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African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
African Sun 2008 annual report
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African Sun 2008 annual report

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African Sun annual report in respect of the year ended 30 September 2008

African Sun annual report in respect of the year ended 30 September 2008

Published in: Investor Relations
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  • 1. Annual Report 2008 OUR VISION TAKES WING
  • 2. The Kingdom
  • 3. CONTENTSCompany Profile 2Financial Highlights 4Statement of Vision 5Our Vision Takes Wing 8Historical Highlights 9To our Shareholders and Partners 10Business Review 14Report of the Directors 20Accounting Philosophy 22Directors Responsibility for Financial Reporting 23Certificate by the Company Secretary 25Report of the Independent Auditors 26Financial Statements 28Five-Year Financial Review 62Supplementary Information 65Group Structure 68Shareholders Analysis 69Directorate 72Management 73Corporate Governance 76Notice of Annual General Meeting 79Shareholders Diary 81Contact Information 82Detachable – Proxy Form for the Annual General Meeting 83 The Victoria Falls Hotel Elephant Hills Resort African Sun Limited 2008 1
  • 4. African Sun Limited COMPANY PROFILE A frican Sun Limited, ‘African Sun’ is the fastest operates the Great Zimbabwe Hotel in Masvingo, which is growing hospitality group in sub-Saharan Africa, located within walking distance from the Great Zimbabwe with interests in Zimbabwe, South Africa, Nigeria, and National Monument. Ghana. Established in 1968, the Group, then known as Zimbabwe Sun Limited, was part of Delta Corporation, Regionally, the Group has properties in South Africa, and has evolved significantly from being just a Zimbabwe- Nigeria and Ghana. In South Africa, operations consist of based hospitality management company into a truly The Grace in Rosebank and The Lakes Hotel and Conference pan-African operation. Centre in Benoni, both in Gauteng. In Nigeria, the Group operates under management contracts, Obudu Mountain In Zimbabwe, African Sun Limited is the leading player in Resort, Utanga Lodge and Amber Tinapa, all in Cross the tourism and hospitality industry, with the Zimbabwe River State, Nike Lake Resort in Enugu State as well as a operations forming the largest business within the African specialised spa boutique hotel in Lagos named the Clear Sun Limited group of companies. The Zimbabwe operations Essence California Wellness Centre and Boutique Hotel. portfolio currently comprises various city hotels and resorts In Ghana, we operate the Holiday Inn Accra Airport. across the nation. Three resort hotels are in the town of Victoria Falls, namely Elephant Hills Resort, The Kingdom All these developments are supported by a management at Victoria Falls and The Victoria Falls Hotel, the latter team comprising seasoned hotel and business managers jointly managed with Kingdom Meikles Africa Limited. providing the intellectual capital needed to up-scale Close to Victoria Falls, in Hwange, is African Sun Limiteds the business. safari operation, Hwange Safari Lodge. Other resort hotels in the Group are Troutbeck in Nyanga and Caribbea Bay Also under its wing, African Sun Limited holds a 17.72% and Fothergill Island Safari Lodge, both located in Kariba. equity interest in Dawn Properties Limited, an investment property holding company formed and then listed on the The city hotels in Zimbabwe include three Intercontinental Zimbabwe Stock Exchange in 2003 when the Group spun- Hotels Group (IHG) affiliated brands, the Crowne Plaza off wholly-owned property interests to concentrate on the Monomotapa in Harare, the three Holiday Inn branded hotel management business. Dawn Properties owns nine of hotels in Harare, Bulawayo, and Mutare, and the Express by the properties that African Sun Limited leases and operates Holiday Inn Beitbridge. In addition to these, the Group also in Zimbabwe. Caribbea Bay Obudu Mountain Resort The Grace in Rosebank2 African Sun Limited 2008
  • 5. As part of its strategic thrust, African Sun Limited places the region, our brand strategy will focus on the use ofsignificant importance on its human capital base, and Intercontinental Hotels Group (IHG) brands, namelythis has resulted in the strengthening of its training Holiday Inn, Crowne Plaza and Express by Holiday Inn indivision, the Hospitality Training Academy (HTA). The main emerging markets. IHG brands are tried and tested withrole of the training academy is to ensure and maintain great brand equity and awareness, especially for foreignexcellent service delivery within the Group through the and business travellers, who have a high internationalimplementation of appropriate training programmes for brand awareness.our staff. African Sun Limited will use its own brands in marketsThrough the Hospitality Training Academy (HTA), African where the Group has already gained recognition.Sun Limited will replicate its excellent service standards These are:through the installation of satellite training academies Five Star Luxury: The Mulberryin west and east Africa, the two main areas of expansion Five Star City: Platinumplans in sub-Saharan Africa. Mid range: Amber Value: AdrenalinnGrowing the brands regionally is a fundamental factor in Long stay: MyPlacethe Groups continued quest to establish brand leadershipthrough which African Sun Limited will dominate other All these investments serve to enhance the Groups corebrands and become the benchmark for other players business which is to extend the provision of other leisurein the region. As African Sun Limited expands into activities reflective of a lifestyle that is unforgettable! Obudu Mountain Resort Troutbeck Resort African Sun Limited 2008 3
  • 6. FINANCIAL hIGhLIGhTS For the year ended 30 September 2008 41% ROOM OCCUPANCY 54% OPERATING PROFIT MARGIN Z$706.13 bASIC EARNINGS PER ShARE GROUP Historical Cost 2008 2007 $ $ GROUP SUMMARY Revenue 811 829 069 449 173 Profit before tax 539 629 628 295 48 Attributable earnings 473 336 928 670 35 Total assets 16 593 398 526 134 1 176 Market capitalisation 82 556 088 480 000 19 145 SHARE PERFORMANCE ($) Earnings per share - Basic earnings basis 706.13 – - Fully diluted earnings basis 706.13 – Net asset value per share 18 678 – Market price per share 120 000 – FINANCIAL STATISTICS Return on equity (%) 4 4 Interest cover (times) 136 53 ROOMS UNdER MANAGEMENT 3 500 3 000 zIMbAbwEAN STORY 2 500 Local roomnights 400 000 Foreign roomnights 2 000 Number of roomsRoomnights 300 000 1 500 Zimbabwe 200 000 Africa 1 000 * Forecast 100 000 500 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2007 2008 2009* 4 African Sun Limited 2008
  • 7. Statement of Vision VISIONThe Lifestyle Company creating unforgettable leisure experiences.MISSIONWe exist to create wealth in a sustainable manner by anticipating and meeting the needs of our stakeholders, throughthe provision of seamless leisure services in our chosen markets.WE DO SO bY:• Developing intimate and emotional relationships, as we reach out to hearts and minds.• Exceeding guest expectations.• Having a formalised unique sequence of doing things.• Implementing innovative techniques that seek to continuously re-invent African Sun Limited in order to maintain excellence in everything we do.• Creating opportunities for personal growth and balanced lifestyles for all staff to enable them to positively impact lives around them.FOCUSWe have re-defined our business as encompassing all aspects of the tourism chain.We are committing ourselves to expanding our operations throughout Africa through direct investment, equityparticipation and strategic alliances.We will provide a holistic hospitality and leisure product that will meet the needs and exceed the expectationsof our guests.These include the integration and co-ordination of:• Seamless delivery of guests to and from the destination.• Co-ordination of an exciting suite of activities and attractions.• Provision of appropriate high quality accommodation and amenities.CORE VALUES AND bELIEFSINTEGRITY – We do what we say. We are true to self and true to others.RESPECT – In all our relationships, we seek to build and honour.CARE – We show concern and seek the well-being of everyone.FUN – We celebrate life together. African Sun Limited 2008 5
  • 8. African Sun Values ThE AFRICAN SUN WAY SHAREd VISION – We will always seek to have a buy-in whilst providing leadership. SHAREd VALUES – Our values are the glue that binds us together. TIMEOUS ExECUTION ANd CLOSURE – It is not done until there is closure. EFFECTIVENESS – We will deliver beyond expectations. AdAPTAbILITY – We will be flexible without losing our strategic intent. EFFICIENCY – We will be disciplined in utilizing resources in all we do. CONNECTIVITY – It is our responsibility to get the message to the other party. "Come to the Edge We might fall Come to the Edge Its too high! Come to the Edge And they came And he pushed And they flew" – Christopher Logue Caribbea Bay Resort Obudu Mountain Resort The Grace in Rosebank6 African Sun Limited 2008
  • 9. Obudu Mountain ResortAfrican Sun Limited 2008 7
  • 10. Our Vision Takes Wing T here comes a moment when the young eagle knows with the wind behind us, will follow this direction with instantly that it is time to fly. For a long period it flaps dedication and commitment. and strengthens its wings, then suddenly takes off into the sublime air. This is such a time for African Sun Limited. AN EYE ON THE FUTURE The eagle builds its nest with care and skill. From this After 40 years of stability and growth, we are now lofty eyrie it can view its kingdom and explore its world. spreading our wings across Africa, with a new vision, We too have viewed the terrain with careful detail and laid seeking out opportunities and focusing on quality of well-constructed plans to become the largest lifestyle and service, people and hospitality across different brands. hospitality Group right across the African continent. SOARING TO NEw HEIGHTS A SYMbOL OF POwER ANd TEAMwORk It has taken perseverance and tenacity to carry us through Certain eagle species are more successful when they hunt stormy times. Like the eagles gliding over our resorts, in a team of two. This is particularly true of Zimbabwes we have used the wind of the storm to lift us above the own majestic black eagle, which has a dense population clouds and view a landscape of great possibilities. We in the Matopos Hills. Team spirit is one of African Sun have set ourselves important and far-seeing objectives Limiteds core values, and one of the reasons for our to expand into new and unfamiliar markets, and now growth and success. This is our time to fly.8 African Sun Limited 2008
  • 11. Historical Highlights OUR jOURNEY ThUS FAR • 1952 – Rhodesia and Nyasaland Hotels (Private) • 1994 – First regional office for reservations is Limited is formed as a wholly-owned subsidiary of established in Johannesburg Rhodesian Breweries • 1998 – The construction of Express by Holiday Inn • 1968 – Sable Hotels (Private) Limited is established in Beitbridge is completed • 1973 – Rhodesian Government grants first casino • 1999 – Zimbabwe Sun Limited acquires 40% equity licence for the Victoria Falls Hotel and management of Baio Do Paraiso • 1974 – Development of first four world class hotels: • 1999 – Makasa Sun is re-developed into The Monomotapa Hotel in Salisbury, The Wankie Safari Kingdom at Victoria Falls Lodge, Caribbea Bay at Kariba, and the Elephant • 2002 – Zimbabwe Sun Limited is unbundled from Hills Country Club in Victoria Falls Delta Corporation • 1979 – Meikles Southern Sun Hotels is established, • 2003 – Zimbabwe Sun Limited owns 100% shares in becoming the largest hotel chain in southern and the timeshare operation in Vilanculos, Mozambique eastern Africa, with control of thirteen major • 2003 – Dawn Properties Limited is listed as the first properties in the country property entity on the Zimbabwe Stock Exchange • 1980 – Meikles Southern Sun Hotels changes • 2003 – The Hospitality Training Academy (HTA) its name to Zimbabwe Sun Hotels after is re-launched Zimbabwe’s Independence • 2003 – First negotiations for management of Holiday • 1988 – Zimbabwe Sun Hotels merges with Touch Inn Accra Airport, Ghana the Wild safari operations, later selling it to Rainbow • 2004 – Zimbabwe Sun Limited acquires The Grace Tourism Group (Private) Limited on 30 April 1998 Hotel in Rosebank South Africa, ranked among the • 1990 – Zimbabwe Sun Limited is floated on the "Top Ten" hotels in Africa and the Middle East by Zimbabwe Stock Exchange (ZSE), at the time being Condé Nast Traveller (USA) in its first year the largest flotation in Zimbabwe, with 70 million of operation shares offered to the public which was • 2008 – Zimbabwe Sun Limited adds The Lakes Hotel over-subscribed by 28% and Conference Centre, in Johannesburg, South • 1990 – Opening of the timeshares built in Troutbeck, Africa to its portfolio Nyanga and at Caribbea Bay, which received • 2008 – Zimbabwe Sun Limited rebrands its name to “Gold Crown Resorts” status from the RCI in 1999 African Sun Limited • 1991 – First Holiday Inn franchise in Harare • 2008 – African Sun Limited adds Obudu Mountain • 1991 – The Elephant Hills Resort hosts the Resort to its regional portfolio Commonwealth Heads of Government meeting, • 2008 – African Sun Limited takes over management officially opening in 1992 of Holiday Inn Accra AirportThe Victoria Falls Hotel 1972 Johannesburg 1898 Monomotapa Hotel 1973 African Sun Limited 2008 9
  • 12. To our Shareholders & Partners A s we take flight and look into the future, we must acknowledge the events of the past that have given strength and provided the launch pad for African Sun Limited to soar into the future. I must hasten to add that the past is not a dwelling place but a reference point, and on that note, I must spend a little time on our not-too-distant past which has provided the building blocks for the future of the Group. African Sun Limited, formerly Zimbabwe Sun Limited, changed ownership in 2002, thus beginning a strategic journey to attain blue chip status for the Group.10 African Sun Limited 2008
  • 13. dE-MERGER OF THE PROPERTY INTERESTS thus the hospitality training institute was re-launchedThe restructuring and unbundling of Zimbabwe Sun in 2003 as the Hospitality Training Academy (HTA).Limiteds property interests to form Dawn Properties This was a strategic decision aimed at ensuring thatLimited was undertaken to preserve the value of these the quality of the Groups human capital would remainassets and drive more value for the shareholders in line relevant to the Groups growth and superior servicewith international trends. It also allowed the Group to delivery strategies.focus its management strength on its hospitality andleisure business. Dawn Properties Limited was listed on FINANCIAL SUFFICIENCY ANd HOSTING CULTUREthe Zimbabwe Stock Exchange (ZSE) and is currently the The Group focused on its strategy to increase revenuelargest listed property company on this bourse. generation, manage cash flows and costs, and increase productivity from 2004 to 2008. Prudent and financialREGIONAL ExPANSION ANd INCORPORATION OF management saw the Group emerge as a ‘Blue Chip’AFRICAN SUN LIMITEd entity through increased market capitalization; the GroupThe strong belief by the Group’s executives that they could has paid dividends consistently.create a legacy of hospitality excellence and leadershipnot only in Zimbabwe, but in Africa, created a deliberate The gap between service expectations and serviceeffort to spread the Groups risk geographically in order delivery was recognised and in 2007 focus on thisto maximise yields and foreign currency earnings. key area gave impetus to a service culture that had previously not been experienced in the ZimbabweanThis led to the registration of African Sun Limited PCC hospitality industry. This was the introduction of thein Mauritius as a wholly-owned subsidiary of African How May I Serve You? (HMISY) service culture campaign.Sun Limited to drive the regional expansion initiative. In this campaign, the Group Chief Executive Officer heldThe Grace in Rosebank, Johannesburg, South Africa himself accountable for the service performance ofwas the Group’s first hotel outside Zimbabwe and the the whole Group and responded directly to any issuesregionalization drive thus became a reality in February of service failure from the public. This raised the bar2003. The Grace in Rosebank was to set a precedent for for hospitality operations in Zimbabwe and the Groupthe Group’s drive to achieve hospitality excellence and emerged as a market leader.brand leadership in the region. With many internationalaccolades (ranked the Ninth Best Hotel out of the Top 25 RE-bRANdINGhotels in Africa and the Middle East, and 47th of the best In May 2008, Zimbabwe Sun Limited re-branded to African100 hotels worldwide by Travel & Leisure, a United States Sun Limited in order to re-position the Group as a leadingof America-based hospitality magazine), The Grace in brand of hospitality in Africa; the name encapsulates theRosebank is aptly dubbed more than a gracious home, as synergies within the Group’s operations in sub-Saharanit epitomizes the finest in hospitality and service. Africa as we emerge as a pan-African hospitality Group within the tourism chain.RE-LAUNCH OF THE HOSPITALITY TRAINING ACAdEMYThe success of the Group was largely dependent on its As we look into the future we must remember that weskilled manpower and the quality of its human capital; have achieved our success as a result of processes Victoria Falls Hotel The Grace, Johannesburg Troutbeck Resort African Sun Limited 2008 11
  • 14. and initiatives that have been carefully crafted and and superior for both the Group and the industry at large. executed, in order to derive maximum yields and create The Group’s human skills base is its greatest asset, and sustainable wealth. is a key strategic aspect of the regionalisation strategy. To this end, satellite training academies will be set up INCREASE OUR CAPACITY: GROw ROOMS UNdER in east, west and southern Africa in order to maintain MANAGEMENT FROM CURRENT 2500 TO 8500 bY 2012 standards and replicate the processes that have given Research in sub-Saharan Africa has shown that Africa African Sun Limited its winning formula. has a critical need for five times more rooms in the hospitality sector than there are available. As such, CREATING SUSTAINAbLE wEALTH African Sun Limited has targeted to increase rooms under A relevant business model is key to our operations. In management in Africa from the current 2 500 to 8 500 keeping with modern trends, the Group’s portfolio is by 2012. This pathway will clearly set the pace for brand largely dependent on a good mix of key revenue drivers dominance in the sub-region and will see the bulk of the together with identification of locations for expansion, Group’s business deriving from west, east and southern based on sound business practice. The Group’s target will Africa. Zimbabwe will contribute 28% of total rooms be primary growth in mega cities in Africa, resources rich by 2012. This expansion highlights diversification and countries (oil and minerals) and leisure enclaves. spread of risk managed by country and region. Focus will be on the profitable core business (rooms, food EMPLOYER OF CHOICE and beverage, conferencing, casinos and entertainment), The Group continues in its quest to become an employer of and any linkages that will anchor its core. However, in choice by providing competitive remuneration, an enabling order to reach critical mass and maintain a competitive and winning environment driven by personal learning and edge in a wider range of regions the Group will maximize development. In the year under review, the Group has return through pursuing a fee-based model which retained the bulk of its employees, with staff movements includes Leasing, Management and Franchise contracts below international trends. Remuneration remains in the to maximize revenue opportunities. upper quartile in the hospitality industry, with regional benchmarks being the yardstick throughout the Group. Ultimately, the long term vision is to create a franchise business from our own brands, allowing leases and The role profiling and brand alignment exercise was management contracts to anchor the Group as we work on conducted across the Group resulting in staff being our goal to achieve a market capitalisation of US$1billion. ideally placed in their roles. A mentorship programme In addition, ownership of hotels will be considered in key was implemented in order to replicate the DNA across the strategic locations such as Cape Town, Johannesburg, Group as a way of maintaining high standards. Lagos and Nairobi. As Human Capital is a key aspect of the expansion The re-modelling of the Group’s distribution channels strategy, the Group has resourced and strengthened its through the introduction of channel management will Hospitality Training Academy (HTA) in order to provide a help decrease reliance on third party intermediaries to ‘one-stop’ shop for all training requirements in hospitality drive sales, hence resulting in higher yields. Availability and to ensure that its human capital base remains relevant to a wider market segment makes it possible to manage The Grace in Rosebank Hwange Safari Lodge Crowne Plaza Monomotapa12 African Sun Limited 2008
