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Dawn 2010 annual report
 

Dawn 2010 annual report

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Dawn Properties Limited 2010 annual report

Dawn Properties Limited 2010 annual report

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    Dawn 2010 annual report Dawn 2010 annual report Document Transcript

    • 2010
    • Group Profile •.•.•••••.................•••••.•••..•••••••••••••••••••••••••••••••••••••••••••••••••••••••••.•.••••••••..•••••••••••• 2• Group Stlucture ...............................••••........••.••..........•••••......••••..•.•..................••.....•........... 3 Mission .nd Core V.lues.......•••••••..........•••••..........•......•......•••••••••.••••••.•.....••••..••••••.•.••••....• Directorate .nd M.n.gement. .........•.•.••.............•............................................................... 5• Ch.nn.ns Stat8nJent........................................................................................................ 6 CotporeteGovem.nce ...............•..•••••••.............•••••••.....•......•••....•......••............•.........••...... 9• Repott of the Dlteetors •••.....••.......••••••................•.••••.....•.....••.•••••••••••••••••••••••••..••••••••.••••••• 11 Dll8CtofS Responsibility Statement. 12 Independent Auditors Report ••..............•••........•.............................................................. 13• Consolld.ted Statement of Fn.nc. Position 15 Company Statement of Fn.nc. Position •••••...••.••••••.•••••••••••••••••••••••••••••••••••••.••.•.••••••••• 16 Consolidated Comprehensive Income ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 17 Consolld.ted Statement of Ch.nges In Equity ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 18 Consolidated Cash Flow Statement................................................................................. 19 Notes to the Fn.nc. Statements................................................................................... 20 An.lysls of Sh.reholdets ••••••••••••..•••.•.....••••....••••••.....................••....••••.•......••••......••••.••••••• 56 Notlce to Metnbets •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 58 CompiJnyDettlIIs ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 59• ProJC) Fonn •..••••••••.•.••••••••••••••••••••••••••••••.•.••..........•...•••...•............••••................•................... 64-------------A-n-nu-a-/-R-e-p-o-rt-2-0-j-O-----------•
    • Dawn Properties Limited ("Dawn Properties"), Dawn Properties provides investors with anformerly a wholly owned subsidiary of opportunity to invest in a collection of sought"African Sun Limited ("Afrisun"), was after hotel properties. The counter is not onlyincorporated as a variable rate loan stock a good inflation and currency hedge but also("VRLS") Company by converting its ordinary has the potential to generate strong cash flowsshares into linked units. Afrisun now owns and high yields. The properties are professionally16.57% of the Company enabling it to have managed ensuring that the highest standards arean independent mission. The core business maintained at all times.of the company, which is incorporated in The Group is well represented in all major touristZimbabwe, is that o~n investment property destinations as detailed below. Although the factholding company and through its wholly that the Group has a predominant tourismowned subsidiaries owns properties in the exposure is of concern to some investors, it istourism sector. equally important to note that it is a sector thatOn 9 September 2003 Dawn Properties never ceases to attract the attention ofbecame the first VLRS investment property international investors even in hard times. Thisholding company to be listed on the probably gives the properties a premium aheadZimbabwe Stock Exchange. of other property classes such as industrial property, for example. Nevertheless, the Group has taken a view to further diversify the portfolio at the earliest opportune time.e------------A-n-n-u-a-I-R-e-p-o-rt-2-0-1-0-------------
    • To create sustainable value for stakeholders, We are committed to the highest standards ofwhich is in line with the industrial index. This delivery.is to be achieved by;a) Investing in high yielding properties. We believe in creating a happy work environmentb) Optimising net rentals by drafting premised on teamwork. appropriate lease agreements and closely managing costs"c) Ensuring that properties are properly We are committed to safeguarding the environment for maintained. this and future generations. The assessment of environ-d) Ensuring that adequate attention is given mental issues is therefore critical for all projects we are to risk management. involved in. We are committed to compliance with environmental, health and safety standards.To be a successful investment property holdingcompany.Investment policyDawn Properties intends to diversify from thecurrent hospitality portfolio in order to minimizerisk associated with anyone asset class andto increase the liquidity of the portfolio.Employment equityWe are committed to ensuring that employees areoffered equal opportunities and appropriateparticipation.We conduct our business in an honest, fair andtransparent manner.We believe in our products and this drives all ourinnovations.
    • DAWN PROPERTIES LIMITED(Incorporated in Zimbabwe)BUSINESSThe principal business of the Group is that of investing in investment property and propermanagement.ChairmanF. RwodziT.P. Chimuriwo •• (Outgoing (Incoming Chairman) Chairman) (Resigned (Appointed 31.03.10) 31.03.10)Executive DirectorM. ManyikaNon-executive DirectorsE.!. Manikai (Non-Executive Director)S.A. Munyeza (Non-Executive Director)C.A. Mataure (Non-Executive Director)C.B. Thorn (Non-Executive Director)G. Goldwasser (Non-Executive Director)P. Gwatidzo (Non-Executive Director) (Appointed 10.06.10)M. Tunmer (Non-Executive Director) (Appointed 10.06.10)D. Cooper (Non-Executive Director) (Appointed 10.06.10)J. Worsfold (Non-Executive Director) (Appointed 10.06.10)Remuneration Committee Finance and Investment CommitteeE. I. Manikai - Chairman S. A. Munyeza - ChairmanM. Manyika T. P. ChimuriwoS. A. Munyeza E. I. Manikai M. Manyika C. B. ThornAudit and Risk CommitteeC.B. ThornC. A. MataureManagementChief Executive Officer - M. ManyikaAdministration and Human Resource Executive - N. M Tome (Mrs)Group Finance Executive - B. MaguraManaging Director - CB Richard Ellis (Zimbabwe) - T. MatondaManaging Director - CBRE (Botswana) - S. Hove--------------A-n-n-u-al-R-ep-o-rt-2-01-0------------1
    • The founding chairman of the Board Mr Farai Rwodzi and Mr. Bryan Thorn resigned from the Board atthe end of the financial year. The Board and Management of the Group would like to convey theirutmost appreciation to the gentlemen for their contributions during their tenure and wish them well intheir future endeavours. Subsequent to this Mr. Tendayi Phineas Chimuriwo was appointed chairman.The Board and management of the Group congratulate him on the appointmentIn order to enhance the:ffectiveness of the Board and to replace outgoing Board members, Messrs PhibionGwatidzo, Mark Tunmer, Dave Cooper and James Worsfold were appointed to the Board with effect from10 June 2010.It is acknowledged and accepted that business fortunes follow political fortunes, however the tourism sectoris more susceptible to political sentiments than any other sectors of the economy. The Zimbabwe brand isladen with negative perceptions which stakeholders in the sector have to some extent managed but thepace of political reform has worked against such noble efforts. This has hampered the recovery of thetourism sector as much as the other sectors of the economy. This said the Group made significantrecovery and commences the new financial year on a stronger footing.REVIEW OF OPERATIONSHOTEL PROPERTY PORTFOLIOThe portfolio has shown recovery posting a yield of 2.5% and a rental revenue for the year ofUS$1.3 million, an increase of 364% over last year. The bulk of the improvement can be attributed tothe fact that rentals for the year were in hard currency. In the previous year rentals were in Zimbabwedollars and the fact that they were collected in arrears didnt help. However, business fundamentals alsoshowed signs of improvement. Guest arrivals into the hotels were firmer at about 38% compared to 30%last year. Occupancy in the city hotels, which are more resilient, averaged around 50% whilst our resortproperties closed the year at about 30%. Occupancy levels are expected to maintain an upward trendbefore settling at about 65%. The average daily rate reported a modest gain of about 23% but more canbe achieved on the back of a major refurbishment of the hotels, the responsibility of which lies with thetenant African Sun Limited ("Afrisun"). A refurbished product will translate into both higher room ratesand occupancies.To this end Afrisun has secured offshore funding but now requires security in the form of real estate.Your Board has been called upon to consider providing security and has seen it fit to do so and furtherdetails will be made available to shareholders at the annual general meeting.
    • At half year stakeholders were informed that rental arrangements were being renegotiated for the thirdtime. Substantial progress has been made in this respect and agreements will be signed soon.Principally, the parties have agreed to migrate from turnover rentals to fixed rentals in line with regionaltrends. A target yield of 10% has been agreed and this is expected to be achieved in year four. Atransition period of three years has been set. During this period rental income will be the higher of 10%of the tenants turnover or the guaranteed rental. The guaranteed rental for the ensuing year has beenagreed at US$2.1 million and it will be reviewed upwards annually for the next two years.PROPERTY CONSULTANCY SEGMENTThe division has re~onded well to the hard-currency operating environment and is currently operatingat above 80% of its capacity. In the short-term it is expected that revenue generation will be maintainedat current levels inferring that the divisions contribution to Group revenue of 56% will thus be dilutedfurther in the ensuing periods. The division is currently exploring opportunities within its sector toenhance its revenue streams.The Group has secured approval to construct a seven storey block of flats along Baines Avenue inHarare. The block will comprise fifty two, two-bedroom flats and four, three-bedroom penthouses. Theproject will be executed during the course of the year. The project will precede the Marlborough twohundred and sixty-four, two-bed flats because of its manageable size and proximity to the centralbusiness district.Marlborough Residential EstateTown planning work on developing the 250 hectare land bank that the Group owns in Marlborough hascommenced. The land bank will be developed into a secured residential estate. Plans are for an up-marketestate that will comprise a private school and at least two club houses among other facilities to makeit a self contained community. Civils work is expected to commence after twenty four months. The projectwill be executed over about ten years and will have a significant impact on the fortunes of the Group.The Group has a near debt free balance sheet wtVch it cannot meaningfully leverage owing to insufficientcash flow generation. Consequently, the Group "as significant tranches of development land lying idle.The Group has thus embarked on a drive to create business units that have the potential to generatestrong cash flows at minimal capital outlay. The resultant cash flows will be used to leverage on thebalance sheet size and access appropriate finance that will be used to execute property developmentprojects.Agri-business unitAs previously reported, the Group entered into a partnership with a seasoned farmer to unlock value outof its idle development land.--------------A-n-n-u-al-R-ep-o-r-t-2-01-0------------•
    • The Group owns 70% of the operations and the balance is owned by its technical partner. The periodunder review was a set up phase, with close to 60 hectares being put under Hypericum for export andvegetables for the local market. In the financial year under review this unit did not contribute to turnoverbut it is on course to contribute at least US$2 million to turnover for the year ending 31 March 2011.An appropriate site has been identified within our Hwange estate that is suitable for constructing anupmarket safari camp. The project is still at conception and design phase. The Safari business willenable the Group to tilize the vast land it owns in Hwange and increase revenue streams.FINANCIAL REVIEWIncome statementThe Group turnover increased by 255% to US$3.9 million for the period under review. The markedimprovement in turnover is a result of the stabilization of the macroeconomic environment. Operatingexpenses represent 80% of the turnover achieved during the period under review, the ratio comparesfavourably with the 129% achieved during the last fiscal year. The ratio is on the high side as a resultof deal pipeline expenditure incurred that has no corresponding income. The operating costs include thatof the agri-business segment which recorded no revenue for the period under review. The impact of thenew unit will be felt in the ensuing financial year.The major balance sheet item, investment property, was steady at US$69.3 million. While it is acceptedthat all things being equal the value of an asset, hotel properties included, is determined by the quantumof its future cash flows it is also accepted that the economy is going through a transition which rendersa purely academic valuation difficult to motivate and perhaps inappropriate. Consequently, the costbased valuation method was used to assess the reasonableness of market values. Your Board issatisfied that the valuation is a fair representation of the portfolio.The Group looks to the future with optimism and it will seek to accelerate its development pipeline.Concurrent to this a keener focus on cash generation will be emphasised.Let me take this opportunity to thank all the stakeholders for their invaluable support. To the Boardmembers, management and staff your dedication is appreciated and may it continue.T.P. ChimuriwoChairman
    • Dawn Properties accepts and complies with the The committee is required to provide assurence to theprinciples of the Code of Corporate Practices as Board that adequate and appropriate financial andenunciated in the King II Report. The Directors are fully operating controls are in place, that significant financial,aware and cognisant of the importance of executing business and other risks have been identified and aretheir duties in keeping with the principles of transparency, being suitably managed and that satisfactory standardsintegrity, faimess and a=untability and in a=rdance of governance, reporting and compliance are inwith accepted corporate practices in order to enhance operation.the interests of its shareholders, employees and otherstakeholders. This includes timely and meaningful Its responsibilitiesincludes overseeing the financialreportingreporting to all its stake Iders. process, reviewing audit results, audit processes and risk management, the cost effectiveness, independence and objectivityof the auditors and compliance issues.The Board currently comprises nine non-executive andone executive director. The non-executive directorsbring to the Board a wide range of skills and To identify, assess, manage and monitor the risks toexperience that enable them to contribute independent which the business is exposed to. The most significantviews and to exercise objective judgements in matters risk is one material customer exposure. Others arerequiring the directors decisions. single sectorial exposure, total or partial destruction of property and the replacement of electro mechanicalThe Board is responsible for the strategic direction gadgets.of the Group, reviews the investment policy andapproves all significant investments or The Group is cautiously looking for opportunities todisinvestments. The Board has ultimate diversify its portfolio and this should give it a broaderresponsibility for proper management, risk customer base. The tenant insures all properties at grossmanagement in general, compliance and ethical replacement values.behaviour of the business. To achieve this, theBoard has established three committees to give The audit and risk committee comprises two non-€xecutivedetailed attention to each specific area. directors. The extemal auditors have full aocess to the committee and its chairman. The committee meets atAudit and risk committee least three times per year.The committee has two mandates:a) AuditTo provide the Board with additional assuranceregarding the efficacy and reliability of the finan.cialinformation used by the directors to assist them inthe discharge of their duties---------------A-n-n-u-a-/-R-e-p-o-rt-2-0-j-O------------.
