African Sun 2010 annual report

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African Sun Limited (ZW) 2010 annual report

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African Sun 2010 annual report

  1. 1. Growth through partnerships ANNUAL REPORT 2010
  2. 2. Contents Company Profile 3 Financial Highlights 5 Statement of Vision 6 The African Sun Way 7 Market Overview 8 Our Footprint 9 Historical Highlights 10 Chairmans Statement 12 Group Chief Executives Report 16 Accounting Philosophy 18 Certificate by the Company Secretary 21 Directors Report 22 Corporate Governance 25 Directors Responsibility for Financial Reporting 29 Independent Auditors Report 30 Financial Statements Consolidated Statement of Financial Position 32 Company Statement of Financial Position 33 Consolidated Statement of Comprehensive Income 34 Consolidated Statement of Changes in Equity 35 Consolidated Statement of Cashflows 36 Notes to the Consolidated Financial Statements 37 Notes to the Company Statement of Financial Position 69 Group Supplementary Information 74 Shareholders Profile 76 Group Structure 78 Business Composition 79 Board of Directors 80 Corporate Information 83 Management 84 Notice of Annual General Meeting 85 Shareholders Diary 87 Corporate and Hotel Directory 8802 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  3. 3. Company ProfileEstablished in 1968, the Group, then known as Zimbabwe Sun Limited, the way for entry into new markets. This strategy has helped Africanwas part of Delta Corporation Limited but has evolved significantly Sun grow its footprint into Botswana, Nigeria and Ghana.from being just a Zimbabwe-based hospitality management companyto a Pan-African entity. In Zimbabwe, African Sun is the leading player The Zimbabwe operations portfolio currently comprises 13 hotels andin the tourism and hospitality industry, with the Zimbabwe operations resorts across the nation, including three resort hotels in the towncurrently forming the largest business under the African Sun Group. of Victoria Falls, namely Elephant Hills Resort, The Kingdom at Victoria Falls and The Victoria Falls Hotel, which is jointly managedEmerging markets continue to present attractive development with Meikles Africa Hotels. Close to the resort town of Victoria Fallsopportunities and pipeline projects are on the upturn. This trend is in Hwange is African Sun’s safari operation, Hwange Safari Lodge.expected to gain momentum in 2012 as Africa begins to attract These four hotels together make up the Western Region of African Sunmore investors, driven by the availability of funds focused on hotel Zimbabwe’s hotels and resorts.development in these markets. The Group is poised to capitalise oninternational interest in the continent and has undertaken strategic The Eastern Region comprises mainly city hotels for businessmarketing and communication initiatives at international trade events, travellers, three resort properties and one safari lodge. The cityshowcasing its offering to the global tourism community and business hotels include three Intercontinental Hotels Group (IHG) affiliatedtravellers. African Sun has interests in a number of African countries, brands, the Crowne Plaza Monomotapa, and the three Holiday Innnamely Zimbabwe, South Africa, Nigeria, Ghana and Botswana, which branded hotels in Harare, Bulawayo, and Mutare, and the Holiday Innis coming on board in the second quarter of 2011. As a result of Express in Beitbridge. In addition to these, the Group also operatesour geographical spread, we are geared to take advantage of both the Great Zimbabwe Hotel in Masvingo, which is located withinbusiness and leisure travel within sub-Saharan Africa. walking distance from the Great Zimbabwe Ruins National Monument. The three resorts in the Eastern Region are Troutbeck Resort inThe Group’s expansion theme for 2010 was “Growth through Nyanga and Caribbea Bay Resort located in Kariba. FothergillPartnerships”. This meant identifying shared agendas with our key Island, a safari lodge also located in Kariba is currently undergoingstakeholders and then using these relationships to maintain a strong refurbishment and is scheduled for re-opening in the second half offoothold in markets which we are already operating in, and also paving 2011. “If you can envIsIon It, you can accomplIsh It. If you can ImagIne It, you can reach the heavens.” A famous Zimbabwean Proverb Women Grinding Millet Together, Zimbabwe, Southern Africa AFRICAN SUN LIMITED ANNUAL REPORT 2010 03
  4. 4. Company Profile (continued) Outside Zimbabwe, the Group has a presence in South Africa, Nigeria As African Sun’s growth strategy is implemented, a combined brand and Ghana. In South Africa operations are made up of The Grace in strategy involving the use of Intercontinental Hotels Group (IHG) Rosebank and The Lakes Hotel & Conference Centre in Benoni, brands, namely Holiday Inn, Crowne Plaza and Holiday Inn Express both in Johannesburg. as well as the Best Western brand in emerging markets is key. IHG brands and the Best Western brand are tried and tested with great In Nigeria, the Group operates the following hotels under management brand equity and awareness, especially amongst international and contracts, Obudu Mountain Resort, Utanga Lodge and Amber business travellers. Tinapa, all in Cross River State, Nike Lake Resort in Enugu State, and Best Western Ikeja in Lagos. In Ghana, also under management African Sun will use its own brands in markets where the Group deems contract, there is Holiday Inn Accra Airport. Imminent on the books appropriate and these are made up of the following: is Holiday Inn Gaborone in Botswana, scheduled to open in the third quarter of 2011. African Sun Limited also has a strong pipeline of • Five Star Luxury: The Mulberry additional sub-Saharan Africa properties under development, many of • Five Star City: Platinum which are scheduled to come on line in 2012. • Mid-range: Amber • Value: Amber Express We are committed to driving rooms growth over the next three years. • Long stay: My Place The anticipated growth will be driven by adding management contracts in West Africa. A key strength for the Group is that its operations Also under its wing, African Sun holds a 15.68% equity interest in and initiatives are supported by a management team comprising Dawn Properties Limited, an investment property holding company seasoned hotel and business managers. The combined intellectual formed and listed on the Zimbabwe Stock Exchange in 2003 when capital, expertise and experience of the team ensure that African Sun the Group spun off wholly owned property interests; retaining the hotel is well positioned to achieve the aggressive Group targets. management business. Dawn Properties Limited owns nine of the properties that African Sun leases and operates in Zimbabwe. As part of its strategic thrust, African Sun places significant importance on its human capital base and this has resulted in the strengthening of As the global economy continues to recover, African Sun will focus on its training division, Hospitality Training Academy (HTA). driving RevPAR growth through the addition of lease and fee based management contracts, in line with our business model. Growing the brands regionally is a fundamental factor as the Group continues in its quest to establish brand leadership where African Sun will create brands of enduring value.04 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  5. 5. Financial Highlightsfor the year ended 30 september 2010 2010 2009GROUP SUMMARY: (US$)Revenue 54 182 233 35 236 138EBITDA 364 528 (4 068 462)Loss before tax (4 197 397) (5 367 659)Attributable loss (3 139 687) (4 649 446)Total assets 49 954 294 43 740 628Market capitalisation 23 281 241 62 032 477SHARE PERFORMANCE: centsLoss per share- Basic earnings basis (0.39) (0.63)- Fully diluted earnings basis (0.39) (0.63)Net asset value per share 3 2.7Market price per share 2.8 9FINANCIAL STATISTICSReturn on equity (%) (13) (25)Interest cover (times) (2) (13) AFRICAN SUN LIMITED ANNUAL REPORT 2010 05
