Interfresh Rights Offer Circular

8/12/2019 Interfresh Rights Offer Circular

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Lead Financial Advisor

Reporting Accountants and

Independent Auditor

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This Circular (Document) does not purport to be an offer to sell, or the solicitation of an offer to buy shares in any country other than Zimbabwe. The distribution of this Document outside

Zimbabwe may constitute a violation of the laws of other countries. This Document contains an offer to the existing shareholders of Interfresh Limited to purchase additional shares in Interfresh

Limited that shall in all respects rankpari passuwith, and be uniform to shares already in issue. The terms and conditions of the Transaction are set out herein.

No person has been authorised to give any information, or make any representations in connection with the Transaction, or the Company other than as contained in this Document and, if given or

made, such information or representation must not be relied upon as having been authorised by the Company, its Directors, or its advisors. The Advisors are acting as advisors to the Company only, in

connection with the Transaction, and wil l not be responsible to any other person for providing the protect ion offered to their clients.

If you are in any doubt as to the action you should take, you should immediately seek advice from your bank manager, legal practitioner, accountant or other professional advisor.

(Incorporated in Zimbabwe on 9 February 1953 under company registration number 40/53)

CIRCULAR TO SHAREHOLDERS

Relating to:

(i) the consolidation of the authorised and issued shares in the capital of Interfresh Limited by a factor of ten (10) in terms of which 10 [ten] ordinary shares with a nominal value of US$0.001 each

shall be consolidated into 1 [one] ordinary share with a nominal value of US$0.01 each in the capital of the Company; and

(ii) the proposed recapitalisation by US$3,000,000 (Three Million United States Dollars) of Interfresh limited through a rights offer to current shareholders through the issue of 150,000,000

ordinary shares with a nominal value of US$0.01 at a subscription price of US$0.02.

Incorporating the

NOTICE CONVENING AN EXTRAORDINARY GENERAL MEETING

NOTICE OF AN EXTRAORDINARY GENERAL MEETING FOR SHAREHOLDERS OF INTERFRESH LIMITED

The notice of an Extraordinary General Meeting of the shareholders of Interfresh Limited to be held at 10:30 am (or immediately after the conclusion or adjournment of the Annual General Meeting

which has been convened to be held at the same place and on the same day) on, 22 July 2013 in the Miti Conference Room, Cresta Lodge, Corner Samora Machel and Robert Mugabe, Msasa, Harare is

set out at the end of this Circular. Shareholders are asked to complete and return the enclosed Form of Proxy in accordance with the instructions printed thereon as soon as possible, but in any event

so as to be received by no later than 19 July 2013.

Shareholders will find as part of this Circular a Form of Proxy for use at the Extraordinary General Meeting of the shareholders of Interfresh Limited. To be valid, a Form of Proxy and an authority

certificate notarially executed or in some other way approved by Interfresh Limited Directors, must be completed and returned in accordance with the instructions printed thereon by post or (during

normal business hours only) by hand to the Company Secretary of Interfresh Limited, but in any event so as to arrive not less than forty-eight (48) hours before the time for the Extraordinary General

Meeting or adjourned meeting at which the person named in the instrument proposes to vote. Whether or not you intend to be present at the Extraordinary General Meeting, please complete and

return the Form of Proxy, which is part of this Document. The completion and return of the Form of Proxy will not prevent you from attending and voting at the meeting or any adjournment thereof, in

person if you wish to do so.

Transfer SecretariesLegal AdvisorsUnderwriters Sponsoring Brokers

timeless financial solutions

Issue Date: 1 July 2013

Securities


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INTERFRESH LIMITED CIRCULAR TO SHAREHOLDERS

corporate information and advisors

Lead Financial Advisors Cosmos Capital Limited

3rd Floor, Beverly Court100 Nelson Mandela

Harare, Zimbabwe

Reporting Accountants and Independent Auditor PricewaterhouseCoopers, Chartered Accountants (Zimbabwe)

Building No. 4

Arundel Office Park

Norfolk Road

Mount Pleasant

Harare, Zimbabwe

Legal Advisors Coghlan, Welsh & Guest

Executive Chambers

16 George Silundika Avenue

Harare, Zimbabwe

Company Secretary and Registered Office Tawanda Namusi

No. 3 Ramon Road

Graniteside, Harare

Postal Address

Number 35 College Road

Alexandra Park

Harare, Zimbabwe

Sponsoring Brokers Old Mutual Securities (Private) Limited

1st Floor, 3 Anchor House

54 Jason Moyo Avenue

Harare, Zimbabwe

Underwriter Metbank Limited7th Floor, Metropolitan House

3 Central Avenue

Harare, Zimbabwe

Principal Bankers Agricultural Development Bank of Zimbabwe Limited

Metbank Limited

ZB Bank Limited

Transfer Secretaries ZB Transfer Secretaries (Private) Limited

Ground Floor, ZB Centre

Corner First Street and Kwame Nkrumah Avenue

Harare, Zimbabwe

i


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ii

table of contents

Page

CORPORATE INFORMATION iDEFINITIONS iii

IMPORTANT DATES v

PART I SALIENT FEATURES 1

PART II LETTER FROM CHAIRPERSON 3

1. THE TRANSACTION 3

2. THE RATIONALE 4

3. APPLICATION OF PROCEEDS 4

4. EFFECTS OF TRANSACTION 5

5. CONSEQUENCES OF NOT RAISING ADDITIONAL CAPITAL 8

6. PROSPECTS 8

7. DIVIDENDS 8

8. UNDERWRITING 89. CONDITIONS PRECEDENT 8

10. NOTICE OF EXTRAORDINARY GENERAL MEETING AND RECORD DATE 8

11. CORPORATE GOVERNANCE 9

12. DIRECTORS DECLARATIONS 9

13. EXPERTS CONSENT 10

14. DOCUMENTS AVAILABLE FOR INSPECTION 10

15. DIRECTORS RESPONSIBILITY STATEMENT 11

16. OPINIONS AND VOTING RECOMMENDATIONS 11

PART III INFORMATION ON INTERFRESH LIMITED 12

PART IV SHARE CONSOLIDATION 34

PART V TERMS AND CONDITIONS OF OFFER 35

PART VI FINANCIAL INFORMATION 37

a) Report of the Independent Reporting Accountants on the unaudited Proforma Financial information of Interfresh 37

b) Report on the Independent Reporting Accountants on the Financial information of Interfresh 39

PART VII UNDERWRITERS DETAILS 42

PART VIII RIGHTS OFFER ENTITLEMENTS 43

PART IX DETERMINATION OF RIGHTS OFFER PRICE PER SHARE 44

PART X NOTICE OF EXTRAORDINARY GENERAL MEETING 45

PART XI LETTER OF ALLOCATION 48

PART XII DIRECTORS RESPONSIBILITY STATEMENTS 52


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definitions

iii

Aardcor Aardcor Limited, a limited liability company incorporated in Zimbabwe under registration number 318/1955, which is a wholly owned subsidiary of Interfresh

Limited in whose name the title deeds for Mazoe Citrus Estates are held;

Act The Companies Act [Chapter 24:03], as amended;

Agribank Agriculture Development Bank of Zimbabwe Limited, a limited liability company incorporated in Zimbabwe under registration number 4503/95, a

commercial bank licensed so by the Registrar of Banks and Financial Institutions;

A I Clothing A I Clothing Exports (Private) Limited, a limited liabili ty company incorporated in Zimbabwe under registration number 266/87, which is a wholly owned

subsidiary through which Interfresh Limited owns stand 16980 Harare Township of Stand 16969 Harare Township;

Artic les of Association The Artic les of Association of Interfresh Limited, as amended;

Board, Board of Directors The Board of Directors of Interfresh Limited;

Broadbridge Broadbridge Investments (Private) limited, a limited liability company incorporated in Zimbabwe under registration number 602/97, which is a wholly owned

subsidiary of Interfresh Limited involved in agricultural operations and fruit processing;

Circular or Document This Document which sets out the terms and conditions of the proposed Transaction and details of the Extraordinary General Meeting required to approvethe Transaction in Interfresh Limited;

Closing Date The date on which the Rights Offer closes, being 28 August 2013;

Conditions Precedent Suspensive conditions to the implementation of the Transaction;

EGM The Extraordinary General Meeting of Interfresh Limited shareholders to be held at

on

to approve the resolutions and give effect to the Transaction;

Emugrand Emugrand Investments (Private) Limited, a limited liability company incorporated in Zimbabwe under registration number 1474/2012, which is a wholly

owned subsidiary through which Interfresh Limited owns stand 11477 Salisbury Township of Salisbury Town Lands;

Financial Advisor Cosmos Capital Limited, limited liability company incorporated in Zimbabwe under registration number 251/2010 and licensed as Investment Adviser by the

Securities Commission of Zimbabwe;

Form of Proxy, or Proxy Form The form, included in this Circular, which enables Interfresh Limited Shareholders to appoint a proxy to attend and vote on their behalf at the EGM;