  • 15. rates and inventory at the point of purchase and will Pipeline projects nearing completion include: offer a direct selling approach on the back of a dynamic  Holiday Inn Kano, Nigeria with 200 rooms pricing strategy so that the hotel knows where and who  Holiday Inn Arusha, Tanzania, with 198 rooms the client is at the time of booking.  Mongomo Hotel, in Bala, with 74 rooms and Hotel 3 Augusto in Malabo, with 45 rooms, both in Equatorial Guinea. GROwING OUR bRANdS REGIONALLY Much of this report on the Group has been intentionally The Group continues in its quest to establish brand focused on the future and, as a consequence, comment leadership in which African Sun Limited will dominate on the financial results will be found in the Business other brands and become the benchmark for other players Review Report. in the region. As African Sun Limited goes into the region, combined brand strategy of the use of Intercontinental dIRECTORATE Hotels Group (IHG) brands, namely Holiday Inn, Crowne Mr D Mamvura and Mrs P Murombedzi resigned from the Plaza and Express by Holiday Inn in emerging markets, Board on 30 August and 30 September 2008, respectively. is key. IHG brands are tried and tested with great brand Their valued contribution to the Board over the years is equity and awareness, especially for foreign and business much appreciated. travellers. In markets where we have gained recognition, we will use our own brands. Not only will the Group FINAL dIVIdENd dECLARATION be able to generate higher average daily rate (ADR), In light of the Groups satisfactory performance, I am pleased occupancy and revenue per available room (REVPAR), to report that the Board of Directors has declared a final the high international brand awareness will facilitate the dividend of $229.72 per share payable out of the profits securing of funding as and when this may be required. of the company for the period ended 30 September 2008. Shareholders will be able to receive dividends wholly in cash bRANd VALUE AddITION or take a script dividend in the form of ordinary shares. The In its on-going quest to create sustainable wealth and offer price will be determined by taking the closing price unlock shareholder value, the Group will seek a dual of the African Sun Limited shares on 30 September 2008. listing on another major bourse by 2010. Through Dividend warrants will be posted and cheque payments these plans and developments, African Sun Limited made to shareholders on or about 12 February 2009. has successfully planted its footprint in strategic target markets. We will continue to increase our presence APPRECIATION across Africa and make growth objectives for wealth, As Chairman I would like to commend the management and creative brand dominance, capacity and legacy a reality. staff for the efforts made during the year and their ability to adapt to the ever-changing business environment. Much IN CLOSING appreciation also goes to my fellow directors for their support I am pleased to say that that the continental thrust into and contribution to the business of the Group over the west, east and southern Africa, is a totally co-ordinated past year. exercise based on potential projects that will fulfill laid down investment criteria. Our Groups investment strategy is endorsed by these acquisitions to date: The Grace in Rosebank, South Africa The Lakes Hotel and Conference Centre, South Africa E M Makonese Holiday Inn Accra Airport, Ghana Chairman Obudu Mountain Resort, Nigeria 12 February 2009 Utanga Lodge, Nigeria Clear Essence California Wellness Centre and Boutique Hotel, Lagos, Nigeria Nike Lake Resort, Nigeria Amber Tinapa, Nigeria African Sun Limited 2008 13
  • 16. Business Review I am pleased to share with you some of the highlights that have made this year exciting. African Sun Limited re-branded in May and this gave realization to a bigger vision which has seen the Group’s thrust to increase its rooms under management in sub-Saharan Africa take wing. The Group attained an additional 1 100 rooms in the year under review, which when averaged, reflected an opening of a new hotel every six weeks! This has taken place under some global challenges which have affected the hospitality industry in various ways. On the African front, this has included the Zimbabwe elections scenario, and on a worldwide scale the global credit crunch which dampened arrivals from some of our source markets in Europe and America. More recently, the bombings in Mumbai, India have also affected international travel. Going forward, African Sun Limiteds stance has been to adopt a growth mode instead of merely operating14 African Sun Limited 2008
  • 17. The Grace in Rosebank The Graceon survival mode. This has paid off handsomely as the until there is closurebusiness model, geared at growth, has enabled the EFFECTIVENESS – We will deliver beyond expectationscompany to meet some of its targets in pursuance to the AdAPTAbILITY – We will be flexible without losing ourquest to become big in Africa. strategic intent EFFICIENCY – We will be disciplined in utilizing resourcesThe Group has also taken a position to ensure in all we dostandardization in the way of doing business and has called CONNECTIVITY – It is our responsibility to get ourthis the African Sun Way. This was adopted at the annual message across to the other partyManagement Conference and will see predictability beingan integral part of the business regardless of physical zimbabwelocation. The African Sun way entails the following: The economy has continued to deteriorate, resulting in aSHAREd VISION – We will always seek to have a buy-in reversal of growth trend in foreign arrivals experiencedwhilst providing leadership over the last two years. Governments of some of theSHAREd VALUES – Our values are the glue that binds international source countries downgraded the countryus together as a destination, in the aftermath of the electionsTIMEOUS ExECUTION ANd CLOSURE – It is not done resulting in significant cancellations by foreign guests. African Sun Limited 2008 15
  • 18. Foreign room nights therefore recorded a 6% decrease FINANCIAL PERFORMANCE compared to prior year. Group Hotel occupancy remained steady at 41% compared to 40% achieved in 2007, whilst operating However, hotel occupancy increased to 41% from margins grew to 53.5% compared to 29.5% in 2007, 39% last year, on the back of an upsurge in domestic owing to the contribution of exchange gains on debtors patronage, albeit at lower yields due to the regulated and foreign currency denominated balances. Operations in prices. Yields achieved by African Sun Limiteds hotels the rest of Africa, which constitute 11% of current room remained suppressed compared to similar properties capacity, contributed US$8.7million in turnover, up from in other regional countries. Cost containment measures US$5.5million in the prior period. This represents 27% of continued to be used with the effect of improving the consolidated turnover in comparison to a contribution of suppressed margins caused by the skewed pricing 15% in the previous financial year. Zimbabwe hotels, which structure. This assisted in cushioning the Group from constitute 89% of the current room capacity contributed the inflationary environment. The new pricing structure 73%. The growth in operations in the rest of Africa, which came into effect in October 2008, which allows revaluation of Plant and Equipment and the surge in fair hotels to peg rates in hard currency, should however value of the investment in Dawn Properties Limited and assist in improving yields in the future. other approved hedging instruments, contributed to the significant growth of the Statement of Financial Position. South Africa Economic growth continues to be spurred by fixed capital bUSINESS MOdEL formation as the 2010 Soccer World Cup draws near. As African Sun Limited pursues its expansion, the Group Prospects for travel therefore remain positive after FIFA will target primary and growth cities in Africa to establish endorsed South Africa to host the Confederations Cup in hotel operations. These are cities where operations are 2009 just before the World Cup. Contribution to Group likely to thrive owing to the great potential inherent in their turnover from South African operations increased to 27%, resources and people. Hotel operations run by the Group compared to 15% in the prior reporting period, owing to will continue to focus on rooms, food and beverage, casinos, the acquisition of a long term lease on the operations conferencing and entertainment. As the company’s own of the 151 roomed The Lakes Hotel and Conference brands are set to dominate on the African continent, the Centre in Johannesburg and the 37% improvement in the Group is able to earn franchise fees to augment main line average daily rate (ADR) at The Grace in Rosebank. business activities of lease and management contracts. The Group will seek to obtain lease and management Nigeria contracts as it expands into Africa so as to minimize Nigeria’s economy benefited from high oil prices experienced risk, but ownership will be considered in strategic in the first half of 2008 and the resultant economic growth locations. Where necessary, mergers and acquisitions has translated directly into increased hotel rates and will be used to gain entry into more mature markets. occupancies within Nigeria’s top destinations. In May 2008, African Sun Limited assumed management of Obudu STRATEGIC GOALS Mountain Resort, a leading leisure facility in Cross River  To grow rooms in Africa under African Sun Limiteds State, having agreed a plan with the state government to management from the current 2 500 to 8 500 by 2012. bring the resort to its full operational potential through an  To become an employer of choice by providing competitive improvement in access and regional marketing initiatives. remuneration, an enabling and winning environment driven by personal learning and development. Ghana  To achieve a market capitalization of US$1billion. Macroeconomic stability, an increasingly business friendly  To establish brand leadership where we dominate other environment and the recent discovery of oil in Ghana, will brands and become the benchmark for other players. spur growth and demand for accommodation. African Sun  To seek a dual listing on a major bourse by 2012. Limited assumed management of the Holiday Inn Accra These goals have continued to be the guiding factor as the Airport on 15 August, 2008. The hotel performed above Group realizes its vision of attaining 8 500 rooms under industry average, achieving a revenue per available room management by 2012. In view of this strategic positioning, (RevPAR) of US$124 in the first few months of opening, it is appropriate that I furnish you with an update on these which was 11% ahead of the hotel’s competitive set. goals for the period under review.16 African Sun Limited 2008
  • 19. Hwange Safari Lodge Hwange Safari Lodge Express by Holiday Inn Beitbridge REVIEw OF THE STRATEGIC GOALS excellence remain the dominant factor in our strategy.1. Capacity Growth Initiatives such as role profiling for all staff as well as At the beginning of the 2008, the Group had 73 rooms brand alignment were embarked upon to ensure that under management outside Zimbabwe, but as our vision the correct people are aligned to the correct job and the took wing we closed the year with nearly 1 100 rooms correct hotel to ensure high service delivery at all times. and eight operational hotels. The Group has experienced exponential growth with the addition of a total of With the growth that the Group is experiencing, it is 877 rooms in West Africa, namely, Obudu Mountain paramount that service standards are adhered to. This Resort in Cross River State, Nigeria with 159 rooms has been addressed by the inclusion of the Hospitality and Holiday Inn Accra Airport with 168 rooms. These Training Academy (HTA) in all pre-openings of new came on board in July and August 2008 respectively. properties to ensure that the gap between new units and the African Sun way of doing things is closed. In Of these 877 rooms, 548 came on board in the latter existing properties, the Hospitality Training Acacemy part of the year and were effectively under Africa Sun (HTA) will focus on Service Revitalization Programmes Limited Management between November and December group wide through strategic alliances with industry 2008. These are Utanga Lodge with 90 rooms and leaders in training such as Cornell University and Swiss Amber Tinapa with 243 rooms, both in Cross River Hotel School. Attention will be paid to the following: State, Nigeria. In addition, Nike Lake Resort in Enugu  Service Quality State, also in Nigeria added 215 rooms to the portfolio.  Quality Control In South Africa, The Lakes Hotel and Conference Centre  The African Sun Way with 144 rooms came on board in August 2008.  People  Brand Going forward, the Group will see West Africa having the largest number of rooms under management As the expansion drive comes to fruition, a sustainable given the potential that is represented by that region. service support system is imperative and this has Projected regional contributions by 2012 will be been addressed through the introduction of satellite as follows: training academies in both West Africa and Equatorial West Africa 35% Guinea in order to manage the service gaps and provide East Africa 7% continuous training which is a vital component of the Southern Africa 33% (excluding Zimbabwe) hospitality industry. Zimbabwe 25% The main Hospitality Training Academy in Zimbabwe will2. Human Resources and Hospitality Training continue to seek strategic alliances with other accredited Academy (HTA) institutes of higher learning in order to upgrade the level People continue to be the backbone of African Sun Limited of qualifications. The Hospitality Training Academy will and as the Group grows, it is imperative that systems are not only provide training for African Sun Limited hotels put in place to ensure that skills development and service in Zimbabwe, but for the industry as a whole. African Sun Limited 2008 17
  • 20. 3. Market Capitalization in selected areas with linen and crockery. In addition, the Research conducted by Renaissance Capital has valued Group has partnered with World Vision Zimbabwe to assist African Sun Limited at US$0.54 per share (Market in their eradication of poverty and hunger programme Capitalization of US$389 million assuming confirmed with specific reference to identified children who have rooms of 3500 including the existing rooms). According been orphaned as a result HIV and AIDS. to this research, and taking into account the target of 8500 rooms, African Sun Limited value grows to US$762 LOYALTY PROGRAMMES million, a clear indication of the attainability of our goal Loyalty Programmes, notably Sunset Club and Sun to reach US$1 billion market capitalization by 2012. Rewards mainly active in the Zimbabwe market continue to add value to the business, and in the period under 4. brand Leadership review have contributed significantly to room nights The Group is on course with its quest of establishing brand to Zimbabwe operations. Sunset Club achieved a leadership in the areas within which it has chosen to operate. contribution of 13% to room nights and Sun Rewards The period under review saw the introduction of African contributed 40% room nights for the period ending Sun Limiteds own mid range brand, Amber, in Tinapa, 30 September 2008. As the pan-African expansion Cross River State, Nigeria. On the Zimbabwean front, the programme takes shape, loyalty programmes will plans for building an Amber branded hotel in the border be adopted to gain market share as well as develop town of Beitbridge were signed off which will introduce customer allegiance to the African Sun Limited brands. a total of two African Sun Limited Amber branded hotels within the group, in the period under review. African Sun CONCLUSION Limited continues to expand its IHG branded properties This year the Group made a conscious decision to increase with the addition of Holiday Inn Accra Airport in Ghana. rooms and grow brand equity. This has largely been This hotel performed 11% ahead of its peers within its first successful as evidenced by the many accolades received few months under management by African Sun Limited. throughout 2008. The Grace in Rosebank continued to raise high the African Sun Limited Flag and was named CORPORATE SOCIAL RESPONSIbILTY the Best Hotel in Johannesburg in the United States based As African Sun Limited, the Group has a robust corporate Condé Nast Traveller Choice Readers awards.The Victoria social investment programme which has several initiatives Falls Hotel was given the accolade of Zimbabwe’s leading under the banner of its Suncare Corporate Responsibility resort by the World Travel Awards awarded at Indaba held Programme. The basis of the African Sun Limited social in Durban in May 2008. In addition, African Sun Limited responsibility programme is in line with the United was recognised by the Institute of Personnel Management Nations eight Millennium Development Goals which (Zimbabwe) for its keen interest and success in Human cover the following areas of need throughout the world: Resource Development in the training of its personnel  Eradicate Extreme Poverty and Hunger across the Group. It has indeed been an exciting year  Achieve Universal Primary Education which will be used as the launch pad to soar higher in the  Promote Gender Equality quest to achieve the stipulated goals.  Reduce Child Mortality  Improve Maternal Health In conclusion, I would like to acknowledge my executive  Combat HIV and AIDS, Malaria and Other Diseases team, management and staff for their valued contribution  Ensure Environmental Stability and direction. In addition, I would like to express my  Develop a Global Partnership for Development. utmost appreciation for the leadership shown by the African Sun Limited has adopted the following board and my fellow directors which has enabled our specific goals: Group to attain the success it has seen this year.  "Achieve Universal Primary Education"  "Health Improvement"  "Eradication of Poverty and Hunger" The Group’s initiatives include distribution of primary school text books for every child in selected schools in the S A Munyeza areas within which it operates. African Sun Limited has Group Chief Executive Officer also undertaken to assist less privileged district hospitals 12 February 200918 African Sun Limited 2008