  6. 6. Statement of Vision vIsIon To be the benchmark hotel management company in Africa. mIssIon We exist to create value for all our stakeholders through the deployment of our intellectual property and service skills in a professional, predictable and consistent manner. We Do so By: • Having a formalised and proprietary business management system. • Anticipating and meeting the needs of our guests. • Delivering a consistent return to our shareholders and owners. • Creating opportunities for personal growth, development and equitable rewards for our employees. • Building long-term partnerships through win-win relationships with our stakeholders. our core values anD BelIefs IntegrIty – 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. professIonalIsm – We exude expert competence in the way we do business. responsIBIlIty – Management and conservation of natural and other resources is integral to all we do. Elephant Sculpture, Zimbabwe06 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  7. 7. The African Sun WayshareD vIsIonWe will always seek to have a buy-in whilst providing leadership.shareD valuesOur values are the glue that binds us together.tImeous eXecutIon anD closureIt is not done until the task is complete.effectIvenessWe will deliver beyond expectations.aDaptaBIlItyWe will be flexible without losing our strategic intent.effIcIencyWe will be disciplined in utilising resources in all we do.connectIvItyIt is our responsibility to get the message across to the other party.“after clImBIng a great hIll, one only fInDs thatthere are many more hIlls to clImB.”Nelson Mandela – Former President, South Africa Bongo Drums, Congo, Central Africa AFRICAN SUN LIMITED ANNUAL REPORT 2010 07
  8. 8. Market Overview THE TOURISM ENVIRONMENT Although tourism has been seriously impacted by the Global Financial Crisis (GFC), 2010 saw a 7% increase in tourist arrivals worldwide with emerging economies, which include Africa, leading at 8% and a lower growth rate of 5% for the more advanced economies. This is according to UNWTO Tourism Barometer for the period January to August 2010. Africa as a region experienced a growth of 9%, part of which is attributed to the 2010 FIFA World Cup hosted in South Africa between June and July 2010. This is supported by the fact that African growth was spurred by sub-Saharan Africa where arrivals grew by 13% compared to the same period last year. In the countries where African Sun operates, there was a general growth in overnight visitor arrivals with South Africa recording the highest at 16%, whilst Ghana and Zimbabwe had slight increases of 1% which was lower than that achieved in 2009. Nigeria experienced a decline of approximately 2% in overnight visitors compared to the prior year. All these countries showed more or less the same trend in international visitor arrivals, with all statistics as reported by the World Travel and Tourism Council. Arrivals into African Sun therefore generally grew ahead of the market with Ghana at 5%, Nigeria 200%, South Africa 40% and Zimbabwe 25% compared to last year. International tourist arrivals are expected to continue with the growth trend forecasted at 4% in 2011 with emerging destinations continuing to lead. UNWTO Tourism Barometer forecasts that despite this growth the following challenges continue to plague the industry: increasing taxes on travel and tourism, visa restrictions and budget constraints in main source markets. Other industry related issues that must be taken into account are the trends in travel and tourism. There is a marked increase in outbound tourism demand from emerging economies. As a result a lot of diversification will be required within industry operations to cater for diverse market segments and innovation. New technologies and ways of communicating with customers will be required to meet the global travel and convenience needs of customers worldwide. Last but not least, greening is fast becoming an important factor in customer choice, hence ecologically responsible practices are essential with laws and regulations on this aspect expected to tighten in years to come. In addition, a large majority of international travel takes place within the traveller’s own region, with around four out of five arrivals worldwide originating from the same region. Domestic tourism is of equal importance. Worldwide, the number of domestic arrivals is estimated to exceed approximately four times the number of international arrivals. GROWTH THROUGH PARTNERSHIPS African Sun has continued to consolidate its position as a leading player in the tourism industry in Africa, despite the challenging economic times by investing in building strong relationships with strategic partners. The Group realises that it is through transparent dialogue, identifying shared agendas and working closely with governments, developers, financiers, suppliers, shareholders, employees and communities that African Sun will continue to increase its footprint on the African continent. Strong strategic partnerships and a dedicated management team have steered the organisation successfully through two recessions, the first being the ten-year economic downturn in Zimbabwe and the second, the global financial crisis. As a result African Sun is adept at adjusting to macroeconomic challenges and operating in some of the most difficult market conditions on the continent.08 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  9. 9. Our Footprint geographical locations zIMbAbWENIGERIA zIMbAbWE Egypt Nigeria Ethiopia GhanaIkEjA, lAGOS Cameroon Cote dIvoire Uganda KenyaGHANA Equatorial DRC Guinea Tanzania zIMbAbWEAccra Airport bOTSWANA Malawi Angola Zambia Zimbabwe Madagascar Namibia *Gaborone Botswana* Mozambique Harare SOUTH AFRICA South Africa Mutare bulawayo beitbridge* Opening in 2011 AFRICAN SUN LIMITED ANNUAL REPORT 2010 09
  10. 10. Historical Highlights our Journey thus far • 1952 – Rhodesia and Nyasaland Hotels (Private) Limited is formed • 1999 – Makasa Sun is re-developed into The Kingdom at as a wholly-owned subsidiary of Rhodesian Breweries Victoria Falls • 1968 – Sable Hotels (Private) Limited is established • 2002 – Zimbabwe Sun Limited is unbundled from Delta Corporation Limited • 1973 – Rhodesian Government grants first casino licence for The Victoria Falls Hotel • 2003 – Zimbabwe Sun Limited owns 100% shares in the timeshare operation in Vilanculos, Mozambique • 1974 – Development of the first four world-class hotels: Monomotapa Hotel in Salisbury, The Wankie Safari Lodge in Wankie, • 2003 – Dawn Properties Limited is listed as the first property entity Caribbea Bay at Kariba, and the Elephant Hills Country Club in on the Zimbabwe Stock Exchange Victoria Falls • 2003 – The Hospitality Training Academy (HTA) is re-launched • 1979 – Meikles Southern Sun Hotels is established, becoming the largest hotel chain in Southern and Eastern Africa, with control of • 2003 – First negotiations for management of Holiday Inn Accra 13 major properties in the country Airport, Ghana • 1980 – Meikles Southern Sun Hotels changes its name to • 2004 – Zimbabwe Sun Limited acquires The Grace Hotel in Zimbabwe Sun Hotels after Zimbabwe’s independence Rosebank, South Africa, ranked among the “Top Ten” hotels in Africa and the Middle East by Condé Nast Traveller (USA) in its first • 1988 – Zimbabwe Sun Hotels merges with Touch the Wild safari year of operation operations, later selling it to Rainbow Tourism Group (Private) Limited on 30 April 1998 • 2008 – Zimbabwe Sun Limited adds The Lakes Hotel and Conference Centre, in Johannesburg, South