Icejay Investments Icejay Investments (Private) limited, a limited liability company incorporated in Zimbabwe under registration number 8976/2012, which is a wholly owned

subsidiary of Interfresh Mauritius Limited;

IDC SA Industrial Development Corporation of South Africa, a South African development financial institution;

Interfresh or the Company Interfresh Limited, a limited liability company incorporated in Zimbabwe under registration number 40/53, which is listed on the Zimbabwe Stock Exchange;

Interfresh Mauritius Interfresh Mauritius Limited, a private company limited by shares [with limited life] incorporated in the Republic of Mauritius under registration number

113016 C1/GBL and wholly owned by AAF SME Fund LLC whose registered office is at c/o CIM Fund Services Limited, 3rd Floor, Rogers House, 5 President John

Kennedy Street, PortLouis, Mauritius;

Legal Advisor Coghlan, Welsh & Guest, a legal firm duly licensed by the Law Society of Zimbabwe to practice law in Zimbabwe;

Letter of Allocation, or LA The renounceable letter of allocation that sets out the entitlement of the shareholder with respect to the Rights Offer shares;

Listing rules The Listing Requirements of the Zimbabwe Stock Exchange;

10:30 am (or immediately after the conclusion or adjournment of the

Annual General Meeting which has been convened to be held at the same place and on the same day) 22 July 2013 in the Miti Conference Room, Cresta

Lodge, Corner Samora Machel and Robert Mugabe, Msasa, Harare



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definitions (contd)...

iv

Marlon Trading Marlon Trading (Private) Limited, a limited liability company incorporated in Zimbabwe under registration number 4490/90 through which Interfresh Limited

undertakes its trading activities;

Metbank Metbank Limited, a limited liability company incorporated in Zimbabwe under registration number 2688/1998 and licensed as a commercial bank by the

Registrar of Banks and Financial Institutions;

MCE Mazoe Citrus Estates;

NAV Net Asset Value;

Opening Date Opening date of the Rights Offer, being 29 July 2013;

Ordinary Shares The ordinary shares in the authorized and issued share capital of Interfresh Limited;

RBZ Reserve Bank of Zimbabwe;

Record Date The date on which the Interfresh Limited share register will be closed for purposes of determining the eligibility of Shareholders to participate in the Rights

Offer which date is the close of business on 22 July 2013;

Resolutions The special and ordinary resolutions contained in the Notice of the EGM giving effect to the Transaction upon approval by the Interfresh Limited Shareholders;

Rights Offer The renounceable rights offer, being the rights offered to existing shareholders to subscribe for ordinary shares totalling 150,000,000 Interfresh Limited

ordinary shares, pro rata to their shareholding, at a subscription price of US$0.02 each, in the ratio of 3.08 new rights offer shares for every 1 ordinary share

held;

SECZ Securities Commission of Zimbabwe, the regulatory body for capital markets in Zimbabwe;

Shareholder A holder of Interfresh Limited ordinary shares registered in the Interfresh Limited share register as at the Record Date;

Share Consolidation The consolidation of every ten [10] shares in the capital of the Company into one [1] share to precede the proposed recapitalisation of Interfresh Limited

through a Rights Offer;

Smithfield Smithfield Horticulture (Private) Limited, a limited liability company incorporated in Zimbabwe under registration number 1699/2012, which is a wholly

owned subsidiary of Interfresh Limited;

Sponsoring Broker Old Mutual Securities (Private) limited, a limited liability company incorporated in Zimbabwe under registration number 1231/10, a subsidiary of Old Mutual

Zimbabwe that is duly licensed to offer stock broking services by the Securities Commission of Zimbabwe and member of the Zimbabwe Stock Exchange;

Subscription Price The amount at which the rights offer shares are being offered for subscription, being US$ 0.02 per share;

Transaction The consolidation of the authorised and issued shares by a factor of 10 [ten] ordinary shares into 1 [one] ordinary share in the capital of the Company and

recapitalisation by US$3,000,000 [Three Million United States Dollars] through the proposed rights offer involving the issue of 150,000,000 new ordinary

shares in the capital of Interfresh Limited, including any processes and approvals required to give effect to the proposed Transaction;

Underwriters The institution committing to taking up any new rights offer ordinary shares not subscribed for by the existing shareholders, namely Metbank Limited;

United States dollars or United States of America dollars, the lawful currency of the United State of America; and

US$

ZSE Zimbabwe Stock Exchange.



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v

important dates

The following timetable is only indicative. Any material changes to the timetable shall be published in the press.

Event Date

Registration of Circular, Letters of consent, underwriting agreement and Underwriters affidavits with Registrar of Companies 1 July 2013

Publication and posting of the Circular 1 July 2013

Last Day for Lodging Proxy Forms 19 July 2013

EGM to approve the Transaction 22 July 2013

Record Date 22 July 2013

Rights Offer opens 29 July 2013

Last Day of Splitting of LAs 26 August 2013

Last Day of Dealing in LAs 27 August 2013

Closing Date of Rights Offer, and Last Day of Payment 28 August 2013

Allotment and Listing of Rights Offer Shares 4 September 2013

Publication of Results Rights Offer, and Posting of Share Certificates 5 September 2013



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part i: salient features (contd)...

2

Increase in Authorised Share Capital

The Companys share price on the ZSE has fallen from a peak of US$0.01 in 2009 to the current US$0.002 largely due to liquidity constraints on the market and working capital constraints. Pricing of

the proposed Rights Offer based on the current market price would have resulted in the Interfresh register having a high number of shares and shareholders on the ZSE which has significant cost

implications for managing it.

Rights Offer

The Rights Offer seeks to raise US$3,000,000 (Three Million United States Dollars) required to retire short-term debt and finance working capital requirements. As a response to the capitalisation

challenges posed by the dollarisation of the economy, Interfresh has had to borrow capital to sustain its operations. The interest rates on short-term borrowings have been too high and

unsustainable. To alleviate the challenges arising from debt, the Company sold its Graniteside property complex and retired part of the loans obtained from local banks. During recapitalisation

negotiations the Company secured a short term bridging loan of US$ 1,250,000 from Icejay Investments in December 2012.

Authority Required

The Transaction is subject to shareholder and regulatory approvals, including but not limited to authorisation for consolidation of the Companys shares, increasing the authorised share capital,

waiver of pre-emptive rights, exchange control approval for non-resident shareholders to follow their rights, and possibly compliance with local ownership and empowerment laws of Zimbabwe.

Read the whole of this Document

You should read the whole of this Document, and not just these salient features, or the Chairpersons Letter. Save where otherwise indicated, the financial information contained in this Document has

been extracted as specified without material adjustment.



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part ii: letter from the chairperson

3

1 July 2013

Dear Shareholder

INTRODUCTION

Since the dollarisation of the economy, Interfresh has not been recapitalised but relied on debt financing to sustain its operations. The cost of debt has generally been unsustainable for most

borrowers in Zimbabwe. The Company secured a US$5 million six-year loan in May 2011 to fund both capital expenditure and working capital. Further, in December 2011 it disposed of the

Graniteside property complex to retire most of the short-term debt then and also provide working capital relief. In 2012 the company experienced severe working capital constraints and could not

significantly increase borrowing due to the high cost of borrowing and tighter requirements for security by lenders. During recapitalisation negotiations in the fourth quarter of 2012, the Company

secured a US$ 1.25 million short-term bridging loan from Icejay Investments (Private) Limited in December 2012.

In January 2013 the Ministry of Lands and Rural Resettlement allocated approximately 1,600 hectares of MCE to another party. The consequent loss of revenue and assets impairment has left the

balance sheet in need of restructuring through an increase in equity funding.

The proposed recapitalisation seeks to raise equity capital to retire the short-term bridging loan and finance working capital requirements. Apart from the recapitalisation, this Circular provides

information about the proposed consolidation of the authorised and issued shares in the capital of Interfresh. Shareholders will be asked to vote and, if deemed fit, approve resolutions authorising

the implementation of the consolidation of the authorised and issued shares of the Company, increase the authorised share capital and raise US$3,000,000 (Three Million United States Dollars)

required to retire short- term bridging debt and finance working capital requirements at the EGM scheduled to be held on 22 July 2013.

THE TRANSACTION

Share Consolidation

In order to rationalise the authorised and issued shares in the capital of Interfresh and provide headroom for issuing new ordinary shares by increasing the authorised share capital, the Company

seeks shareholder approval to consolidate the authorised and issues ordinary shares by a factor of ten [10] in terms of which ten [10] ordinary shares will consolidate into one [1] ordinary share in the

capital of the Company. If approved by the shareholders at the EGM, the authorised and issued shares will reduce from 600,000,000 and 487, 442, 532 to 60,000,000 and 48,744,253 ordinary shares

respectively. The proposed share consolidation will also increase the nominal value of each ordinary share from US$0.001 to US$0.01. To create the headroom required to accommodate the

proposed issue of new ordinary shares, shareholder approval is required to increase the post consolidation authorised share capital to 250,000,000 (Two Hundred and Fifty Million).

