African Sun 2008 annual report

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

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African Sun 2008 annual report

  1. 1. Annual Report 2008 OUR VISION TAKES WING
  2. 2. The Kingdom
  3. 3. CONTENTSCompany Profile 2Financial Highlights 4Statement of Vision 5Our Vision Takes Wing 8Historical Highlights 9To our Shareholders and Partners 10Business Review 14Report of the Directors 20Accounting Philosophy 22Directors Responsibility for Financial Reporting 23Certificate by the Company Secretary 25Report of the Independent Auditors 26Financial Statements 28Five-Year Financial Review 62Supplementary Information 65Group Structure 68Shareholders Analysis 69Directorate 72Management 73Corporate Governance 76Notice of Annual General Meeting 79Shareholders Diary 81Contact Information 82Detachable – Proxy Form for the Annual General Meeting 83 The Victoria Falls Hotel Elephant Hills Resort African Sun Limited 2008 1
  4. 4. African Sun Limited COMPANY PROFILE A frican Sun Limited, ‘African Sun’ is the fastest operates the Great Zimbabwe Hotel in Masvingo, which is growing hospitality group in sub-Saharan Africa, located within walking distance from the Great Zimbabwe with interests in Zimbabwe, South Africa, Nigeria, and National Monument. Ghana. Established in 1968, the Group, then known as Zimbabwe Sun Limited, was part of Delta Corporation, Regionally, the Group has properties in South Africa, and has evolved significantly from being just a Zimbabwe- Nigeria and Ghana. In South Africa, operations consist of based hospitality management company into a truly The Grace in Rosebank and The Lakes Hotel and Conference pan-African operation. Centre in Benoni, both in Gauteng. In Nigeria, the Group operates under management contracts, Obudu Mountain In Zimbabwe, African Sun Limited is the leading player in Resort, Utanga Lodge and Amber Tinapa, all in Cross the tourism and hospitality industry, with the Zimbabwe River State, Nike Lake Resort in Enugu State as well as a operations forming the largest business within the African specialised spa boutique hotel in Lagos named the Clear Sun Limited group of companies. The Zimbabwe operations Essence California Wellness Centre and Boutique Hotel. portfolio currently comprises various city hotels and resorts In Ghana, we operate the Holiday Inn Accra Airport. across the nation. Three resort hotels are in the town of Victoria Falls, namely Elephant Hills Resort, The Kingdom All these developments are supported by a management at Victoria Falls and The Victoria Falls Hotel, the latter team comprising seasoned hotel and business managers jointly managed with Kingdom Meikles Africa Limited. providing the intellectual capital needed to up-scale Close to Victoria Falls, in Hwange, is African Sun Limiteds the business. safari operation, Hwange Safari Lodge. Other resort hotels in the Group are Troutbeck in Nyanga and Caribbea Bay Also under its wing, African Sun Limited holds a 17.72% and Fothergill Island Safari Lodge, both located in Kariba. equity interest in Dawn Properties Limited, an investment property holding company formed and then listed on the The city hotels in Zimbabwe include three Intercontinental Zimbabwe Stock Exchange in 2003 when the Group spun- Hotels Group (IHG) affiliated brands, the Crowne Plaza off wholly-owned property interests to concentrate on the Monomotapa in Harare, the three Holiday Inn branded hotel management business. Dawn Properties owns nine of hotels in Harare, Bulawayo, and Mutare, and the Express by the properties that African Sun Limited leases and operates Holiday Inn Beitbridge. In addition to these, the Group also in Zimbabwe. Caribbea Bay Obudu Mountain Resort The Grace in Rosebank2 African Sun Limited 2008
  5. 5. As part of its strategic thrust, African Sun Limited places the region, our brand strategy will focus on the use ofsignificant importance on its human capital base, and Intercontinental Hotels Group (IHG) brands, namelythis has resulted in the strengthening of its training Holiday Inn, Crowne Plaza and Express by Holiday Inn indivision, the Hospitality Training Academy (HTA). The main emerging markets. IHG brands are tried and tested withrole of the training academy is to ensure and maintain great brand equity and awareness, especially for foreignexcellent service delivery within the Group through the and business travellers, who have a high internationalimplementation of appropriate training programmes for brand awareness.our staff. African Sun Limited will use its own brands in marketsThrough the Hospitality Training Academy (HTA), African where the Group has already gained recognition.Sun Limited will replicate its excellent service standards These are:through the installation of satellite training academies Five Star Luxury: The Mulberryin west and east Africa, the two main areas of expansion Five Star City: Platinumplans in sub-Saharan Africa. Mid range: Amber Value: AdrenalinnGrowing the brands regionally is a fundamental factor in Long stay: MyPlacethe Groups continued quest to establish brand leadershipthrough which African Sun Limited will dominate other All these investments serve to enhance the Groups corebrands and become the benchmark for other players business which is to extend the provision of other leisurein the region. As African Sun Limited expands into activities reflective of a lifestyle that is unforgettable! Obudu Mountain Resort Troutbeck Resort African Sun Limited 2008 3