Africa to • 1990 – Zimbabwe Sun Limited is floated on the Zimbabwe Stock its portfolio Exchange (ZSE), at the time being the largest flotation in Zimbabwe, with 70 million shares offered to the public, which was over- • 2008 – Zimbabwe Sun Limited rebrands its name to African subscribed by 28% Sun Limited • 1990 – Opening of the timeshares built in Troutbeck, Nyanga and • 2008 – African Sun Limited adds Obudu Mountain Resort to its at Caribbea Bay, which received “Gold Crown Resorts” status from regional portfolio the RCI in 1999 • 2008 – African Sun Limited takes over management of Holiday Inn • 1991 – First Holiday Inn franchise in Harare Accra Airport • 1991 – The Elephant Hills Resort hosts the Commonwealth Heads • 2009 – African Sun Limited acquires Hotelserve Holdings of Government meeting, officially opening in 1992 (Private) Limited • 1994 – First regional office for reservations is established in • 2009 – The Company raises US$10 million through a Rights Offer Johannesburg • 2010 – Best Western Ikeja – Lagos Nigeria opened its doors to the • 1998 – The construction of Express by Holiday Inn Beitbridge is public on 1 October 2010 completed, (now Holiday Inn Express) • 1999 – Zimbabwe Sun Limited acquires 40% equity and management of Baio Do Paraiso SARL, Mozambique10 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  11. 11. s at the grace 2010 World cup celebration r. Kelly gets cosy with staff of the grace in rosebank the grace hotel’s stu nning rooftop poolthe grace in rosebank, Johannesburg ference speakers at the hIca con AFRICAN SUN LIMITED ANNUAL REPORT 2010 11
  12. 12. Chairman’s Statement to our shareholders and potential partners bUSINESS ENVIRONMENT t he year began with the world emerging from a financial crisis and this has benefited our industry as evidenced by a 7% growth in global tourism. Sub-Saharan Africa experienced a growth of 8% compared to the previous period. The overall pattern of arrivals into our hotels from our major source markets mirrors this positive trend, with Zimbabwe experiencing a 58% growth from the prior year. At a Group level, our RevPAR in leased operations increased by 50% and we closed the year with an EBITDA margin of +0.7% from a negative position of minus 11.5% last year, Zimbabwe was the main contributor to this figure with an EBITDA margin of 6.7% compared to minus 8.4% last year. timothy chiganze – chairman Emerging markets continue to present attractive development opportunities and pipeline projects are on the upturn. This trend is expected to gain momentum in 2012 as Africa begins to attract more investors, coupled with the emergence of funds focused on hotel development in these markets. As a result of our geographical spread, we are geared to take advantage of both business and leisure travel within sub-Saharan Africa. The 2010 FIFA World Cup in South Africa was a success for our hotels with exceptional performance in June and July 2010. Occupancies post the event have dropped as a result of oversupply of rooms, which has not been matched by an increase in demand, resulting in reduced RevPAR mainly in the five-star market, notably in Cape Town, Johannesburg and Durban. The mid-market hotels remain largely unaffected by the reduction in RevPAR. Zimbabwe is on a recovery path, and occupancies in the city hotels remain strong with the resort hotels showing signs of improvement. The multi-currency system which has prevailed for two years has brought some stability in the economy, slowing down inflation to between 4% and 5%. However, the major challenge has been poor liquidity, and this has tended to put pressure on borrowing costs. The oil rich hub of West Africa has responded to the global recovery by recording high GDP growth (Nigeria 9% and Ghana 7.2%) as a result of oil exports and improved fiscal policies. This is expected to spur business travel to the main cities in the foreseeable future. FINANCIAl REVIEW Revenue grew by 54% to US$54.2 million from US$35.2 million achieved last year, spurred by a strong RevPAR growth recorded in Zimbabwe and South Africa. The RevPAR increase was driven primarily by an occupancy recovery in the Zimbabwe hotels and an exceptional performance from the South African hotels during the 2010 FIFA World Cup period. Overall, we achieved an increase of 50% in RevPAR, up from US$24 last year to US$36 as occupancies surged to 45% from 32% last year. In absolute terms, cost of sales increased by 61.3% over last year, ahead of the increase of 54% in Revenue, as cost structures crystallised in US dollars and wages increased following dollarisation in Zimbabwe. The cost of sales percentage therefore increased from 34.3% last year to 36% in the year under review. This is however, an improvement from the 38% achieved in the last half of the prior year.12 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  13. 13. Chairman’s Statement (continued)Operating expenses, which amounted to 72% of Revenue last FUNdINGyear, have now reduced to 64% of Revenue in response to the We received shareholder approval in 2009 to raisegrowth in Revenue and the impact of cost-cutting initiatives that we US$35 million for refurbishment, recapitalisation of operations and embarked on. This ratio will further improve as we increase rooms regional expansion. This was to be raised through a Rights Offer, debtunder management as the oversight structure in West Africa has no instrument and private placement. We were able to raise US$10 incremental costs and is adequate to handle additional management million through the Rights Offer and this was used predominantlycontracts. to recapitalise the operations in addition to commencing part of the refurbishment. The debt instrument has been secured and weThe hosting of the 2010 FIFA World Cup saw South Africa experience are currently dealing with the conditions precedent which must bea 27% increase in operating expenses as utility costs and property fulfilled before the draw down scheduled for the early part of nextrates also increased by 35% during this period. The increase year. The Private Placement is in abeyance due to unfavourablein operating costs in Zimbabwe was contained to 9.6% over last market conditions.year compared to an increase in Revenue of 63% as the impact ofcost-cutting initiatives began to be realised. As a result, the overall CORPORATE SOCIAl RESPONSIbIlITyincrease in operating costs was contained at 28% compared to a We continue our Corporate Social Responsibility Initiatives under the54% increase in Revenue. banner of Sun Care, in line with our selected goals derived from the United Nations Millennium Development Goals which are:Together, the improvement in Revenue and cost ratios resulted in anincrease in EBITDA, from minus US$4 million (-11.5% margin) incurred • To achieve universal primary educationlast year to US$364 528 (+0.7% margin). This improvement would • To improve health have been higher, but was negated by the combined EBITDA loss of • Eradicate poverty and hungerUS$1.5 million experienced by Elephant Hills Resort, Caribbea Bay Resort, Hwange Safari Lodge and The Grace in Rosebank due to We have consolidated our partnership with health institutions andrelatively higher fixed costs against a low occupancy performance. worked with two of the major referral hospitals in Zimbabwe in the yearWe have implemented initiatives which will further reduce fixed under review. We contributed significant quantities of much neededcosts and enhance revenues. This is expected to bring about an linen, crockery and cutlery to Harare Hospital and Mpilo Hospital. Thisimprovement in business performance. initiative will continue in the future as we continue our partnership with the other referral hospitals throughout Zimbabwe.Finance costs increased from last year as we held highly