Rights Offer

Subject to shareholder approval by the members at the EGM, the Board of Directors wishes to raise US$3,000,000 (Three Million United States Dollars) through a rights offer, in terms of which

150,000,000 new ordinary shares will be offered to existing shareholders for subscription in cash at a price of US$0.02 each, payable in full on acceptance, on the basis of 3.08 rights offer shares forevery 1 ordinary share held.

(Incorporated in Zimbabwe on 9 February 1953 under registration number 40/53)

Directors:, C Mtasa, (Non-Executive Chairperson), L Chipango (Chief Executive Officer), D. Matangira, M Matshiya

Registered Address: 3 Ramon Road, Graniteside, Harare, Zimbabwe

Postal Address: 35 College Road, Alexandra Park, Harare, Zimbabwe

Email address: [email protected]

Website: www.interfresh.co.zw



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part ii: letter from the chairperson (contd)...

The authorisat ion to proceed with the Transaction will be sought by the Board from Interfresh Shareholders at the EGM to be held on 22 July 2013.

In the event that Shareholders approve the proposed Rights Offer at the EGM, Shareholders will be required to complete Letters of Allocation, which will be posted to Shareholders from 26 July 2013.

Shareholders will be required to indicate whether they accept or renounce their rights in terms of the Rights Offer on their Letters of Allocation. It is envisaged that the Rights Offer shares will be listed

on the ZSE on 4 September 2013.

THE RATIONALE

As stated elsewhere is this Document, the share consolidation is intended to rationalise the number of authorised and issued shares and create sufficient headroom for issuing new ordinary shares in

the capital of the Company pursuant to the proposed recapitalisation of Interfresh. The share consolidation will also increase the nominal value of the ordinary shares of the Company. If not

implemented, the authorised and issued shares would be more than a billion, numbers not consistent with the dollarised economy obtaining in Zimbabwe.

Since the dollarisation of the economy, Interfresh has not had any equity capital injection but relied on debt to finance its operations. The cost of short-term debt from local banking institutions is high

and unsustainable. The rights offer seeks to raise US$3,000,000 (Three Million United States Dollars) which will be used to retire the bridging short-term loan and finance working capital

requirements.

TRANSACTION BENEFITS

The issue and allotment of new shares pursuant to the proposed rights offer will result in the following benefits:

raise equity capital required to retire bridging short-term debt and finance working capital requirements;

restructure the balance sheet by reducing debt, thereby improving its solvency ratios and providing scope for procuring long term funding to support the long-term growth strategy;

enhance Interfreshs capacity to consolidate the gains of the current growth strategy, albeit under reduced capacity due the allocation of approximately 1,600 hectares of MCE;

increase the companys borrowing capacity in terms of its articles of association;

increase production capacity and yields at MCE;

improve trading capacity; and

improve export earnings.

APPLICATION OF PROCEEDS

The application of the proceeds of the Rights Offer is set out below:

Requirement Amount

Repayment of short term bridging loan US$1,250,000

Working capital US$1,600,000

Transaction costs US$150, 000

Total US$3,000,000

Transaction costs comprise of advisory fees, regulatory, printing and distribution costs.



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5


EFFECTS OF TRANSACTION

Share Capital

Increase in After Increase

Before Consolidation After Authorized in Authorized After

Consolidation Factor Consolidation Share Capital Share Capital Rights Offer Rights Offer

Authorized share capital

Number of ordinary shares 600 000 000 10 60 000 000 190 000 000 250 000 000 250 000 000 250 000 000

Nominal value [US$] 0.001 10 0.01 0.01 0.01 0.01 0.01

Share capital 600 000 600 000 1 900 000 2 500 000 2 500 000 2 500 000

Issued share capital

Number of ordinary shares 487 442 532 10 48 744 253 - 48 744 253 150 000 000 198 744 253Nominal value 0.001 10 0.01 - 0.01 0.01 0.01

Share capital 487 443 - 487 443 - 487 443 1 500 000 1 987 443

Unissued share capital

Number of ordinary shares 112 557 468 10 11 255 747 - 201 255 747 51 255 747 51 255 747

Nominal value 0.001 10 0.01 - 0.01 0.01 0.01

Share capital 112 557 - 112 557 - 2 012 557 512 557 512 557



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Shareholders

The Company currently has 3,183 Shareholders. Based on the shareholding as at 6 May 2013, the effect of the Transaction to the ownership of the Company is shown in the schedule below assuming

consolidation and shareholders do not follow their rights in the Rights Offer.

Name Before Consolidation Rights Offer

Shares % Shares % Shares %

Drovegate Investments (Private) Limited 161,269,390 33.08% 16,126,939 33.08% 16,126,939 8.11%

Old Mutual Life Assurance 94,953,498 19.48% 9,495,350 19.48% 9,495,350 4.78%

Msasa Nominees 76,398,800 15.67% 7,639,880 15.67% 7,639,880 3.8%

TN Securities Nominees 24,572,209 5.04% 2,457,221 5.04% 2,457,221 0.12%

TN Securities Nominees 2 7,680,099 1.58% 768,001 1.58% 768,001 0.39%

Bouvrie Limited 7,532,112 1.55% 753,211 1.55% 753,211 0.38%

Drop Hill Investments 7,128,468 1.46% 712,847 1.46% 712,847 0.36%

Hofer - NNR Kurt 5,843,206 1.20% 584,321 1.20% 584,321 0.29%

Turner Roy 5,584,008 1.15% 558,401 1.15% 558,401 0.28%

Local Authorities Pension Fund 5,000,000 1.03% 500,000 1.03% 500,000 0.3%

Subtotal 395,961,790 81.24% 39,596,179 81.24% 39,596,179 19.9%

Others 91,480,742 18.76% 9,148,074 18.76% 9,148,074 4.6%

Underwriter - - - - 150,000,000 75.5%

Total 487,442,532 100% 48,744,253 100% 198,744,253 100%

In the event that Shareholders approve the Rights Offer at the EGM and assuming that all shareholders follow their rights, there will be no change in the shareholding structure of the Company. If all

the shareholders elect not to follow their rights, their percentage shareholding in the Company will be diluted by 75.5 per cent. The underwriter shall take up shares not subscribed for by the existing

shareholders or not renounced in favour of another party to the Rights Offer.

Directors and Management

The composition of the Board of Directors may change depending on the outcome of the Rights Offer and the rights accorded to Shareholders with respect to board representation. However, no

material changes are anticipated on the management team.

Financial Effects

Assuming that the Transaction was implemented as at 31 December 2012, the consolidated financial position of the Group would be affected in the manner shown in the proforma consolidated

statement of financial position on the next page.



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Audited Unaudited

Pre-Transaction Post-transaction

2012 Note 1 Note 2 Note 3 2012

US$ US$ US$ US$ US$

ASSETS

Non-current assets

Property, plant and equipment 6 466 737 - - - 6 466 737

Biological assets 6 167 437 - - - 6 167 437

Deferred income tax assets 284 545 - - - 284 545

12 918 719 12 918 719

Current assets

Inventories 1 259 580 - - - 1 259 580

Biological assets 262 181 - - - 262 181

Advance crop expenditure - - - - -

Trade and other receivables 907 779 - - - 907 779

Cash and bank 168 509 3 000 000 (1 250 000) (150 000) 1 768 509

2 598 049 3 000 000 (1 250 000) (150 000) 4 198 049

Total assets 15 516 768 3 000 000 (1 250 000) (150 000) 17 116 768

EQUITY AND LIABILITIES

Equity

Share capital 487 443 1 500 000 - - 1 987 443

Other reserves 8 704 854 1 500 000 - - 10 204 854

Accumulated losses / retained earnings (5 698 702) - - (150 000) (5 848 702)

Total equity attributable to shareholders 3 493 595 3 000 000 - (150 000) 6 343 595

Non-current liabilities

Deferred income tax liability 1 344 061 - - - 1 344 061

Borrowings 3 204 227 - - - 3 204 227

4 548 288 - - - 4 548 288

Current liabilities

Trade and other payables 4 440 807 - - - 4 440 807

Borrowings 3 034 078 - (1 250 000) - 1 784 078

7 474 885 - (1 250 000) - 6 224 885

Total equity and liabilities 15 516 768 3 000 000 (1 250 000) (150 000) 17 116 768

Notes

1. The issue and allotment of 150,000,000 ordinary shares at an issue price of US$0.02 each.

2. Repayment of short term bridging loan of US$1,250,000

3. Represents transaction costs of US$150,000



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8

CONSEQUENCES OF NOT RAISING EQUITY CAPITAL

In the event that shareholders do not approve the recapitalisation of the Company, Interfresh will not be able to restructure the balance sheet and the Company will not be able to fund its businessoperations.

PROSPECTS

The reduced business activity following the allocation of part of MCE land which has a significant part of the Company's biological assets had far reaching consequences to the viability of the Company.