  • 21. Caribbea BayElephant Hills Resort The Grace in Rosebank Obudu Mountain Resort African Sun Limited 2008 19
  • 22. Clear Essence California Wellness Centre and Boutique Hotel Report of the Directors The Directors present their Annual Report and the Audited Financial Statements of the Company and the Group for the twelve months ended 30 September 2008. YEARS RESULT HISTORICAL COST $ Profit attributable to shareholders 473 336 928 670 Dividends Interim: $556.40 (old currency) per share paid in August 2008. Final: $229.72 (revalued) per share paid in November 2008. CAPITAL ExPENdITURE Capital expenditure for the twelve months to 30 September 2008 on properties and operating assets amounted to $120 711 871 625.00. The programmed capital expenditure for the year to 30 September 2009 totals $1 138 019 250 000.00, of which $548 125 000 000 has been set aside for Product Improvement, Safety and Essential Services and new projects.20 African Sun Limited 2008
  • 23. INVESTMENTSThe Group holds equity investments in the following organisations to the extent indicated below:African Sun Limited PCC (Mauritius) 100%African Sun Zimbabwe (Private) Limited 100%RCI (Zimbabwe) (Private) Limited 24%Dawn Properties Limited 17,72%SHARE CAPITALThe issued share capital was increased, by the issue of 43 035 081 ordinary shares, to 687 967 404 ordinary shares.The shares were issued in terms of share option schemes and interim scrip dividend. Accordingly, the issued share capitaland share premium totals $8 832.00. There are no unexercised shares under the current employee share option scheme.RESERVESThe movement in the reserves of the Group are shown in the Group Statement of Comprehensive Income, GroupStatement of Changes in Shareholders’ Equity and in the Notes to the Financial Statements.dIRECTORSMessrs N Mangwiro, T N Chiganze and L T Kapungu retire by rotation. All being eligible, they will offer themselves forre-election at the Annual General Meeting.AUdITORSMembers will be asked to re-appoint PricewaterhouseCoopers as auditors to the Group for the ensuing year.ANNUAL GENERAL MEETINGThe Thirty-Seventh Annual General Meeting of members of the Company will be held on Friday 27 March 2009 at12:00 at Holiday Inn Harare.by the order of the board:E M MakoneseChairmanS A MunyezaGroup Chief Executive OfficerE T ShangwaCompany Secretary12 February 2009 African Sun Limited 2008 21
  • 24. Accounting Philosophy ACCOUNTING PhILOSOPhY A frican Sun Limited is dedicated to achieving meaningful and responsible reporting through comprehensive disclosure and explanation of its financial results. This is done to ensure objective corporate performance measurement, to enable returns on investment to be assessed against the risks inherent in their achievement and to facilitate appraisal of the full potential of the Group. The core determinant of meaningful presentation and disclosure of information is its validity in supporting management’s decision-making process. While the accounting philosophy encourages the pioneering of new techniques, it endorses the fundamental concepts underlying both the financial and management accounting disciplines as enunciated by The Institute of Chartered Accountants of Zimbabwe, The International Accounting Standards Board and The International Federation of Accountants. The Group is committed to regular review of financial reporting standards and to the development of new and improved accounting practices. This is practised to ensure that the information reported to the management and stakeholders of the Group continues to be internationally comparable, relevant and reliable. This includes, wherever it is considered appropriate, the early adoption of financial reporting standards. During the year, the Group early adopted 1FRS 8 Operating Segments for its half-year results. This was an endeavour to adhere to the standards of disclosure of all relevant information so as to influence economic decisions by all of our shareholders. For the final results, International Accounting Standard 1 (IAS1) – Presentation of Financial Statements (revised) was also adopted early in the year. This resulted in significant changes in primary statements being changed from Income Statement, Balance Sheet, Cash flow Statement and Statement of Changes in Equity, to Statement of Comprehensive Income, Statement of Financial Statement, Statement of Cash flow and Statement of Changes in Equity respectively. This is to disclose fully the financial effect of non-owners increase in equity in the Statement of Comprehensive Income so that only changes resulting from shareholders contributions will be recognised directly in equity. This therefore enhances reliability and relevance of the Groups financial information.22 African Sun Limited 2008
  • 25. Financial Reporting DIRECTORS RESPONSIbILITY FOR FINANCIAL REPORTINGAfrican Sun Limiteds Directors are required by the a Risk and Audit Committee of the Board of Directors,Companies Act (Chapter 24:03) to maintain adequate which meets quarterly with Management, the internalaccounting records and to prepare financial statements auditors and external auditors, to review specificfor each financial year which present a true and fair view accounting, reporting and internal control matters,of the state of affairs of the Group at the end of the and to satisfy itself that the system of internal controlfinancial year, and of the profit or loss and cash flows is operating effectively. Both the internal auditors andfor the period. In preparing the accompanying financial the external auditors have unlimited access to the Riskstatements, generally accepted accounting practices and Audit Committee. The Committee also reviews thehave been followed and suitable accounting policies have interim and annual results of the Company prior to theirbeen used and applied consistently and reasonable and publication. In addition, the Group’s external auditorsprudent judgements and estimates have been made. The review and test appropriate aspects of the internalfinancial statements incorporate full and responsible financial control systems during the course of theirdisclosure in line with the accounting philosophy of the statutory examinations of the Group.Group stated on page 22. The Group’s Risk and Audit Committee has met theThe Directors have reviewed the Group’s budget internal and external auditors to discuss their reports onand cash flow forecast for the twelve months to 30 the results of their work, which include assessments of theSeptember 2009. On the basis of the review of the relative strengths and weaknesses of key control areas. Inoperating forecasts and in light of the current financial a Group of the size, complexity and geographical diversityposition and existing borrowing facilities, the Directors of African Sun Limited, it may be expected that occasionalare satisfied that African Sun Limited is a going concern breakdowns in established control procedures can occur.and have continued to adopt the going concern basis No breakdowns involving material loss have been reportedin preparing the financial statements. The Group’s to the Directors in respect of the year under review and itexternal auditors, PricewaterhouseCoopers, have is believed that none of any significance exist.audited the financial statements and their reportappears on pages 26 and 27. The historical cost financial statements for the twelve months ended 30 September 2008 which appear onThe Group has an independent internal audit function, pages 28 to 61 have been approved by the Board ofwhich has the objective of assisting executive Directors and are signed on its behalf by:management and the Risk and Audit Committee in thedischarge of their responsibilities, and which monitorsthe effectiveness of the accounting system and relatedinternal financial controls on a continuing basis. Theinternal audit function performs a critical examination of E M Makonesethe financial and operating information for Management, Chairmanand reports its findings and its recommendations toManagement and to the Risk and Audit Committee.Procedures are in place to identify key business riskstimeously, to determine the likelihood of the risks S A Munyezacrystallising, and to determine the significance of the Group Chief Executive Officerconsequential financial impact on the business. There is 12 February 2009 African Sun Limited 2008 23
  • 26. Hwange Safari Lodge Clear Essence California Wellness Centre and Hwange Safari Lodge Express by Holiday Inn Beitbridge Boutique Hotel24 African Sun Limited 2008
  • 27. Company Secretary CERTIFICATE bY ThE COMPANY SECRETARY I, the undersigned, in my capacity as Company Secretary, hereby confirm to the best of my knowledge and belief that for the financial year ended 30 September 2008, the Company has lodged with the Registrar of Companies all returns required of a public quoted Company in terms of the Companies Act (Chapter 24:03) and that all such returns are true, correct and up to date. E T Shangwa Company Secretary 12 February 2009 African Sun Limited 2008 25
  • 28. PricewaterhouseCoopers Building Number 4, Arundel Office Park Norfolk Road Mount Pleasant Po Box 453 Harare Zimbabwe REPORT OF ThE INDEPENDENT AUDITORS TO ThE MEMbERS OF AFRICAN SUN LIMITED W e have audited the accompanying financial statements of African Sun Limited set out on pages 28 to 61, which comprise the statements of financial position as at 31 December 2008 and the statements of comprehensive income, cash flows and changes in equity for the year then ended and a summary of significant accounting policies and other explanatory notes. dIRECTORS RESPONSIbILITY FOR THE FINANCIAL STATEMENTS The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the provisions of the Zimbabwe Companies Act (Chapter 24:03). This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. AUdITORS RESPONSIbILITY Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. bASIS FOR AdVERSE OPINION ON COMPLIANCE wITH INTERNATIONAL FINANCIAL REPORTING STANdARdS The Zimbabwe economy is recognised as being hyperinflationary for purposes of financial reporting. As discussed under Accounting Policies Note 1.3, the accompanying financial statements have been prepared on the historical cost basis and, therefore, have not been stated in terms of a measuring unit current at 30 September 2008 as required by IAS 29 Financial Reporting in Hyperinflationary Economies. That Standard requires that financial statements that report in the currency of a hyperinflationary economy should be stated in terms of the measuring unit current at the year-end date. The non-compliance with IAS 29 arises from the unavailability of official inflation indices, and the difficulty to reliably measure inflation, as explained under Accounting Policies Note 1.3. However these financial statements would form the basis of the adjustments required in terms of IAS 29.26 African Sun Limited 2008
  • 29. AdVERSE OPINION ON NON-COMPLIANCE wITH INTERNATIONAL FINANCIAL REPORTING STANdARdSIn our opinion, because of the effects of the matter referred to in the Basis for Adverse Opinion paragraph, the accompanyingfinancial statements do not give a true and fair view of the financial position of African Sun Limited company and group as at30 September 2008 and their financial performance and cash flows for the year then ended in accordance with InternationalFinancial Reporting Standards.REPORT ON LEGAL ANd REGULATORY REqUIREMENTSThese financial statements have been prepared in accordance with the accounting policies set out on page 34 to 43, andcomply with the disclosure requirements of the Zimbabwe Companies Act (Chapter 24:03).EMPHASIS OF MATTERWithout further qualifying our opinion, we draw attention to Note 32 to the financial statements, in respect of the following:• The Zimbawe operations of the Group have been significantly affected by the adverse effects of the country’s unfavourable economic environment characterised by, inter-alia, chronic hyperinflation, the erosion of the purchasing power of the local currency, multiple exchange rates and pricing mechanisms and significant distortions in the market.• Given the chronic hyperinflation, the time lapse between the year-end and reporting dates may render the financial information presented in the financial statements less useful and relevant for making economic decisions.CHARTEREd ACCOUNTANTS (zIMbAbwE)HARARE12 February 2009 African Sun Limited 2008 27
  • 30. STATEMENT OF FINANCIAL POSITION As at 30 September 2008 GROUP Historical Cost 2008 2007 ASSETS Notes $ $ Non-current assets Property, plant and equipment 2 7 736 692 907 318 643 Intangible assets 3 281 105 379 180 49 Biological assets 4 90 693 000 000 – Investments in associate 5.1 6 815 892 994 859 307 Other investments 5.2 – 16 Receivables 6 147 129 696 000 – Deferred income tax asset 17.2 15 111 529 101 1 15 086 625 506 458 1 016 Current assets Financial assets at fair value through profit or loss 7 28 250 242 727 – Inventories 8 74 597 183 769 23 Trade and other receivables 9 859 588 144 734 82 Cash and cash equivalents 10 544 337 448 446 55 1 506 773 019 676 160 Total assets 16 593 398 526 134 1 176 EqUITY ANd LIAbILITIES Equity Share capital 11 – – Share premium 12 8 832 1 Share option reserve – 1 Other reserves 12 376 289 715 079 768 Retained earnings 13.1 473 336 925 033 35 Total equity 12 849 626 648 944 805 LIAbILITIES Non-current liabilities Deferred income tax liability 17.2 2 418 353 197 146 197 Current liabilities Trade and other payables 14 1 286 490 951 448 152 Borrowings 16 38 927 728 596 22 1 325 418 680 044 174 Total equity and liabilities 16 593 398 526 134 1 176 These financial statements were approved by the board on the 12th of February 2009 and signed on its behalf by: E M Makonese S A Munyeza Chairman Group Chief Executive Officer28 African Sun Limited 2008
  • 31. STATEMENT OF FINANCIAL POSITIONAs at 30 September 2008 COMPANY Historical Cost 2008 2007 ASSETS Notes $ $ Non-current assets Property, plant and equipment 26 543 707 424 857 31 Investments in subsidiaries 27 13 13 Investments in associate 5.1 6 815 892 994 859 307 7 359 600 419 729 351 Current assets Financial assets at fair value through profit/loss 28 60 212 237 – Trade and other receivables 29 23 048 678 1 83 260 915 1 Total assets 7 359 683 680 644 352 EqUITY ANd LIAbILITIES Equity Share capital 11 – – Share premium 12 8 832 1 Share option reserve – 1 Other reserves 7 193 585 319 041 332 (Accumulated losses)/Retained earnings 13.2 (14 147 235 065) 3 Total equity 7 179 438 092 808 337 Non-current liabilities Deferred income tax 30 167 548 948 659 8 Current liabilities Trade and other payables 31 4 241 087 086 1 Amounts owing to group companies 8 455 507 644 6 Borrowings 44 447 – 12 696 639 177 7 Total equity and liabilities 7 359 683 680 644 352 These financial statements were approved by the board on the 12th of February 2009 and signed on its behalf by: E M Makonese S A Munyeza Chairman Group Chief Executive Officer African Sun Limited 2008 29
  • 32. STATEMENT OF COMPREhENSIVE INCOME For the year ended 30 September 2008 GROUP Historical Cost 2008 2007 Notes $ $ Revenue 811 829 069 449 173 Materials and consumables used (24 048 687 832) (38) Depreciation, amortisation and impairment charges (5 126 818 650) (1) Staff costs (138 027 147 999) (31) Other operating expenses (208 739 325 961) (52) Operating profit 18 435 887 089 007 51 Other income 19 109 248 997 036 – Share of loss of associate (1 990 493 631) (2) Interest income 542 462 346 – Interest costs (4 058 426 463) (1) Profit before taxation 539 629 628 295 48 Taxation 17 (66 292 699 625) (13) Profit for the year 473 336 928 670 35 Other comprehensive income net of tax: Exchange differences on translating foreign operations 388 504 605 870 54 Gains on property revaluation 5 169 901 620 283 411 Share of other comprehensive income of associate 6 817 883 488 158 300 Other comprehensive income for the year net of tax 12 376 289 714 311 765 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 12 849 626 642 981 800 Profit attributable to: 473 336 928 670 35 Company and subsidiaries 475 327 422 301 37 Associated companies (1 990 493 631) (2) Total comprehensive income attributable to: 12 849 626 642 981 800 Company and subsidiaries 6 031 743 154 823 500 Associated companies 6 817 883 488 158 300 Earnings per share ($) Basic earnings basis 20 706.13 – Fully diluted earnings basis 20 706.13 –30 African Sun Limited 2008
  • 33. STATEMENT OF CAShFLOWSFor the year ended 30 September 2008 GROUP Historical Cost 2008 2007 Notes $ $ Cash flows from operating activities Cash generated from trading 21 674 375 610 778 35 Interest paid (4 058 426 463) (1) Cash generated from operating activities 670 317 184 315 34 Cash flows from investing activities Investments to maintain operations: - Interest received 542 462 346 – - Replacement of property, plant and equipment (120 351 526 448) (33) (119 809 064 102) (33) Investment to expand operations: - Property, plant and equipment additions (360 345 177) (1) Net cash utilised in investing activities (120 169 409 279) (34) Cash flows from financing activities Increase in short term loans 38 927 728 574 22 Net cash generated from financing activities 38 927 728 574 22 Net movement in cash and cash equivalents during the year 589 075 503 610 22 Cash and cash equivalents at the beginning of the year 55 – Exchange (gains)/losses on cash and cash equivalents (44 738 055 219) 33 Cash and cash equivalents at the end of the year 544 337 448 446 55 Represented by: Cash on hand and balances with banks 10 544 337 448 446 55 African Sun Limited 2008 31
  • 34. STATEMENT OF ChANGES IN EqUITY For the year ended 30 September 2008GROUP Share capital Share premium Share option reserve $ $ $HISTORICAL COSTBalance at 30 September 2006 – – –Recognition of share based payments – – 1Dividends paid – – –Issue of shares – 1 –Total comprehensive income for the year – – –Balance at 30 September 2007 – 1 1Recognition of share based payments – – (1)Dividends paid – – –Issue of shares – 8 831 –Total comprehensive income for the year – – –balance at 30 September 2008 – 8 832 –32 African Sun Limited 2008
  • 35. Foreign currency Total shareholdersRevaluation reserve translation reserve Fair value reserve Retained earnings equity $ $ $ $ $ 2 – 1 – 3 – – – – 1 – – – – – – – – – 1 411 54 300 35 800 413 54 301 35 805 – – – – (1) – – – (3 672) (3 672) – – – – 8 831 5 169 901 620 283 388 504 605 870 6 817 883 488 158 473 336 928 670 12 849 626 642 981 5 169 901 620 696 388 504 605 924 6 817 883 488 459 473 336 925 033 12 849 626 648 944 African Sun Limited 2008 33