    • The remuneration committee comprises two non-executive directors and the chief executive officer.Its mandate is to ensure that the Group adoptsmarket related remuneration policies and to reviewand approve remuneration for senior executives.The committee •• meets guarterly .The finance and investment committee makesrecommendations to the Board on all materialinvestments. It also reviews banking arrangements.It is comprised of four non-executive directors andthe chief executive officer.
    • The directors have pleasure in presenting their Property, plant and equipmentreport with the audited financial statements of the Capital expenditure for the year ended 31 MarchGroup for the year ended 31 March 2009. 2010 on operating assets totalled US$ 3,096,958. Debenture interest and dividends The Board has resolved that the debenture interest forProfit before income tax 1,253,955 the year be zero and no dividend be declared.Income tax expense •• (479,130)Income taxDeferred income tax In tenms of the Articles of Association, Dr S.A Munyeza, E. I. Manikai and C. A. Mataure, retire by rotation at theProfit attributable to forthcoming Annual General Meeting and being eligible,linked unit holders these directors offer themselves for re-election. No directors had, during or at the end of the year,As at 31 March 2010, the Authorised Share Capital any material interest in any contract of significanceand Debentures was 4,000,000,000 ordinary shares in relation to the Groups business.and Debentures of 4,000,000,000.The issued share capital and debentures were Members will be asked to approve the payment2,457,376,507 ordinary shares and 2,457,376,507 of the directors fees for the year ended 31 Marchdebentures. 2010 of USD76,000.The movements in the reserves of the Group Members will be asked to approve the remunerationare shown in the consolidated statement of of the auditors for the financial year ended 31 Marchchanges in equity. 2010 and to appoint auditors of the Group to holdThe company has the following directly and indirectly office for the ensuing year.held subsidiaries:-Nhaka Properties (Private) Limited 100%Laclede Investments (Private) Limited 100% T.P Chimuriwo SA MunyezaGokJCoast Properties(Private)Limited 100"/0 Chairman Directorcalpine Investments (Private) Limited 100%Dawn Real Estate (Private) Limited 100%CB Richard Ellis (Private) Limited 100%CBRE (Proprietary) Limited 100%Property Facilities Systems (Private) Limited 100%Lipthong (Private) limited 100%Ekodey (Private) Limited 76%Dawn Produce (Private) Limited 70%
    • The directors of the Group are required by theCompanies Act (Chapter 24:03) and the relevant statutoryinstrument ("SI") SI 33/99 and SI 62/96 to maintainadequate aooounting records and to prepare financial C. Mataure M. Manyikastatements that present a true and fair view of thefinancial position of the Group at the end of the financial Director Directoryear and of its financial performanoe and cash flows forthe year then ended. In preparing the aooompanyingstatements, cognisanoe been taken of the currentfinancial reporting environment and procedures followedto present information that adequately discloses thestatus of the Group in the United State of America dollar(US$"). Suitable aooounting policies have been used andconsistently applied, and reasonable and prudentjudgments and estimates have been made.The directors have satisfied themselves thatthe Group is in a sound financial position andhas adequate resources to continue in operationalexistence for the foreseeable future.Accordingly, they are satisfied that it is appropriateto adopt the going concern basis in preparing thefinancial statements.The Board recognises and acknowledges itsresponsibility for the Groups systems of internalfinancial control. Dawn Properties maintains internalcontrols and systems that are designed to safeguardthe assets of the Group, prevent and detect errorsand fraud and ensure the completeness andaccuracy of the Groups records. There were nobreakdowns in the systems of internal controlinvolving material loss, which were reported to thedirectors in respect of the period under review.The consolidated financial statements for the yearended 31 March 2010, which appear on pages 15to 57 have been approved by the Board of directorsand are signed on its behalf by:e------------A-n-n-u-a-/-R-e-p-o-rt-2-0-1-0-------------
    • We have audited the consolidated financial statements of Dawn Properties Limited anIits subsidiaries (the "Group") and the statement of financial position of Dawn Propertie:Limited (the "Company") standing alone, (together the "financial statements") whiclcomprise the consolidated and separate statements of financial position at 31 March 2010and the consolidated statements of comprehensive income, changes in equity and castflows for the year then ended, and the notes to the consolidated financial statements, whiclinclude a summary of significant accounting policies and other explanatory notes set out orpages 15 to 55 .••The directors are responsible for the preparation and fair presentation of these financiastatements in accordance with International Financial Reporting Standards and in thEmanner required by the Companies Act (Chapter 24:03) and the relevant Statuto!)Instruments ("SI") SI 33/99 and SI 62/96. This responsibility includes: designingimplementing and maintaining internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whetherdue to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with International Standards on Auditing.Those standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance whether the financial statements are free frommaterial misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditors judgement, including theassessment of the risks of material misstatement of the financial statements, whether due to fraudor error. In making those risk assessments, the auditor considers internal control relevant to the entityspreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe entitys internal control. An audit also includes evaluating the appropriateness of accounting policiesused 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 toprovide a basis for our qualified audit opinion.--------------A-n-n-u-al-R-e-p-o-y-t-2-01-0----------- -e
    • Basis for Qualified OpinionThe functional and presentation currency of the Company and the presentation currency of the Groupchanged on 1 February 2009 from the Zimbabwe dollar ("ZW$") to the United States of America dollar("US$"), during the prior year. The Zimbabwe economy was previously recognised as beinghyperinflationary for purposes of financial reporting. To effect the change in functional currency, theGroup and Company were required by International Accounting Standard ("IAS") 21, The Effects ofChanges in Foreign Exchange Rates, to restate their financial statements as at and for the ten monthsended 1 February 2009 in accordance with IAS 29, Financial Reporting in Hyperinflationary Economies,before translating the amounts at the closing exchange rate as at 1 February 2009 and to translate theinflation adjusted com rative financial information at the closing exchange rate as at 31 March 2008.However only those assets and liabilities that could be recovered or settled in a currency other thanZW$ or could be reasonably translated into a currency other than the ZW$ and represented an assetor liability of the Group and Company were recorded as taken on balances. The Group and Companyaccounted for share capital, share premium and debentures by translating the proceeds from issue atthe exchange rate prevailing at the dates of issue. Income and expenses for the ten months ended1 February 2009 were translated into US$ using the average exchange rate prevailing during the periodwithout first restating these numbers as required by IAS 29. It was impractical for us to quantify theeffects of non compliance with IAS 21 and IAS 29 on financial statements as at and for the year ended31 March 2009.As described above share capital, share premium and debentures were not translated in the mannerrequired by IAS 21 and IAS 29. As a result these items may also be misstated in the current year.Potential misclassifications between components of equity may also exist as a result of non-compliancewith IAS 21 and IAS 29 in the previous financial year.Non-preparation of inflation-adjusted financial infonmation as required by IAS 21 and IAS 29, was the basisfor our adverse opinion on the financial statements as at and for the year ended 31 March 2009, dated25 August 2009.Qualified OpinionIn our opinion, except for the effect of the matter described in the Basis for Qualified Opinionparagraph, the financial statements give a true and fair view of the financial position of theGroup and Company as at 31 March 2010, and of the Groups consolidated financialperformance and its consolidated cash flows for the year then ended in accordance withInternational Financial Reporting Standards and in the manner required by the ZimbabweCompanies Act (Chapter 24:03) and the relevant Statutory Instruments ("SI") SI 33/99 andSI62/96.Emphasis of matterWithout further qualifying our opinion, we draw your attention to note 30, which indicatesthat the Group and Company are operating in an uncertain economic environment.g. ~w tUu l....c-u.!&.oofl-fPricewaterhouseCoopersChartered Accountants (Zimbabwe)Harare 13 August 2010
    • Consolidated statement offinancial position as at 31 March 2010ASSETS Notes 2010 US$Non-current assetsInvestment property 5 69300000 69300000Property, plant and equipment 6 8619749 5695797Goodwill 7 120 186 120 186 - 78039935 75 115983Current assetsInventories 8 17178 16762Expenditure on next seasons crops 8 249381Trade and other receivables 9 920984 465878Financial assets available for sale 275Cash and cash equivalents 284 621 66840 1472164 549755Non-current assets classified as held for sale 10 287000Total assets 79512099 75952738EQUITYEquity attributable to the owners of the parentShare capital 11 18156 17 784Share premium 11 17680929 16188889Revaluation reserves 4942400 4 160 000Retained profits 40 211192 39436368Shareholders equity 628526n 59803041Minority interest 584 760Total equity 63 437 437 59803041LIABILITIESNon-current liabilitiesLinked unit debentures 12 1797486 1 760658Deferred income tax liabilities 13 13680409 13983679 154n 895 15744337Current liabilitiesTrade and other payables 14 596 767 405360Total liabilities 16074862 16 149697Total equity and liabilities 79512099 75952738
    • Assets NoteNon current assetsGroup company loans 680Investment in subsidiaries 15 19503998Total assets 19504678 17975438Equity and liabilitiesCapital and reservesOrdinary share capital •• 18156 17784Share premium 11 17680929 16188889Retained profits 8107 8107Shareholder equity 17707192 16214780Non current liabilitiesLinked unit debentures 1797486 1 760658Total equity and liabilities 19504678 17975438M. Manyika c. MataureDirector Director
    • • 2010 Notes US$Revenue 16 3869210 1044652Other income 17 362 580 1 073555Total income 4231790 2118207 ••Administration expenses 18 ( 3078408) ( 1 348230)Operating profit 1153 362 769977Finance income 19 100 572Profit before income tax 1253 954 769977Income tax expense 20 479130)Profit for the year 774824 769977Other comprehensive incomeTotal comprehensive income for the year 774824 769977Profit attributable to: - Owners of the parent 774824 769977 - Minority interests 32Other comprehensive income - Change in tax rate on deferred income tax on revaluation surplus 782400Total comprehensive income attributable to: - Owners of the parent 1557224 769977 - Minority interests 32 1557224 769977Basic and diluted earnings per share for profit attributable to the ownersof the parent during the year (expressed in cents per ,?hare) (note 22 tothe consolidated financial statements) 0.03 0.03--------------A-n-n-u-a-/ R-ep-O-Y-t-2-0-10------------e
    • Share capital US$Balance at 1 April 2008 17784 16188889 38666391 54 873 064 - 54 873 064Comprehensive income ••Transfer to non distributablereserves 4160 000 4160 000 4160 000Profit for the year 769977 7699n 7699nTotal comprehensive incomefor 2009 4180 000 769977 49299n 49299nBalanceat 31 March 2009 17 784 16188889 4160 000 39436368 59 603 041 - 59 603 041Comprehensive incomeProfit for the year 774824 n4824 n4824Other comprehensive income - Change in tax rate 782 400 782400 782400Total comprehensive incomefor 2010 782400 774824 1557224 1557224Transactions with ownersShare issue 372 1 492040 1492412 584760 20n172Balance at31 March 2010 18 158 17 680 929 4942400 40211192 82852m 584760 83437437
    • Cash flow from operating activitiesProfit before income taxAdjustment for: 2010 US$ 1253 955 • 769977Depreciation of properly, plant and equipment 171905 90742Interest received •• (100 572) (323 196) (1 073555)Operating surplus before working capital changes 1002092 (212 836)Changes in working capitalIncrease in inventories (415) (11 765)Increase in expenditure on next seasons crops (249 381)Increase in accounts receivable (455106) (333784)Increase in accounts payable 191407 272 153Cash generated by/(used in) operations 488 597 (286232)Income tax paid (16538) (132722)Interest received 100 572Net cash generated by/(used in) operating activities 572631 (418954)Cash flow from investing activitiesPurchase of properly, plant and equipment (977 723) (622382)Proceeds from disposal of property, plant and equipment 12677 1 073556Proceeds from disposal of non current assets held for sale 610196 (354 850) 451 174Net increase in cash and cash equivalents 217781 32220Cash and cash equivalents at the beginning of the ¥ear 66 640 34620 284821 66840Represented By:Cash and bank balances 264 621 66840