The Board is of the view that, with an appropriate capital structure, the existing business assets are, in the long term, able to yield positive returns to shareholders and investors. The demand for the

Company's products remains strong and the strategy is to attain optimal production yields, improve efficiencies and open trade opportunities with traditional and new markets.

DIVIDENDS

No dividend was declared for the year ended 31 December 2012 due to the need to conserve cash. The ordinary shares to be issued pursuant to the Transaction will be issued as fully paid up and will

rankpari passuin all respects with the shares already in issue from the date of issue.

UNDERWRITING

The Rights Offer has been fully underwritten by Metbank and the underwriting agreement dated 16 May 2013 is one of the documents available for inspection.

CONDITIONS PRECEDENT

The proposed rights offer is conditional upon the fulfilment of the following conditions:

Approval of the terms and conditions of the rights offer, including the number of shares, issue price and underwriting arrangement by a simple majority of 50 per cent of the members

entitled to vote at the EGM, present in person or by proxy;

An increase of the authorised share capital of the Company by a majority of not less than 75 per cent of members entitled to vote at the EGM and are present in person or by proxy;

Approval by shareholders entitled to vote at the EGM and are present in person or by proxy by simple majority authorising the increase in borrowing powers of the Company to not less than

three times its net asset value or shareholders funds;

Compliance with the indigenisation and economic empowerment laws or obtaining of a waiver for immediate compliance if the ownership of Interfresh violates local ownership andempowerment laws;

Approval of the issue of the circular regarding Transaction and listing of the new ordinary shares to be issued pursuant to the Transaction by the Listing Committee of the ZSE; and

Exchange control approval.

NOTICE OF EGM AND RECORD DATE

Set out in PART X of this circular is the notice convening the EGM containing detailed resolutions proposed to be passed by shareholders at the EGM. The EGM will be held at 10:30am (or immediately

after the conclusion or adjournment of the Annual General Meeting which has been convened to be held at the same place and on the same day) on, 22 July 2013 in the Miti Conference Room, Cresta

Lodge, Corner Samora Machel and Robert Mugabe, Msasa, Harare. All holders of Ordinary Shares will be entitled to attend and vote at the EGM. A holder of Ordinary Shares who is present in person,

by authorised representative or by proxy shall have one vote on a show of hands and on a poll, one vote for every share held or represented by him/her.

Each Shareholder entitled to attend and vote at the EGM is entitled to appoint one or more proxies, none of whom need be shareholders of Interfresh to attend and vote in his/her/its stead. Please

complete and return the proxy form in accordance with the instructions printed thereon as soon as possible, but in any event so as to be received not later than 4.00 pm on 19 July 2013. The return of

the proxy form does not preclude a shareholder from attending the meeting and voting in person.




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CORPORATE GOVERNANCE

Directors interests in Shares

Name Direct Indirect Total

Chipo Mtasa - - -

Lishon N Chipango - 161,269,390 161,269,390

Dennis Matangira - - -

Melina Matshiya - - -

Directors interests in Transaction

Directors of Interfresh had shares in the Company as indicated above. Like all the shareholders in Interfresh they will be free to follow their rights in their current pro-rata shareholdings on the same

terms and conditions as set out in this document.

Directors interests Other

Save as disclosed in this Document, neither the Directors of Interfresh nor any member of their immediate families nor any person acting in consent with the Company, controls or is interested,

beneficially or otherwise, in any Interfresh Shares.

Directors Service Contracts

Service contracts of Directors will not be affected by the implementation of the Transaction.

DIRECTORS DECLARATIONS

Statement of indebtedness

In terms of the Companys Articles of Association, the Directors of the Company are authorised, at their discretion, without the previous sanction of an ordinary resolution of the Company in general

meeting, to incur borrowings provided the aggregate principal amount of these borrowings shall not, without the previous sanction of an ordinary resolution of the Company in general meeting,

exceed twice the aggregate of:

(i) the nominal amount of the issued and paid up share capital for the time being of the Company; and

(ii) the aggregate of amounts standing to credit of all capital and revenue reserve accounts, any share premium account and profit or loss account as set out in the latest audited balance sheet of

the Company, its holding company and its subsidiaries which has been drawn up to be laid before the shareholders of the Company in general meeting at the relevant time.

Working capital adequacy statement

It is the opinion of the Directors that the working capital available to the Company and its subsidiaries is not sufficient for its working capital requirements, hence the proposed Transaction.



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10


Litigation statement

There are no material litigation matters against the Company and non are pending or threatened.

Material contracts

Over the last 2 years prior to the date of this Rights Offer, the Company had entered into the following material contracts:

The Company accessed a short-term bridging loan facility from Icejay Investments on 14 December 2012 of up to US$1,250,000 for working capital purposes. In terms of the clause 11 of the

agreement [events of default], Interfresh is in default if any of the issued shares of the Company (or any member of the Companys group) or the whole or any part of its revenues or assets is

seized, nationalised, expropriated or compulsorily acquired by Government. The allocation of 1,599.7 hectares of MCE by Government has caused an event of default which makes the loan

and all accrued interest immediately payable;

The Company accessed a short-term loan facility from ZB Bank on 19 October 2012 of up to US$500,000 for the purposes of restructuring an already existing facility. The facility will expire on

30 September 2013 and is secured by several liabilities guarantees, a First Mortgage Bond for US$250,000 over Stand 11477 Salisbury Township of Salisbury Township Lands, a Notarial

General Covering Bond number 4110/2010 for US$500,000 and a Cessation of insurance policy over bonded property; and

Interfresh accessed a six year loan facility from IDC SA on 17 May 2011 through Agribank of US$5,000,000 for the purposes of funding working capital and capital expenditure requirements.

The loan was secured using Stand 16980 Harare Township of Stand 16969 Harare Township in the district of Salisbury; and a Notarial General Covering Bond number 4891/12 for

US$7,000,000.

Material changes

As reported on 15 January 2013 in a notice to shareholders, the Ministry of Lands and Rural Resettlement allocated 1,599.7 hectares of MCE land to another party. The portion allocated had citrus

lemon orchards, seed soya beans, commercial and seed maize and horticultural produce. This portion of MCE represents 46 per cent of MCEs total arable land, 30 per cent of its budgeted revenue for

the financial year 2013 and 52 per cent of the value of immovable and biological assets. An appeal has been lodged with the Ministry of Lands and Rural Resettlement for their consideration. To date

the Company has not received any formal response.

EXPERTS CONSENT

Cosmos Capital Limited, PricewaterhouseCoopers Chartered Accountants (Zimbabwe), Old Mutual Securities, Coghlan Wesh& Guest Legal Practitioners, Metbank, and ZB Transfer Secretaries have

given and not withdrawn their consents to the issue of this Rights Offer Document with the inclusion of their names and reports in the forms and contexts in which they appear.

DOCUMENTS AVAILABLE FOR INSPECTION

The following documents or copies thereof will be available for inspection at the registered office and postal offices of Interfresh during normal business hours:

Memorandum and Articles of Association of Interfresh;

Audited financial statements of the Company for the years ended 31 December 2009, 2010, 2011 and 2012;

The experts consents referred to in paragraph 14 of the Chairmans letter;

The underwriting agreement(s) relating to the Transaction;

The original copy of the signed circular to shareholders;

Loan Agreement between Interfresh and Icejay Investments relating to the bridging loan extended to Interfresh by Icejay Investments in the amount of US$1,250,000 (One Million Two

Hundred and Fifty Thousand United States Dollars) dated 14 December 2012;

Offer letter relating to the IDC-SA Commercial Loan Facility extended by Agribank in the amount of US$5,000,000 (Five Million United States Dollars) to finance working capital and capital

expenditure dated 17 May 2011;

Facility letter relating to a short-term loan by ZB Bank in the amount of US$500,000 (Five Hundred Thousand United States Dollars) dated 19 October 2012; and

Letter from Metbank dated 21 June 2013, indicating commitment as underwriters to dispose of shareholding to be acquired through the underwriting process within the stipulated period

required by the regulatory authorities.



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11


DIRECTORS' RESPONSIBILITY STATEMENT

Directors responsibility statement is contained in PART XII of this document.

OPINIONS AND VOTING RECOMMENDATIONS

The Directors have considered the terms and conditions of the proposed Transaction and are of the opinion that it is in the best interests of Interfresh and its shareholders.

Shareholders holding 72 per cent of the Companys issued share capital have already indicated that they wil l vote in favour of the resolutions at the EGM.

Accordingly, the Directors unanimously recommend that shareholders vote in favour of the Resolutions at the EGM and follow their rights. Directors holding shares in the Company intend to vote in

favour of the Resolutions at the EGM.