  • 36. STATEMENT OF ACCOUNTING POLICIES For the year ended 30 September 2008 1. ACCOUNTING POLICIES IFRS 1 (Amendment), First time adoption of IFRS. The following paragraphs set out the principal accounting IAS 27, Consolidated and separate financial policies of the Group in compliance with International Financial statements (effective 1 January 2009). Reporting Standards promulgated by the International IAS 28 (Amendment), Investments in associates. Accounting Standards Board (IASB) (International Financial IAS 32, Financial instruments: Presentation. Reporting Standards incorporate all International Accounting IFRS 7, Financial instruments: Disclosures. Standards previously issued by the IASB). Unless otherwise IAS 36 (Amendment), Impairment of assets (effective stated, these are consistent with prior years. 1 January 2009). IAS 38 (Amendment), Intangible assets (effective 1.1 bASIS OF PREPARATION 1 January 2009). The financial statements of the Group are prepared in IAS 19 (Amendment), Employee benefits (effective accordance with International Financial Reporting Standards 1 January 2009). (IFRS),exceptforcompliancetoInternationalAccountingStandard IAS 37, Provisions, contingent liabilities and (IAS) 29 Financial Reporting in Hyperinflationary Economies, contingent assets. which require for purposes of fair presentation that historical IAS 39 (Amendment), Financial instruments: Recognition information be restated for changes in the general purchasing and measurement. power of the Zimbabwe Dollar. Inflation-adjusted financial statements could not be produced for reasons outlined in 1.3. Interpretation and amendments to existing standards that are not yet effective and not relevant for the Groups operations The preparation of financial statements in conformity with IAS 20 (Amendment), Accounting for government grants International Financial Reporting Standards (IFRS) requires and disclosure of government assistance (effective the use of certain critical accounting estimates. It also requires 1 January 2009). management to exercise its judgement in the process of IFRIC 15, Agreements for construction of real estates (effective applying the Groups accounting policies. The areas involving 1 January 2009). a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated 1.3 INFLATION AdJUSTMENT financial statements, are disclosed in Policy 23. IAS 29 requires that Financial Statements prepared in the currency of a hyperinflationary economy be stated in terms of a 1.2 AdOPTION OF STANdARdS measuring unit current at the year-end, and that corresponding Standards and amendments early adopted by the Group figures for previous periods be stated in the same terms to IAS 1, Presentation of financial statements. the latest reporting date. At the time of producing these IFRS 8, Operating segments replaces IAS 14. financial statements, the Central Statistical Office (CSO) had not released the August and September 2008 consumer price Interpretations effective in 2008, but not relevant indices. Further, due to the existence of multiple economic IFRIC 11, IFRS 2 – Group and treasury shared transactions. factors and market distortions which are pervasive to the IFRIC 12, Service concession arrangements. Zimbabwean economic environment inflation cannot be IFRIC 13, IAS 18 – Customer loyalty programmes. accurately measured by other means. As a result, inflation- IFRIC 14, IAS 19 – The limit on a defined benefit asset. adjusted financial statements have not been produced. Standards, amendments and interpretations to existing 2. SEGMENT REPORTING standards that are not yet effective and have not been early A business segment is a group of assets and operations adopted by the Group engaged in providing products or services that are subject IAS 23 (Amendment), Borrowing costs (effective to risks and returns that are different from those of other 1 January 2009). business segments. A geographical segment is engaged in IFRS 2 (Amendment), Share-based payment (effective providing products or services within a particular economic 1 January 2009). environment that is different from those of segments IAS 32 (Amendment), Financial instruments. operating in other economic environments.34 African Sun Limited 2008
  • 37. 3. CONSOLIdATION amount of the investment. When the Groups share of losses Subsidiaries are all entities over which the Group has the in an associate equals or exceeds its interest in the associate, power to govern the financial and operating policies generally including any other unsecured receivables, the Group does not accompanying a shareholding of more than one-half of the recognise further losses, unless it has incurred obligations or voting rights. The existence and effect of potential voting made payments on behalf of the associate. Unrealised gains rights that are currently exercisable or convertible are on transactions between the Group and its associate are considered when assessing whether the Group controls eliminated to the extent of the Groups interest in the associates. another entity. Subsidiaries are fully consolidated from Unrealised losses are also eliminated unless the transactions the date on which control is transferred to the Group. They provide evidence of an impairment of the asset transferred. are de-consolidated from the date that control ceases. The purchase method of accounting is used to account for 4. FOREIGN CURRENCY TRANSLATION the acquisition of subsidiaries by the Group. The cost of Functional and presentation currency an acquisition is measured as the fair value of the assets Items included in the financial statements of each of the Groups given, equity instruments issued and liabilities incurred entities are measured using the currency of the primary economic or assumed at the date of exchange, plus costs directly environment in which the entity operates ("the functional attributable to the acquisition. currency"). The consolidated financial statements are presented in Zimbabwe Dollars, which is the Companys functional currency. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured Transactions and balances initially at their fair values at the acquisition date, irrespective Foreign currency transactions are translated into the of the extent of any non-controlling interest. The excess functional currency using the exchange rates prevailing at of the cost of acquisition over the fair value of the Group’s the dates of the transactions and from the translation at share of the identifiable net assets acquired is recorded as year-end exchange rates of monetary assets and liabilities goodwill. If the cost of acquisition is less than the fair value denominated in foreign currencies are recognised in the of the net assets of the subsidiary acquired, the difference is Statement of Comprehensive Income, except when deferred recognised directly in the Statement of Comprehensive Income. in equity as qualifying cash flow hedges and qualifying net Inter-company transactions, balances and unrealised gains investment hedges. Translation differences on non-monetary on transactions between Group companies are eliminated. financial assets and liabilities are reported as part of the fair Unrealised losses are also eliminated but considered an value gain or loss. Translation differences on non-monetary impairment indicator of the asset transferred. Accounting financial assets and liabilities such as equities held at fair policies of subsidiaries have been changed where necessary to value through profit or loss are recognised in profit or loss as ensure consistency with the policies adopted by the Group. part of the fair value gain or loss. Associates Group companies Associates are all entities over which the Group has significant The results and financial position of all the group entities that influence but not control, generally accompanying a have a functional currency different from the presentation shareholding of between 20% and 50% of the voting rights. currency (none of which has the currency of a hyperinflationary Investments in associates are accounted for by the equity economy) are translated into the presentation currency as method of accounting and are initially recognised at cost. The follows: assets and liabilities for each Statement of Financial Groups investment in associates includes goodwill (net of any Position presented are translated at the closing rate at the accumulated impairment loss) identified on acquisition. reporting date; income and expenses for each Statement of Comprehensive Income are translated at average exchange The Groups share of its associates post-acquisition profits rates (unless this average is not a reasonable approximation of or losses is recognised in the Statement of Comprehensive the cumulative effect of the rates prevailing on the transaction Income, and its share of post-acquisition movements in reserves dates, in which case income and expenses are translated at the is recognised as comprehensive income. The cumulative post- rate on the dates of the transactions); and all resulting exchange acquisition movements are adjusted against the carrying differences are recognised as a separate component of equity. African Sun Limited 2008 35
  • 38. STATEMENT OF ACCOUNTING POLICIES Continued On consolidation, exchange differences arising from the the item will flow to the Group and the cost of the item can translation of the net investment in foreign operations and be measured reliably. All other repairs and maintenance are of borrowings and other currency instruments designated charged to the Statement of Comprehensive Income during the as hedges of such investments, are taken to comprehensive financial period in which they are incurred. income. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are Depreciation is calculated on a straight line basis at the following recognised in the Statement of Comprehensive Income as part annual rates in order to allocate their cost or revalued amounts of the gain or loss on sale. Goodwill and fair value adjustments to the residual values over their estimated useful lives: arising on the acquisition of a foreign entity are treated as Freehold buildings 2% assets and liabilities of the foreign entity and translated at the Leasehold improvements over the period of the lease closing rate. Plant and equipment 7.5-15% Vehicles 20% of 80% of cost 5. CAPITALISATION OF FINANCING COSTS ANd ExCHANGE dIFFERENCES The useful lives and residual values of assets are reviewed and Financing costs and exchange differences, to the extent that adjusted, if appropriate, at each reporting date. Where the they are considered to be finance costs which specifically relate residual value of an asset increases to an amount equal to or to funds raised to finance the construction of new projects or greater than the assets carrying amount, depreciation will cease re-development of existing hotels, are capitalised as part of to be charged on the asset until its residual value subsequently the asset up to the date of commissioning of the asset. decreases to an amount below its carrying amount. 6. PROPERTY, PLANT ANd EqUIPMENT Assets are assessed for potential impairment at each reporting Hotel properties are maintained as a matter of company date. If circumstances exist which suggest that there may be policy by an ongoing programme of refurbishment and repair. impairment, a more detailed exercise is carried out which Property, plant, equipment and vehicles are stated at fair value compares the carrying values of the assets to recoverable based on periodic, but at least biennial, valuations by the value based on either a realisable value or a value in use. Directors or independent external valuers, less subsequent Value in use is determined using discounted cash flows accumulated depreciation and impairment losses, apart from budgeted for each cash-generating unit. Detailed budgets for land and buildings, which are shown at indexed cost less the ensuing three years are used and, where necessary, these accumulated depreciation. are extrapolated for future years taking into account known structure changes. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, Service division assets and cash flows are allocated to and the net amount is restated to the revalued amount of the operating divisions as appropriate. Discount rates used asset. Increases in the carrying amount arising on revaluation are the medium term expected pre-tax real rates of return, of property, plant and equipment is credited to a revaluation adjusted in the case of historical financial information to take reserve through the Statement of Comprehensive Income. account of inflation. Impairment losses are recognised as an expense in the Statement of Comprehensive Income and Decreases that offset previous increases of the same the carrying value of the asset and its annual depreciation asset are charged against other reserves in equity through are adjusted accordingly. In the event that, in a subsequent other comprehensive income; all other decreases are period, an asset that has been subject to an impairment charged to the Statement of Comprehensive Income. loss is considered no longer to be impaired, the value is The revaluation surplus included in equity in respect of restored and the gain is recognised in the Statement of an item of property, plant and equipment is transferred Comprehensive Income. directly to retained earnings when the asset is de-recognised. Subsequent costs are included in the assets carrying amount The restoration is limited to the value which would have been or recognised as a separate asset, as appropriate, only when recorded had the impairment adjustment not taken place. it is probable that future economic benefits associated with Surpluses or deficits arising on the disposal of property, plant,36 African Sun Limited 2008
  • 39. equipment and vehicles are determined by comparing proceeds fair values for the stages of forest development. with the carrying amount. These are included in the Statement of Comprehensive Income. Livestock Livestock are measured at their fair value, less estimated7. HOTEL EqUIPMENT point-of-sale costs. The fair value of livestock is determined Hotel equipment, comprising standard service stock, is not by the Directors based on the quoted market price in an depreciated but the annual charge for usage is recognised in active market. the Statement of Comprehensive Income. 10. IMPAIRMENT OF NON-FINANCIAL ASSETS8. INTANGIbLE ASSETS Assets that have an indefinite useful life are not subject to Goodwill amortisation and are tested annually for impairment. Assets Goodwill represents the excess of the cost of an acquisition that are subject to amortisation are reviewed for impairment over the fair value of the Group’s share of the net identifiable whenever events or changes in circumstances indicate that the assets of the acquired subsidiary at the date of acquisition. carrying amount may not be recoverable. An impairment loss is Goodwill on acquisition of subsidiaries is included in recognised for the amount by which the assets carrying amount ‘intangible assets’. Separately recognised goodwill is tested exceeds its recoverable amount. The recoverable amount is the annually for impairment and carried at cost, less accumulated higher of an assets fair value, less costs to sell and value in use. impairment losses. Impairment losses on goodwill are not reversed. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable Gains and losses on the disposal of an entity include the cash flows (cash-generating units). Non-financial assets other carrying amount of goodwill relating to the entity sold. than goodwill that suffered an impairment are reviewed for Goodwill is allocated to cash-generating units for the purpose possible reversal of the impairment at each reporting date. of impairment testing. Each cash-generating unit represents the Groups investment in each country of operation by each 11. FINANCIAL ASSETS primary reporting segment. Classification The Group classifies its financial assets in the following brand names and trademarks categories: loans and receivables, at fair value through Brand names and trademarks are shown at cost, less profit or loss, held to maturity and available for sale. accumulated amortisation. Amortisation is calculated using The classification depends on the process for which the the straight-line method to allocate the cost of brand names financial assets were acquired. Management determines the and trademarks over their estimated useful lives. Brand classification of its financial assets at initial recognition. At names and trademarks are reviewed for impairment on an year end the company only had loans and receivables and annual basis and the carrying amount of an asset is written fair value through profit/(loss). down to its recoverable amount immediately, if the carrying amount is greater than the estimated recoverable amount. Loans and receivables Loans and receivables are non-derivative financial assets with9. bIOLOGICAL ASSETS fixed or determinable payments that are not quoted in an The Group engages in agricultural activity through active market. They are included in current assets, except for management of the biological transformation of biological maturities greater than 12 months after the reporting date. assets for sale as agricultural produce or transformation These are classified as non-current assets. The Groups loans into additional biological assets. and receivables comprise "trade and other receivables" and cash equivalents in the Statement of Financial Position. Timber plantation Timber plantations are measured at their fair value, less Fair value through profit or loss estimated point-of-sale costs. The fair value of timber Financial assets at fair value through profit or loss are financial plantations is determined by a professional valuer, based on assets held for trading. A financial asset is classified in this African Sun Limited 2008 37