    • The principal business of the Group is that of investing in investment property and property management. The Group is a limited liability company incorporated and domiciled in Zimbabwe and is-listed on the Zimbabwe Stock Exchange. The address of its registered office is 8th Floor, Beverly Court, Corner Fourth Street and Nelson Mandela Avenue, Harare. The consolidated financial statements have been approved for issue by the Board of Directors on 13 August 20102 SUMMARY OF SI!NIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.2.1 Basis of presentation Statement of compliance The consolidated financial statements of Dawn Properties Limited have been prepared in accordance with International Financial Reporting Standards ("I FRS") as issued by the International Accounting Standard Board, except for the effects of non-compliance International Accounting Standard ("IAS") 21, The Effects of Changes in Foreign Exchange Rates and IAS 29, Financial Reporting in Hyper-inflationary Economies in the prior year ended 31 March 2009. The Group reports cash flows from operating activities using the indirect method. The acquisition of investment properties are disclosed as cash flows from investing activities because this appropriately reflects the Groups business activities. The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of investmeflf property and land and buildings. , The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Groups accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions change. Management believe that the underlying assumptions are appropriate. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4 to the consolidated financial statements.
    • On the date of change in functional currency on, 1 February 2009, the reserve that was derived fromthe translation of the assets and liabilities that could be recovered or settled in a currency other thanZW$ or could be reasonably translated into a currency other than the ZW$ and represented an assetor liability of the Group and Company, net of the amount that was allocated to share capital andshare premium was included in retained income.(a)The following standards, amendments and interpretations, which became effective in 2009, arerelevant to the Group: Applicable for financial year-. Standardl beginning Interpretation on/after Amendment: Improving disclosures about financial instrumentsA revised version of IAS 1 was issued in S~ptember 2007. The revised standard prohibits thepresentation of items of income and expense (that is, "non-owner changes in equity") in thestatement of changes in equity, requiring non-owner changes in equity to be presentedseparately from owner changes in equity in a statement of comprehensive income. As a result,the Group presents in the consolidated statement of changes in equity all owner changes inequity; all non-owner changes in equity are presented in the consolidated statement ofcomprehensive income. The adoption of this revised standard impacts only on presentationaspects; therefore; it has no impact on profit or earnings per share.
    • 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)2.1 Sasis of presentation (continued)A revised version was issued in March 2007. Under the revised standard, an entity isrequired to capitalise borrowing costs directly attributable to the acquisition, constructionor production of qualifying asset (one that takes a substantial period of time to get readyfor use or sale) a art of the cost of that asset. The option of immediately expensingthose borrowing costs was removed. The capitalisation is required for qualifying assetsfor which the commencement date for the capitalisation is on or after 1 January 2009.The lASS published amendments to IFRS 7 in March 2009. The amendments requireenhanced disclosures about fair value measurements and liquidity risk. In particular, theamendment requires disclosure of fair value measurements by level of a three-level fairvalue measurement hierarchy. In addition to that, the amendment clarifies that thematurity analysis of liabilities should include issued financial guarantee contracts at themaximum amount of the guarantee in the earliest period in which the guarantee couldbe called; and secondly requires disclosure of remaining maturities of financial derivativesif the contractual maturities are essential for an understanding of the timing of cash flows.The entity has to disclose a maturity analysis of financial assets it holds for managingliquidity risk, if that information is necessary to enable users of its financial statements toevaluate the nature and extent of liquidity risk. The adoption of the amendments resultin additional disclosures but does not have an impact on profit or earnings per share.IFRS 8 replaces IAS 14, "Segment reporting", and is effective for annual periods beginningon or after 1 January 2009. The new standard requires a "management approach" underwhich segment information is presented on a similar basis to that used for internal reportingpurposes. The effects of adoption by the Group are disclosed in note 27 to the consolidatedfinancial statements.IAS 40, "Investment property" amendment (and consequential amendment to IAS 16,"Property, plant and equipment")The amendments are part of lASSs annual improvements project published in May 2008and are effective from 1 January 2009. Property that is under construction or developmentfor future use as investment property is brought within the scope of IAS 40. Where thefair value model is applied, such property is measured at fair value. However, where thefair value of property under construction is not determinable, the property is measuredat cost until the earlier of the date construction is completed and the date at which fairvalue becomes reliably measurable.
    • IFRIC 15, "Agreements for the construction of real estate" (effective from 1 January 2009)The interpretation clarifies whether IAS 18, "Revenue" or IAS 11, "Construction contracts"should be applied to particular transactions. It is likely to result in IAS 18 being applied to awider range of transactions. The Group expects to apply such sale agreements; however,IFRIC 15 is currently not relevant to the Groups operations, as it has not yet entered intoany sale agreements for property under development.The improvement roject contains numerous amendments to IFRS that the lASS considersnon-urgent but necessary. Improvements to IFRS comprise amendments that result inaccounting changes for presentation, recognition or Improvements to IFRS compriseamendments that result in accounting changes for presentation, recognition or measurementpurposes, as well as terminology or editorial amendments related to a variety of IFRSstandards. Most of the amendments are effective for annual periods beginning on or after1 January 2009. No material changes to accounting policies arose as a result of theseamendments except to the amendments to IAS 40, Investment property.(b) Interpretations and amendments to standards becoming effective in 2009 but are notrelevant to the Group Applicable for financial Y"" Standardl beginning Interpretation on/after Puttable financial instruments and obligations arising on liquidation Hedges of a net investment in a foreign operation
    • 2.1 Basis of presentation (continued) (c) Standards, amendments and interpretations that are not yet effective and expected to have a significant impact on the Groups financial statements Applicable for financial years Stand-ld/ beginning Interpretation on/after IFRS 1 and IAS 27 Cost of an investment in a subsidiary, jointly- controlled entity or associate Share-based payments - Vesting conditions and cancellations Consolidated and separate financial statements Additional exemptions for first time adopters Group cash-settled share based payment transactionsIAS 27, "Consolidated and separate financial statements" (revised 2008; effective forannual periods beginning on or after 01 July 2009. The revised standard requires the effectsof all transactions with non-controlling interests to be recorded in equity if there is no changein control and these transactions will no longer result in goodwill or gains or losses. Thestandard also specifies the accounting wtlBn control is lost. Any remaining interest in theentity is remeasured to fair value and a gain or loss is recognised in profit or loss.IFRS 3, "Business combinations" (revised 2008; effective for business combinations forwhich the acquisition date is on or after the beginning of the first annual reporting periodbeginning on or after 01 July 2009). The revised standard continues to apply theacquisition method to business combinations, with some significant changes. For example,all payments to purchase a business are to be recorded at fair value at the acquisitiondate, with contingent payments classified as debt subsequently re-measured through theincome statement. There is a choice on acquisition-by-acquisition basis to measure the
    • non-controlling interests proportionate share of the "Improvements to IFRS" (issued in Aprilacquirers net assets. All acquisition related costs 2009)should be expensed. The improvement project contains numerous amendments to IFRS that the IASB considersIFRS 9, "Financial instruments: Classification non-urgent but necessary "Improvements toand measurement" IFRS" comprise amendments that result in accounting changes for presentation,In November 2009, the Board issued the first recognition or measurement purposes, as wellpart of IFRS 9 reliing to the classification as terminology or editorial amendments relatedand measurement of financial asset. IFRS 9 to a variety of individual IFRS standards. Mostwill ultimately replace IAS 39. The standard of the amendments are effective for annualrequires an entity to classify its financial periods beginning on or after 01 January 2010assets on the basis of the entitys business respectively, with earlier application permitted.model for managing the financial assets and No material changes to accounting policies arethe contractual cash flow characteristic of expected as a result of these amendments.the financial asset, and subsequentlymeasures the financial assets as either atamortised cost or fair value. The newstandard is mandatory for annual periodsbeginning on or after 01 January 2013.(d) Standards, amendments and interpretations that are not yet effective and not expectedto have a significant impact on the Groups financial statements Applicable for financial years Standardl beginning interpretation _C;;;..;;.o.;.n;.;;te.;;.;.;n..;;,t ••c.. _ onlafter IAS 39 Financial Instruments: Recognition and measurement-Eligible hedged items First-time adoption of International Financial Reporting Standards--------------A-n-n-u-a-l R-ep-o-r-t-2-0-10------------e
    • Notes To The Consolidated Financial Statements For The Year Ended 31 March 2010(e) Early adoption of standards resulting outputs that are or will be used toIn 2009, the Group did not early adopt any new generate revenues. In the absence of suchor amended standards or interpretations. criteria, a group of assets is deemed to have been acquired. If goodwill is present in a 2.2 ConsolidationSubsidiaries are all entities (including special transferred set of activities and assets, thepurpose entities) over which the Group has transferred set is presumed to be a business.the power to go_n the financial and For acquisitions meeting the definition of aoperating policies generally accompanying a business, the purchase method of accountingshareholding of more than one half of the is used. The cost of an acquisition is measuredvoting rights. The existence and effect of as the fair value of the assets given, equitypotential voting rights that are currently instruments issued and liabilities incurred orexercisable or convertible are considered assumed at the date of exchange, plus costswhen assessing whether the Group controls directly attributable to the acquisition. Identifiableanother entity. Joint control is the contractually assets acquired and liabilities and contingentagreed sharing of control over economic liabilities assumed in a business combinationactivity. There are no jointly controlled entities are measured at their fair values at the acquisitionwithin the Group. date, irrespective of the extent of any minority interest. The excess of the cost of acquisitionAn associate is an entity, including an over the fair value of the Groups share of theunincorporated entity such as partnership, identifiable net assets acquired is recorded asover which the investor has significant goodwill. If the cost of acquisition is less than theinfluence and that is neither a subsidiary nor fair value of the Groups share of net assetsan interest in a joint venture. acquired, the difference is recognised directly in the profit or loss for the year as negative goodwill.Subsidiaries are fully consolidated from thedate on which control is transferred to the For acquisitions not meeting the definition ofGroup. They are deconsolidated from the a business, the Group allocates the costdate that control ceases. between the individual identifiable assets and liabilities in the Group based on their relativeAccounting for business combinations under fair values at the date of acquisition. SuchIFRS 3 only applies if it is considered that a transactions or events do not give rise tobusiness has been acquired.Under IFRS 3 goodwill."Business combinations", a business is defrne~ •as an integrated set of activities and assets All the Group companies have 31 March as theirconducted and managed for the purpose of year end. Consolidated financial statements areproviding a return to investors or lower costs prepared using uniform accounting policies for likeor other economic benefits directly and transactions. Accounting policies for subsidiariesproportionately to policyholders or participants. have been changed where necessary to ensureA business generally consists of inputs, consistency with the policies adopted by the Group.processes applied to those inputs and theer------------- Annual Report 2010