Yours faithfully,

For and behalf of the Board of Directors ofInterfresh Limited

Chipo Mtasa

Chairperson



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12

part iii: information on Interfresh

History & Nature of Business

Interfresh is a diversified agro-based group involved in the production, processing and marketing of agricultural and allied food products for both the local and international markets. The Companywas incorporated in February 1953 and subsequently listed on the ZSE in 1997. The group structure is as shown below:

Corporate Structure

INTERFRESH LIMITED

A I Clothing

Exports

(Private) LimitedAardcor Limited

Smithfield Horticulture

(Private) Limited

Emugrand Investments

(Private) Limited

Marlon Trading

(Private) Limited

Broadbridge

Investments

(Private) Limited

Property owning

company

Property owning

companyTrading Company

Property owning

companyTrading company Citrus division

Crops division

Horticulture division

Beverages divison

(Juicing factory)



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part iii: information on Interfresh (contd)...

Citrus Division

The Citrus Division comprises 517 hectares of which the entire hectarage has bearing trees all located at MCE. The orchards consist of two main cultivars namely navel and valencia post allocation of aportion of MCE. The table below details the hectare split by cultivar:

Cultivar Hectares

Navels 237

Valencia 280

Total 517

The Division lost the lemon orchards due to the allocation of part of MCE.

Citrus produce is marketed into three main markets as follows:

Local Market

Whole fruit oranges are sold to the formal channels [fresh produce wholesalers and supermarket chains] and informal markets such as Mbare.

Regional Market

The regional market consists of Zambian and the Democratic Republic of Congo markets.

International Markets

Major markets are the Middle East, Russian and Far East markets.

Crops Division

The division is comprised of 748 hectares of summer cropping and winter cropping; (there are 250 hectares which can be doubled through winter cropping). The main crop lines are seed soya beans,

commercial soya beans, seed maize and commercial maize. The 250 hectares during winter cropping consist of seed wheat and commercial wheat and barley, all of which are irrigated. All cropscurrently produced under this division are being sold locally. The Division was significantly affected by the allocation of part of MCE.

Horticulture Division

Horticulture is undertaken through a wholly owned subsidiary, Broadbridge. The Horticulture operation is now a 25-hectare intensive vegetable-growing project situated at MCE. The Division was

significantly affected by the allocation of part of MCE.

Beverages Division

Based at MCE, the beverages division is comprised of:

Juicing factory

The factory processes oranges from the Citrus division and a wide range of other fruits namely, granadilla, guava, lemons, soft citrus and pineapples procured from third party growers into juice

concentrates. Syrups and purees produced are for the local and export markets. The factory also produces highly marketable ci trus oils from lemons and oranges for the local and export markets.



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Bottling Plant

The plant bottles the Marlon Orange Crush and Marlon Ready to Drink fruit nectars [orange, guava, passion, and tropical]. The Marlon Fine Foods range of juices is produced for the local and regional

markets.

Fast Moving Consumer Goods

FMCG are distributed under Marlon Trading, a wholly owned subsidiary of Interfresh. Marlon Trading imports FMCG from South Africa, Botswana and Mauritius and distributes in Zimbabwe. Marlon

Trading also owns the Marlon Fine Foods range of tinned and bottled fruit juices and vegetables. It supplies the retail and wholesale markets throughout Zimbabwe and has recently started exporting

to Zambia.

Corporate Governance

The Board of Directors of the Company currently comprises four directors of which one is an executive director. There are three independent non-executive Directors. The Board of Directors is

ultimately responsible for the management of the Company. The Information pertaining to the Directors of Interfresh is set out below.

Profile of Directors

The profiles of the Directors of Interfresh are detailed below.

Chipo Mtasa Non-Executive Chairperson [48]

Chipo is the Managing Director of TelOne (Private) Limited. Prior to joining Telone, she was the Chief Executive Officer of Rainbow Tourism Group (RTG) for a period of 8 years and was with the RTG

for 13 years. She holds a Bachelor of Accountancy (Hons) degree from the University of Zimbabwe and is a Chartered Accountant registered with the Institute of Chartered Accountants of Zimbabwe

(CAZ). Chipo is non-executive director of several other companies.

Lishon Ngonidzaishe Chipango -Chief Executive Officer [50]

Lishon is the Chief Executive Officer of Interfresh. He holds a Bachelor of Accountancy (Hons) degree from the University of Zimbabwe and is a Chartered Accountant registered with the Institute of

Chartered Accountants of Zimbabwe (CAZ). Prior to joining Interfresh in May 2005, he was Managing Director of Old Mutual Asset Managers and Old Mutual Properties for a period of 8 years and was

with Old Mutual for 14 years.

Dennis Matangira - Non-Executive Director [45]

Dennis is the Senior Managing Partner at Databank Agrifund Manager Limited. Dennis holds a Masters in International Finance and Banking and an MBA from Babcock Graduate School of

Management at Wake Forest Universi ty. He has a wealth of experience in the private equity industry in both Afr ica and the USA. He worked for Wachovia Corporate and Investment Bank in the USA for

ten years on both their Leveraged Acquisition Finance and Distressed/Special Financing teams before joining Rockwell Collins to execute middle market investment deals, and ultimately founding

Kalahari Capital Partners, executing Small and Medium Enterprises Private Equity deals in Africa.

Melina Matshiya [45]

Melina is partner at Mtetwa and Nyambirai legal practioners. She was previously the managing partner at Wilmont and Bennet which mergered with Mtetwa and Nyambirai in 2010. She holds a

Bachelor of Laws from the University of Zimbabwe.A registered legal practitioner, Notary public and Conveyancer and registered to practise law in Zimbabwe she is also a non-executive director at the

Insurance and Pensions Commission and the Southern Africa Aids Trust Board.

Board Committees

The Board is responsible for the management of Interfresh and it has delegated certain responsibilities to the Board Committees, which operate within clearly defined terms of reference, have a

majority of non-executive directors in their membership and report regularly to the Board and which include:



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15

Remuneration Committee

The committee comprises two non executive directors and the Chief Executive Officer. The committee meets at least once a quarter. The committee is responsible for the determination of the

remuneration policy for executive directors and senior management and human resources policies and practices.

Audit and Risk Management Committee

The committee consists of two non-executive directors and meets at least four times a year with management, internal and external auditors. The committee is responsible for the review of internal

control systems, compliance and risk management processes within the Group. Other areas covered include; review of important accounting issues; interim and annual financial statements before

submission to the Board for approval; review of major recommendations of internal and external auditors. Internal and external auditors have unrestricted access to the committee to ensure the

independence and objectivity of their reports.



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16

Historical Financial Information

Consolidated Statement of Comprehensive Income

Audited Audited Audited Audited

2012 2011 2010 2009

US$ US$ US$ US$

CONTINUING OPERATIONS

Revenue 5 478 949 7 180 280 6 675 528 4 497 788

Cost of sales (3 542 454) (4 626 686) (5 111 196) (2 757 085)

Gross profit 1 936 495 2 553 594 1 564 332 1 740 703

Other income 91 580 663 512 330 372 27 819

Other gains - net change in fair value on biological assets 90 996 933 362 4 795 279 1 003 830

Land allocation asset impairment (6 188 698) - - -Distribution expenses (208 616) (247 895) (300 579) (309 855)

Administrative expenses (2 372 093) (2 057 217) (2 326 148) (1 232 135)

Other operating expenses (1 975 561) (1 547 591) (825 924) (661 060)

Operating (loss) / profit (8 625 897) 297 766 3 237 332 569 302

Finance cost (802 620) (1 108 475) (569 389) (86 290)

Loss before tax (9 428 517) (810 709) 2 667 943 483 012

Income tax credit 2 192 075 419 494 (477 770) 696 729

Loss from continuing operations (7 236 442) (391 215) 2 190 173 1 179 741

DISCONTINUED OPERATIONS

Loss for the year from discontinued operations (419 794) (1 175 643) (1 031 297) (1 190 225)

Loss for the year (7 656 236) (1 566 858) 1 158 876 (10 484)

Other comprehensive income:

Gains on revaluation of property plant and

equipment (net of tax) - 332 200 2 509 435 -

Total comprehensive loss for the year (7 656 236) (1 234 658) 3 668 311 (10 484)




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17

Consolidated Statement of Financial Position


2012 2011 2010 2009

US$ US$ US$ US$

ASSETS

Non-current assets

Property, plant and equipment 6 466 737 7 071 076 11 821 532 7 976 466

Biological assets 6 167 437 11 060 752 8 956 519 4 161 240

Deferred income tax assets 284 545 646 482

12 918 719 18 778 310 20 778 051 12 137 706

Current assets

Inventories 1 259 580 1 467 377 1 511 331 1 243 958

Biological assets 262 181 749 164 638 393 326 918

Advance crop expenditure - - 474 345 625 362

Trade and other receivables 907 779 3 775 316 1 391 902 1 837 703

Cash and bank 168 509 719 185 131 570 261 586

2 598 049 6 711 042 4 147 541 4 295 527

Total assets 15 516 768 25 489 352 24 925 592 7 020 178

EQUITY AND LIABILITIES

Equity

Share capital 487 443 487 443 487 443 -

Other reserves 8 704 854 8 704 854 10 748 654 8 726 662

Accumulated losses / retained earnings (5 698 702) 1 957 534 1 148 392 (10 484)