  • 40. STATEMENT OF ACCOUNTING POLICIES Continued category if acquired principally for the purpose of selling in considered as an indicator that the securities are impaired. If the short-term. any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between Recognition and measurement the acquisition cost and the current fair value, less any Regular purchases and sales of financial assets are recognised impairment loss on that financial asset previously recognised on the trade date – the date on which the Group commits to in profit or loss – is removed from comprehensive income purchase or sell the asset. Investments are initially recognised and recognised in the income statement. Impairment losses at fair value, plus transaction costs for all financial assets recognised in the Statement of Comprehensive Income on not carried at fair value through profit or loss. Financial equity instruments are not reversed through the Statement assets carried at fair value through profit or loss are initially of Comprehensive Income. Impairment testing of trade recognised at fair value, and transaction costs are expensed receivables is described in Accounting Policy 13. in the Statement of Comprehensive Income. Financial assets are de-recognised when the rights to receive cash flows from 12. INVENTORY the investments have expired or have been transferred and Inventories, which consist of foodstuffs, beverages, shop the Group has transferred substantially all risks and rewards merchandise and consumable stores, are stated at the lower of ownership. Available-for-sale financial assets and financial of cost and net realisable value. Cost is determined on a assets at fair value through profit or loss are subsequently "first-in, first-out" basis. Net realisable value is the estimated carried at fair value. Financial assets at fair value through selling price in the ordinary course of business, less the profit or loss are subsequently carried at fair value. Loans and estimated costs necessary to make the sale. receivables are carried at amortised cost using the effective interest method. 13. TRAdE RECEIVAbLES Trade receivables are recognised initially at fair value and Gains or losses arising from changes in the fair value of the subsequently measured at amortised cost using the effective ‘financial assets at fair value through profit or loss’ category interest rate method, less provision for impairment. are presented in the Statement of Comprehensive Income within ‘other (losses)/gains – net’ in the period in which A provision for impairment of trade receivables is established they arise. Dividend income from financial assets at fair where there is objective evidence that the Group will not be value through profit or loss is recognised in the Statement able to collect all amounts due according to the original terms of Comprehensive Income as part of other income when the of receivables. The amount of the provision is the difference Group’s right to receive payments is established. between the carrying amount and the present value of future cash flows, discounted at the effective interest rate. The The fair values of quoted investments are based on current amount of the provision is recognised in the Statement of bid prices. If the market for a financial asset is not active Comprehensive Income. and for unlisted securities, the Group establishes fair value by using valuation techniques. These include the use of recent 14. CASH ANd CASH EqUIVALENTS arm’s length transactions, reference to other instruments that Cash and cash equivalents includes cash in hand, deposits are substantially the same, discounted cash flow analysis, held at call with banks, other short term highly liquid and option pricing models, making maximum use of market investments with original maturities of three months or less, inputs and relying as little as possible on entity-specific inputs. and bank overdrafts. Bank overdrafts are shown within net The Group assesses at each reporting date whether there is interest bearing debt on the Statement of Financial Position. objective evidence that a financial asset or group of financial assets is impaired. 15. PROVISIONS Provisions are recognised when the Group has a present An impairment loss is recognised for the amount by which legal or constructive obligation as a result of past events. the assets carrying amount exceeds its recoverable amount It is probable that an outflow of resources will be required classified as available for sale; a significant or prolonged to settle the obligation and the amount has been reliably decline in the fair value of the security below its cost is estimated. Restructuring provisions comprise lease38 African Sun Limited 2008
  • 41. termination penalties and employee termination payments. of time modules for use during the next twenty-five years of Provisions are not recognised for future operating losses. apartments owned by the company. At the end of this period, all Where there is a number of similar obligations, the likelihood rights in the apartments revert to the company. Revenue is taken that an outflow will be required in settlement is determined to account when a time module sale contract is concluded. by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect 17. LEASES to any one item included in the same class of obligations Leases in which a significant portion of the risks and rewards may be small. of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases- net Provisions are measured at the present value of the expenditures of any incentives received from the lessor- are charged to the expected to be required to settle the obligation using a pre- Statement of Comprehensive Income on a straight-line basis tax rate that reflects current market assessments of the time over the period of the lease. Leases of property, plant and value of money and the risks specific to the obligation. The equipment where the Group has substantially all the risks increases in the provision due to passage of time is recognised and rewards of ownership are classified as finance leases. as interest expense. Finance leases are capitalised at the leases commencement at lower of the fair value of the leased property and the16. REVENUE RECOGNITION present value of the minimum lease payments. Revenue is derived from the following sources: sales of goods and services in leased properties, management fees and Each lease payment is allocated between the liability and other revenues which are ancillary to the Groups operations. finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental obligations, net Revenue represents sales (excluding value added tax and similar of finance charges, are included in other long-term payables. taxes) of goods and services and net of discounts, provided in The interest element of the finance cost is charged to the the normal course of business and recognised when services Statement of Comprehensive Income over the lease period so as have been rendered. Revenue is measured at the fair value to produce a constant periodic rate of interest on the remaining of the consideration received or receivable. The following is a balance of the liability for each period. The property, plant and description of the composition of revenues of the Group: equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term. Leased Primarily derived from hotel operations, including the rental of 18. dIVIdENd dISTRIbUTION rooms, food and beverage sales from leased hotels operated Dividend distribution to the Companys shareholders is under the Groups brand names. Revenue is recognised when recognised as a liability in the Groups financial statements rooms are occupied and food and beverages are sold. in the period in which the dividends are approved by the Companys shareholders. Management fees Management fees represent fees earned from hotels managed 19. CURRENT ANd dEFERREd INCOME TAx by the Group usually under long-term contracts with the hotel The tax expense for the period comprises current and deferred owner. These are generally a percentage of hotel revenue, and tax. Tax is recognised in the Statement of Comprehensive an incentive fee, which is based on a fixed or variable per cent Income, except to the extent that it relates to items recognised of hotel profits after a stated return threshold to the owner. directly as comprehensive income. In this case, the tax is also Management fees are recognised as revenue when they are recognised in other comprehensive income. earned in terms of the contracts. In an interim period and at year end incentive fees are recognised as if they were due had The current income tax charge is calculated on the basis of the contract been terminated at the end of the period. the tax laws enacted at the reporting date in countries where the companys subsidiaries and associates operate and Timeshare revenue generate taxable income. Management periodically evaluates The extended reservations system involves the advance sale positions taken in tax returns with respect to situations in African Sun Limited 2008 39
  • 42. STATEMENT OF ACCOUNTING POLICIES Continued which applicable tax regulations are subject to interpretation; annually by independent actuaries using the projected unit it establishes provisions where appropriate on the basis of credit method. amounts expected to be paid to the tax authorities. The present value of the defined benefit obligation is Deferred income tax is provided in full, using the liability determined by discounting the estimated future cash outflows method, on temporary differences arising between the tax using interest rates of high-quality corporate bonds that are bases of assets and liabilities and their carrying amounts in denominated in the currency in which the benefits will be the consolidated financial statements. However, the deferred paid and that have terms to maturity approximating to the income tax is not accounted for if it arises from initial recognition terms of the related pension liability. of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither Actuarial gains and losses arising from experience adjustments accounting nor taxable profit or loss. Deferred income tax is and changes in actuarial assumptions are charged or credited determined using tax rates and laws that have been enacted or to Statement of Comprehensive Income in the period in which substantially enacted by the reporting date and are expected they arise. Past-service costs are recognised immediately in to apply when the related deferred income tax asset is realised income, unless the changes to the pension plan are conditional or the deferred income tax liability is settled. on the employees remaining in service for a specified period of time. In this case, the past-service costs are amortised Deferred income tax assets are recognised to the extent on a straight-line basis over the vesting period. For defined that it is probable that future taxable profit will be available contribution plans, the Group pays contributions to publicly against which the temporary differences can be utilised. or privately administered pension insurance plans on a Deferred income tax is provided on temporary differences mandatory, contractual or voluntary basis. The Group has arising on investments in subsidiaries and associates, except no further payment obligations once the contributions have where the timing of the reversal of the temporary difference is been paid. The contributions are recognised as an employee controlled by the Group and it is probable that the temporary benefit expense when they are due. Prepaid contributions are difference will not reverse in the foreseeable future. recognised as an asset, to the extent that a cash refund or reduction in future payments is available. 20. EMPLOYEE bENEFITS Pension obligations Termination benefits The Group has a defined benefit and a defined contribution Termination benefits are payable when employment is plan. A defined contribution plan is a pension plan under which terminated by the Group before the normal retirement date, the Group pays fixed contributions into a separate entity. The or whenever an employee accepts voluntary redundancy Group has no legal or constructive obligations to pay further in exchange for these benefits. The Group recognises contributions if the fund does not hold sufficient assets to termination benefits when it is demonstrably committed to pay all employees the benefits relating to employee service either terminating the employment of current employees in the current period and prior periods. A defined benefit according to a detailed formal plan without possibility of plan is a pension plan that is not a defined contribution plan. withdrawal, or providing termination benefits as a result of Typically defined benefit plans define an amount of pension an offer made to encourage voluntary redundancy. Benefits benefit that an employee will receive on retirement, usually falling due more than 12 months after the reporting date are dependant on one or more factors such as age, years of discounted to their present value. service and compensation. bonus plans The liability recognised in the Statement of Financial Position The Group recognises a liability and an expense for bonuses in respect of defined benefit pension plans is the present based on a formula that takes into consideration key value of the defined benefit obligation at the reporting date, performance indicators measured on a quarterly basis. less the fair value of plan assets, together with adjustments The Group recognises a provision where contractually for unrecognised acturial gains or losses and past obliged or where there is a past practice that has created a service costs. The defined benefit obligation is calculated constructive obligation.40 African Sun Limited 2008
  • 43. Share-based compensation 23. CRITICAL ACCOUNTING ESTIMATES ANd JUdGEMENTS The Group operates an equity-settled share-based compensation Estimates and judgements are continually evaluated and are plan under which the entity receives services from employees based on historical experience and other factors, including as consideration for equity instruments of the Group. The fair expectations of future events that are believed to be reasonable value of the employee services received in exchange for the under the circumstances. The Group makes estimates and grant of the options is recognised as an expense. The total assumptions concerning the future. The resulting accounting amount to be expensed is determined by reference to the fair estimates will, by definition, seldom equal the related actual value of the options granted, excluding the impact of any results. The estimates and assumptions that have a significant non-market service and performance vesting conditions, for risk of causing a material adjustment to the carrying amounts example, profitability, sales growth targets and remaining an of assets and liabilities within the next financial year are employee of the entity over a specified time period. disclosed below. Non-market vesting conditions are included in assumptions Value of "The Grace" brand name about the number of options that are expected to vest. The total The value of the brand name "The Grace" has been determined amount expensed is recognised over the vesting period, which by assuming the hotel maintains certain average room rates is the period over which all of the specified vesting conditions and occupancy levels over a projected time period. If revised are to be satisfied. At each reporting date, the entity revises its estimated average room rates and occupancy levels were estimates of the number of options that are expected to vest, lower than managements estimates at 30 September 2008, based on the non marketing vesting conditions. It recognises the Group would need to reduce the carrying value of the the impact of the revision to original estimates, if any, in the brand name accordingly. Statement of Comprehensive Income, with a corresponding adjustment to equity. The proceeds received net of any directly Estimated impairment of goodwill attributable transaction costs are credited to share capital and Goodwill was recognised when The Grace was purchased, share premium when the options are exercised. which was determined as the excess of the cost of the business combination over the net fair value of the identifiable assets,21. SHARE CAPITAL liabilities and contigent liabilities recognised. The Group tests Ordinary shares are classified as equity. Incremental costs annually whether goodwill has suffered any impairment, in directly attributable to the issue of new shares or options are accordance with the accounting policy stated in note 10. shown in equity as a deduction, net of tax, from the proceeds. As of the 30th of September 2008, the recoverable amount22. bORROwINGS of the business as determined by the hotels discounted cash Borrowings are recognised initially at fair value, net of flows over a thirteen year period had significantly increased. transaction costs incurred. Borrowings are subsequently stated If assumptions used by management had been 10% lower, at amortised cost; any difference between the proceed – net goodwill could still not have been impaired for the year ended of transaction costs – and the redemption value is recognised 30 September 2008. The increase in the value of the business in the Statement of Comprehensive Income over the period of since acquisition indicates that goodwill of The Grace is the borrowings using the effective interest method. Fees paid not impaired. on establishments of loan facilities are recognised as transaction costs of the loan, to the extent that it is probable that some or Income taxes all of the facility will be drawn down. In this case, the fee is The Group is subject to income taxes in numerous jurisdictions. deferred until the draw down occurs. To the extent that there Significant judgement is required in determining the worldwide is no evidence that it is probable that some or all of the facility provision for income taxes. There are many transactions will be drawn down, the fee is capitalised as a prepayment for and calculations for which the ultimate tax determination is liquidity services and amortised over the period of the facility to uncertain. The Group recognises liabilities for anticipated tax which it relates. Borrowings are classified as current liabilities, audit issues based on estimates of whether additional taxes unless the Group has an unconditional right to defer settlement will be due. Where the final tax outcome of these matters is of the liability for at least twelve months after the reporting date. different from the amounts that were initially recorded, such African Sun Limited 2008 41
  • 44. STATEMENT OF ACCOUNTING POLICIES Continued differences will impact the current and deferred income tax transact at these rates in local Zimbabwe market. In applying assets and liabilities in the period in which such determination this policy, all Zimbawe Dollar transactions during the period is made. Were the actual final outcome to differ by 10% and balances at year-end are translated at the lower of Old from managements estimates, the Group would need to Mutual implied rate (OMIR) and market rate. The application increase the income tax liability by $77 252 103 and the of this policy will be reviewed when appropriate. deferred tax liability by $6 552 017 859, if unfavourable, or decrease the income tax liability by $77 252 103 and the Fair values deferred tax liability $6 552 017 859, if favourable. The Group also makes estimates and judgements in the valuation of property, plant and equipment, the valuation of financial Revenue recognition assets and other non-financial assets. Judgement is required in The Group has recognised revenue during 2008 from Pre-Opening determining fair values of assets. The Group may also rely on Services Agreements (POSA) in various African countries. The independent opinions of experts in the related fields. Group believes that payment will be received in full and therefore no corresponding provision against revenue is recognised. 24. FINANCIAL RISk MANAGEMENT Financial risk factors Foreign operations The Groups activities expose it to a variety of financial risks: The Group has operations outside of Zimbabwe where it is market risk (including currency risk, fair value interest rate primarily domiciled. This entails that the functional currency risk, cash flow interest rate risk and price risk), credit risk and of the foreign operations has to be translated to the reporting liquidity risk. The Groups overall risk management programme currency of the reporting entity based on IAS 21 Effects focuses on the unpredictability of financial markets and seeks to of Changes in Foreign Exchange Rates. Due to the multiple minimise adverse effects of the Groups financial performance. foreign currency rates prevailing in Zimbabwe, Directors had Risk management is carried out by Group Treasury under to set the foreign exchange rates they deemed reasonable at policies approved by the Board of Directors. Group Treasury the time of reporting. identifies, evaluates and hedges financial risks in close co- operation of the Groups operating units. The Board provides Useful lives and residual values of property, plant principles for overall risk management as well policies and equipment covering specific areas such as foreign exchange risk, interest The Group assesses the useful lives and residual values of rate risk, credit risk and investment of excess liquidity. property, plant and equipment each year taking into account past experience and macroeconomic changes. 24.1 MARkET RISk Foreign exchange risk Going concern The Group operates regionally and is exposed to foreign Despite the challenging operating environment, and after the exchange risk arising from various currency exposures, primarily assessment of going concern, the Directors have no reason with respect to the United States Dollar and the South African to doubt that the Group will continue to operate for the Rand. Foreign exchange risk arises from future commercial foreseeable future. Management strategies have been put in transactions, recognised assets and liabilities and net place to mitigate all the challenges the Group is facing and investments in foreign operations. Foreign exchange risk arises the Groups ability to pay its maturing obligations. when future commercial transactions or recognised assets and liabilities are denominated in a currency that is not the entitys Exchange rates functional currency. The Group has certain investments in foreign It is the view of the Directors that the translation of balances operations whose net assets are exposed to foreign currency and transactions from Zimbabwe dollars to United States translation risk. Currency exposure arising from the net assets dollars should be based on an exchange rate that is aligned of the Groups foreign operations is managed primarily through to the market forces and fairly presents the fair value of the borrowings denominated in the relevant foreign currencies. balances and transactions when translated. It should be emphasised that the policy is for fair presentation purposes Price risk only and does not indicate an intention of the Group to The Group is exposed to equity securities price risk because of42 African Sun Limited 2008