    • Intercompany transactions, balances and from the translation at year end exchange ratesunrealised gains on transactions between of monetary assets and liabilities denominated ingroup companies are eliminated.Unrealised foreign currencies are recognised in the profit orlosses are also eliminated unless the transaction loss for the year.provides evidence of an impairment of the asset c) Group companiestransferred. The results and financial position of all the GroupThe Group has a policy of treating transactions entities (none of which has the currency of awith minority interests as transactions with hyperinflationary economy) that have a functionalparties external to tt; Group.Minority interests currency different from the presentation currencyrepresent the portion of profit and net assets are translated into the presentation currency asnot held by the Group. They are presented follows:separately in the statement of comprehensiveincome and the consolidated statement of (i) assets and liabilities for each statement offinancial position separately from the amounts financial position presented are translated atattributable to the owners of the parent. the closing exchange rate at the date of that financial position;2.3 Operating segments (ii)income and expenses for each statement ofOperating segments are reported in a manner comprehensive income are translated atconsistent with the internal reporting provided to average exchange rates (unless this averagethe chief operating decision maker. The chief is not a reasonable approximation of theoperating decision maker is the person or group cumulative effect of the rates prevailing on thethat allocates resources to and assesses the transaction dates, in which case income andperformance of the operating segments of an expenses are translated at the rate on theentity. The Group has determined that the chief dates of the transactions).operating decision maker is the Executive (iii)all resulting exchange differences areCommittee. recognised in other comprehensive income.2.4 Foreign currencies Goodwill and fair value adjustments on thea) Functional and presentation currency acquisition of a foreign entity are treated as assets and liabilities of the foreign entity andItems included in the financial statements of each translated at the closing exchange rate.of the Groups entities are measured using, thecurrency of the primary economic environment in 2.5 Investment propertywhich the entity operates (the "functional currency"). Property that is held for long-term rental yields or forThe consolidated financial statements are capital appreciation or both; and that is not occupiedpresented in the United States of America dollar, by the companies in the Group, is classified as("US$"), the Companys and Groups functional investment property. As from 01 January 2009,currency and presentation currency. investment property also includes property that is being constructed or developed for future use asb) Transactions and balances investment property. Investment property is measuredForeign currency transactions are translated into initially at cost, including related transaction costs andthe functional currency using the exchange rate borrowing costs. Borrowing costs are incurred for theprevailing at the dates of the transactions. purpose of acquiring, constructing or produdng aForeign exchange gains and losses resulting qualifying asset. After initial recognition, investmentfrom the settlement of such transactions and--------------A-n-n-u-al-R-ep-o-r-t-2-01-0------------.
    • property is camed at fair value. Fair value is based on conditions. The fair value also reflects, on aactive market prices, adjusted, if necessary, for any similar basis, any cash outflows that could bedifference in the nature, loca~on or condition of the expected in respect of the investment property.specific asset. If this informa~on is not available, the Some of those outflows are recognised as a liabilityGroup uses a~emawe valua~on method sum as the including finance lease liabilities in respect ofmarket comparison method or discounted cash flow leasehold land classified as investment property;projedons. Valua~ons are performed as of the others, including contingent rent payments, arestatement of financial position date by professional not recognised in the financial statements.valuers who hold rerognised and relevant professional Subsequent expenditure is capitalised to the assetsqualifica~ons and have r experience in the location carrying amount only when it is probable that futureand category of investment property being valued. economic benefits associated with the expenditureThese valua~ons form the basis for the carrying will flow to the Group and cost of the item can beamounts in the financial statements. Investment property measured reliably. All other repairs and maintenancethat is being redeveloped for con~nuing use as costs are expensed when incurred. When part of aninvestment property for whim the market has become investment property is replaced, the carrying amountless active con~nues to be measured at fair value. of the replaced part is derecognised.Fair value measurement of investment property The fair value of investment property does notunder construction is applied if the fair value is reflect future capital expenditure that will improveconsidered reliably measurable. or enhance the property and does not reflect the related future benefits from this future expenditureIt may sometimes be difficult to determine reliably other than those rational market participants wouldthe fair value of the investment property under take into account when determining the value ofconstruction. In order to evaluate whether the the investment property.fair value of an investment property underconstruction can be determined reliably, Changes in fair value are recognised in themanagement considers the following factors, statement of comprehensive income. Investmentamong others: properties are derecognised either when they have been disposed of or when the investment * The provisions of the construction contract; property is permanently withdrawn from use and * The stage of completion; no economic benefit is expected from its disposal. * Whether the project/property is standard (typical for the market) or non-standard; When the Group disposes of a property at fair value in an arms length transaction, the carrying * The development risk specific to the value immediately prior to the sale is adjusted to constructiol")s; and • the transaction price, and the adjustment is recorded in the statement of comprehensive income within the net gain from fair value adjustment on The fair value of investment property reflects, investment property. among other things, rental income from current leases and assumptions about rental income from If an investment property becomes owner-occupied, future leases in the light of current market it is reclassified as property, plant and equipment. Its fair value at the date of reclassification becomes its cost for subsequent accounting purposes.e------------A-n-n-u-a-/-R-e-p-o-rt-2-0-j-O-------------
    • If an item of owner-occupied property becomes Increases in the carrying amount arising onan investment property because its use has revaluation of land and buildings are credited tochanged, any difference resulting between the revaluation reserves in shareholders equity.carrying amount and the fair value of this item Decreases ·that offset previous inj::reases of theat the date of the transfer is treated in the same same asset are charged against revaluationway as revaluation under IAS 16, Property, Plant reserves directly in equity; all other decreases areand Equipment. Any resulting increase in the charged to the statement of comprehensivecarrying amount of the property is recognised in income.the profit or loss toe extent that it reverses a Land is not depreciated.previous impairment loss, with any remaining Depreciation on other assets is calculated using theincrease recognised in other comprehensive income straight line method to allocate their cost or revaluedand increases directly to revaluation reserves within amounts to the residual values over their estimatedequity. Any resulting decrease in the carrying amount useful lives;of the property is initially charged in othercomprehensive income against any previouslyrecognised revaluation surplus, with any remaining Buildings 25 - 40 yearsdecrease charged to profit and loss. Motor vehicles 5 years Computer equipment 4 years Farm equipment and implements 10 yearsProperty, plant and equipment comprise mainly land,buildings, farm equipment and motor vehicles. Land The assets residual values and useful lives areand buildings are shown at fair value based on reviewed, and adjusted if appropriate, at eachperiod, but at least triennial, valuations by statement of financial position date. An assetsprofessional valuers, less subsequent accumulated carrying amount is written down immediately to itsdepreciation for the buildings. recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.Any accumulated depreciation at the date of Gains or losses on disposals are determined byrevaluation is eliminated against the gross carrying comparing the proceeds with the carrying amountamount of the asset, and the net amount is restated and are recognised in the statement ofto the revalued amount of the asset. All other comprehensive income.property, plant and equipment is stated at historicalcost less accumulated depreciation. Historical cost When revalued assets are sold, the amountsincludes expenditure that is directly attributable to included in revaluation reserves are transferredthe acquisition of the items. Subsequent costs aFe to retained profits.included in the assets carrying amount or recognised 2.7 Leasesas a separate asset, as appropriate, only when it is (a) Where the Group is the lessee in an operatingprobable that the future economic benefits associated leasewith the item will flow to the Group and the cost of Leases in which a significant portion of the risksthe item can be measured reliably. The carrying and rewards of ownership are retained by anotheramount of the replaced part is derecognised. All party, the lessor, are classified as operating leases.other repairs and maintenance are charged to the Payments, including prepayments, made understatement of comprehensive income during the operating leases are charged to profit or loss onperiod in which they occur. a straight line basis over the period of the lease.---------------A-n-n-u-a-/-R-e-p-o-r-t 2-0-1-0--------------1.
    • (b) Where the Group is the lessor in an operating For the purposes of assessing impairment, assetslease are grouped at the lowest levels for which there areProperties leased out under operating leases are separately identifiable cash flows ("cash-generatingincluded in investment property in the statement of units"). Non-financial assets that suffered anfinancial position (notes 2.5 and 2.21 to the impairment are reviewed for possible reversal of theconsolidated financial statements) for the recognition impairment at each reporting date.of rental income. 2.10 InventoriesThe Group does not have any finance lease The Groups inventory arise when there are realarrangements. •• estate developments in progress and any items of2.8 Goodwill fuels and stationery on hand as at the end of aGoodwill represents the excess of the cost of an financial period. Inventories are stated at lower ofacquisition over the fair value of the Groups share cost or net realisable value. Cost is determinedof the net identifiable assets of the acquired using the first-in, first out ("FIFO") method.business at the date of acquisition (providing that 2.11 Expenditure on next seasons cropsthe acquisition fulfil the definition of a businesscombination in accordance with IFRS 3). Goodwill Directly attributable costs incurred on;is tested annually for impairment and carried at the -establishing hypericum flower and vegetable gardenscosts less accumulated impairment losses. for the year ended 31 March 2010 are deferred andImpairment losses on goodwill are not reversed. amortized against revenue realised on harvesting theGains and losses on the disposal of an entity flowers in the 2011 calendar year. The costs incurredinclude the carrying amount of goodwill relating to are apportioned against volumes harvested.the entity sold. -cropping programmes where plantingGoodwill is allocated to cash-generating units for the commenced in the current year andpurpose of impairment testing. The allocation is made harvesting is forecasted to be undertaken into those cash generating units or group of cash the subsequent financial reporting period aregenerating units that expected to benefit from the deferred until harvesting. The costs incurredbusiness combination in which the goodwill arose are apportioned against volumes harvested.identified according to the operating segment. 2.12 Prepayments Prepayments are carried at cost less any accumulated impairment losses.Assets that have an indefinite useful lives, forexample land, are not subject to depreciation andare tested annually for impairment. Assets that aresubject to amortisation are reviewed for impairment a) Classificationwhenever events or changes in circumstances The Group classifies its financial assetsindicate that the carrying amount may not be in the following categories: at fair valuerecoverable. An impairment loss is recognised for through profit or loss, loans andthe amount by which the assets carrying amount receivables, and available-far-sale. Theexceeds the recoverable amount. The recoverable classification depends on the purpose foramount is the higher of an assets fair value less which the financial assets were acquired.costs to sell and value in use. Management determines the classification of its financial assets at initial recognition.