priced short-term loans for the greater part of the year than in the previous year. In addition to the work with hospitals, we continue with our textbookInterest cost dropped from 38% last year to 18% during the year programme with selected primary schools in the areas within whichunder review. Current assets increased by 105% to US$18.5 million, we operate, as well as our partnership with the United Stateswith receivables having increased by 122%. Included in receivables Achievers programme, through provision of air tickets to threeare trade receivables amounting to US$5.4 million (128% increase) deserving students, bringing to six the number of students assistedand US$1.2 million deposits. since inception last year.Trade receivables grew as a result of the increase in revenue in the Our agreement with the City of Harare municipality remains inmonth of September 2010. Our net working capital position improved force. The community in Mbare and surrounding areas comprising,from minus US$10.1 million to minus US$1.4 million mainly due to 15 schools and the local community, continue to benefit from ourthe Rights Offer injection and the improvement in performance. maintenance of Mbare swimming pool.We closed the year on a net cash position of US$2.8 million. AFRICAN SUN LIMITED ANNUAL REPORT 2010 13
  14. 14. Chairman’s Statement (continued) OUTlOOk APPRECIATION As we look to the future and the improved global economy, our focus I would like to commend management and staff for their continued will remain on driving rooms growth in line with our business model. commitment throughout the year, achieving recognition from the West Africa will remain our key growth market and our business market and peers and receiving a handful of continental hospitality development team continues to pursue this thrust aggressively. Cost and management awards. Much appreciation also goes to my fellow containment will remain key as we streamline the business to perform directors for their support and contribution to the business during efficiently. the financial year ended 30 September 2010. I look forward to a successful year ahead. dIRECTORATE Mrs Nonhlanhla Rene Ramikosi was appointed to the African Sun Limited Board with effect from 17 September 2010. I would like to take this opportunity to welcome her. I have every belief that she will bring invaluable contribution and wise counsel, and I wish her all the best during her term on the Board. TIMOTHY CHIGANZE Chairman dIVIdENd 24 February 2011 In view of the subdued performance and the need to continue with the recapitalisation and hotel refurbishment programmes, the Board resolved not to declare a dividend for the 12 months ended 30 September 2010. fun and enjoym ent e cuisin tasty top trained chefs14 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  15. 15. elephant hills resort, victoria falls, Zimbabwe championship golf course relaxing at the poolside host to 2010 co mesa conferen ce AFRICAN SUN LIMITED ANNUAL REPORT 2010 15
  16. 16. Group Chief Executive’s Report review of operations g rowth returned to global tourism during the year under review as the world showed signs of recovery from the financial crisis. Emerging markets impacted positively on travel and this optimistic outlook has been evident in our business. We have seen major improvements in our occupancies, mainly in our Zimbabwe hotels. South Africa witnessed exceptional performance in June and July during the 2010 FIFA World Cup period but occupancies remain depressed as a result of an oversupply of rooms in the major cities of Johannesburg, Cape Town and Durban. Room rates remain depressed, especially in the five-star hotel market though we anticipate the mid-market hotels to remain buoyant and strategies will be implemented to take advantage of this trend. West Africa remains critical to our growth path and we remain on course to add more rooms in this enclave, in line with our business model. shingi munyeza – group chief executive zIMbAbWE Strong occupancies in the city hotels and the resurgence of foreign traffic to resort hotels resulted in occupancies closing at 46% compared to 32% last year. Foreign arrivals which now contribute 32% of room nights from 27% last year grew by 58%. Local arrivals constituting 68% of room nights grew by 36 % during the period under review. Turnover amounted to US$38.4 million, being 59% increase from US$24.1 million last year. Despite the strengthening of the Rand and increase in payroll and other costs, cost of sales of 31% was within budget, achieving an EBITDA of US$2.3 million (6.7% margin). City hotels contributed 56% to revenue and 85% to EBITDA, anchored by strong occupancies although room rates remain depressed. The contribution by resort hotels from both revenue and EBITDA are expected to improve as business into these hotels strengthens. From June to September 2010, Zimbabwe has been averaging occupancies of above 50%, a scenario last experienced in the 1990s when the tourism industry was at its peak. We expect to maintain these levels of growth at a sustainable pace as we expect liquidity in the market to improve and the increase in foreign travel to continue. RETAIl Hotelserve was acquired mainly as a means to enable the Group to enhance procurement efficiencies of imported hotel amenities vital to the business, at the onset of the dollarisation era. With our expansion into the sub-Saharan Africa region, we have begun to enjoy structural synergies for procurement, resulting in the subsidiary focusing more on supplying the retail market. We continue to look at future initiatives aimed at unlocking value from this operation as we fine tune our business model. Trade in this market is volume based with low margins and is sensitive to sectoral and macro-economic influences. The appreciation of the South African Rand and temporary ban on importation of meat and dairy products into Zimbabwe due to the outbreak of the Rift Valley fever in South Africa, affected the subsidiary’s margins leading to an EBITDA loss of US$226 072 for the year under review. SOUTH AFRICA During the 2010 FIFA World Cup period, performance in June and July was exceptional and saw our two hotels operating at 83% occupancy with a RevPAR of ZAR1 727, compared to a RevPAR of ZAR588 before the event. The performance of the two hotels was depressed before the World Cup due to the impact of the global economic slowdown. This was further worsened by an addition of rooms in the Rosebank and Sandton market leading to a reduction in occupancy of between 20 and 25 percentage points.16 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  17. 17. Group Chief Executive’s Report (continued)South Africa, which includes the regional office that has oversight Award” by Hospitality Investment Conference Africa (HICA) for workof operations outside Zimbabwe, posted an EBITDA loss of US$1.7 carried out in improving tourism and hospitality on the continent,million. This was exacerbated by non-recurring costs amounting Best Hospitality Management Team in sub-Saharan Africa awarded byto US$833 000 that were incurred in the period under review. We the Africa Investor Tourism Awards, Corporate Social Responsibilityhave reduced costs through a retrenchment exercise and have Award from the US Embassy and American Business Associationimplemented initiatives which will reduce fixed costs and will result of Zimbabwe for our contribution to investing in Zimbabwe’s future.in savings amounting to US$1 million in the financial year to 30 Other awards include sectoral awards for some of the individual hotelsSeptember 2011. throughout the Group.WEST AFRICA OUTlOOkDuring the year under review, the Nigerian operations experienced As the global economy continues to recover, we will focus on drivingsome challenges. The delay in the