Total equity attributable to shareholders 3 493 595 11 149 831 12 384 489 8 716 178

Non-current liabilities

Deferred income tax liabili ty 1 344 061 3 898 073 3 738 719 2 181 665

Borrowings 3 204 227 4 161 310 - -

4 548 288 8 059 383 3 738 719 2 181 665

Current liabilities

Trade and other payables 4 440 807 4 298 500 4 811 841 3 695 963

Borrowings 3 034 078 1 981 638 3 990 543 1 839 427

7 474 885 6 280 138 8 802 384 5 535 390

Total equity and liabilit ies 15 516 768 25 489 352 24 925 592 16 433 233




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18

Consolidated Statement of Cashflow


2012 2011 2010 2009

US$ US$ US$ US$

CASH FLOW FROM OPERATING ACTIVITIES

Operating loss (9 079 231) (167 191) 2 840 048 (620 923)

Adjustments for :

Depreciation 550 140 772 763 240 357 173 567

Profit on disposal of property, plant and equipment - (306 572) (265 000) -

Change in classification - fair value adjustment (985 763) (665 083) - -

Land allocation asset impairment 6 188 698 - - -

Fair value adjustment on biological assets (90 996) (933 362) (4 795 279) (1 003 830)

Operating loss before working capital changes (3 417 152) (1 299 445) (1 979 874) (1 451 186)

Decrease in inventories 207 797 43 954 (267 373) (799 072)

Decrease / (increase) in current biological assets 486 983 (142 214) (27 684) -

Decrease / (increase) in advance crop expenditure - - (132 774) (519 868)

Decrease / (increase) in trade and other receivables 2 867 537 (2 383 414) 445 801 (1 204 608)

Increase / (decrease)in trade and other payables 142 307 (513 341) 1 115 878 2 850 779

Cash generated from /(utilised in) operating activities 287 472 (4 294 460) (846 026) (1 123 955)

Interest paid (620 797) (1 416 574) (994 394) (86 290)

Net cash generated from / (utilised in) operating activities (333 326) (5 711 034) (1 840 420) (1 210 245)

CASH FLOW FROM INVESTING ACTIVITIES

Purchases of property, plant and equipment (345 405) (1 137 744) (705 712) (325 144)

Proceeds from the disposal of property, plant and equipment 124 785 4 221 510 265 000 -

Net cash (utilised in) / generated from investing activities (220 620) 3 083 766 (440 712) (325 144)

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from long term borrowings - 5 000 000 - -

Proceeds from short term borrowings 1 250 000 485 885 1 988 853 1 839 427

Repayments of long term borrowings (1 039 690) - - -

Repayments of short term borrowings (430 833) (2 170 955) - (201 976)

Net cash (utilised in) / generated from financing activities (220 523) 3 314 930 1 988 853 1 637 451

Net (decrease) / increase in cash and cash equivalents (774 469) 687 662 (292 279) 102 062

Cash and cash equivalents at the beginning of the year 656 969 (30 693) 261 586 159 224

Cash and cash equivalents at the end of the year (117 500) 656 969 (30 693) 261 286




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19

Statement of Changes in Equity

Accumulated

Share capital Other reserves losses/retained Total Equity

US$ US$ earnings US$ US$

Year ended 31 December 2009

Balance at the beginning of the year - - - -

Arising on changes in Functional currency - 8 726 662 - 8 726 662

Loss for the year - - (10 484) (10 484)

Balance as at 31 December 2009 - 8 726 662 (10 484) 8 716 178


Balance at the beginning of the year - 8 726 662 (10 484) 8 716 178

Transfer from non distributable reserves on redenomination of share capital to US$ 487 443 (487 443) - -

Profit for the year - - 1 158 876 1 158 876Other comprehensive income - - -

Gains on revaluation of property plant and equipment (net of tax) - 2 509 435 2 509 435

Balance as at 31 December 2010 487 443 10 748 654 1 148 392 12 384 489

Balance at 1 January 2011 487 443 10 748 654 1 148 392 12 384 489

Comprehensive loss:

Loss for the year - - (1 566 858) (1 566 858)

Other comprehensive income:

Gains on revaluation of property plant and equipment (net of tax) - 332 200 - 332 200

Transfer to retained earnings on disposal of property (net of tax) (2 376 000) 2 376 000 -

Balance as at 31 December 2011 487 443 8 704 854 1 957 534 11 149 831


Balance at 1 January 2012 487 443 8 704 854 1 957 534 11 149 831

Comprehensive loss:

Loss for the year - - (7 656 236) (7 656 236)

Balance as at 31 December 2012 487 443 8 704 854 (5 698 702) 3 493 595

SUPPLEMENTARY INFORMATION

1. The accounting policies notes which accompany the financial statements for the year ended 31 December 2012 have been excluded from this Circular, but are included in the financial

statements contained in the Company's Annual Report. The financial statements will be tabled for adoption by shareholders at the next Annual General Meeting of the Company to be held

on the 22nd of July 2012 at 10:00 am in the Miti Conference Room, Cresta Lodge, Corner Samora Machel and Robert Mugabe, Msasa, Harare which immediately precedes EGM to convened

on the same day and at the same place.

The annual report which contains the reports of the Directors and Independent Auditors are available for inspection at the registered and postal addresses of the Company. The same

information is available on the Company's website. The company will be distributing the Annual Report together with the Circular to all shareholders of the Company. This document must beread together with the Annual report for the financial year ended 31 December 2012.




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2. Historical information for the year ended 31 December 2011 has adopted the disclosures presented in the financial statements for the year ended 31 December 2012 for consistency

purposes. The impact of these disclosures on the financial information for the years ended 31 December 2009 and 2010 is not material.

3. Supplementary notes from the annual financial statements for the year ended 31 December 2012 have been included in this Circular.

4 REVENUE

Group Group

2012 2011

US$ US$

Local sales 4 225 000 5 131 392

Export sales 1 253 949 2 048 888

5 478 949 7 180 280

5 FINANCE COSTS

Finance costs:

- interest payable on borrowings 802 620 1 108 475

6 EARNINGS PER SHARE

2012 2011

US$ US$

6.1 Basic earnings per share

Loss from continuing operations (7 236 442) (391 215)

Loss from discontinued operations (419 794) (1 175 643)

Attributable loss(US$) (7 656 236) ( 1 566 858)

Weighted average number of ordinary shares in issue during the year 487 442 532 487 442 532

From continuing operations (1.48) (0.08)From discontinued operations (0.09) (0.24)

From loss for the year (cents) (1.57) (0.32)

6.2 Diluted earnings per share

Attributable loss (US$) (7 656 236) ( 1 566 858)

Weighted average number of ordinary shares in issue during the year 487 442 532 487 442 532

Adjusted for:

- share option - 675 000

487 442 532 488 117 532

From continuing operations (1.48) (0.08)

From discontinued operations (0.09) (0.24)From loss for the year (cents) (1.57) (0.32)

20




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7 PROPERTY, PLANT AND EQUIPMENT

Furniture,

Commercial Agricultural fittings and

land and land and Plant and Motor office

buildings buildings equipment vehicles equipment Total

Consolidated US$ US$ US$ US$ US$ US$


Opening net book amount 5 398 000 2 456 621 2 904 481 827 254 235 176 11 821 532

Revaluation surplus 332 200 - - - - 332 200

Additions - - 650 786 416 626 70 332 1 137 744

Disposal (5 384 792) (66) - (62 779) - (5 447 637)

Depreciation charge (247 408) (153 031) (237 334) (101 533) (33 457) (772 763)

Closing net book amount 98 000 2 303 524 3 317 933 1 079 568 272 051 7 071 076

At 31 December 2011Cost / revaluation 98 000 2 473 201 3 555 267 1 181 101 317 909 7 625 478

Accumulated

depreciation - (169 677) (237 334) (101 533) (45 858) (554 402)

Net book amount 98 000 2 303 524 3 317 933 1 079 568 272 051 7 071 076


Opening net book amount 98 000 2 303 524 3 317 933 1 079 568 272 051 7 071 076

Additions 264 520 - 26 000 20 500 34 385 345 405

Land allocation write off - (33 253) (241 567) - - (274 820)

Disposal - - - (124 785) - (124 785)

Depreciation charge (7 962) (172 895) (209 162) (107 297) (52 823) (550 140)

Closing net book amount 354 558 2 097 376 2 893 204 867 986 253 613 6 466 737

At 31 December 2012

Cost / revaluation 362 520 2 439 948 3 339 700 1 076 816 352 294 7 571 278

Accumulated depreciation (7 962) (342 572) (446 496) (208 830) (98 681) (1 104 542)

Net book amount 354 558 2 097 376 2 893 204 867 986 253 613 6 466 737

No revaluation was done during the year as the fair values did not change significantly.

21




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7 PROPERTY, PLANT AND EQUIPMENT (continued)

Depreciation expense of US$ 534 780 (2011: US$749 219) has been charged in administrat ion expenses, and US$ 15 359 (2011 : US$ 23 544) in cost of sales.