  • 45. investments held by the Group and classified on the Statement Interest cover times of Financial Position at fair value through profit or loss. The This is the ratio which the aggregate of operating income, Group through the treasury department disposes equity non-recurring items and equity accounted earnings bears to securities when prices would disadvantage the Groups position interest payable (including capitalised interest). and acquires equity securities when gains are anticipated. Net assets These are equivalent to shareholders equity. Cash flow and fair value interest rate risk Pretax return on total assets As the Group has no significant interest bearing assets, the This is calculated by relating to closing total assets, Groups income and operating cash flows are substantially operating income plus dividend income and equity independent of changes in the market interest rates. accounted earnings. The Groups interest rate risk arises from long term borrowings. Taxed operating return Borrowings issued at variable rates expose the Group to cash This is calculated by relating to closing total capital employed, flow interest rate risk. Borrowings issued at fixed rates expose income after taxation plus taxed interest payable. the Group to fair value interest rate risk. Borrowings are basic earnings per share repaid immediately if interest rates are unfavourable and the The calculations are based on the earnings attributable to Group negotiates with lenders favourable rates and tenures ordinary shareholders. Account is taken of the number to avoid both cashflow and fair value interest rate risk. of shares in issue for the period during which they have participated in the income of the Group.24.2 CREdIT RISk diluted earnings per share Credit risk is managed on a Group basis. Credit risk arises from Diluted earnings per share are calculated by dividing the cash and cash equivalents, derivative financial instruments profit/(loss) shown above by the adjusted weighted average and deposits with banks and financial institutions, as well as number of ordinary shares, assuming conversion of all credit exposures to wholesale and retail customers including dilutive potential ordinary shares. The company has share outstanding receivables and committed transactions. options and a calculation is done to determine the number Management assesses the credit quality of the customer, of shares that could be acquired at fair value based on the taking into account its financial position, past experience and monetary value of the subscription rights attached to the other factors. Individual risk limits are set based on internal outstanding share options. The amount calculated above is or external ratings in accordance with limits set by the Board. compared with the number of shares that would have been The utilisation credit limits are regularly monitored. issued assuming the exercise of the share options. Financial gearing ratio24.3 LIqUIdITY RISk This represents the ratio of interest bearing debt, less cash to Prudent liquidity risk management includes maintaining total shareholders equity. sufficient cash and marketable securities, the availability African Sun of funding from an adequate amount of committed credit African Sun Limited formerly Zimbabwe Sun Limited. facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, Group 26. COUNTRY OF INCORPORATION ANd Treasury maintains flexibility in funding by maintaining REPORTING CURRENCY availability under committed credit lines. All Group companies are incorporated in Zimbabwe, except for African Sun Limited PCC, which is incorporated As disclosed in Note 15 and in terms of the Groups management in Mauritius and has subsidiaries in Mozambique and of financial risks, management believes that the Group does not South Africa. These financial statements are expressed in have significant exposure to financial risk. Zimbabwe Dollars. The Zimbabwe Dollar was revalued on 1 August 2008 (with the removal of 10 zeros), as announced25. dEFINITIONS by the Reserve Bank of Zimbabwe, Governor in the August Taxed interest payable Monetary Policy Review Statement. The financial statements This is calculated by taxing interest payable at the standard rate have been presented based on the new currency. Comparative of taxation. financial information has been restated accordingly. African Sun Limited 2008 43
  • 46. NOTES TO ThE FINANCIAL STATEMENTS For the year ended 30 September 20081. GROUP SEGMENTAL REPORTINGThe Group operates in four main geographical areas and its adminstrative functions are carried out from Zimbabwe.The area of operation principally comprise of city and resort hotels. zimbabwe South Africa Other Eliminations Consolidated $ $ $ $ $Historical cost 2008Revenue 596 083 424 127 206 956 878 963 76 943 310 537 (68 154 544 178) 811 829 069 449Segment out-turnSegment operating profit/(loss) 427 700 646 179 (5 579 162 167) 14 398 767 044 (633 162 049) 435 887 089 007Other income 109 248 997 036 – – – 109 248 997 036Share of loss of associates (1 990 493 631) – – – (1 990 493 631)Net interest (cost)/income (2 714 855 010) (1 059 263 328) 258 154 221 – (3 515 964 117)Taxation (65 520 178 587) (772 521 038) – – (66 292 699 625)Profit/(loss) after tax 466 724 115 987 (7 410 946 533) 14 656 921 265 (633 162 049) 473 336 928 670Other informationCapital additions 107 346 372 413 11 138 369 400 2 227 129 812 – 120 711 871 625Depreciation – 4 240 143 598 – – 4 240 143 598Amortisation – 885 997 986 – – 885 998 017AssetsSegment assets 7 617 398 939 800 1 297 698 049 021 834 158 283 803 – 9 749 255 272 624Investment in associate 6 815 892 994 859 – – – 6 815 892 994 859Financial assets at fair valuethrough profit/loss 28 250 258 651 – – – 28 250 258 651Consolidated total assets 14 461 542 193 310 1 297 698 049 021 834 158 283 803 – 16 593 398 526 134LiabilitiesSegment liabilities (2 409 378 897 982) (590 188 374 162) (705 276 876 450) – (3 704 844 148 594)Borrowings – (38 927 728 596) – – (38 927 728 596)Consolidated total liabilities (2 409 378 897 982) (629 116 102 758) (705 276 876 450) – (3 743 771 877 190)44 African Sun Limited 2008
  • 47. NOTES TO ThE FINANCIAL STATEMENTS For the year ended 30 September 2008 1. GROUP SEGMENTAL REPORTING zimbabwe Mozambique South Africa Other Eliminations Consolidated $ $ $ $ $ $Historical cost 2007Revenue 144 – 29 6 (6) 173Segment out-turnSegment operating profit/(loss) 61 – 3 – (13) 51Share of loss of associates (2) – – – – (1)Taxation (13) – (1) – – (13)Profit/(loss) after tax 46 – 2 – (13) 35Other informationCapital additions 32 – 2 – – 34Depreciation – – (1) – – (1)AssetsSegment assets 724 – 93 35 – 852Associates 307 – – – – 307Investments and loans 4 16 – 115 (118) 17Consolidated total assets 1 035 16 93 150 (118) 1 176LiabilitiesSegment liabilities 264 – 32 53 – 349Borrowings 8 – 13 – – 22Consolidated total liabilities 272 – 46 53 – 371 African Sun Limited 2008 45
  • 48. NOTES TO FINANCIAL STATEMENTS For the year ended 30 September 2008 GROUP2. PROPERTY, PLANT & Freehold Leasehold Plant and Hotel properties properties equipment equipment Vehicles TotalEqUIPMENT $ $ $ $ $ $Historical costAt 30 September 2006Cost/valuation – – 2 – – 3Accumulated depreciation – – – – – –Net book amount – – 2 – – 3Period ended 30 September 2007Opening book amount – – 2 – – 3Additions – 14 16 1 3 34Revaluation surplus – 19 512 – 64 595Exchange differences – 7 5 – – 12Depreciation charge – – (1) – – (1)Closing net book amount – 40 534 1 67 643At 30 September 2007Cost/valuation – 40 535 1 67 644Accumulated depreciation – – (1) – – (1)Net book amount – 40 534 1 67 643Year ended 30 September 2008Opening book amount – 40 534 1 67 643Additions – 5 110 034 418 126 360 345 177 10 317 108 317 120 711 871 625Revaluation surplus – 871 897 676 091 6 239 661 899 257 – 370 208 326 653 7 481 767 902 001Exchange differences – – 138 793 898 205 – – 138 793 898 205Hotel usage – – – (340 621 557) – (340 621 557)Depreciation charge – (303 260 907) (3 702 328 165) – (234 554 526) (4 240 143 598)Closing net book amount – 871 594 415 230 6 484 787 887 957 19 723 621 380 290 880 511 7 736 692 907 318At 30 September 2008Cost/valuation – 871 897 676 136 6 488 490 216 123 19 723 621 380 525 435 037 7 740 933 050 918Accumulated depreciation – (303 260 907) (3 702 328 166) – (234 554 526) (4 240 143 599)Net book amount – 871 594 415 230 6 484 787 887 957 19 723 621 380 290 880 511 7 736 692 907 318The Groups property, plant and equipment was revalued by an independent valuer on 30 September 2008. Valuations were made by referenceto an active market. The revaluation surplus net of deferred income taxes was credited to revaluation reserve through comprehensive income.If property, plant and equipment were stated on the cost basis, the amount would be nil as a result of the revaluation of the Zimbabwean Dollar by the ReserveBank of Zimbabwe in August 2008 which resulted in the removal of ten zeros.46 African Sun Limited 2008
  • 49. NOTES TO ThE FINANCIAL STATEMENTSFor the year ended 30 September 2008 GROUP Historical Cost 2008 2007 3. INTANGIbLE ASSETS $ $ Goodwill and brand names Cost 49 – Accumulated amortisation (899 650 448) – Exchange differences 282 005 029 579 49 Net carrying value 281 105 379 180 49 Goodwill: At the beginning of the period 30 – Exchange differences 173 799 003 570 30 At the end of the period 173 799 003 600 30 Goodwill is allocated to the Groups cash generating unit in South Africa. No impairment charge was recognised for the year as the recoverable amount from the cash generating unit, based on value-in-use calculations, is in excess of the carrying amount of goodwill brand names: At the beginning of the period 19 – Amortisation charge (885 997 986) – Exchange differences 108 192 373 548 19 At the end of the period 107 306 375 580 19 Brand names consist of the brand name "The Grace" and its registered trademark. The brand name is amortised using the straight-line method over a period of 20 years Total intangible assets 281 105 379 180 49 4. bIOLOGICAL ASSETS At the beginning of the period – – Gain from changes in fair value less estimated point of sale costs 569 954 250 001 – Write-off of biological assets (479 261 250 001) – At the end of the period 90 693 000 000 – Biological assets consist of timber plantations and horses. Fair value for plantations has been determined by an independent valuer based on the stages of forest development. Horses are valued by the Directors based on reference to quoted market prices. During the year a veld fire destroyed part of the plantations at Troutbeck in Inyanga valued at $479 261 250 001 African Sun Limited 2008 47
  • 50. NOTES TO ThE FINANCIAL STATEMENTS For the year ended 30 September 2008 GROUP Historical Cost 2008 2007 5. INVESTMENTS $ $ 5.1 Investments in associate Dawn Properties Limited 17.72% (2007: 18.02%) At the beginning of the period 307 1 Share of loss of associate (1 990 493 631) (2) Equity movements: fair value reserve 6 817 883 488 183 307 At the end of the period 6 815 892 994 859 307 Total investments in associate 6 815 892 994 859 307 African Sun Limited has a 17.72% share in Dawn Properties Limited, a listed company. The market value of its investment amounts to $7.7 trillion. Dawn Properties Limited has a 31 March financial year end. The share of results for Dawn Properties Limited is based on an aggregation of six months of the audited financials for the year ended 31 March 2008 with the unaudited interim financials for the six months ended 30 September 2008 The summarised pro-forma financial statements of Dawn Properties Limited are as follows: Income Statement Revenue 7 785 640 000 9 Operating expenses (5 536 653 000) (12) Fair value adjustment to financial assets 42 426 971 807 000 2 467 Operating profit 42 429 220 794 000 2 463 Other (losses)/gains (6 871 286 000) 1 Profit before taxation 42 422 349 508 000 2 464 Taxation (13 113 592 879 499) (764) Net profit for the period 29 308 756 628 501 1 700 balance sheet Total assets 53 880 214 484 000 2 483 Total liabilities 15 415 905 234 000 769 Equity 38 464 309 250 000 1 715 53 880 214 484 000 2 483 A significant portion of the profits of Dawn Properties Limited arises from fair value gains on investment property. The investment properties of Dawn Properties Limited mainly constitute hotel properties leased and occupied by African Sun Limited (formerly Zimbabwe Sun Limited). The properties are therefore classified as owner occupied from a Group perspective. As a result the Groups portion of the fair value gains on investment properties, which are accounted for in the income statement of Dawn Properties Limited, are credited to a fair value reserve in the consolidated financial statements.48 African Sun Limited 2008
  • 51. NOTES TO ThE FINANCIAL STATEMENTSFor the year ended 30 September 2008 GROUP Historical Cost 2008 2007 $ $ 5.2 Other investments Investment in joint venture Investment in Clube Paraiso Limitada (10%) At beginning of period 16 – Write-off on disposal (16) 16 At end of period – 16 The 10% investment in Clube Paraiso Limitada was disposed of during the year 6. NON-CURRENT RECEIVAbLES Security deposit 147 129 696 000 – African Sun SA (Pty) Limited entered into a lease agreement in terms of which a security deposit was payable. The non-current receivable has been recognised at amortised cost using the effective interest method. The effective interest rate applied is 12% per annum. 7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Listed equity securities at market value 28 250 242 727 – 8. INVENTORIES Food and beverage 19 418 669 480 19 Shop merchandise 22 733 756 – Consummable stores 54 219 829 094 2 Maintenance stock 216 846 439 2 74 597 183 769 23 9. TRAdE ANd OTHER RECEIVAbLES Trade receivables 211 154 891 267 39 Less: provision for impairment of receivables (5 435 637 278) – Trade receivables – net 205 719 253 989 39 Payments 44 318 628 861 11 Other receivables 609 550 261 884 32 859 588 144 734 82 African Sun Limited 2008 49
  • 52. NOTES TO ThE FINANCIAL STATEMENTS For the year ended 30 September 2008 GROUP Historical Cost 2008 2007 $ $ 10. CASH ANd CASH EqUIVALENTS Cash on hand and at bank 544 337 448 446 55 GROUP ANd COMPANY Historical Cost 11. SHARE CAPITAL 2008 2007 Number of shares Number of shares Authorised Ordinary shares of $0.0000000000001 1500 000 000 1 500 000 000 Issued and fully paid Ordinary shares of $0.0000000000001 At 30 September 2007 644 932 323 638 153 323 Issued during the period 43 035 081 6 779 400 At 30 September 2008 687 967 404 644 932 323 Unissued shares Subject to the limitations imposed by the Companies Act (Chapter 24:03), in terms of an Ordinary Resolution of the Company in a general meeting, the unissued share capital of $nil ($812 093 old currency) has been placed at the disposal of the Directors to allot and dispose of the shares in terms of the Companies Act (Chapter 24:03) and the Securities Commission Act. Shares under option The Directors are empowered to grant share options to certain employees of the Company. These options are granted for a period of ten years at a price determined by the middle market price ruling on the Zimbabwe Stock Exchange on the day on which the options are granted. Movements in the number of share options were as follows: Movements in the number of share options as at 30 September 2008 2008 2007 Number of shares Number of shares Movements for the period As at 30 September 2007 300 000 3 778 429 New options granted 32 246 616 – Options forfeited – (3 078 429) Options exercised (32 546 616) (400 000) As at 30 September – 300 000 Outstanding Share Options – 300 000 In terms of the Group share option scheme, options were granted during the period ended 30 September 2008. The Group recognised total expenses of $nil in respect of share options granted as all shares were issued at market value. No credits were recognised to the share option reserve as there were no unexercised shares at year-end.50 African Sun Limited 2008
  • 53. NOTES TO ThE FINANCIAL STATEMENTSFor the year ended 30 September 2008 directors shareholdings At 30 September 2008, the Directors held directly the following number of shares in the company, of which the total issued shares are 687 967 404 2008 2007 Number of shares Number of shares Executive directors N Mangwiro – – S Munyeza – – Non Executive directors E Makonese 2 631 852 2 596 763 B Nkomo – – E Chitiga 5 074 5 006 L Kapungu – – F Rwodzi – – D W Birch 7 588 – T Chiganze – – 2 644 514 2 601 769 Messrs F Rwodzi, T N Chiganze, S A Munyeza and N Mangwiro held indirectly shares in the company through controlling interest in the following companies: Names Company Shareholding in African Sun Limited % 2008 2007 F Rwodzi / T Chiganze Msasa Nominees 14.62 17.59 S A Munyeza Riustrix Investments (Pvt) Ltd 25.31 26.09 Criben Investments (Pvt) Ltd 1.84 1.97 Total shareholding 27.15 28.06 N Mangwiro Ganlake Investments (Pvt) Ltd 0.33 0.75 N K Rehoaboth Investments (Pvt) Ltd 0.69 – Total shareholding 1.02 0.75 African Sun Limited 2008 51
  • 54. NOTES TO ThE FINANCIAL STATEMENTS For the year ended 30 September 2008 GROUP Historical Cost 2008 2007 $ $ 12. SHARE PREMIUM At the beginning of period 1 – Arising on issue of shares 8 831 1 At end of period 8 832 1 13. RETAINEd EARNINGS 13.1 Group At beginning of period 35 – Profit for the period 473 336 928 670 35 Dividend paid (3 672) – At end of period 473 336 925 033 35 Retained in: Group 475 327 418 664 37 Associated companies (1 990 493 631) (2) 473 336 925 033 35 13.2 Company At beginning of period 3 – (Loss)/profit for the period (14 147 231 396) 4 Dividends paid (3 672) (1) At end of period (14 147 235 065) 3 Retained in: Company (12 156 741 434) 5 Associated companies (1 990 493 631) (2) (14 147 235 065) 3 14. TRAdE ANd OTHER PAYAbLES Trade payables 118 825 339 716 100 Amounts due to related parties 16 206 107 432 1 Accruals, provisions and other creditors 1 151 459 504 300 50 1 286 490 951 448 15252 African Sun Limited 2008