construction of the conference RevPAR growth through the addition of fee-based managementfacility affected business into Amber Tinapa. The closure for contracts in line with our business model. In addition we will continuerefurbishment of Enugu airport resulted in a decline in occupancies with our cost containment drive. Subsequent to year end weat Nike Lake Resort. As we look to the year ahead, we expect to see have recorded a RevPAR of US$43, an improvement of 19% from an improvement in performance as the construction of the Amber that achieved in the full year to September 2010. The increase isTinapa conference facilities has been approved and the Enugu attributed to a steady growth in occupancy, particularly in Zimbabweairport is scheduled for completion by end of 2010. which started in June 2010. We achieved occupancy of 53% in October 2010 compared to 43% last year. The 2010 FIFA World CupWe anticipate a higher fee growth in Nigeria as occupancies grow presented a unique marketing opportunity for the southern Africanand new hotels under management contracts are added to the tourism industry through heightened awareness of the region andportfolio. The addition of new management contracts will not attract we believe this will drive volumes going forward. Overall we areincremental oversight costs. forecasting Revenue to end of September 2011 of US$64 million and an EBITDA margin of 7% from the 0.7% achieved in the year underThe discovery of oil in Ghana has resulted in increased arrivals into review. We also anticipate an increase in rooms under managementthe country and consistent RevPAR growth. Occupancies remain from our pipeline. Projects include Holiday Inn Gaborone with 151high and RevPAR has grown by 18% due to better yield management. rooms, scheduled to open its doors to the public in the third quarterWe anticipate a growth in RevPAR, due to increased arrivals into of 2011 and an additional 583 rooms are expected to be opened inthe country as a result of commencement of oil drilling which is West Africa under management contract in the coming year.imminent. West Africa contributed an EBITDA of US$83 912 and represents a strong opportunity for growth through management In conclusion, I would like to thank my executive team, managementcontracts. and staff for their sterling effort and hard work during 2010. My sincere appreciation also goes to the Board and my fellow directorsREFURbISHMENT for the leadership and guidance shown throughout the year. I also takeAll our hotels in Zimbabwe are overdue for refurbishment. The major this opportunity to welcome Mrs Nonhlanhla Ramikosi to the Board.overhaul process should have started this year in our traditional lowseason which starts in November, but we experienced delays in therelease of the funding and will only be able to draw down this year.To date, we commenced work on electro-mechanical replacementsin some of the hotels. We expect the refurbishment process to SHINGI MUNYEZAcontinue over the next two years as we have to manage our high and Group Chief Executivelow seasons in the implementation of this programme. In line with 24 February 2011the refurbishment of our hotels, we will be launching the new lookHoliday Inn in our portfolio by second half of 2011.AWARdSDuring the period under review, we were awarded several continentaland localised awards for our contribution and achievements in thehospitality and tourism industry. These include the “Mover and Shaker AFRICAN SUN LIMITED ANNUAL REPORT 2010 17
  18. 18. Accounting Philosophy African Sun Limited is dedicated to achieving meaningful and International Federation of Accountants (IFA). The Group is committed responsible reporting through comprehensive disclosure and to the regular review of financial reporting standards and to the explanation of its financial results. This is done to ensure objective development of new and improved accounting practices. This is corporate performance measurement, to enable returns on investment practised to ensure that the information reported to management and to be assessed against the risks inherent in their achievement and to stakeholders of the Group continues to be internationally comparable, facilitate appraisal of the full potential of the Group. relevant and reliable. This includes, wherever it is considered appropriate, the early adoption of financial reporting standards. The core determinant of meaningful presentation and disclosure of information is its validity in supporting management’s decision- The Group adopts all accounting standards and interpretations making process. While the accounting philosophy encourages the applicable that are issued by the IASB and the International Financial pioneering of new techniques, it endorses the fundamental concepts Reporting Interpretations Committee (IFRIC). Unless otherwise stated, underlying both the financial and management accounting disciplines these standards are applied consistently to enhance comparability of as enunciated by the Institute of Chartered Accountants of Zimbabwe financial information relating to different financial periods. (ICAZ), the International Accounting Standards Board (IASB) and the memories are made of this mother and calf from the presidential herd lioness survey s her realm hwange safari lodge, hwange, Zimbabwe18 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  19. 19. fine dining stylish african décor hosted presiden Barack obama t in July 2009 tel exterior view of hoholiday Inn accra airport, accra, ghana AFRICAN SUN LIMITED ANNUAL REPORT 2010 19
  20. 20. executive chalets with a view gruelling obudu mountain race untain road Winding up the obudu mo longest cable car in africa obudu mountain resort, cross river state, nigeria20 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  21. 21. 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 2010, the Company has complied with Zimbabwe Stock Exchange Listing Requirements, 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. EDWIN SHANGWA Company Secretary 24 February 2011edwin shangwa – company secretary AFRICAN SUN LIMITED ANNUAL REPORT 2010 21
  22. 22. directors’ Report The directors present their Annual Report and the Audited Financial Statements of the Company and the Group for the 12 months ended 30 September 2010. yEAR’S RESUlT 2010 2009 US$ US$ EBITDA 364 528 4 068 462 Loss attributable to shareholders (3 139 687) (4 364 899) Dividends No dividend was declared for the year ended 30 September 2010. CAPITAl COMMITMENTS 2010 2009 US$ US$ Authorised by directors and contracted for 3 000 000 3 196 538 Authorised by directors but not contracted for 8 885 782 22 100 316 Total commitments 11 885 782 25 296 854 INVESTMENTS The Company 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 15.68% Hotelserve Holdings (Private) Limited 100% SHARE CAPITAl The issued share capital was increased by the issue of 125 223 168 ordinary shares under a Rights Offer. An additional 5 000 000 ordinary shares were issued pursuant to the acquisition of Hotelserve Holdings (Private) Limited to bring the total number of issued ordinary shares to 831 472 907. Accordingly, the issued share capital and share premium totals US$31 533 645. The number of ordinary shares currently under the employee share option scheme totals 35 062 487. RESERVES The movement in the reserves of the Group are shown in the Group statement of comprehensive income, Group statement of changes in shareholders’ equity and in the notes to the financial statements. dIRECTORS Messrs Nigel Mangwiro, Bekithemba L Nkomo and Timothy N Chiganze retire by rotation. All being eligible, they will offer themselves for re-election at the Annual General Meeting. Shareholders will be asked to confirm the appointment of Mrs Nonhlanhla R Ramikosi to the Board by an ordinary resolution.22 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  23. 23. directors’ Report (continued)AUdITORSShareholders will also be asked to re-appoint PricewaterhouseCoopers as Auditors to the Group for the ensuing year.ANNUAl GENERAl MEETINGThe Thirty-Ninth Annual General Meeting of members of the Company will be held on Thursday 31 March 2011 at 10h00 at Crowne PlazaMonomotopa, 1st Floor, Great Indaba Room, 54 Park Lane, Harare.By order of the Board:TIMOTHY CHIGANZEChairmanSHINGI MUNYEZAGroup Chief ExecutiveEDWIN SHANGWA “We face neIther east nor West:Company Secretary We face forWarD.”24 February 2011 Kwame Nkrumah – Statesman, Ghana African Elephants, Botswana, Southern Africa AFRICAN SUN LIMITED ANNUAL REPORT 2010 23