Property, plant and equipment is used as securi ty for borrowings (note 22)

If property, plant and equipment were stated on the historical cost basis, the amounts would be as follows:

Furniture,

Commercial Agricultural fittings and

Land and land and Plant and Motor office

buildings buildings equipment vehicles equipment Total

US$ US$ US$ US$ US$ US$

2011

Cost 98 000 2 473 201 3 497 665 1 023 684 317 909 7 410 459

Accumulated depreciation - (169 677) (169 677) (101 533) (45 858) (486 745)

Net book amount 98 000 2 303 524 3 327 988 922 151 272 051 6 923 714

2012

Cost 362 520 2 439 948 3 339 700 919 399 352 294 7 413 861

Accumulated depreciation (7 962) (342 572) (446 496) (208 830) (98 681) (1 104 542)

Net book amount 354 558 2 097 376 2 893 204 710 569 253 613 6 309 319

22




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7 PROPERTY, PLANT AND EQUIPMENT (continued)

Furniture,Commercial fittings and

land and Plant and Motor office

Company buildings equipment vehicles equipment Total

US$ US$ US$ US$ US$


Opening net book amount 5 398 000 20 515 140 248 13 755 5 572 518

Revaluation surplus 332 200 - - - 332 200

Additions - - 107 182 56 625 163 807

Disposals - (20 515) (62 779) - (83 294)

Transfer to group company (5 632 200) - 30 699 102 501 (5 499 000)

Depreciation charge - - (13 312) (40 727) (54 039)

Closing net book amount 98 000 - 202 038 132 154 432 192

At 31 December 2011

Cost / revaluation 98 000 - 225 681 172 881 496 563

Accumulated depreciation - - (23 644) (40 727) (64 371)

Net book amount 98 000 - 202 038 132 154 432 192


Opening net book amount 98 000 - 202 038 132 154 432 192

Additions - - - 33 993 33 993

Depreciation charge - - (54 940) - (55 355) (110 295)

Closing net book amount 98 000 - 147 098 110 792 355 890

At 31 December 2012

Cost / revaluation 98 000 - 225 681 206 874 530 555

Accumulated depreciation - - (78 584) (96 082) (174 666)

Net book amount 98 000 - 147 098 110 792 355 890

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8 BIOLOGICAL ASSETS

Agricultural Citrus

produce Orchards Total

US$ US$ US$


Carrying amount at 1 January 2011 638 393 9 422 754 10 061 147

Attributable farming costs 1 226 972 1 009 956 2 236 928

Net fair value adjustment - 933 362 933 362

Decrease due to sales (1 116 201) (305 320) (1 421 521)

Carrying amount at 31 December 2011 749 164 11 060 752 11 809 916

Non current 11 060 752

Current 749 164

11 809 916


Carrying amount at 1 January 2012 749 164 11 060 752 11 809 916

Attributable farming costs 1 047 647 953 289 2 000 936

Net fair value adjustments - 90 996 90 996

Decrease due to sales (1 226 972) (331 380) (1 558 352)

Land allocation asset impairment (note 24) (307 658) (5 606 220) (5 913 878)

Carrying amount at 31 December 2012 262 181 6 167 437 6 429 618

Non current 6 167 437

Current 262 181

6 429 618

The total area under citrus orchards as at 31 December 2012 amounted to approximately 517 ha (2011: 592ha), of which approximately 517 ha (2011: 550 ha) can be classified as bearing.

The fair value of the citrus harvested during the current financial year amounted to $ 1 682 955 (2011: $1 935 845). The fair value was calculated with reference to arms length prices paid in

an active market less estimated costs to sell at harvesting.

The fair value of bearing citrus trees was calculated by discounting the net cash flows thereof over their remaining lives at a discount rate of 13.7% (2011: 11.4 %). The net cash flows were

calculated with reference to citrus cultivars, expected yields based on the forecast yields, estimated future sales prices and estimated future production costs.

The discount factor is based on weighted average cost of capital which at year end was 13.4%.

The average productive life of the citrus trees are estimated at 28 years for both navel and valencia cultivars.

Agricultural produce carrying amount consists of attributable farming costs incurred to year end measured at cost less impairment.

24




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9 INVENTORIES

2012 2011

Group

Agricultural inputs 433 723 260 745

Merchandise / produce for resale 598 139 903 670

Packing materials 162 090 82 662

Consumables 65 628 220 300

1 259 580 1 467 377

Company

Consumables - 20

Inventory amounting to $3 542 454 ($4 626 686: 2011) was transferred to cost of sales.

10 TRADE AND OTHER RECEIVABLES

US$ US$

2012 2011

Group

Trade - local 656 446 1 385 915

Less: Allowance for impairment of trade receivables (78 535) (146 325)

Trade receivables -net 577 911 1 239 590

Prepayments 81 687 395 377

Receivable from disposal of property - 1 585 000

Other 248 181 555 349

907 779 3 775 316

Company

Trade - amounts due from Group companies (note 28) 2 421 754 477 708

Receivable from disposal of property - 1 585 000

2 421 754 2 062 708

The fair values of trade and other receivables approximate the carrying amount due to the short-term maturities of these assets. All receivables are due within 12 months from the reporting

date.

As at 31 December 2012 trade receivables of US $ 251 261 (2011: US $ 595 520) were fully performing.

As at 31 December 2012 trade receivables of US $ 326 650 (2011: US $ 644 070) were past due at the reporting date but not impaired. These relate to a number of independent customers

where there have not been any history of payment default or significant changes in credit quality and the amounts are still considered recoverable.

25




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The age analysis of trade debtors past due but not impaired is as follows:

2012 2011

US$ US$

60 to 90 days 195 432 275 315

90 days + 131 218 368 755

326 650 644 070

In the view of management, the credit quality of trade receivables is considered sound.

At 31 December 2012, trade receivables of US$ 78 535 (2011: US $ 146 325) were impaired and provided for.

The movement of the Groups allowance for impairment of trade receivables is as follows:

Balance at the beginning of the year 146 325 5 209

Receivables written off during the year as uncollectable - 146 325

Unused amounts reversed (67 790) (5 209)

Balance at the end of the year 78 535 146 325

The creation and release of provision for impaired receivables have been included in administrative costs in the statement of comprehensive income. The other classes within trade and other

receivables do not contain impaired assets.

The carrying amounts of the Groups trade and other receivables are denominated in the US$.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable as mentioned above.

The Group does not hold any collateral as security.

Bank borrowings amounting to US$457 000 are secured by inventories and trade receivables (note 22).

11 CASH AND CASH EQUIVALENTS

2012 2011

US$ US$

Group

Cash and bank balances 168 509 719 185

Bank overdraft (note 22) (286 009) (62 216)

(117 500) 656 969

Company

Cash and bank balances 172 428 577 601

Bank overdraft (note 22) (272 374) -

(99 946) 577 601

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12 TRADE AND OTHER PAYABLES

2012 2011

US$ US$

Trade

- local 3 281 220 2 323 665

- foreign - 84 553

3 281 220 2 408 219

Taxes 306 522 164 414

Social security liabilities 88 695 29 252

Accrued expenses 764 370 1 696 616

4 440 807 4 298 500

Trade Company

Trade creditors 828 060 -

other creditors 695 540 412 325

1 523 600 412 325

The fair value of trade and other payables approximate their carrying amounts, as the impact of discounting is not significant.

All trade payables balances are denominated in US$.

13 BORROWINGS

Group

Current

Bank overdraft 286 009 62 216

Bank loans 2 748 069 1 919 422

3 034 078 1 981 638

Non current

Bank loans 3 204 227 4 161 310

Total borrowings 6 238 305 6 142 948

Company

Current

Bank overdraft 272 374 -

Bank loans 2 748 056 1 981 638

3 020 430 1 981 638

Non current

Bank loans 3 204 240 4 161 310

Total borrowings 6 224 670 6 142 948

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13 BORROWINGS(continued)

Bank borrowings amounting to US$6 238 318 are secured by property, plant and equipment, inventories and trade receivables and unlimited joint and several guarantees of subsidiary

companies.

Short term bank loans mature in 2013. The average cost of short term borrowings is 17% per annum.

Long term borrowings are repayable in 10 equal semi - annual instalments which commenced May 2012 over 5 years at US$ Libor rate + 9% per annum.

The fair value of borrowings approximate the carrying amount , as the impact of discounting is not significant.

Borrowing powers

The aggregate principle amount at any one time outstanding in respect of monies borrowed or raised by the Company and/or any of its subsidiaries excluding any monies borrowed or raised

by any such companies but including the principal amount secured by any outstanding guarantees of surety given by the company or any of its subs idiaries for the time being for the share

capital or indebtedness of any other company or companies whatsoever and already included in the aggregate amount so borrowed or raised, shall not, without the previous sanctions of an

ordinary resolution of the Company in general meeting exceed twice the aggregate of :

a) the nominal amount of the issued and paid share capital for the time being of the company; and

b) the aggregate of the amounts standing to the credit of all capital and revenue reserve accounts, any share premium account and profit and loss account as set out in the latestconsolidated audited statement of financial position of the company and its subsidiaries which has been drawn up and laid before the shareholders of the Company in general meeting at

the relevant time.