  • 55. NOTES TO ThE FINANCIAL STATEMENTSFor the year ended 30 September 2008 GROUP Historical Cost 2008 2007 15. NET CURRENT ASSETS $ $ Current assets: Financial assets at fair value through profit or loss 28 250 242 727 – Inventories 74 597 183 769 23 Trade and other receivables 859 588 144 734 82 Cash and cash equivalents 544 337 448 446 55 1 506 773 019 676 160 Current liabilities: Trade and other payables 1 286 490 951 448 152 Borrowings 38 927 728 596 22 1 325 418 680 044 174 Net current assets/(liabilities) 181 354 339 632 (14) Rates of 16. CURRENT bORROwINGS Interest (%) Foreign loans United States Dollar loan 10.00 – 2 Short term loans Standard Chartered Bank Zimbabwe 2 900.00 – 2 Stanbic Bank 2 500.00 – 2 Barclays Bank of Zimbabwe Limited 1 600.00 – 3 – 7 Other Nedbank (South Africa) loan 12.00 38 927 728 596 – Nedbank (South Africa) current portion of long-term loan 13.50 – 13 Total current borrowings 38 927 728 596 22 The outstanding balance on the loan from Nedbank as at 30 September 2008 was R1 272 148 (Z$38 927 728 596). This loan is secured by a Swift Demand Guarantee. The fair value of current borrowings equals their carrying amount, as the impact of discounting is not significant. The fair values are based on cash flows discounted using the rates based on the applicable rates. The carrying amounts of the borrowings approximate their fair value African Sun Limited 2008 53
  • 56. NOTES TO ThE FINANCIAL STATEMENTS For the year ended 30 September 2008 GROUP Historical Cost 2008 2007 17. TAxATION $ $ 17.1 Taxation charge Current taxation 772 521 038 – Deferred taxation 65 520 178 587 13 66 292 699 625 13 Reconciliation of rate of taxation Standard rate 30.9 30.9 Adjusted for: Capital allowances in excess of depreciation 12.14 26.85 Other adjustments including permanent differences (30.76) (29.9) Effective rate 12.28 27.85 17.2 deferred taxation Deferred taxation is calculated in full on temporary differences under the liability method using a prinicipal tax rate of 30.9% (2007:30.9%) 17.2.1 Deferred taxation asset - Assessed tax losses 15 111 529 101 1 15 111 529 101 1 The movement on deferred income tax asset is as follows: - Balance at 30 September 2007 1 – - Charge to income statement (456 645 501) – - Exchange differences 15 568 174 601 2 15 111 529 101 1 17.2.2 Deferred income tax liability Accelerated wear and tear on property, plant and equipment 2 418 353 197 146 196 Prepayments – 3 Assessed losses – (2) 2 418 353 197 146 197 The movement on the deferred income tax liability is as follows: - Balance at 30 September 2007 197 – - Charge to the income statement 65 976 824 088 13 - Charge to equity 2 352 376 372 861 184 Balance on 30 September 2008 2 418 353 197 146 197 Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The deferred tax asset and liability of the Group pertain to different tax jurisdictions and therefore have not been offset against each other.54 African Sun Limited 2008
  • 57. NOTES TO ThE FINANCIAL STATEMENTS For the year ended 30 September 2008 Historical 2008 2007 Tax (charge) before Tax (charge) before tax credit After tax tax credit After tax $ $ $ $ $ $17.3 Tax effects on components ofother comprehensive incomeFair value gains:- Property, plant and equipment 7 481 767 902 001 (2 311 866 281 718) 5 169 901 620 283 595 (184) 411Share of other comprehensiveincome of associates 9 866 691 010 358 (3 048 807 522 201) 6 817 883 488 158 434 (134) 300Currency translations differences 562 235 319 638 (173 730 713 768) 388 504 605 870 78 (24) 54Other comprehensive income 17 910 694 231 997 (5 534 404 517 687) 12 376 289 714 310 1 107 (342) 765 GROUP Historical Cost 2008 2007 18. OPERATING PROFIT $ $ Operating profit is stated after charging/(crediting) the following: Depreciation of property, plant and equipment 4 240 143 598 1 Amortisation of brand name 885 997 986 – Auditors remuneration – – Net lease expense – 4 Impairment of trade debtors 5 435 637 278 – Average number of employees 2 232 2 083 19. OTHER INCOME Profit on disposal of investments 1 451 066 940 – Gain from changes in fair value less estimated point of sale costs 569 954 250 001 – Write-off of biological assets (479 261 250 001) – Exchange gains 17 104 930 096 – 109 248 997 036 – 20. EARNINGS PER SHARE basic earnings basis Profit attributable to shareholders 473 336 928 670 35 Weighted average number of ordinary shares 670 323 021 642 538 000 basic earnings per share ($) 706.13 – diluted earnings per share Profit attributable to shareholders 473 336 928 670 35 Weighted average number of ordinary shares 670 323 021 642 538 000 Adjustments for share options – 300 000 Weighted average number of ordinary shares for diluted earnings per share 670 323 021 642 838 000 diluted earnings per share ($) 706.13 – African Sun Limited 2008 55
  • 58. NOTES TO ThE FINANCIAL STATEMENTS For the year ended 30 September 2008 GROUP Historical Cost 21. CASH GENERATEd FROM TRAdING 2008 2007 $ $ Operating profit 435 887 089 007 51 Adjustments for: - Depreciation and hotel equipment usage 4 240 143 598 1 - Amortisation of brand name 885 997 986 – - Fair value gains in biological assets (90 693 000 000) – - Fair value gains in investments and loans (28 250 258 633) (18) - Fair value gains in intangible assets – (49) Changes in working capital - Increase in inventories (74 597 183 746) (23) - Increase in trade and other receivables (859 588 128 730) (79) - Increase in trade and other payables 1 286 490 951 296 152 674 375 610 778 35 22. dIRECTORS EMOLUMENTS For service as Directors 164 859 323 – For managerial services 6 452 745 1 171 312 068 1 23. COMMITMENTS FOR CAPITAL ExPENdITURE Authorised by Directors but not contracted for 1 138 019 250 000 318 The capital expenditure is to be financed out of the Groups own recources and existing borrowing facilities56 African Sun Limited 2008
  • 59. NOTES TO ThE FINANCIAL STATEMENTSFor the year ended 30 September 2008 24. PENSION FUNdS The company and all employees contribute to one or more of the following independently administered pension funds: 24.1 African Sun Limited Pension Fund This fund is a fully funded, uninsured, consolidated scheme consisting of a defined benefit scheme and a defined contribution scheme. All employees, except those who are members of the Catering Industry Pension Fund and African Sun Limited, are members of this fund. 24.2 Catering Industry Pension Fund This is a defined contribution scheme which covers employees in specified occupations of the catering industry. The majority of employees of African Sun Limited are members of this fund. 24.3 African Sun SA (Pty) Ltd The subsidiary company has a defined contribution provident fund, of which full time employees of the company are members. The subsidiary companys contribution to the provident fund for the year amounted to R371 862 (Z$11 470 515 604). 24.4 National Social Security Authority Scheme The Company and all its employees based in Zimbabwe contribute to the National Social Security Scheme, promulgated under the National Social Security Act 1989. The companys obligations under this scheme are limited to specific contributions legislated from time to time. GROUP Historical Cost 2008 2007 $ $ 24.5 Pension costs recognised as an expense for the period African Sun Limited pension funds 11 904 158 246 1 Catering Industry Pension Fund 34 755 385 – National Social Security Authority Scheme 81 864 961 1 12 020 778 592 2 African Sun Limited 2008 57
  • 60. NOTES TO ThE FINANCIAL STATEMENTS For the year ended 30 September 2008 GROUP Historical Cost 2008 2007 $ $ 25. RELATEd PARTY TRANSACTIONS The following transactions were carried out with related parties 25.1 Purchase of goods and services Dawn Properties Limited Rent paid 2 306 745 915 4 African Sun Limited owns 17.72% (18.02%:2007) of the shares in Dawn Properties Limited. All commercial transactions with Dawn Properties Limited were at arms length. 25.2 Year end balances arising from transactions with related parties: Dawn Properties Limited: - Payable (rentals) 16 206 107 432 1 25.3 key management compensation Salaries and other short term employee benefits 3 711 304 332 5 Termination benefits – – 3 711 304 332 5 25.4 Loans to key management Beginning of the period 2 Loans advanced during the period 17 349 3 Loan repayments received during the period (1 427) (1) At the end of the period 15 924 2 The fair values of loans advanced to key management approximate their carrying amounts. No provisions for impairment have been made against related party balances for the periods ended 2007 and 2008.58 African Sun Limited 2008
  • 61. NOTES TO ThE FINANCIAL STATEMENTS For the year ended 30 September 2008 COMPANY Freehold Leasehold Plant and properties properties equipment Vehicles Total $ $ $ $ $26. HISTORICAL COSTAt 30 September 2006Cost/valuation – – – – –Accumulated depreciation – – – – –Net book amount – – – – –Period ended 30 September 2007Opening book amount – – – – –Revaluation surplus – 9 – 22 31Closing net book amount – 9 – 22 31At 30 September 2007Cost/Valuation – 9 – 22 31Accumulated depreciation – – – – –Net book amount – 9 – 22 31Year ended 30 September 2008Opening book amount – 9 – 22 31Disposals – – – (2) (2)Revaluation surplus – 447 082 424 848 – 96 624 999 980 543 707 424 828Closing net book amount – 447 082 424 857 – 96 625 000 000 543 707 424 857At 30 September 2008Cost/Valuation – 447 082 424 857 – 96 625 000 000 543 707 424 857Accumulated depreciation – – – – –Net book amount – 447 082 424 857 – 96 625 000 000 543 707 424 857The companys property, plant and equipment was revalued by an independent valuer Knight Frank on 30 September 2008. Valuations were madeby reference to an active market. The revaluation surplus net of deferred income taxes was credited to revaluation reserves in shareholders equity.If property, plant and equipment were stated on the cost basis, the amount would be nil as a result of the revaluation of the ZimbabweanDollar by the Reserve Bank of Zimbabwe in August 2008 which resulted in the removal of ten zeros. African Sun Limited 2008 59
  • 62. NOTES TO ThE FINANCIAL STATEMENTS For the year ended 30 September 2008 COMPANY Historical Cost 2008 2007 $ $ 27. INVESTMENTS IN SUbSIdIARIES African Sun Limited (Mauritius) 100% Loan: At the beginning of the period 13 – Fair value adjustment – 13 At the end of the year 13 13 28. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT/LOSS Listed equity securities at market value 60 212 237 – 29. TRAdE ANd OTHER RECEIVAbLES Other receivables 23 048 678 1 The fair value of the receivables is as stated above60 African Sun Limited 2008
  • 63. NOTES TO ThE FINANCIAL STATEMENTSFor the year ended 30 September 2008 COMPANY Historical Cost 2008 2007 $ $ 30. dEFERREd TAxATION Deferred taxation is calculated in full on temporary differences under the liability method using a principal tax rate of 30.9% (2007:30.9%) deferred taxation liability Accelerated wear and tear on property, plant and equipment 167 548 948 659 8 167 548 948 659 8 The movement on the deferred income tax liability is as follows: Balance 30 September 2007 8 – Release to the income statement – (1) Charge to equity 167 548 948 651 10 Balance at 30 September 2008 167 548 948 659 8 31. TRAdE ANd OTHER PAYAbLES Accruals, provisions and other payables 4 241 087 086 1 32. OPERATING ENVIRONMENT During the period under review, the Zimbabwe operating environment deteriorated further driven by chronic levels of hyperinflation, multiple and distorted exchange rates, distorted pricing mechanisms, fast deteriorating local currency unit and significant distortions in the market. The Groups Zimbabwe operations have therefore been significantly affected by these conditions. Given the chronic hyperinflation, the time lapse between the year-end and reporting date may also render the financial information here-in less useful and relevant for making economic decisions. Not withstanding the above, the operating environment is set to improve remarkably due to the following: • The liberalisation of the Zimbabwean economy led to the removal of price controls and foreign currency exchange controls. Pricing will be a function of fundamental market forces of supply and demand. • The use stable currencies as a basis of all pricing decisions will witness the eradication of hyperinflation as inflation in Zimbabwe will align to inflation from the source countries of the currencies being used. • The new political dispensation which ushered in Government of National Unity (GNU) in Zimbabwe will aid the perception of the country as a safe tourist destination. Despite the challenging operating environment, and after the assessment of going concern, the Directors have no reason to doubt that the Group will continue to operate for the foreseeable future. Management strategies have been put in place to mitigate all the challenges the Group is facing and the Groups ability to pay its maturing obligations. African Sun Limited 2008 61
  • 64. FIVE YEAR FINANCIAL REVIEW Historical Statistical Information 30 September 30 September 31 March 31 March 31 March 2008 2007 2006 2005 2004 $ $ $ $ $ 5 year Compound growth % p.a.INCOME STATEMENTSRevenue 370 114% 811 829 069 449 173 – – –Operating profit 435 887 089 007 51 – – –Other income 109 248 997 036 – – – –Equity accounted earnings (1 990 493 631) (2) – – –Net financing costs (3 515 964 117) (1) – – –Profit before tax 539 629 628 295 48 – – –Taxation (66 292 699 625) (13) – –Profit after tax 473 336 928 670 35 – – –Ordinary dividend (3 672) – – – –Retained income 473 336 925 033 35 – – –bALANCE SHEETSShareholders equity 972 432% 12 849 626 648 944 805 – – –Capital employed 972 432% 12 849 626 648 944 805 – – –AssetsNon-current 960 845% 15 114 875 765 109 1 018 – – –Current 561 052% 1 478 522 761 025 158 – – –Total assets 844 316% 16 593 398 526 134 1 176 – – –LiabilitiesNon-current (1 973 202 590) (197) – – –Interest free liabilities (3 702 870 946 004) (152) – – 1Borrowings (38 927 728 596) (22) – – –Total liabilities (3 743 771 877 190) (371) – – 1Employment of capital 189 065% 12 849 626 648 944 805 – – 1SHARE PERFORMANCEPer share ($)Basic earnings 706.13 – – – –Diluted earnings 706.13 – – – –Net asset value 18 678 – – – –Closing market price 120 000 – – – –Share informationIn issue (000s) 687 964 644 932 638 154 579 969 579 969Market capitalisation (millions) 82 556 088 19 145 32 12 16ZSE industrial index 89 494 552 388 686 2 483 347 17962 African Sun Limited 2008
  • 65. FIVE YEAR FINANCIAL REVIEW Historical Statistical Information 30 September 30 September 31 March 31 March 31 March 2008 2007 2006 2005 2004RATIOS ANd RETURNSRevenue generationRoom occupancy (%) 41 42 35 38 42ProfitabiliyReturn on equity (%) 4 4.3 2.3 21.8 23.7Income after taxation to total capital employed (%) 3.0 3.0 2.1 9.8 23.1Taxed operating return (%) 3.25 4.1 2.2 20.5 41.2Pretax return on total assets (%) 3 4.1 2.1 9.8 10.4SolvencyFinancial gearing ratio (%) – 19.70 0.39 9.60 2.60Interest cover (times) 136 52.70 75.90 0.10 3.10Total liabilities to total shareholders funds (%) 29 46.30 5.20 113.40 127.20LiquidityCurrent assets to interest free liabilities and shortterm borrowings 0.39 0.42 1.16 0.88 0.83ProductivityTurnover per employee 363 723 1 – – –Turnover to payroll (times) 5.25 5.60 3.98 3.28 4.87OtherNumber of employees 2 232 2 083 1 874 1 607 1 442Number of shareholders 5 992 4 547 4 279 4 539 4 539 African Sun Limited 2008 63
  • 66. Obudu Mountain Resort64 African Sun Limited 2008
  • 67. SUPPLEMENTARY INFORMATION
  • 68. SUPPLEMENTARY INFORMATION For the year ended 30 September 2008 30 September 30 September 31 March 31 March 2008 2007 2006 2005 US$ 000s US$ 000s US$ 000s US$ 000sSTATEMENTS OF COMPREHENSIVE INCOMERevenue 26 312 21 614 27 342 25 052Operating Income 12 972 8 089 9 182 2 070Equity accounted earnings (65) – 217 (6)Net interest (costs)/income (114) (132) 113 (646)Profit before tax 12 793 7 956 9 512 1 418STATEMENTS OF FINANCIAL POSITIONShareholders equity 33 244 16 948 29 728 6 599Interest bearing debt – 483 171 1 613Total equity 33 244 17 431 29 899 8 211AssetsNon-current 32 982 17 056 29 529 8 087Current 5 996 3 749 1 860 7 075Total assets 38 978 20 806 31 389 15 162Current liabilities (5 734) (3 375) (1 490) 15 162Net assets 33 244 17 431 29 899 8 211HIGHLIGHTSRevenue 26 312 21 614 27 342 25 052Attributable earnings 12 793 7 956 9 512 1 418Total assets 38 978 20 806 31 389 15 162Rooms available/day 2 060 1 926 1 926 1 926Occupancies % 41 42 35 38Return on sales % 49 37 35 666 African Sun Limited 2008
  • 69. SUPPLEMENTARY INFORMATION For the year ended 30 September 2008NOTES TO ThE SUPPLEMENTARY INFORMATION1. GROUP SEGMENTAL REPORTINGThe Group operates in four main geographical areas and its adminstrative functions are carried out from Zimbabwe.The area of operation principally comprises of city and resort hotels. zimbabwe South Africa Other Eliminations Consolidated US$ 000s US$ 000s US$ 000s US$ 000s US$ 000sRevenue 17 109 6 709 2 494 – 26 312Profit/(loss) before tax 12 533 (277) 537 – 12 793AssetsSegment assets 22 377 3 180 3 336 – 28 893Associates 9 597 – – – 9 597Investments and loans 486 _ 2 204 (2 204) 486Consolidated total assets 32 461 3 180 5 541 (2 204) 38 9782. ExCHANGE RATESSupplementary information has been presented in United States Dollar (US$), which is not the reporting currency of the Group. Owing tothe unprecedented hyperinflation conditions prevailing in Zimbabwe and the impact of these and other conditions on the Zimbabwe Dollarreporting, the Directors are of the opinion that the supplementary information in US$ will offer more useful information to stakeholders.The Zimbabwean economy has been characterised by multiple foreign currency exchange rates. It is the view of the Directors that thetranslation of balances and transactions from Zimbabwe Dollar to US$ for this purpose should be based on an exchange rate that isaligned to the market forces and fairly presents the value of the transactions and balances when translated. It should be emphasisedthat this translation is for fair presentation purposes only. The exchange rates used for this purpose are the lower of the Old MutualImplied Rate (OMIR) and the market rate.In preparing the supplementary information, the Group did not comply to International Accounting Standards (IAS) 21: The Effectsof Changes in Foreign Exchange Rates. Therefore, this information should not be relied on as the primary information. African Sun Limited 2008 67
  • 70. Group Structure GROUP STRUCTURE AFRICAN SUN LIMITEd AFRICAN SUN zIMbAbwE dAwN PROPERTIES RCI (zIMbAbwE) AFRICAN SUN (PRIVATE) LIMITEd LIMITEd (PRIVATE) LIMITEd LIMITEd PCC (MAURITIUS) 100% 17.72% 24% 100% ShAREhOLDER STRUCTURE 1.18 35.52 25.31 23.37 14.62 Riustrix Investments (Private) Limited Old Mutual Msasa Nominees Public Investors African Sun Limited Employee Share Participation68 African Sun Limited 2008
  • 71. ShAREhOLDERS PROFILES SHAREHOLdER PROFILE AS AT 30 SEPTEMbER 2008 Number of % Issued Shares % bY SIzE Shareholders Range of holdings 1 to 5 000 4 502 75.13 4 857 236 0.7 5 001 to 10 000 468 7.81 3 216 534 0.47 10 001 to 25 000 488 8.15 7 263 812 1.06 25 001 to 50 000 153 2.55 5 320 035 0.77 50 001 to 100 000 131 2.19 8 934 684 1.3 100 001 to 500 000 159 2.65 32 926 305 4.79 500 001 to 1 000 000 23 0.38 16 566 731 2.41 Over 1 000 000 68 1.14 608 882 067 88.5 TOTAL 5 992 100 687 967 404 100 SHAREHOLdER PROFILE AS AT 30 SEPTEMbER 2008 bY TYPE Local Companies 375 6.26 286 695 858 41.67 Nominees Local 155 2.59 122 442 009 17.8 Insurance Companies 12 0.20 105 404 582 15.32 Local Individual Residents 4 598 76.74 80 861 294 11.75 Investments and Trusts 448 7.48 58 334 895 8.48 Pension Funds 43 0.72 22 075 338 3.21 Other Organisations 60 1.00 4 960 238 0.72 Non Residents 232 3.87 2 915 925 0.42 Fund Managers 25 0.42 2 327 462 0.34 Employee Share Participation Trust 8 0.13 1 393 471 0.20 New Non Residents 9 0.15 228 643 0.03 Banks 9 0.15 216 086 0.03 Nominee Foreign 5 0.08 57 438 0.03 Deceased Estates 10 0.17 34 249 – Undefined 1 0.02 16 896 – Executive Share Participation Trust 1 0.02 1 824 – Former Resident 1 0.02 1 196 – Total 5 992 100 687 967 404 100 SHAREHOLdER PROFILE AS AT 30 SEPTEMbER 2008 bY TYPE (SUMMARISEd) Shareholder Type Public . 5 920 98.80 331 980 464 48.26 Directors 6 0.10 303 624 867 44.13 *Other Non Public 66 1.10 52 356 999 7.61 5 992 100 687 967 404 100*Non public include the African Sun Employee Share Participation Trust and Managerial Employees who hold shares in the company in their individual capacities.*Public refers to Local Companies, Insurance Companies, Nominees, Banks, Investments, Trusts, Pension Funds and other organizations.* Directors means Company Directors who hold shares in the Company directly and indirectly. African Sun Limited 2008 69
