statements have been prepared in accordance with International Accounting Standard 34; Interim Financial Reporting, the Zimbabwe Stock Exchange Listing Rules and the British Virgin Islands Companies Act for International Business Companies (Chapter 291). 5. Audit opinion  The Group auditors Ernst & Young have issued an unqualified opinion with an Emphasis of Matter on going concern on the Group financial statements. The signed audit opinion is available for inspection at the Companys regional office. 6. Results of assets held for sale and discontinued operations  The results of discontinued operations comprise rental income and related expenditure for the Mutare land and buildings.  The Mutare land and buildings and the related liabilities remain held for sale. The land and buildings have not yet been sold due to circumstances beyond the Groups control. Management is still actively looking for a buyer and is confident that the assets will be sold in the near future.  In compliance with the requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the assets and liabilities of the discontinued operations amounting to US$2,629million (2012: US$3,569million) and US$745,000 (2012: US$1,013million) have been included in the Group statement of financial position as assets of disposal group classified as held for sale and as liabilities associated with the assets of disposal group classified as held for sale respectively.  Assets shown as held for sale in 2012 included the Chloride Zambia land and buildings, valued at US$962,000, sold in October 2012. Group 7. Total borrowings split
Continuing Operations Discontinued operations

GROUP STATEMENT OF FINANCIAL POSITION

ASSETS Non-current assets Property, plant and equipment Biological assets Investments Deferred tax assets Other non-current financial assets Current assets Inventories Trade and other receivables Cash and short term deposits Assets of disposal group classified as held for sale TOTAL ASSETS EQUITY AND LIABILITIES Capital and reserves Share capital Share premium Accumulated loss Non-distributable reserves Total equity Non-current liabilities Interest bearing loans and borrowings Deferred tax liabilities Current liabilities Trade and other payables Provisions Income tax payable Interest bearing loans and borrowings Bank overdrafts Total current liabilities Liabilities directly associated with the assets of disposal group classified as held for sale Total liabilities TOTAL EQUITY AND LIABILITIES 2013 US$ 000 2012 US$ 000

10 324 4 649 27 3 311 - 18 311 6 304 3 892 627 10 823 2 629 31 763

10 402 3 906 28 3 214 35 17 585 6 067 3 947 554 10 568 3 569 31 722

47 4 378 (5 657) 12 462 11 230

47 4 378 (6 853) 13 102 10 674

2 123 4 144 6 267 6 366 569 533 5 980 73 13 521 745 14 266 20 533 31 763

2 587 4 44 7 028 5 403 604 411 6 500 89 13 007 1 013 14 020 21 048 31 722

2013 2012 2013 2012 2013 2012

Short term borrowings 5 980 Long term borrowings 2 123 8 103 6,500 2,587 9 087 276 - 276 568 - 568 6 256 2 123 8 379 7 068 1 587 9 655

In terms of the Articles of Association, the borrowings of the Company shall not exceed the total issued share capital and reserves as set out in the consolidated audited statement of financial position.

GROUP STATEMENT OF CASH FLOWS

8. Lease commitments 2012 US$ 000

2013 2012 Minimum payments Minimum payments US$000 US$000 188 705 1 101 1 994 (965) 1 029 184 1 099 1 283 (283) 1 000

2013

US$ 000

CASH FLOW FROM OPERATING ACTIVITIES: Cash generated from operations 3 353 Finance income 7 Finance costs (1 947) Income tax paid (139) Cash raised from/(utilised in) operating activities 1 274
INVESTING ACTIVITIES Purchase of property, plant and equipment Increase in biological assets Acquisition of a subsidiary net of cash acquired Proceeds from sale of property plant and equipment Cash utilised in investment activities FINANCING ACTIVITIES: Proceeds from borrowings Repayment of borrowings Cash (utilised in)/raised from financing activities Increase/ (decrease) in cash and cash equivalents Net foreign exchange differences Cash and cash equivalents at beginning of the year Cash and cash equivalents at the end of the year Comprising: Cash and short term deposits Overdrafts Cash and cash equivalents at 30 September Cash and cash equivalents Continuing operations Discontinued operations Cash and cash equivalents at 30 September (598) (303) (55) 1 016 60 1 615 (2 891) (1 276) 58 26 472 556 629 (73) 556 554 2 556

1 567 12 (2 174) (140) (735) (586) (213) 524 (275) 2 850 (2 186) 664 (346) 4 814 472 561 (89) 472 464 8 472

Within one year After one year but not later than five years More than five years Total minimum lease payments Less amounts representing finance charges Present value of minimum lease payments

Included in the consolidated financial statements as: 2013 2012 US$ 000 US$ 000 Current borrowings 17 Long term borrowings 1 012 1 029 9. Capital commitments Authorised capital expenditure 10. Headline Earnings per share 2 699 1 000 1 000 894

Headline earnings comprise of basic earnings attributable to equity holders of the parent adjusted for separately identifiable re-measurements, net of related tax (both current and deferred) other than re-measurements specifically included in headline earnings. A re-measurement is an amount recognised in profit or loss relating to any change (whether realised or unrealised) in the carrying amount of an asset or liability that arose after the initial recognition of such asset or liability. The reconciliation of basic earnings to diluted earnings on the above basis shall be detailed in the annual report as the net amounts are not significant to warrant publication in the press statement. The resulting headline earnings per share are as shown below:
2013 2012

Basic Headline Earnings Per Share Diluted Headline Earnings Per Share

0.09 0.08

0.10 0.10

PM Matupire CHAIRMAN 12 December 2014 Group Secretary: F. D. Mukarakate fmukarakate@artcorp.co.zw

11. Movement in equity  The US$797,000 movement in the statement of changes in equity relates to transfer of the revaluation amounts associated with the Zambian building disposed in current year from non distributable reserves to distributable reserves 12. Events after reporting date There have been no significant events after reporting date at the time of issuing this press r elease.

Directors: P M Matupire (Chairman), *R K Zirobwa (Group Chief Executive), *N Dube, L W Tapera, *T Murad Ameer, N N Moyo, O Mtasa, K Naik , A M Chingwecha (*EXECUTIVE)