14 LAND ALLOCATION ASSET IMPAIRMENT

Land Acquisition

In January 2013 the company was advised by the Ministry of Lands and Resettlement that a portion of land measuring 1 599.7 hectares which was part of Mazoe Citrus Estates ("MCE") had in

December 2012 been allocated to another party.

The land allocated 46 % (forty six percent) of the arable land of MCE.

MCE had on going operations which included citrus orchards consisting of lemons and crops (soya beans, commercial and seed maize) and horticultural produce on the allocated land. The

farms affected also had immovable fixed assets such as irrigation systems, canal works, staff housing and packing facilities.

An appeal was lodged with the Ministry of Lands and Resettlement but to date there has been no formal response.

The following criteria has been applied in the determination of the impairment in the financial statements.

Non current biological assets

The carrying amount of the affected biological assets have been fully written off based on their carrying amounts as at 31 December 2012.

Property, plant and equipment

The carrying amount of immovable property, plant and equipment which were located on the land allocated by government were written off in full based on their carrying amounts as at 31

December 2012.

Current biological assets

The cost of inputs and an approximate estimation of direct costs and overhead relating to on going operations on maize, soya beans and horticultural produce have been written off in full.

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14 LAND ALLOCATION ASSET IMPAIRMENT(continued)

The effect of the impairment of the various asset categories on the financial statements is summarised below:

US$

Non current biological assets (Lemon orchards) 5 606 220

Property, plant and equipment 274 820

Plant and equipment (immovable) 241 567

Agricultural buildings 33 253

Current biological assets 307 658

Lemons 76 088

Maize 91 936

Soya beans 79 626Horticultural produce 60 009

Total write offs recognized in the statement of comprehensive income 6 188 698

No compensation for the allocated land has been received by the company to date.

15 DISCONTINUED OPERATIONS

Wholesale Fruiterers

Wholesale Fruiterers was a wholesaler and distributor of fresh produce to various supermarkets in the country. This division was no longer profitable under the retail model of distribution.

The formal decision to discontinue the wholesale model of the operation was made in October 2011.

Costs recorded in the statement of comprehensive income residual costs in the process of winding up the division.

Citrus Projects

The partnership between the Group and the Guruve Rural District Council was discontinued in September 2011. The Group was previously responsible for the production, marketing and

distribution of citrus products from a network of small orchards totalling 180 hectares.

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The results of discontinued operations are presented below:

Wholesale Citrus Wholesale Citrus

Fruiterers Projects Total Fruiterers Projects Total2012 2012 2012 2011 2011 2011

Revenues 29 906 - 29 906 3 186 641 135 724 3 322 365

Expenses (483 240) - (483 240) (1 872 390) (137 493) (2 009 883)

Loss before tax of discontinued operations (419 794) - (419 794) (1 004 997) (197 321) (1 202 318)

Taxation - - - 100 751 ( 74 076) 26 675

Loss after tax of discontinued operations (419 794) - (419 794) (904 246) (271 397) (1 175 643)

Operating cash flows - - - (593 880) 257 020 (336 860)

Investing cash flows - - - (162 310) - (162 310)

Financing cash flows - - - (295 216) (202 401) (497 617)

Total cash flows - - - (1 051 406) 54 619 (996 787)

16 CHANGE IN CLASSIFICATION

The Group has reclassified certain items in the current year. Previously these items were incorrecty classified or set off as follows:

Statement of Financial Position

i) subsequent expenditure on biological assets capitalised was shown as a separate line item under current assets

ii) deferred tax assets arising in separate legal entities within the Group were offset against deferred tax liabilities arising in other entities

Statement of Comprehensive Income

iii) certain cost of sales items (farming costs and decrease due to sales) and fair value gains in respect of the citrus orchard were shown as one net amount under 'other gains - fair value

adjustment on biological asset'

Accordingly the comparative financial information had been restated.

The above reclassif ications have no effect on previously reported operating profit and loss for the year.

The effects on the Statement of Financial Position presented for comparative purposes are as follows (note: the effect of the reclassifications on the reported amounts as at

31 December 2010 and 31 December 2009 is not material )

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16 CHANGE IN CLASSIFICATION(continued)

Biological assets Subsequent Deferred tax Deferred tax(non-current) expenditure liability asset

At 31 December 2011

- as previously reported 10 554 964 505 788 646 480 646 480

- reclassification 505 788 (505 788) 3 898 071 646 480

- amount after reclassi fication 11 060 752 - 4 544 551 1 292 960

At 1 January 2011

- as previously reported 8 956 519 474 345 3 738 719 -

- reclassification 474 345 (474 345) 529 315 529 315

- amount after reclassi fication 9 430 864 - 4 268 034 529 315

The effects on the statement of comprehensive income presented for comparative purposes are as follows:

Fair value

adjustment on

biological

Cost of sales assets


- as previously reported 5 291 768 1 598 445

- reclassif ication (665 083) (665 083)

- amount after reclassi fication 4 626 685 933 362

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17 SEGMENT INFORMATION

Business segments

Management has determined the operating segments based on reports reviewed by the Executive Committee that are used to make strategic decisions. Segment results, assets andliabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise corporate assets and expenses.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one reporting period.

The reportable segments derive their revenue primarily from the sale of agricultural produce, fast moving consumer goods, fruit based cordials and concentrates. Agricultural produce takes

the form of whole fruit orange and lemons, soya beans, wheat, maize and various fresh vegetable lines.

The Executive Committee assesses the performance of the operating segments based on a measure of return on capital employed. Interest income and expenditure are not allocated to

segments as this type of activity is driven by the central treasury function, which manages the cash position of the Group.

As at 31 December 2012, the Group is organised into five main operating segments;

a) Beverage division

b) Citrus division

c) Crops division

d) Horticulture division

e) Trading division

All revenues allocated to the segments are from external customers and they relate to continuing operations. Segmental revenues are recorded in a manner which is consistent to that in the

statement of comprehensive income.

There were no revenues from a single customer which amounted to 10 % or more of the Group's revenues.

17.2 Geographical segments

Total segment

revenue

Sales US$

Zimbabwe 4 593 860

South Africa 462 258

Middle East 422 831

Total 5 478 949

Total assets 15 516 768

All revenue is earned from assets in Zimbabwe.

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17 SEGMENT INFORMATION (continued)

17.3 Segmental Analysis

For the year ended 31 December 2012

Total Beverages Citrus Cropping Horticulture Trading Head Office

US$ US$ US$ US$ US$ US$ US$

2012

Revenue 5 478 949 907 746 1 437 959 1 225 804 273 657 1 633 783 -

External 6 104 051 1 264 147 1 682 955 1 225 804 297 362 1 633 783 -

Group (625 102) (356 401) (244 996) - (23 705) - -

Other profit and loss disclosures

Interest expense 697 892 104 728 171 270 78 344 14 075 101 987 332 216

Depreciation 550 140 33 874 321 662 78 124 58 909 28 704 62 741

Income tax credit (2 192 075) (32 368) (1 766 228) (123 400) (84 896) (185 183) -

Fair value gains on biological assets 90 996 - 90 996 - - - -

Land allocation impairment (6 188 698) - (5 957 128) (231 570) - - -

Total assets 15 516 768 1 908 846 12 184 344 1 240 477 938 796 469 404 683 747

2011

Revenue 5 065 993 2 114 287 1 350 532 1 552 307 173 159 1 989 995 -

External 5 515 228 2 114 287 1 702 533 1 552 307 270 393 1 989 995 -

Group (449 236) - (352 001) - (97 234) - -

Other profit and loss disclosures

Interest expense 1 028 943 79 532 308 122 202 735 241 047 277 039 -

Depreciation 658 501 114 262 199 667 54 992 86 958 21 462 295 423

Income taxation credit 469 607 (50 133) 88 718 (5 909) 134 481 96 521 155 796

Fair value gains on biological assets 933 362 - 933 362 - - - -

Total assets 24 842 870 2 075 596 16 123 193 1 756 524 1 053 909 961 015 2 872 633

All the segmental information relates to continuing operations.

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34

part iv: share consolidation

The Directors propose the consolidation of every 10 [ten] shares in the capital of the company into 1 [one] share. Consequently, the 600,000,000 (six hundred million) ordinary shares with a nominal

value of US$0.001 each comprising the authorized share capital of the Company shall be consolidated into 60,000,000 (sixty million) ordinary shares with a nominal value of US$0.01 each.

Thus the 487,442,532 issued ordinary shares with a nominal value of US$0.001 each in the capital of the Company will consolidate into 48,744,253 ordinary shares of US$0.01each.

Interfresh Rights Offer Circular

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