    • Notes To The Consolidated Financial Statements For The Year Ended 31 March 2010i) Financial assets at fair value through Financial assets carried at fair valueprofit or loss through profit or loss are initiallyFinancial assets at fair value through profit recognised at fair value, and transactionor loss are financial assets held for trading. costs are expensed in the statement ofA financial asset is classified in this category comprehensive income. Financial assetsif acquired principally for the purpose of are derecognised when the rights to receiveselling in the short-term. Derivatives are cash flows from the investments havealso categorised as held for trading unless expired or have been transferred and thethey are designated as hedges. Assets in this Group has transferred substantially all riskscategory are classified as current assets. and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequentlyLoans and receivables are non-derivative carried at fair value. Loans and receivables arefinancial assets with fixed or determinable subsequently carried at amortised cost using thepayments that are not quoted in an active effective interest method.market. They are included in current assets,except for maturities greater than 12 months Gains or losses arising from changes in the fair value of the financial assets at fair valueafter the end of the reporting period. These through profit or loss category are presentedare classified as non-current assets. The in the statement of comprehensive income in Groups loans and receivables comprise which they arise. Dividend income fromtrade and other receivables and cash and financial assets at fair value through profit orcash equivalents in the statement offinancial position. loss is recognised in the statement of comprehensive income as part of other income when the Groups right to receive payments is established. Available-for-sale financial assets are non- derivatives that are either designated in this Changes in the fair value of monetary category or not classified in any of the securities denominated in a foreign other categories. They are included in non currency and classified as available-for -current assets unless the investment -sale are ana lysed between translation matures or management intends to dispose differences resulting from changes in of it within 12 months of the end of the amortised cost of the security and other reporting period. changes in the carrying amount of the security. The translation differences on monetary securities are recognised in Regular purchases and sales of financial profit or loss; translation differences on assets are recognised on the trade-date - non-monetary securities are recognised in the date on which the Group commits to other comprehensive income. Changes in purchase or sell the asset. Investments the fair value of monetary and non- are initially recognised at fair value plus monetary securities classified as available transaction costs for all financial assets -for-sale are recognised in other not carried at fair value through profit or comprehensive income. loss. ________ ------J•• Annual Report 2010 -
    • When securities classified as available-for - It becomes probable that the borrower will enter-sale are sold or impaired, the accumulated bankruptcy or other financial reorganisation;fair value adjustments recognised in equity - The disappearance of an active market for thatare included in the statement of financial asset because of financial difficulties;comprehensive income as gains and losses orfrom investment securities. - Observable data indicating that there is a measurable decrease in the estimated futureInterest on available-for-sale securities calculated cash flows from a portfolio of financial assetsusing the effective interest method is recognised since the initial recognition of those assets,in the statement of ~mprehensive income although the decrease cannot yet be identifiedas part of other income. with the individual financial assets in the portfolio, including:Dividends on available-for sale equity instrumentsare recognised in the statement of comprehensive (i) Adverse changes in the payment status ofincome as part of other income when the Groups borrowers in the portfolio; andright to receive payments is established. (ii) National or local economic conditions thatc) Impairment of financial assets correlate with defaults on the assets in theAssets carried at amortised cost portfolio. The amount of the loss is measured as theThe Group assesses at the end of each reporting difference between the carrying amount and theperiod whether there is objective evidence that a present value of estimated future cash flowsfinancial asset or group of financial assets is (excluding future credit losses that have not beenimpaired. A financial asset or a group of financial incurred) discounted at the financial assets originalassets is impaired and impairment losses are effective interest rate. The carrying amountincurred only if there is objective evidence of of the asset is reduced and the amount of the lossimpairment as a result of one or more events that is recognised in the consolidated statement ofoccurred after the initial recognition of the asset oomprehensive inoome. If a loan or held-ta-maturity(a "loss event") and that loss event (or events) has investment has a variable interest rate, the disoountan impact on the estimated future cash flows of rate for measuring any impairment loss is thethe financial asset or group of financial assets that current effective interest rate determined under thecan be reliably estimated. oontract. As a practical expedient, the Group mayThe criteria that the Group uses to determine that measure impairment on the basis of an instrumentsthere is objective evidence of an impairment loss fair value using an observable market price. If, in ainclude: 4 subsequent period, the amount of the impairment- Significant financial difficulty of the issuer • loss decreases and the decrease can be related or obligor; objectively to an event occurring after the impairment- A breach of contract, such as a default or was recognised (such as an improvement in the delinquency in interest or principal payments; debtors credit rating), the reversal of the previously - The Group, for economic or legal reasons recognised impairment loss is recognised in the relating to the borrowers financial difficulty, consolidated statement of oomprehensive inoome. granting to the borrower a concession that the lender would not otherwise consider;
    • Notes To The Consolidated Financial Statements For The Year Ended 31 March 2010 The fair value of a non interest bearing liability is its discounted repayment amount.The Group assesses at the end of each reporting If the due date of the liability is less thanperiod whether there is objective evidence that a one year, discounting is omitted.financial asset or a group of financial assets is 2.14 Cash and cash equivalentsimpaired. In the case of equity investmentsclassified as available-for-sale, a significant or Cash and cash equivalents include cashprolonged decline in the fair value of the security in hand, deposits held at call with banks,below its cost is also evidence that the assets other short term highly liquid investmentsare impaired. If a such evidence exists for with original maturities of three months oravailable-for-sale financial assets, the cumulative less, and bank overdrafts.loss - measured as the difference between the 2.15 Non-current assets (or disposal groups)acquisition cost and the current fair value, less held for saleany impairment loss on that financial assetpreviously recognised in profit or loss - is removed Non-current assets (or disposal groups) arefrom equity and recognised in the consolidated classified as assets held for sale when theirstatement of comprehensive income. Impairment carrying amount is recovered principallylosses recognised in the consolidated statement through a sale transaction and sale isof comprehensive income on equity instruments considered highly probable. They are statedare not reversed through the consolidated at the lower of the carrying amount and fairstatement of comprehensive income. If, in a value less costs to sell if their carryingsubsequent period, the fair value of a debt amount is recovered principally through ainstrument classified as available-for-sale increases sale transaction rather than through use.and the increase can be objectively related to an 2.16 Share capitalevent occurring after the impairment loss was Shares are classified as equity when there isrecognised in profit or loss, the impairment loss is no obligation to transfer cash or other assets.reversed through the consolidated statement of Incremental costs directly attributable to thecomprehensive income. issue of new shares are shown in equity as a deduction net of tax from the proceeds.Liabilities within the scope of IAS 39 are classifiedas financial liabilities at fair value through profit or Trade and other payables are recognisedloss or other liabilities as appropriate. initially at fair value and subsequently measured at amortised cost using theA financial liabilityis derecognisedwhen the obligation effective interest method.under liabilityis discharged, cancelled or expires. 2.18 Current and deferred income taxAll loans and borrowings are classified asfinancial liabilities. Initial recognition is at fair Tax expense comprise deferred and currentvalue less directly attributable cost using the income tax. Tax is recognised in theeffective interest method. Financial liabilities statement of comprehensive income, exceptincluded in trade and other payables are to the extent that it relates to items--------~-initially recognised at fair value and recognised directly in equity, in which casesubsequently carried at amortised cost. the tax is recognised in equity. Annual Report 2010 -
    • The current income tax charge is calculated The capital gains tax rate is applied on the fairon the basis of the tax laws enacted or value gain on the land and the income tax ratesubstantively enacted on the date of the is applied on the fair value gain on the building.statement of financial position in the countries The deferred income tax is then calculated basedwhere the Group operates. Management on the respective temporary differences and taxperiodically evaluates positions taken in tax consequences arising from recovery through usereturns with respects to situations in which and through sale.applicable tax regulation is subject tointerpretation, and stablishes provIsions Deferred income tax is provided on temporarywhere appropriate on the basis of amounts differences arising on investment inexpected to be paid to the tax authorities. subsidiaries except where the timing of the reversal of the temporary difference isDeferred income tax is provided in full, using controlled by the Group and it is probable thatthe liability method, on temporary differences the temporary difference will not reverse in thearising between the tax base of assets and foreseeable future.liabilities and their carrying amounts in theconsolidated financial statements. However, 2.19 Employee Benefitsdeferred income tax is not accounted for if it (a) Pensionsarises from initial recognition of an asset orliability in a transaction other than a business The Group operates a defined contributioncombination that at inception of the plan. The Group pays contributions to atransaction affects neither accounting or privately administered pension fund ontaxable profit or loss. Deferred income tax is mandatory basis. The Group has no furtherdetermined using tax rates (and laws) that payment obligations once the contributionshave been enacted or substantially enacted have been paid. The contributions areby the date of the statement of financial recognised as employee benefit expenseposition and are expected to apply when the when they are due. Prepaid contributionsrelated deferred income tax asset is realised are recognised as an asset to the extentor the deferred income tax liability is settled. that a cash refund or a reduction in theDeferred income tax assets are recognised future payments is available.to the extent that it is probable that futuretaxable profit will be available against whichthe temporary differences can be utilised. (b) Short-term employee benefits andThe carrying value of the Groups investment compensation absences, wages, salaries,property will generally be realised by a paid annual leave, bonuses andcombination of income (rental stream during non-monetary benefits (such as healththe period of use) and capital (the services) are recognised as employeeconsideration on sale at the end of use). The benefit expense and accrued when thelength of the period for which a property will associated services are rendered by thebe held prior to disposal is based on the employees of the Group.Groups current tax plans and recentexperience with similar properties.