  24. 24. crowne plaza monomotapa, harare, Zimbabwe parkview resta urant Buffet second floor pool deck at sunset hotel exterior24 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  25. 25. Corporate Governance THE AFRICAN SUN CHARTERCORPORATE GOVERNANCE complying with applicable laws and regulations.a frican Sun Limited personnel are committed to a long- published code of ethics. This incorporates the Group’soperating, financial and behavioural policies in a set of integrated The controls throughout the Group concentrate on critical risk areas. All controls relating to the critical areas in the casino and hotel operating environments are closely monitored by thevalues, including the ethical standards required of members of the directors and subjected to internal audit reviews. Furthermore,African Sun Limited family in their interface with one another and with assessments of the information technology environment are alsoall stakeholders. performed.There are detailed policies and procedures in place across the An Audit Services Manager, who reports directly to the chairman ofGroup, covering the regulation and reporting of transactions in the Risk and Audit Committee, heads the Internal Audit department.securities of the Group by the directors and officers. The Group The Internal Audit department is designed to serve managementadopted a Corporate Governance Charter and the recommendations and the Board of Directors through independent evaluations andmade in the King Report III. examinations of the Group’s activities and resultant business risks.STAkEHOldERS bOARd MEETINGSFor many years, African Sun Limited has had a formalised stakeholder The Board meets at least four times per financial year in orderphilosophy and structures of corporate governance to manage the to monitor, consider and review, inter alia, matters of a strategic,interface with the various stakeholder groups. African Sun Limited financial, non-financial and operational nature. Special Boardhas in place responsive systems of governance and practice which meetings may be convened on an ad hoc basis, when necessary,the Board and management regard as entirely appropriate and in to consider issues requiring urgent attention or decision. Duringaccordance with the Code of Corporate Practices and Conduct the year under review, four Board meetings were held.contained in the Cadbury and King Reports I, II and III. The Board works to a formal agenda prepared by the CompanydIRECTORATE Secretary in consultation with the Chairman and the Group ChiefThe Board of Directors of African Sun Limited is constituted with an Executive, which, inter alia, covers operations, finance, capitalequitable ratio of executive to non-executive directors and meets at expenditure, acquisitions and strategy. Any Board member mayleast quarterly. The African Sun Limited Board is chaired by a non- request the addition of an item to the agenda and will liaise withexecutive director. the Company Secretary in this regard. Board papers comprising the agenda, minutes of Board and Board committee meetings and thedIRECTORS INTERESTS relevant supporting documentation are circulated to all directors inAs provided by the Companies Act (Chapter 24:03) and the Company’s advance of each meeting in order that they can adequately prepareArticles of Association, the directors are bound to declare any time and participate fully, frankly and constructively in Board discussionsduring the year, in writing, whether they have any material interest in and bring the benefit of their particular knowledge, skills and abilitiesany contract of significance with the Company which could have given to the Board table.rise to a related conflict of interest. No such conflicts were reportedthis year. bOARd COMMITTEES The Board is authorised to form committees to assist in theINTERNAl CONTROl execution of its duties, powers and authorities. The Board has fiveThe Board of Directors is responsible for the Group’s systems of standing committees, namely: Risk and Audit, Human Resources andinternal control. These systems are designed to provide reasonable, Remuneration, Finance and Investments, Marketing and Nominations.but not absolute, assurance as to the integrity and reliability of In addition, there is the Corporate Governance Committee, which isthe financial statements and to safeguard, verify and maintain an ad hoc committee. The terms of reference and composition ofaccountability of its assets and to detect and minimise significant the committees are determined and approved by the Board and havefraud, potential liability, loss and material misstatement while been adopted by the Board on an annual basis. AFRICAN SUN LIMITED ANNUAL REPORT 2010 25
  26. 26. Corporate Governance (continued) THE RISk ANd AUdIT COMMITTEE CORPORATE GOVERNANCE COMMITTEE The Risk and Audit Committee deals, inter alia, with compliance, The Corporate Governance Committee is an ad hoc committee internal control and risk management. It is regulated by specific which sits as and when it is necessary. It is made up of a non- terms of reference, chaired by a non-executive director, has one executive chairman, the Group Chief Executive and two other non- non-executive director and incorporates the Group Chief Executive executive directors. and Chief Finance Officer as members. It meets with the Company’s external auditors to discuss accounting, auditing, internal control NATIONAl WORkS COUNCIl ANd WORkERS and financial reporting matters. The external and internal auditors COMMITTEES have unrestricted access to the Risk and Audit Committee. The Group holds National Works Council meetings at least twice a year. Each hotel within the Group has a Works Council THE HUMAN RESOURCES ANd REMUNERATION representative who attends these meetings, which is a forum COMMITTEE where employees participate in the decision-making process and The Group has a Human Resources and Remuneration Committee also discuss employees’ concerns with top management. The which is made up of a non-executive chairman, the Group Chief Group believes in and practices worker participation throughout Executive and one non-executive director. The committee acts in the different levels. All hotels have Workers’ Committees, which accordance with the Board’s written terms of reference to review serve as a communication channel with shop floor employees. remuneration of all African Sun Limited executive directors, senior management and other members of staff. ANAlyST bRIEFING The Group reports formally to shareholders twice a year when its THE FINANCE ANd INVESTMENTS COMMITTEE half and full year results are announced. The Group Chief Executive The Group has a Finance and Investments Committee which is made and the Chief Finance Officer give presentations on these results up of a non-executive chairman, the Group Chief Executive, Chief to institutional investors, analysts and the media. The data used in Finance Officer and one non-executive director. It is chaired by a these presentations may be found at www.africansuninvestor.com. non-executive director. The committee is responsible for the review and preliminary approval of the major investment decisions of the ANNUAl GENERAl MEETING Company. The Annual General Meeting provides a useful interface with private shareholders, many of whom are also customers. THE MARkETING COMMITTEE The Group has a Marketing Committee comprising, a non- The Chairman of the Board and the Group Chief Executive are executive chairman, the Group Chief Executive and one non- available at the Annual General Meeting to answer questions. executive director. The committee is responsible for the Information about the Group is maintained and available to review of all sales and marketing programmes of the Group. shareholders at www.africansuninvestor.com. THE NOMINATIONS COMMITTEE The Nominations Committee is now a standing, as opposed to an ad hoc, committee, pursuant to the recommendations made in the King III Report. It is made up of a non-executive chairman, the Group Chief Executive, and one non-executive director. It assists with the identification and recommendation of potential directors to the Board.26 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  27. 