  • 72. TOP TEN SHAREHOLdERS Shareholding % Shareholding % 2008 2007ShareholderRiustrix Investments (Private) Limited 174 123 042 25.31 168 273 237 26.09Old Mutual 160 784 409 23.37 158 478 798 24.57Msasa Nominees (Private) Limited 100 602 056 14.62 113 499 659 17.59Criben Investments (Private) Limited 12 664 980 1.84 12 466 794 1.97Kingdom Nominees (Private) Limited 11 288 100 1.64 11 581 091 1.77Chikata Trust 10 997 779 1.60 9 576 887 1.48Bretwin Investments (Private) Limited 10 983 571 1.60 – –Penblet Investments (Private) Limited 10 219 379 1.49 8 334 765 1.29Scaiflow Investments (Private) Limited 9 596 281 1.39 9 446 115 1.47Nezungai Innocent 9 569 809 1.39 9 442 220 1.46Zimbabwe Sun Employee Share – – 8 000 000 1.24Participation TrustOther 177 137 998 25.75 135 832 757 21.07TOTAL 687 967 404 100 644 932 323 100 ShARE PRICE INFORMATIONMId MARkET PRICE AT:Friday 28 September 2007 1 600 000 cents (Revalued)Sunday 30 September 2007 ZSE closed for tradeMonday 31 December 2007 35 000 000 cents (Not Revalued)Monday 31 March 2008 250 000 000 cents (Not Revalued)Monday 30 June 2008 1 500 000 000 cents (Revalued)Tuesday 30 September 2008 12 000 000 cents (Revalued)PRICE RANGEHighest: 30 September 2008 12 000 000 cents (Revalued)Lowest: 28 September 2008 1 600 000 cents (Not Revalued)70 African Sun Limited 2008
  • 73. bUSINESS COMPOSITIONThe company operates in the hospitality and leisure industry through a number of hotels, resorts, casinos and timeshareoperations throughout Zimbabwe, two city hotels in South Africa, three resorts in Nigeria and a hotel in Ghana.South AfricaThe Grace in RosebankThe Lakes Hotel and Conference CentreNigeriaClear Essence California Wellness Centre and Boutique HotelObudu Mountain ResortNike Lake ResortGhanaHoliday Inn Accra AirportzimbabweCrowne Plaza MonomotapaExpress by Holiday Inn BeitbridgeHoliday Inn Bulawayo OUR FOOTPRINTHoliday Inn HarareHoliday Inn MutareLake View Sun (closed for re-development)Troutbeck Resort EgyptCaribbea Bay ResortGreat Zimbabwe HotelElephant Hills Resort and Conference CentreHwange Safari LodgeThe Kingdom at Victoria Falls Nigeria EthiopiaThe Victoria Falls Hotel Partnership (50%) Cameroon UgandaFothergill Island Safari Lodge Ghana Cote dIvoire KenyaSun Casinos Equatoria DRC GuineaCaribbea Bay Sun Casino TanzaniaMakasa Sun Casino Angola MalawiHarare Sun Casino ZambiaBulawayo Sun CasinoRedcliff Sun Casino Madagascar Zimbabwe Namibia BotswanaSun VacationsCaribbea Bay Resort Mozambique SouthTroutbeck Resort Africa African Sun Limited 2008 71
  • 74. Front row from left to right: Ms E Chitiga, Mr E M Makonese, Mr S A Munyeza and Mr F Rwodziback row from left to right: Mr N Mangwiro, Dr L T Kapungu, Mr B L Nkomo, Mr D W Birch and Mr T N Chiganze Corporate information DIRECTORATE Chairman Risk and Audit Committee Finance and Investments Committee E M Makonese B L Nkomo (Chairman) F Rwodzi (Chairman) S A Munyeza B L Nkomo Executive directors D W Birch T N Chiganze S A Munyeza N Mangwiro S A Munyeza N Mangwiro N Mangwiro Human Resources and Non-Executive directors Remuneration Committee Marketing Committee B L Nkomo D W Birch (Chairman) B L Nkomo (Acting Chairman) E Chitiga L T Kapungu Ms E Chitiga L T Kapungu Ms E Chitiga S A Munyeza F Rwodzi S A Munyeza D W Birch T N Chiganze  Mr D Mamvura and Mrs P T Murombedzi resigned from the African Sun Limited Board on 31 August 2008 and 30 September 2008, respectively.72 African Sun Limited 2008
  • 75. MANAGEMENTExecutive CommitteeS A Munyeza Group Chief Executive OfficerN Mangwiro Chief Financial OfficerT Madziwanyika Commercial DirectorM S Manyumwa Managing Director – Zimbabwe OperationsE T Shangwa Company Secretary / Finance Director Zimbabwe OperationsG Taputaira Development DirectorT Maswiswi Human Resources DirectorC Nyahunda Operations Director – Regional OperationsT Chaora Investments ExecutiveE Cameron Managing Director – African Sun Limited PCC (Mauritius)F Mangwende Corporate Communications Manager (ex officio)HOTEL ANd RESORT GENERAL MANAGEMENTProperty General ManagersSouth AfricaB Frolich The Grace in Rosebank – JohannesburgM Lourens The Lakes Hotel and Conference Centre – JohannesburgNigeriaTBA Clear Essence California Wellness Centre and Boutique HotelG Manyumwa Obudu Mountain ResortD Kanyandu Nike Lake ResortJM Patterson Amber TinapaGhanaB Porter Holiday Inn Accra AirportzimbabweI Katsidzira Holiday Inn HarareT Macheka Crowne Plaza MonomotapaS Dube Holiday Inn MutareT Mutyandasvika Holiday Inn BulawayoM Zulu Express by Holiday Inn BeitbridgeC Yapp Hwange Safari LodgeT Hwingwiri Elephant Hills ResortI Kasozi Troutbeck ResortB Chimanga Caribbea Bay ResortD Kung The Kingdom at Victoria FallsI Kufa Great Zimbabwe HotelK Snater The Victoria Falls Hotel PartnershipSun CasinosR Choto Casino General ManagerP Munodawafa Sales and Public Relations ManagerL Sibanda Makasa Sun CasinoB Chiutare Harare Sun CasinoN Matebwe Bulawayo Sun CasinoP Fumhanda Caribbea Bay CasinoW Magaya Redcliff Sun Casino African Sun Limited 2008 73
  • 76. 74 African Sun Limited 2008
  • 77. The Kingdom at Victoria FallsCaribbea Bay Holiday Inn Mutare Hwange Safari Lodge African Sun Limited 2008 75
  • 78. Corporate Governance ThE AFRICAN SUN CODE A frican Sun Limited personnel are committed to a INTERNAL CONTROL long-published code of ethics. This incorporates the The Board of Directors is responsible for the Group’s Group’s operating, financial and behavioural policies in a systems of internal control. These systems are designed set of integrated values, including the ethical standards to provide reasonable, but not absolute, assurance as to required of members of the African Sun Limited family in the integrity and reliability of the financial statements their interface with one another and with all stakeholders. and to safeguard, verify and maintain accountability of its assets and to detect and minimise significant fraud, There are detailed policies and procedures in place potential liability, loss and material misstatement while across the Group, covering the regulation and reporting complying with applicable laws and regulations. of transactions in securities of the Group by the Directors and officers. The controls throughout the Group concentrate on critical risk areas. All controls relating to the critical STAkEHOLdERS areas in the casino and hotel operating environments, For many years, African Sun Limited has had a formalised are closely monitored by the Directors and subjected stakeholder philosophy and structures of corporate to internal audit reviews. Furthermore, assessments governance to manage the interface with the various of the information technology environment are stakeholder groups. African Sun Limited has in place also performed. responsive systems of governance and practice which the Board and Management regard as entirely appropriate An Audit Services Manager, who reports directly to and in accordance with the code of Corporate Practices the Chairman of the Risk and Audit Committee, heads and Conduct contained in the Cadbury and King’s the internal audit department. The internal audit Reports “I” and “II” on Corporate Governance. department is designed to serve management and the Board of Directors through independent evaluations dIRECTORATE and examinations of the Group’s activities and resultant The Board of Directors of African Sun Limited is business risks. constituted with an equitable ratio of executive to non-executive Directors and meets at least quarterly. bOARd MEETINGS The African Sun Limited Board is chaired by a The Board meets at least four times per financial year in non-executive Director. order to monitor, consider and review, inter alia, matters of a strategic, financial, non-financial and operational dIRECTORS INTERESTS nature. Special Board meetings may be convened on As provided by the Companies Act (Chapter 24:03) and an ad hoc basis, when necessary, to consider issues the Company’s Articles of Association, the Directors are requiring urgent attention or decision. During the year bound to declare any time during the year, in writing, under review, four Board meetings were held. whether they have any material interest in any contract of significance with the Company, which could have given The Board works to a formal agenda prepared by the rise to a related conflict of interest. No such conflicts Company Secretary in consultation with the Chairman and were reported this year. the Group Chief Executive Officer, which, inter alia, covers76 African Sun Limited 2008
  • 79. operations, finance, capital expenditure, acquisitions Committee and it is made up of a non-executiveand strategy. Any Board member may request the addition Chairman, the Group Chief Executive Officer and two non-of an item to the agenda and will liaise with the Company executive Directors. The Committee acts in accordanceSecretary in this regard. Board papers comprising the with the Board’s written terms of reference to reviewagenda, minutes of Board and Board committee meetings the remuneration of all African Sun Limited Executiveand the relevant supporting documentation are circulated Directors, senior management and other members of staff.to all Directors in advance of each meeting in order thatthey can adequately prepare and participate fully, frankly THE FINANCE ANd INVESTMENTS COMMITTEEand constructively in Board discussions and bring the The Group has a Finance and Investments Committeebenefit of their particular knowledge, skills and abilities and it is made up of a non-executive Chairman, theto the Board table. Group Chief Executive Officer, Group Chief Financial Officer and three non-executive Directors. The CommitteebOARd COMMITTEES is responsible for the review and preliminary approval ofThe Board is authorised to form committees to assist in the major investment decisions of the Company.the execution of its duties, powers and authorities. TheBoard has four standing committees, namely, Risk and THE MARkETING COMMITTEEAudit, Human Resources and Remuneration, Finance The Group has a Marketing Committee and it is made upand Investments and Marketing. The terms of reference of a non-executive Chairman, the Group Chief Executiveand composition of the committees are determined and Officer and two non-executive Directors. The Committeeapproved by the Board and have been adopted by the is responsible for the review of all sales and marketingBoard on an annual basis. programmes of the Group.THE RISk ANd AUdIT COMMITTEE THE NOMINATION COMMITTEEThe Risk and Audit Committee of the Board deals, The Nomination Committee is an ad hoc Committeeinter alia, with compliance, internal control and risk which sits as and when it is necessary.management. It is regulated by specific terms ofreference, is chaired by a non-executive Director, has a NATIONAL wORkS COUNCIL ANd wORkERSmajority of non-executive Directors and incorporates the COMMITTEESGroup Chief Executive Officer and Group Chief Financial The Group holds National Works Council meetings atOfficer as members. It meets with the Company’s least twice a year. Each hotel within the Group hasexternal auditors to discuss accounting, auditing, a Works Council representative who attends theseinternal control and financial reporting matters. The meetings, which is a forum where employees participateexternal and internal auditors have unrestricted access in the decision- making process and also discussto the Risk and Audit Committee. employees’ concerns with top management. The Group believes in and practises worker participationTHE HUMAN RESOURCES ANd REMUNERATION throughout the different levels. All hotels have Workers’COMMITTEE Committees, which serve as a communication channelThe Group has a Human Resources and Remuneration with shop floor employees. African Sun Limited 2008 77
  • 80. ANALYST bRIEFING The Chairman of the Board and the Group Chief Executive The Group reports formally to shareholders twice a year Officer are available at the Annual General Meeting to answer when its haIf year and full year results are announced. questions. Information about the Group is maintained and The Group Chief Executive Officer and the Group Chief available to shareholders at www.africansuninvestor.com Financial Officer give presentations on these results to institutional investors, analysts and the media. dIRECTORS ATTENdANCE OF MEETINGS IN 2008 The data used in these presentations may be found Individual Director attendance at Board and Committee at www.africansuninvestor.com meetings appears in the Table below. Where a Director has not been able to attend a Board meeting, any ANNUAL GENERAL MEETING comments which he or she has had arising out of the The Annual General Meeting provides a useful interface with papers to be considered at that meeting have been private shareholders, many of whom are also customers. relayed in advance to the Chairman of the Board. Main board Finance and Marketing Risk and Audit Human Resources Investments Committee Committee and Committee Remuneration Committee Number of 4 4 4 4 4 meetings E M Makonese 4 *2 *2 *2 *3 T N Chiganze 4 4 – – – B L Nkomo 3 4 3 4 – S A Munyeza 4 4 4 4 4 N Mangwiro 4 4 *3 4 – E Chitiga 3 – 1 – 1 L T Kapungu 2 – – – 2 D W Birch 4 – – 4 4 P T Murombedzi 4 – – 4 – D Mamvura 2 2 3 – – F Rwodzi 3 3 – – – * by invitation / – not a member78 African Sun Limited 2008
  • 81. Annual General Meeting NOTICE OF ANNUAL GENERAL MEETINGNotice is hereby given that the Thirty-Seventh Annual General Meeting of members of African Sun Limited will be heldin the Kariba Room at Holiday Inn Harare, Corner 5th Street and Samora Machel Avenue, Harare on 27 March 2009 at12 noon for the following purposes:ORdINARY bUSINESS1. To receive and adopt the financial statements for the year ended 30 September 2008, together with the report of the Directors and Auditors therein.2. To confirm the total dividend of $229.72 (interim dividend $556.40 before revaluation) declared for the 12 months months ended 30 September 2008.3. To appoint Directors. Messrs N. Mangwiro, T. N. Chiganze and L.T. Kapungu retire by rotation. All being eligible, they will offer themselves for re-election at the Annual General Meeting.4. To determine the Auditors’ remuneration for the past audit. PricewaterhouseCoopers have indicated their willingness to continue in office.SPECIAL bUSINESS5. Directors fees. To review fees payable to the Chairman and Non Executive Directors.by order of the boardE T ShangwaCompany Secretary17th Floor, Crowne Plaza Monomotapa54 Park Lane, Hararezimbabwe12 February 2009 African Sun Limited 2008 79
  • 82. Elephant Hills Elephant Hills Resort Victoria Falls80 African Sun Limited 2008
  • 83. Shareholders Diary ShAREhOLDERS DIARYdIVIdENd INFORMATION FOR THE YEARInterimDividend announced 20 June 2008Dividend paid 8 August 2008FINALDividend announced 28 November 2008Dividend paid 11 February 2009Analyst Briefing 3 December 2008Annual Report Published February 2009Thirty-Seventh Annual General Meeting March 2009INTERIM REPORTS ANTICIPATEd dATE6 months to 31 March 2009 May 2009FINALDividend announced November 2009Dividend paid February 2010Analyst Briefing November/December 2009Thirty-Eighth Annual General Meeting February 2010 African Sun Limited 2008 81
  • 84. Contact Information ADMINISTRATION African Sun Limited Incorporated in the Republic of Zimbabwe Registration number: 643/1971 Registered office Transfer Secretaries 17th Floor Corpserve (Private) Limited Crowne Plaza Monomotapa 2nd Floor 54 Park Lane ZB Bank Centre P Box CY 1211 .O. cnr Kwame Nkrumah Avenue / First Street Causeway P Box 2208 .O. Harare Harare Zimbabwe Zimbabwe Telephone: +263 4 250501/7 or +263 4 700521/4 Telephone: +263 4 751559/61 edwinsh@africansun.co.zw busi@corpserve.co.zw www.africansunhotels.com Auditors Legal Practitioners PricewaterhouseCoopers Chartered Accountants Dube, Manikai and Hwacha Legal Practitioners Principal bankers Investor Relations MBCA Bank Limited Internet: www.africansuninvestor.com Telephone Numbers For reservations: Central Reservations Office Johannesburg (PACRO) +27 11 442048827 Central Reservations Office Harare +263 4 700521 4 or +263 4 250501 7 or +263 4 705110/94 Corporate Headquaters +263 4 250501 or +263 4 700521 4 Sub Corporate Office in Johannesburg +27(0) 11 447 9369 The Grace in Rosebank +27(0) 11 280 7200 Lakes Hotel and Conference Centre +27(0) 11 421 5310 Obudu Mountain Resort +234 803 550 625 or +234 803 364 8209 or +234 803 550 6252, +234 803 364 8209 or +234 803 472 9327 Amber Tinapa +234 703 898 4298 Clear Essence California Wellness Centre and Boutique Hotel +234 087 806 5555 Holiday Inn Accra Airport +233 21 785324 or 888 465 4329 The Victoria Falls Hotel +263 13 44751/60 or +263 13 44203/5 Elephant Hills Resort +263 13 44793/9 The Kingdom at Victoria Falls +263 13 44275 or +263 13 42358 Troutbeck Resort +263 298 881 or +263 298 883/6 Caribbea Bay +263 61 2452/4 Hwange Safari Lodge +263 18 331/6 Great Zimbabwe Hotel +263 39 262274, +263 39 265427 or +263 39 264187 Crowne Plaza Monomotapa +263 4 704501/30 Holiday Inn Harare +263 4 251200/14 or +263 4 795610/38 Holiday Inn Bulawayo +263 9 252464, +263 9 257211 or +263 9 252460/9 Holiday Inn Mutare +263 20 64431 Express by Holiday Inn Beitbridge +263 86 23001/4 or +263 86 23371/282 African Sun Limited 2008
  • 85. PROxY FORM FOR ThE ANNUAL GENERAL MEETINGFor use at the Thirty-Seventh Annual General Meeting to be held on Friday 27 March 2009 at Holiday Inn Harare,cnr 5th Street and Samora Machel Avenue, Harare.I/We, the undersignedOfBeing registered holder/s of ordinary sharesHereby appointOr failing him,Or failing them, the Chairman of the meeting as my/our proxy to act for me/us and vote for me/us on my/ourbehalf as indicated below at the Annual General Meeting of the company to be held on Friday 27 March 2009 at12:00 and at any adjournment thereof.PROXY(a) In terms of section 129 of the Companies Act (Chapter 24:03), members are entitled to appoint one or more proxies to act in the alternative, to attend and vote and speak in their place at the meeting. A proxy need not be a member of the company.(b) In terms of article 80 of the Companys Articles of Association, instruments of the proxy must be lodged at the registered office of the Company at least forty-eight hours before the time appointed for holding the meeting.Signed at this Day of 2009Signature of ShareholderPLEASE NOTEIf the address on the above envelope of this letter is incorrect, please fill in the correct details below and return tothe Company SecretaryNameAddress
  • 86. The Company Secretary African Sun Limited 17th Floor – Office 1708Crowne Plaza Monomotapa Hotel 54 Parklane, Harare P Box CY 1211, Causeway .O. Harare, Zimbabwe
  • 87. Corporate Head Office African Sun Limited 17th Floor – Office 1708 Crowne Plaza Monomotapa 54 Parklane, Harare PO Box CY 1211, Causeway, Harare, Zimbabwe +263 4 250501/7 or +263 4 700521/4 Email: edwinsh@africansun.co.zw www.africansunhotels.com Regional Office African Sun Hotels SA (Pty) Ltd.54 Bath Avenue, Rosebank, Johannesburg, South Africa PO Box 2772, Saxonworld, 2132 Tel: +27 11 442 0488 Fax: +27 11 442 6672 Email: info@africansunhotels.co.za www.africansunhotels.com

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