    • (c ) National Social Security Authority The increase in the provIsion due tc Scheme passage of time is recognised as financeThe Group and its employees contribute cost.to the National Social Security Authority 2.21 Revenue recognitionScheme. This is a social security schemewhich was promulgated under the National Revenue comprises the fair value of theSocial Security Act. The Group obligations consideration received or receivable forunder the scheme are limited to specific the rendering of services in the ordinarycontributions as gislated from time to course of the Groups activities. Revenuetime. includes rental income, service charges from properties, and income from property(d) Termination benefits trading. Revenue is shown net of valueTermination benefits are payable when added tax. Revenue is recognised asemployment is terminated by the Group follows:before retirement date, or wheneveran employee accepts voluntary redundancyin exchange for these benefits. The Group Rental income is recognised in the accountingrecognises termination benefits when period in which the property is occupied byit is demonstrably committed to either: the tenant.terminating the employment of currentemployees according to a detailed formalplan without the possibility of withdrawal; or Sale of services are recognised in theproviding termination benefits as a result of accounting period in which the servicesan offer made to encourage voluntary are rendered.redundancy. Interest incomeBenefits falling due more than 12 months Interest income is recognised on the time-after the statement of financial position portion basis using the effective interestdate are discounted to present value. method. Interest income on impaired loan2.20 Provisions is recognised either as cash is collectedProvisions for legal claims are recognised or on a cost-recovery basis as conditionswhen the Group has a present legal or warranty.constructive obligation as a result of pastevents; it is probable that an outflow C,)fresources will be required to settle the Dividend income is recognised when theobligation; and the amount has been right to receive payment is established.reliably estimated.Provisions are measured at the present Dividend distribution to the Companysvalue of the expenditures expected to be shareholders is recognised as a liability inrequired to settle the obligation using a the Groups financial statements in thepre tax rate that reflects current market period in which the dividends are declaredassessment of the time value of money by the directors.and the risks specific to the obligation. •--------------A-n-n-u-a-/ R-ep-o-r-t-2-0-10------------tI
    • Interest income and expenses arerecognised within the "finance income"and "finance cost" in profit or loss usingthe effective interest rate method exceptfor borrowing costs relating to qualifyingassets, which are capitalised as cost ofthe qualifying ass •.The effective interest method is a methodof calculating the amortised cost of afinancial asset or liability and of allocatingthe interest income or interest expenseover the relevant period. The effectiveinterest rate is the rate that exactlydiscounts estimated future cash paymentsor receipts throughout the expected life ofthe financial instrument, or a shorter periodwhere appropriate, to the net carryingamount of the financial asset or financialliability. When calculating the effectiveinterest rate, the Group estimates cashflows considering all contractual terms ofthe financial instrument but does notconsider future credit losses. The calculationincludes fees and points paid or receivedbetween parties to the contract that areintegral part of the effective interest rate,transaction costs and all other premiumsor discounts.2.24 Other expensesExpenses which include legal, accounting, auditingand other fees are recognised as expenses in profi~"or loss in the period in which they are incurred.
    • The risk management function within the Group is carried out in respect of financial risks. Financial risksare risks arising from financial instruments to which the Group is exposed during or at the end of thereporting period. Financial risks comprise market risk (including currency, interest and other price risks)credit risk and liquidity risk. The primary objectives of the financial risk management function are toestablish risk limits, and then ensure that exposure to risks stays within limits.Risk management is_rried out by the Executive Committee under policies approved by the Board ofDirectors. The Executive Committee identifies and evaluates financial risks in close cooperation with theoperating units. The Board provides written principles for overall risk management.Key risk management reports are produced monthly at Group level and provided to the key managementpersonnel of the Group.Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate becauseof changes in the market prices. The Groups market risks arise from open positions in (a) foreign currenciesand (b) interest bearing assets and liabilities, to the extent that these are exposed to general and specificmarket movements.The Group operates in the region and exports flowers to the European markets and is exposed to foreignexchange risk, primarily with respect to the Botswana pula and the Euro. Foreign exchange risks arise inrespect of those recognised monetary financial assets and liabilities and future commercial transactions thatare not denominated in the functional currency of the Group.As at 31 March 2010 Note r Pula Euro Other TotalFinancial assets - loans and US$ US$ US$ US$ Equivalent Equivalent Equivalent EquivalentreceivablesTrade receivables: 9 r- Receivables from customers 4579 4579- Other financial assets 3126 3 126Cash and cash equivalents 6926 6926Total financial assets 10053 4579 14632--------------A-n-n-u-al-R-ep-o-r-t-2-01-0----------- --<.
    • Financial liabilities measured at r Pula Euro Other Totalamortised cost US$ US$ US$ US$Trade and other payables: 14 Equivalent Equivalent Equivalent Equivalent- Trade payables 2829 2829- Other financial liabilities 101 276 101 276 104 105 104 105As at 31 March 2009_ NoteFinancial assets - loans andreceivablesTrade receivables:- Receivables from customers 2144 2144- Other financial assets 2165 2165Cash and cash equivalents 7220 7220 11 529 11 529Financial liabilities measured atamortised costTrade and other payables:- Trade payables 1 814 1 814- Other financial liabilities 79758 79758 81 572 81 572The Group manages foreign currency risk on a group basis. The Groups primary method of managingforeign currency risk is to match the Groups principal cash outflows to the currency in which theprincipal cash inflows are denominated. This is generally achieved by converting all currencies receivedinto US$.
    • 3 FINANCIAL RISK MANAGEMENT (iii) Cash flow and fair value interest rate (continued) risk(a) Market risk (continued) As the Groups interest-bearing risks do not generate significant amounts _of interest(i) Foreign exchange risk (continued) changes in the market, interest rates do notThe functional currency of the Group and its have any significant direct effect on theprincipal subsidiaries is the US$. Only the Groups income.Botswana incorporated subsidiary has theBotswana pula as i~unctional currency. The Trade receivables and payables (other thanfollowing paragraph presents sensitivities of good tenancy deposits) are interest free andprofit and loss to reasonably possible change have settlement dates within one year.in exchange rates applied at the statement offinancial position date relative to the functionalcurrency of the respective Group entities, with Credit risk is the risk that one party to financialall other variables held constant. instrument will cause a financial loss to the other party by failing to discharge a contract.At 31 March 2010, if the Pula weakened/ Credit risk arises from cash and cashstrengthened by 10% (2009: 10%), post-tax equivalents held at banks and trade receivables,profit for the year would have been US$1,012 including rental receivables from lessee. Credit(2009: US$5,256) higher/lower. If the Euro risk is managed on a group basis.strengthened/weakened by 10% (2009: 10%),post-tax profit for the year would have beenUS$458 (2009: nil) higher/lower. Such risks are subject to a quarterly review. The Group has policies in place to ensure that rental contracts are entered into only with lessees with an appropriate credit history.The Group has no significant exposure to Cash balances are held only by financialprice risk but will be exposed to commodity institutions with sound capital bases.price risk in the next financial year when theystart exporting hypericum flowers to theauctions in Europe.Trade receivables, net of allowance for impairment- Rent receivable from lessee 110249 277 391- Other financial assets 810735 188487 284 621 66840 1205605 532718The fair value of cash and cash equivalents at 31March 2010 approximates the carrying amount
    • Trade receivables,Neither past due nor impaired-Receivables-Receivables gross from large companies from small or medium sized companies • ••Total neither past due nor impairedPast due but not impaired-less than 30 days overdue-30 to 90 days overdueThere is no significant concentration of credit risk with respect to cash and cash equivalentsas the Group holds cash accounts with large financial institutions with sound financial andcapital bases.Prudent liquidity risk management principles implies maintaining sufficient cash andthe availability of funding through an adequate amount of committed credit facilities.The Groups liquidity position is monitored on a weekly basis by the Executive Committeeand reviewed quarterly by the Board.e------------A-n-n-u-a-I-R-e-p-o-rt-2-0-1-0-------------
    • r<" On demand From From Later and less than 1 to 12 2 to 5 than one month months years 5 years Total US$ US$ US$ US$ US$Cash and cash equi nts 284 621 284621Trade receivables 277 055 439903 716 958Total assets 561 676 439903 1 001 579LiabilitiesTrade payables 204928 204928Other payables 391 839 391 839 596767 - - - 596767Liquidity gap I (35 091) 439903 - - 404812Cumulative gap (35 091) 404812 - - 4048123.2 Capital risk managementThe Groups objectives when managing capital are to safeguard the Groups ability to continue as a goingconcern in order to provide returns to shareholders and benefits for other stakeholders; and to maintain anoptimal capital structure to reduce the cost of capital.In order to maintain or adjust capital structure, the Group may adjust dividend paid to shareholders,return capital to shareholders, issue new shares or sell assets to reduce debt.The Groups monitors capital on the basis of the gearing ratio. The gearing ratios as at 31 March 2010 andthe previous year were as follows:Total borrowings 1797486 1 760658Less: cash and cash equivalents ( 284 621) (66840)Net debt 1512665 1 693818Total equity 63 437 437 59803041--------------A-n-n-u-a-/ R-ep-o-r-t-2-01-0-----------~.
    • adjustment to the carrying amounts of assets and liabilities within the next financial year areIFRS 7 specifies a hierarchy of valuation techniques outlined below.on whether the inputs to those valuation techniquesare observable or unobservable. Observable inputs (a) Fair value of investment propertyreflect market data obtained from independent In determining the fair value of investment property,sources: unobservable inputs reflect the Groups CB Richard Ellis (Private) Limited used the marketmarket assumptions. These two types of inputs comparison method.have created the following fair value hierarchy; As there is no active market for the hotelLevel 1 - Quoted pric~ (unadjusted) in active properties in Zimbabwe, current prices weremarket for identical assets or liabilities. This drawn from recent transactions of commerciallevel includes listed equity securities traded on properties in general. The prices were adjustedthe Zimbabwe Stock Exchange. for contractual, location and inherent differences.Level 2 - Inputs other than quoted prices includedwithin level 1 that are observable for the asset or The Companys management determines theliability, either directly (that is, as prices) or indirectly estimated useful lives and related depreciation(that is, derived from prices). charges for its property, plant and equipment.Level 3 - Inputs for the asset or liabilitythat are not based This estimate is based on projected life cycleson observable market data (unobservable inputs). This for these assets. It could change significantly aslevel includes equity investments and debt instruments a result of technical innovations and competitorwith significant unobservable components. This level actions in response to severe industry cycles.includes non listed equity investments. Management will increase the depreciationThe hierarchy requires the use of observable market charge where useful lives are less thandata when available. The Group considers relevant previously estimated lives, or it will write off orand observable market prices in its valuations where write down technically obsolete or non-strategic assets that have been abandoned or sold.possible. (c) Income taxesThe Group had no financial assets and liabilities Significant judgement is required in determiningcarried at fair value as at 31 March 2010. the provision for income taxes. There are many4 Critical accounting estimates and judgements transactions and calculations for which theEstimates and judgements are continually evaluated ultimate tax determination is uncertain during theand are based on historical experience as adjusted ~ ordinary course of business.for current market conditions and other factors.4.1 Critical accounting estimates and assumptionsManagement makes estimates and assumptionsconcerning the future. The resulting accountingestimates will, by definition seldom equal the relatedactual results. The estimates and assumptions thathave a significant risk of causing a material
    • The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxeswill be due. Where the final tax outoome of these matters is different from the amounts that were initially reoorded,such differenoes will impact the inoome tax and deferred inoome tax provisions in the period in which suchdetermination is made.At the beginning of the yearNet gain from fair value gains on investments property •The Groups investment properties were revalued at 31 March 2010 using the open market value method byprofessionally qualified valuers, CB Richard Ellis (Private) Limited, who are a related party and hold a recognisedprofessional qualification having recent experience in the locations and categories of the investment propertiesvalued. The investment properties are currently not used as security against borrowings.
    • 6 PROPERTY, PLANT AND EQUIPMENT YLandand Motor Computer OffIce Furniture Farm buildings vehicle equipment equipment and ftttIngs equipment Total US$ US$ US$ US$ US$ US$ US$Year ended 31 March 2009Deemed cost at1 February 2009 •• 5439 001 1 9054 1 420 1682 - 5451 158Additions - 546 997 1 050 74335 622382Transfer to non currentassets (287000) - (287000)Disposals (1) (1 )At the end of the year 5 152000 546 998 10 104 1 420 1682 74 335 5 786 539Accumulated ---depreciationDepreciation charge - (68105) (1 304) (76) (1 257) (90742)DisposalAt the end of the year - (88105J (1 304) (76) (1 257) (90742)Net book amount 5152000 458 893 8800 1 344 425 743355695797 ---Year ended 31 March 2010At the beginningof the year 5 152 000 546 998 10 104 1420 1682 74335 5786539Additions 2 268 046 157 890 42588 38269 590 165 3096958Disposals (1) (962) (138) (1 101)At the end of the year 7 420 046 704 887 51 730 39689 1544 664 500 8 882 396 ---AccumulateddepreciationAt the beginningof the year - (88 105) ,{1 304) (76) (1 257) (90742)Depreciation charge (24060) (131 215) (6276) (1 924) (8430) (171 905)DisposalAt the end of the year (24060)(219320 (7580) (2000) (1 257) (8430) (262647)Net book amount 7 395 988 485 567 44 150 37689 287 856 070 8619749 ---There were no impairment charges in 2010 and 2009. In 2010, no borrowing costs were capitalised forproperly, plant and equipment. No bank borrowings were secured by land and buildings as at 31 March2010.