27. Corporate Governance (continued)dIRECTORS’ ATTENdANCE OF MEETINGS IN 2010Individual director attendance at Board and committee meetings appears in the table below. Where a director has not been able to attenda Board meeting, any comments which he or she has had arising out of the papers to be considered at that meeting have been relayed inadvance 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 T N Chiganze 4 – – – *2 B L Nkomo 3 4 3 4 – S A Munyeza 4 4 4 4 4 D W Birch 4 – – 4 4 E Chitiga 4 – – – 1 Y E Johnston 4 – 4 – – V W Lapham 4 4 – – 3 N Mangwiro 4 4 *4 4 – N R Ramikosi – – 1 – –* By invitationMrs N R Ramikosi did not attend all the meetings because she was appointed to the Board on the 17th of September 2010.Ms E Chitiga did not attend all Human Resources and Remuneration Committee meetings because she was appointed to the committee on1 July 2010. AFRICAN SUN LIMITED ANNUAL REPORT 2010 27
  28. 28. caribbea Bay resort, Kariba, Zimbabwe time for a swim refreshing sundown ers “It’s not What you call me But What I ansWer to.” African Proverb Family Linking Arms, Ghana, West Africa28 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  29. 29. directors’ Responsibility for Financial Reportinga frican Sun directors are required by the Companies Act (Chapter 24:03) and the Zimbabwe Stock Exchange listingsrequirements, to maintain adequate accounting records and to In addition, the Group’s external auditors review and test appropriate aspects of the internal financial control systems during the course of their statutory examinations of the Group.prepare financial statements for each financial year which presenta true and fair view of the state of affairs of the Group at the end The Group’s Risk and Audit Committee has met the internal andof the financial year, and of the profit or loss and cash flows for the external auditors to discuss their reports on the results of theirthe period. In preparing the accompanying financial statements, work, which include assessments of the relative strengths andgenerally accepted accounting practices have been followed weaknesses of key control areas.and suitable accounting policies have been used and appliedconsistently. Reasonable and prudent judgements and estimates In a Group of this size, complexity and geographical diversityhave been made. The financial statements incorporate full and of African Sun Limited, it may be expected that occasionalresponsible disclosure in line with the accounting philosophy of the breakdowns in established control procedures may occur. NoGroup stated on page 18. breakdowns involving material loss have been reported to the directors in respect of the year under review and it is believed thatThe directors have reviewed the Group’s budget and cash flow none of any significance exist.forecast for the twelve months to 30 September 2011. On thebasis of the review of the operating forecasts and in light of The financial statements for the 12 months ended 30 Septemberthe current financial position and existing borrowing facilities, 2010 which appear on pages 32 to 73 have been approvedthe directors are satisfied that African Sun Limited is a going by the Board of Directors and are signed on their behalf by:concern and have continued to adopt the going concern basis inpreparing the financial statements. The Group’s external auditors,PricewaterhouseCoopers, have audited the financial statementsand their report appears on pages 30 to 31.The Group has an independent internal audit function, which has TIMOTHY CHIGANZEthe objective of assisting executive management and the Risk Chairmanand Audit Committee in the discharge of their responsibilities, andwhich monitors the effectiveness of the accounting system andrelated internal financial controls on a continuing basis. The internalaudit function performs a critical examination of the financial andoperating information for management, and reports its findings andits recommendations to management and to the Risk and Audit SHINGI MUNYEZACommittee. Group Chief Executive 24 February 2011Procedures are in place to identify key business risks timeously, todetermine the likelihood of the risks crystallising, and to determinethe significance of the consequential financial impact on thebusiness.There is a Risk and Audit Committee which meets quarterly withmanagement, the internal auditors and external auditors, to reviewspecific accounting, reporting and internal control matters, andto satisfy itself that the system of internal control is operatingeffectively. Both the internal and external auditors have unlimitedaccess to the Risk and Audit Committee. The committee alsoreviews the interim and annual results of the Company prior totheir publication. AFRICAN SUN LIMITED ANNUAL REPORT 2010 29
  30. 30. InDepenDent auDItors reportto the shareholDers of afrIcan sun lImIteDWe have audited the consolidated financial statements of African Sun Limited and its subsidiaries (the “Group”), and the accompanyingstatement of financial position of African Sun Limited (the “Company”) standing alone, together the “financial statements”, which comprise theconsolidated and separate statements of financial position at 30 September 2010, and the consolidated statement of comprehensive income,consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and a summary of significantaccounting policies and other explanatory notes as set out on pages 32 to 73.dIRECTORS’ RESPONSIbIlITy FOR THE FINANCIAl STATEMENTSThe directors are responsible for the preparation and fair presentation of these financial statements in accordance with International FinancialReporting Standards, and in the manner required by the Companies Act (Chapter 24:03) and the relevant Statutory Instruments (“SI”) SI33/99 and SI 62/96. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation andfair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applyingappropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.AUdITOR’S RESPONSIbIlITyOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance withInternational Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Theprocedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements, in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating theoverall 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. PricewaterhouseCoopers, Building No. 4, Arundel Office Park, Norfolk Road, Mount Pleasant PO Box 453, Harare, Zimbabwe T: +263 (4) 338362-8, F: +263 (4) 338395, www.pwc.com TI Rwodzi – Senior Partner The Partnership’s principal place of business is at Arundel Office Park, Norfolk Road, Mount Pleasant, Harare, Zimbabwe where a list of the Partners’ names is available for inspection.
  31. 31. OPINIONIn our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as at 30 September2010, and of the Group’s consolidated financial performance and its consolidated cash flows for the year then ended, in accordance withInternational Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24:03) and the relevant StatutoryInstruments (“SI”) SI 33/99 and SI 62/96.PRICEWATERHOUSECOOPERSCHARTERED ACCOUNTANTS (ZIMBABWE)HARARE28 FEBRUARY 2011
  32. 32. Consolidated Statement of Financial Position as at 30 september 2010 Restated ASSETS Note 2010 2009 1 Feb 2009 US$ US$ US$ Non-current assets Property, equipment and motor vehicles 7 18 712 600 19 751 919 22 093 556 Intangible assets 8 1 495 535 2 110 675 1 200 530 Biological assets 9 255 776 238 610 238 610 Investment in associate 10 9 605 727 10 397 720 10 597 099 Available-for-sale financial assets 12 220 000 - 300 000 Loans 13 - 1 074 724 1 000 000 Deferred income tax assets 22 644 000 519 195 58 620 Deferred expenditure 16 876 137 194 447 687 Other receivables 15 498 614 199 556 588 519 31 449 128 34 429 593 36 524 621 Current assets Inventories 14 2 159 514 2 038 328 1 318 418 Available-for-sale financial assets 12 32 050 6 259 7 100 Loans 13 1 114 650 - - Trade and other receivables 15 12 388 546 5 573 650 3 603 106 Cash and bank 16 2 810 406 1 392 798 2 260 207 18 505 166 9 011 035 7 188 831 Non-current assets held for sale 17 - 300 000 - Total assets 49 954 294 43 740 628 43 713 452 Equity attributable to owners of the Company Share capital 18 8 165 069 - - Share premium 18 23 368 576 - - Non-distributable reserve 19.1 1 327 001 1 327 001 25 419 128 Amount awaiting allotment 19.2 - 21 690 721 - Foreign currency translation reserve 19.3 (1 182 140) (818 998) 109 064 Available-for-sale investments reserve 19.4 (461) 673 - Accumulated losses (6 674 822) (3 535 135) 829 764 Total equity 25 003 223 18 664 262 26 357 956 Liabilities Non-current liabilities Other payables 20 756 958 405 125 - Borrowings 21 694 125 741 543 - Deferred income tax liabilities 22 3 602 076 4 470 168 5 903 300 5 053 159 5 616 836 5 903 300 Current liabilities Trade and other payables 20 12 948 751 13 018 463 11 083 396 Borrowings 21 6 949 161 6 441 067 368 800 19 897 912 19 459 530 11 452 196 Total liabilities 24 951 071 25 076 366 17 355 496 Total equity and liabilities 49 954 294 43 740 628 43 713 452 These financial statements were approved by the Board of Directors on 24 February 2011 and signed on its behalf by: T N CHIGANZE S A MUNYEZA Chairman Group Chief Executive32 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  33. 33. Company Statement of Financial Positionas at 30 september 2010 RestatedASSETS Note 2010 2009 1 Feb 2009 US$ US$ US$Non-current assetsProperty, equipment and motor vehicles 33 163 817 1 602 350 1 785 638Investments in subsidiaries 34 27 477 008 12 819 982 9 943 982Investments in associates 10 9 605 727 10 397 720 10 597 099Receivables 37 28 148 - -Deferred income tax assets 42 74 908 - - 37 349 608 24 820 052 22 326 719Current assetsReceivables 37 1 857 261 465 817 -Available-for-sale financial assets 36 69 421 400 735 120Cash and cash equivalents 38 2 968 1 378 - 1 929 650 867 930 120Total assets 39 279 258 25 687 982 22 326 839EqUITY AND LIABILITIESEquity attributable to owners of the CompanyShare capital 41 8 314 729 - -Share premium 41 24 734 304 - -Amount awaiting allotment - 22 890 721 21 644 054Accumulated losses (318 837) (253 525) -Total equity 32 730 196 22 637 196 21 644 054LiabilitiesNon-current liabilitiesDeferred income tax liabilities 42 - 475 656 580 086Current liabilitiesOther payables 39 295 993 602 047 102 699Borrowings 40 6 253 069 1 973 083 - 6 549 062 2 575 130 102 699Total liabilities 6 549 062 3 050 786 682 785Total equity and liabilities 39 279 258 25 687 982 22 326 839These financial statements were approved by the Board on 24 February 2011 and signed on its behalf by:T N CHIGANZE S A MUNYEZAChairman Group Chief Executive AFRICAN SUN LIMITED ANNUAL REPORT 2010 33
  34. 34. Consolidated Statement of Comprehensive Income for the year ended 30 september 2010 Restated Note 2010 2009 US$ US$ Revenue 5 54 182 233 35 236 138 Cost of sales 25 (19 492 025) (12 082 302) Gross profit 34 690 208 23 153 836 Other income 24 4 863 1 003 722 Operating expenses 25 (36 581 651) (29 087 988) Other expenses 24 (869 695) - Finance income 26 193 785 78 442 Finance costs 26 (1 535 536) (461 364) Share of loss of associate 10 (99 371) (54 307) Loss before income tax (4 197 397) (5 367 659) Income tax credit 22 1 057 710 1 002 760 Loss for the year (3 139 687) (4 364 899) Other comprehensive income: Fair value adjustment on available-for-sale financial assets 12 (1 145) 841 Foreign currency translation reserve (363 142) (928 062) Income tax relating to components of other comprehensive income 11 (168) Other comprehensive loss net of income tax for the year (364 276) (927 389) TOTAL COMPREHENSIVE LOSS FOR THE YEAR (3 503 963) (5 292 288) Loss attributable to: Owners of the parent (3 139 687) (4 364 899) Total comprehensive loss attributable to: Owners of the parent (3 503 963) (5 292 288) Earnings per share (cents) Basic and diluted 27 (0.39) (0.63) Earnings before interest, tax, depreciation and amortisation (EBITDA) for the year was US$364 528 (2009: loss US$4 068 462). See note 5 for detail by segment.34 AFRICAN SUN LIMITED ANNUAL REPORT 2010
  35. 35. Consolidated Statement of Changes in Equity for the year ended 30 september 2010 ATTRIbUTAblE TO EQUITy HOldERS OF THE COMPANy Amount Available-for-sale Foreign currency Total Share Share awaiting Non-distributable investments translation Accumulated shareholders’ capital premium allotment reserve reserve reserves loss equity US$ US$ US$ US$ US$ US$ US$ US$Balance at 1October 2008 – – – – – 109 064 829 764 938 828 Arising fromrestatement onchange in functionalcurrency – – – 25 419 128 – – – 25 419 128 Transfer to amountawaiting allotment – – 21 690 721 (21 690 721) – – – – Total comprehensive income/(loss) for the year – – – – 673 (928 062) (4 364 899) (5 292 288)Balance at 30September 2009(as previously reported) – – 21 690 721 3 728 407 673 (818 998) (3 535 135) 21 065 668 Impact of correction ofprior period errors (note 6.1) – – – (2 401 406) – – – (2 401 406)Balance at 30 September2009 (restated) – – 21 690 721 1 327 001 673 (818 998) (3 535 135) 18 664 262 Transfer from amountawaiting allotment 6 892 497 14 798 224 (21 690 721) – – – – – Total comprehensiveloss for the year – – – – (1 134) (363 142) (3 139 687) (3 503 963)Transactions with ownersIssue of shares 1 272 572 8 570 352 – – – – – 9 842 924 Balance at 30September 2010 8 165 069 23 368 576 – 1 327 001 (461) (1 182 140) (6 674 822) 25 003 223 AFRICAN SUN LIMITED ANNUAL REPORT 2010 35

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