    • GOODWILL Year ended 31 March 2010 At cost Accumulated impairment Net book amountThe recoverable amount of a cash generating unit is determined based on value in use calculations. ThesEcalculations use pre-tax cash flow projections based on computed actual cash flows for the financial years 3March 2009 and 31 arch 2010 and extrapolated using the estimated future growth rates stated belowThe key assumptions used for value in use calculations in 2010 are as follows:Discount rate - 15% per annum and growth rate for the 2011 financial year 10% and thereafter 5% Fuel 3779 Other 13399 17 178 Expenditure on next seasons crops were incurred on Hypericum flowers, cabbages and irish potatoes Trade receivables 723343 Less: impairment allowance (6385) Trade receivables - net 716956 241 281 Prepayments 170162 204678 Loans to employees 29332 3895 Other receivables 4532 16024 Trade receivables ~ 716956 241 281 Prepayments 170162 204678 Loans to employees 29332 3895 Other receivables 4532 16024 920984 465878The estimated fair values of receivables are the discounted amount of the estimated future cashflows expected to be received and an approximate value of their carrying amounts. Expectedcash flows are discounted at current market rates to determine fair values.--------------A-n-n-u-al-R-ep-o-r-t-2-01-0------------•
    • Fully performingPast due 31-60 daysPast due 61-90 days - 277 055 212 237 30274 277 055 212237 30274Past due 91-120 days 7 111 ( 389) 6722More than 120 days 196666 ( 5996) 190670 •• 723343 ( 6 385) 716 958The ageing of trade receivables at 31 March 2009 was:Fully performingPast due 31-60 daysPast due 61-90 days - 241 281 241 281Past due 91-120 daysMore than 120 days 241 281 241 281Allowance for receivables impairment 6385At 31 March 2010 6385As at 31 March 2010, trade receivables amounting toUS$196,666 (31 March 2009 - US$nil) were past due.Trade and other receivables denominated in the United States ofAmerica dollar ("US$")Impairment allowances for the year ended 31 March 2010 amounted to US$6 385 (31 March 2009 - US$nil).The maximum exposure to credit risk at the reporting date is the fair value of each class of receivablesmentioned above. The Group does not hold any collateral as security.
    • At the beginning of the year Reclassification during the year Disposals Fair value adj tment Authorised 2010 Ordinary shares of a nominal value NumlMr of ZW$.00001 each (at the time of issue). Issued, and fully paid Number Ordinary Share of shares shares premium Total U5$ U5$ US$ At the beginning of the year 2407090019 17784 16 188889 16206 673 Issued during the year 50286488 372 1 492040 1492412 At the end of the year 2457376507 18 156 17680929 17699 085The unissued shares are under the control of the directors. The directors are authorisedto allot or dispose of unissued shares under their control at their discretion in accordancewith the provisions of the Articles of Association of the Company, the Zimbabwe CompaniesAct (Chapter 24:03) and the Zimbabwe Stock Exchange listing requirements. The Groupsshares have a nominal value in Zimbabwe dollars. However the Zimbabwean dollar wasdemonetised in 2009. As such the above share capital of the Company has been derivedusing exchange rates at the date of issuance. A pronouncement effective 17 February2010 has been made by the authorities requiring the value of a share to be determinedby the Company. The nominal value of the ordinary shares of the Company in US$ will bedetermined at the next annual general meeting, followed by the due regulatory approvals.--------------A-n-n-u-a-/ R-ep-o-r-t-2-0-10-------------<.
    • 12 LINKED DEBENTURES 2010 Authorised Numbers Debentures of a nominal value of ZW$.00099 each (at the time of issue). 4000 000 000 4 OQO 000 000 2010 US$ Issued At the beginning ••of the year 2407090019 1760658 1 760658 Issued during the year 50286488 36 828 At the end of the year 2457376507 1797486 1 760658The unissued debentures are under the control of directors. The directors are authorised toissue the debentures under their control in accordance with the provisions of the linked unitstrust deed. The debentures bear interest at a rate determined by and at the sole discretionof the directors, and is payable in arrears on 31 August and 28 February in each year, forthe six month period calculated up to and including 30 June and 31 December respectively.For the year ended 31 March 2010, the interest on debentures was US$nil (2009 - US$nil).The are no fixed repayment terms, however the Debentures together with all interest accrued thereonshall become immediately payable on any of the events occurring;If the Company defaults in the payments of any interest on the Debentures and continues such defaultmore that fourteen days after receipt of a written notice from the Trustee demanding that paymentbe made;If the Company commits any breach of any obligations under this deed and, within twenty one daysafter the receipt of notice in writing from the Trustee requiring the breach be remedied, fails toremedy the breach;If a final order shall be made to or an effective resolution is passed for the winding up of the Companyother than winding up for purposes of reconstruction;If any final order shall be made placing the Company under judicial management;If any material assets of the Company are attachep under a writ of execution issued by any court andthe writ is not satisfied within seven days after ttie attachment came to the notice of the Directors ofthe Company;If the Company, without the prior consent of the Trustee, makes any alterations in the provisions of itsMemorandum or Articles of Association which in the Trustees reasonable opinion detrimentally affectsthe interests of the linked unit holder or could do so;If the Company, without the prior written consent, by way of an ordinary resolution of linked unit holders,changes its issued share capital resulting in a change in the debt to equity ratio; and if the Company,without the prior written consent of the Trustee, convenes a meeting of the Company or any of itssubsidiaries to consider the passing of a resolution authorising the alienation,
    • sale or disposal of the whole or major part of the undertaking of the Company or its subsidiaries or toreduce the issued and paid up share capital of the Company. The debentures have a nominal value inZimbabwe dollars. However the Zimbabwe dollar was demonetised in 2009. As such the debenturesUS$ amount has been derived from using the exchange rates at the date of issuance. 13 983 679 13 983 679Statement of comprehensive income 479130Tax credit relating to components of othercomprehensive income ( 782400)Balance at 31 March 13680409 13983679-Deferred income tax assets:-Deferred income tax asset to be recovered after morethan 12 months-Deferred income tax asset to be recovered within12 months-Deferred tax liabilities:-Deferred income tax liability to be recovered after more than 12 months 13791226 14 097467-Deferred income tax liability to be recovered 40738 4256within 12 months 13680409 13983679Deferred income tax is attributable to the following temporary differences;Assessable tax losses (151,555) (118,044)Accelerated wear and tear on vehicles 24,256 20,566Prepayments 40,738 4,256Investment property fair value gains 13,719,850 14,038,643Attributable to subsidiary 47,120 38,258Total 13,680,409 13,983,679Trade payables 204 928 25843Other payables including VAT and PAVE 391839 379517 596 767 405360-------------t~ Annual Report 2010 •
    • 2010 US$ At the beginning of the year 17974988 Acquisition of subsidiaries 1529240 At the end of the year 19503988 Dawn Properties lmiteds subsidiaries are listed in the table below:r Name incorporation interest 2010 interest 2009 Dawn Real Estate (Private) Limited Zimbabwe 100% 100% Nhaka Properties (Private) Limited Zimbabwe 100% 100% Calpine Investments (Private) Limited Zimbabwe 100% 100% Gold Coast Properties (Private) Limited Zimbabwe 100% 100% Laclede Investments (Private) Limited Zimbabwe 100% 100% CB Richard Ellis (Private) Limited Zimbabwe 100% 100% CBRE (Proprietary) Limited Va CBRE Regional. Botswana 100% 100% Property Facilities Systems (Private) Limited Zimbabwe 100% 0% Dawn Produce (Private) Limited Zimbabwe 70% 0% Lipthong Investments (Private) Limited Zimbabwe 100% 0% Ekodey (Private) Limited (Brondesbury) Zimbabwe 76% 0%During the year, certain companies in the Group entered into arms length transactions withother companies in the Group. These intra-group transactions have been eliminated onconsolidation.Lipthong Investments (Private) Limited owns land, situated in Baines Avenue, in Harare andEkodey (Private) Limited, owns Brondesbury Park Hotel, in Juliasdale, both subsidiarieswere acquired through equity settled share based arrangements and the value of land andbuildings acquired were determined by professionally qualified valuers, CB Richard Ellis(Private) Limited using the open market value method. These have been accounted foras property, plant and equipment on the basis of the intended use of the property (note 6and 21 to the consolidated financial statements).
    • 2010 US$16 REVENUE Rental 13408n 277 391 Commission 2440 435 767 261 Cleaning services and other 87899 Total 386921117 OTHER INCOME Sundry income •• Profit on sale of assets held for sale 323196 39384 1 073555 Total 362580 1 07355518 EXPENSES BY NATURE Employee benefit expenses 1 138 545 456773 Depreciation 171 109 90742 Audit fees 94933 13210 Directors fees: -fees n600 27424 Travelling expenses 213312 59372 Telephone and fax 119054 1 671 Staff trainning 167261 17186 Advertising and commisions 194 391 5144 Motor vehicle expenses 220613 85047 Rent, repairs and maintenance 1n 920 2293 Impairment allowance 6385 Other expenses 497285 589368 Total administration expenses 3078408 1 348230 Employee benefit expenses Salaries and wages 984 102 442505 Social Security costs 92144 1 178 Medical aid 46115 763 Other 16184 12327 1 138 545 456773 Number of employees at period end 134 7019 FINANCE INCOME AND COSTS Interest income on short term deposits. 100 572 Interest expense ... 100 572
    • Current income taxDeferred income tax 479130 479130 •The tax on the Groups profit before income tax differs from the theoretical amount that wouldarise using the weiijQted average tax rate of 30.9% on the applicable profits of the Groupas follows: Profit before income taxTax calculated at domestic rates applicable to profitsTax effect on :- Income not subject to tax: 387472 48281- Finance income (100572) 26763- Expenses not deductible for tax purposes: (286900) (75044)- Change in tax rate: 479130Tax charge 479130The Minister of Finance announced a change in corporate tax from 30% to 25% on2 December 2009, 3% Aids levy is payable on the current income tax which results in aneffective tax rate of 30.9% and 25.75% respectively.The Company has no tax-related contingent liabilities and contingent assets in accordancewith IAS 37, Provisions contingent liabilities and contingent assets.21 Purchase of property, plant and equipmentAdditions per property plant and equipment(note 6 to the consolidated financial statements)Assets acquired by issue of shares(note 15 to the consolidated financial statements)Assets brought in by minority shareholders (584 760)Other non-cash additions (5235)Net cash used in purchase of property, plant andequipmentBasic earnings per share are calculated by dividing the profit attributable to shareholders ofthe Company by weighted average number of ordinary shares outstanding during the year.Profit attributable to shareholders of the Company 774824 769977Weighted average number of ordinary shares in issue 2457376507 2407090019Basic earnings per share (US cents per share) 0.03 0.03The Company has no dilutive potential ordinary shares; the diluted earnings per share arethe same as the basic earnings per share.
    • 23 BORROWINGS Group company loans •24 COMMITMENTS The Group an ompany have no capital commitments outstanding at year end (March 2009 - $nil) in respect of purchases of property, plant and equipment.25 CONTINGENCIES The Group and Company have no significant contingent liabilities.26 RELATED PARTY TRANSACTIONS The Group leases out all its hotels to African Sun Limited who have 16.57% stake in the Group. The leases are structured in a commercial way so as to charge market related turnover rentals.26.1 Lease rentals Lease rentals (note 16 to the consolidated financial statements)26.2 Key management compensation Key management includes executive directors of the Company and its subsidiary companies, the group finance executive and the company secretary. The compensation paid to key management for employee services are shown below: Salaries and other short-term employee benefits Other long-term benefits26.3 Year end balances arising from provision of professional services Receivables from related parties African Sun Limited The receivables from related parties arise mainly from the lease of hotel properties. The receivables bear no interest and no guarantees are in place.
    • The Group adopted IFRS 8, "Operating Segments". This has resulted in an increase in the number ofreportable segments presented. In addition, the segments are reported in a manner that is more consistentwith the internal reporting provided to the chief operating decision maker. As goodwill is generally allocatedby management at the operating level ("cash operating unit"), rather than at segment level, the change inreportable segments has not required a reallocation of goodwill to the newly identified operating segments,and no additional impairment of goodwill has been required as a result of adopting IFRS 8 . ••The Group has determined that its chief operating decision maker is the Executive Committee of the Group. * Hotel property * Property consultancy * Property development The segment information provided to the Executive Committee for the reportable segments for the year ended 31 March 2010 is as follows: r Hoell propeIty Property conaultllllcy Property cIweIopment Tot.II Tot.II 2010 2008 2010 2008 2010 2008 2010 2008 U8$ U8$ U8$ U8$ U8$ U8$ U8$ U8$Revenue 1340876 277391 2528334 767260 3869210 1 044652Operating profiU(loss) 141187 (383200) 689,019 79622 323 196 1 073 555 1 153 382 769977Included in operatingDepreciation 47145 24885 124761 65857 171906 90742Non current assetsInvestment property 69 300 000 69300000 69 300 000 69 300 000Property plant and equipment 71116 51877 464 087 417 585 8 084 546 5 226 335 8819749 5695797Goodwill 120186 120186 120 186 120186Current assetsNext seasons crops 249381 249 381Inventories 17 178 16762 17178 16762Trade receivables 110249 197526 806154 268352 4580 920984 465878Cash and cash equivalents 190 863 30666 93958 36174 284 821 66840Other assets 287275 287275Total assets 69872 028 69580069 1 501 562 859060 8338508 5513610 79512099 75952738
    • 28 RETIREMENT BENEFIT OBLIGATION The Group and all employees contribute to the following independently administered pension funds; Dawn Properties Limited pension and life assurance scheme This fund is fully funded, uninsured, consolidated scheme consisting of a defined contribution plan. All employees are members of this fund and they all contribute to a defined contribution plan. National Social Security Authority Scheme The Group and its employees contribute to the National Social Security Authority. This is a social security scheme nich was promulgated under the National Social Security Statutory Instrument. The Groups obligations under this scheme are limited to the specific contributions legislated from time to time. These are presently 4% of pensionable emoluments. There were no material events after the date of the statement of financial position that have a bearing on the understanding of these financial statements.The Groups operations have been significantly affected, and may continue to be affected by the challengingeconomic environment.The directors have assessed the ability of the Group to continue as a going concern and believe that thepreparation of these financial statements on a going concern basis is still appropriate. However, thedirectors believe that under the current economic environment a continuous assessment of the ability of theGroup to continue to operate as a going concern will need to be performed to determine the continuedappropriateness of the going concern assumption that has been applied in the preparation of these financialstatements. Number of.haresC.A Mataure 2000 2000SA Munyeza 8675518 8675518C.B. Thorn 12927 12927 8.690 445 8690445Messrs F. Rwodzi, M. Manyika and S.A. Munyeza hold a total of 17.70% (2009-18.07%) of thecompany through various investment vehicles.32 MINORITY INTERESTNo minority interest has been recognised in the statement of comprehensive income, in respect ofprofit for the year or other comprehensive income because both Ekodey (Private) Limited, a propertyholding company and Dawn Produce (Private) Limited, a greenfield horticultural company did not tradeduring the year.
    • Analysis of Shareholders as at 31 March 2010r Number of Issued Shareholdlng distribution Shareholders % Shares to 5,000 5,898 65.92% 8,032,434 - 0.33% 5,001 to 10,000 957 10.70% 6,864,860 0.28% 10,001 to 25,000 811 9.06% 13,079,168 0.52% 25,001 to _ 50,000 463 5.17% 16,314,407 0.66% 50,001 to 100,000 307 3.43% 21,444,026 0.87% 100,001 to 500,000 278 3.11% 63,488,397 2.58% 500,001 to 1,000,000 77 0.86% 57,292,977 2.33% 1,000,001 and over 156 1.74% 2,270,859,698 92.41% Total 8,947 100% 2,457,376,507 100% Shareholding by industry Local companies 586 6.55% 939,783,835 38.25% Nominees local 103 1.15% 447,212,939 18.20% Pension funds 169 1.89% 262,420,517 10.68% Local individuals resident 7.113 79.50% 231,240,088 9.41% Insurance companies 23 0.26% 231,105,513 9.41% Investments and trusts 530 5.92% 195,917,498 6.75% New non resident 31 0.35% 125,576,359 5.11% Banks 10 0.11% 36,017,592 1.47% Non residents 232 2.59% 8,546,290 0.35% Fund managers 29 0.32% 4,693,705 0.19% Other organisations 82 0.92% 2,292,115 0.09% Nominees, foreign 8 0.09% 2,124,843 0.09% Deceased estates .. ,; 16 0.18% 139,014 0.01% Employee share trust 10 0.11% 129,722 0.01% Undefined 2 0.02% 130,396 0.01% Foreign companies 2 0.02% 27,886 0.00% Exec. Share trust 1 0.01% 18,195 0.00% Total 8,947 100% 2,457,376,507 100%
    • rTOP 10 Shareholders Rank Shareholder Issued Shares % of total African Sun Limited 407,176,062 16.57% 2 Barclays Bank of Zimbabwe Nominees (Private) Limited 321,156,444 13.07% 3 Old Mutual e Assurance Company Zimbabwe Limited 226,022,598 9.20% 4 Old Mutual Zimbabwe Limited 219,478,006 8.93% 5 Tanvest (Private) Limited 206,156,231 8.39% 6 Fed Nominees (Private) Limited 166,599,867 6.78% 7 Datvest Nominees (Private) Limited 74,922,561 3.05% 8 Federated Properties (1992) Limited 57,854,578 2.35% 9 Stanbic Nominees (Private) Limited 40,467,593 1.65% 10 Edward Nominees (Private) Limited 29,228,612 1.19% Other 708,313,955 28.82% 2,457,376,507 100.0% Share Price Information fMid Market Prtce at: US cents 30 September 2009 1.51 31 March 2010 1.10Non public shareholder are defined in the Zimbabwe Stock Exchange Listing Requirements,which requires disclosure of public and non public shareholders, as follows;• The directors of the company;• An associate director of the Company or any•.. ubsidiaries; s• The Trustees of any employees share sche1ne or pension fund established for the benefit of any director or employees of the Company and its subsidiaries.• Any person who, by virtue of any agreement, has the right to nominate a person to the board of the Company; or• Any person who, is interested in more than 10% or more of the securities of the Company of the relevant class unless exempted by the committee.African Sun Limited, Barclays Bank of Zimbabwe Nominees (Private) Limited and the directorsshare holding disclosed in note 31 to the consolidated financial statements are catergorisedas non-public shareholders of the Company.
    • NOTICE IS HEREBY GIVEN that the Seventh Annual General Meeting of members will be held at HolidayInn Harare, comer Samora Machel and 5th Street in the Mazowe Room, Mezzanine Floor, on Thursday 30thof September 2010 at 1000 hours, for the purpose of transacting the following business:-ORDINARY BUSINESS1. To receive, consider and adopt the financial statements for the year ended 31 March 2010 together with the Report of the Directors and Auditors therein.2. Directorate In terms of the articles of association Dr. S.A. Munyeza retires by rotation at the forthcoming Annual General Meeting a eing eligible he offers himself for re-election. To ratify and confirm the appointment of Messrs. Dave Cooper, Mark Tunmer, Phibion Gwatidzo and James Worsfold as additional directors of the Company. To note the resignation of Mr. F Rwodzi, the Chairman, Mr. C. B. Thorn and Mr E.I Manikai from the board as at the end of June 2010.3. To approve the remuneration of the auditors for the financial year ended 31 March 2010 and to appoint auditors of the company for the ensuing year.4. To approve the remuneration of non executive directors of the Company.5. To transact all such other business as other business as may be carried out at an Annual General meeting.To consider and if deemed appropriate to pass the following as a Special Resolutions6. To approve that the Companys authorised share capital of ZW$ 400,000 comprising 4,000,000,000 (four billion) ordinary shares of ZW$ 0.000001 each, be and is here-by re-denominated to US$ 32,000 (thirty-two thousand United States of America dollars) comprising 4,000,000,000 (four billion) ordinary shares of US$ 0.000008 each.7. To approve transfer of an amount sufficient to fund the re-denomination of the share capital and share premium accounts.8. To approve that the directors of the Company be and are hereby authorized to do all such things necessary to give legal effect to the resolutions concerning the share capital.9. To amend the Memorandum and Articles of Association of the Company to the extent necessary pursuant to the above resolutions10.To approve/ratify the hypothecation of Crowne ~Iaza as security for the IDC loan granted to African Sun Limited. Members are entitled to appoint one or more proxies to act in the alternative and to attend and vote and speak in their place. A proxy need not be a member of the company. Proxy forms must reach the Companys registration office not less than 48 hours before the meeting. By Order of the Board N M Tome Company Secretary 13 August 2010.~------------A-n-n-u-a-I-R-e-p-o-r-t-2-0-1-0--------------
    • th8 Floor Beverley Court,100 Nelson Mandela,Harare.263-4-733633/4 - 733647/624263-4-730774/5 - 730764Mrs N. M. Tomenora@dawnpro.co.zwCorpserve2nd Floor, Intermarket Centre,Kwame Nkrumah/First StreetHararePricewaterhouseCoopersChartered Accountants (Zimbabwe)Building No 4 Arundel Office ParkNorfolk Rd, Mt Pleasant, HarareStandard Chartered Bank of Zimbabwe Ltd,Africa Unity Square Branch, Harare.
    • named company, hereby appoint •• as my/our proxy to vote for me/ us on my/our behalf at the annual general meeting of the company to be held on the 30th day of September 2010 and at any adjournment thereof Note: 1. A member who is entitled to attend and vote at the meeting is entitled to appoint a proxy to attend, speak and vote in his stead. The person so appointed need not be a member. 2. Proxy forms should be lodged at the registered office of the company by no later than 48 hours before the time of holding the meeting. 3. Unless specificvoting instructions are noted on this form of proxy, the appointee shall Change of Address Advice The attention of shareholders is drawn to the necessity for keeping the transfer secretaries advised of any change in name and/ or address.e------------A-n-n-u-a-/-R-e-p-o-rt-2-0-j-O-------------
    • 8th Floor Beverly Court, Nelson Mandela Avenue, Box CY 1618, Causeway, HararePhone: +2634733633/4,733647/624, +2634730774/5,730764. Fax: +2634796172 e-mail: info@dawnpro.co.zw