  6. 6. FINANCIAL hIGhLIGhTS For the year ended 30 September 2008 41% ROOM OCCUPANCY 54% OPERATING PROFIT MARGIN Z$706.13 bASIC EARNINGS PER ShARE GROUP Historical Cost 2008 2007 $ $ GROUP SUMMARY Revenue 811 829 069 449 173 Profit before tax 539 629 628 295 48 Attributable earnings 473 336 928 670 35 Total assets 16 593 398 526 134 1 176 Market capitalisation 82 556 088 480 000 19 145 SHARE PERFORMANCE ($) Earnings per share - Basic earnings basis 706.13 – - Fully diluted earnings basis 706.13 – Net asset value per share 18 678 – Market price per share 120 000 – FINANCIAL STATISTICS Return on equity (%) 4 4 Interest cover (times) 136 53 ROOMS UNdER MANAGEMENT 3 500 3 000 zIMbAbwEAN STORY 2 500 Local roomnights 400 000 Foreign roomnights 2 000 Number of roomsRoomnights 300 000 1 500 Zimbabwe 200 000 Africa 1 000 * Forecast 100 000 500 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2007 2008 2009* 4 African Sun Limited 2008
  7. 7. Statement of Vision VISIONThe Lifestyle Company creating unforgettable leisure experiences.MISSIONWe exist to create wealth in a sustainable manner by anticipating and meeting the needs of our stakeholders, throughthe provision of seamless leisure services in our chosen markets.WE DO SO bY:• Developing intimate and emotional relationships, as we reach out to hearts and minds.• Exceeding guest expectations.• Having a formalised unique sequence of doing things.• Implementing innovative techniques that seek to continuously re-invent African Sun Limited in order to maintain excellence in everything we do.• Creating opportunities for personal growth and balanced lifestyles for all staff to enable them to positively impact lives around them.FOCUSWe have re-defined our business as encompassing all aspects of the tourism chain.We are committing ourselves to expanding our operations throughout Africa through direct investment, equityparticipation and strategic alliances.We will provide a holistic hospitality and leisure product that will meet the needs and exceed the expectationsof our guests.These include the integration and co-ordination of:• Seamless delivery of guests to and from the destination.• Co-ordination of an exciting suite of activities and attractions.• Provision of appropriate high quality accommodation and amenities.CORE VALUES AND bELIEFSINTEGRITY – We do what we say. We are true to self and true to others.RESPECT – In all our relationships, we seek to build and honour.CARE – We show concern and seek the well-being of everyone.FUN – We celebrate life together. African Sun Limited 2008 5
  8. 8. African Sun Values ThE AFRICAN SUN WAY SHAREd VISION – We will always seek to have a buy-in whilst providing leadership. SHAREd VALUES – Our values are the glue that binds us together. TIMEOUS ExECUTION ANd CLOSURE – It is not done until there is closure. EFFECTIVENESS – We will deliver beyond expectations. AdAPTAbILITY – We will be flexible without losing our strategic intent. EFFICIENCY – We will be disciplined in utilizing resources in all we do. CONNECTIVITY – It is our responsibility to get the message to the other party. "Come to the Edge We might fall Come to the Edge Its too high! Come to the Edge And they came And he pushed And they flew" – Christopher Logue Caribbea Bay Resort Obudu Mountain Resort The Grace in Rosebank6 African Sun Limited 2008
  9. 9. Obudu Mountain ResortAfrican Sun Limited 2008 7
  10. 10. Our Vision Takes Wing T here comes a moment when the young eagle knows with the wind behind us, will follow this direction with instantly that it is time to fly. For a long period it flaps dedication and commitment. and strengthens its wings, then suddenly takes off into the sublime air. This is such a time for African Sun Limited. AN EYE ON THE FUTURE The eagle builds its nest with care and skill. From this After 40 years of stability and growth, we are now lofty eyrie it can view its kingdom and explore its world. spreading our wings across Africa, with a new vision, We too have viewed the terrain with careful detail and laid seeking out opportunities and focusing on quality of well-constructed plans to become the largest lifestyle and service, people and hospitality across different brands. hospitality Group right across the African continent. SOARING TO NEw HEIGHTS A SYMbOL OF POwER ANd TEAMwORk It has taken perseverance and tenacity to carry us through Certain eagle species are more successful when they hunt stormy times. Like the eagles gliding over our resorts, in a team of two. This is particularly true of Zimbabwes we have used the wind of the storm to lift us above the own majestic black eagle, which has a dense population clouds and view a landscape of great possibilities. We in the Matopos Hills. Team spirit is one of African Sun have set ourselves important and far-seeing objectives Limiteds core values, and one of the reasons for our to expand into new and unfamiliar markets, and now growth and success. This is our time to fly.8 African Sun Limited 2008
  11. 11. Historical Highlights OUR jOURNEY ThUS FAR • 1952 – Rhodesia and Nyasaland Hotels (Private) • 1994 – First regional office for reservations is Limited is formed as a wholly-owned subsidiary of established in Johannesburg Rhodesian Breweries • 1998 – The construction of Express by Holiday Inn • 1968 – Sable Hotels (Private) Limited is established in Beitbridge is completed • 1973 – Rhodesian Government grants first casino • 1999 – Zimbabwe Sun Limited acquires 40% equity licence for the Victoria Falls Hotel and management of Baio Do Paraiso • 1974 – Development of first four world class hotels: • 1999 – Makasa Sun is re-developed into The Monomotapa Hotel in Salisbury, The Wankie Safari Kingdom at Victoria Falls Lodge, Caribbea Bay at Kariba, and the Elephant • 2002 – Zimbabwe Sun Limited is unbundled from Hills Country Club in Victoria Falls Delta Corporation • 1979 – Meikles Southern Sun Hotels is established, • 2003 – Zimbabwe Sun Limited owns 100% shares in becoming the largest hotel chain in southern and the timeshare operation in Vilanculos, Mozambique eastern Africa, with control of thirteen major • 2003 – Dawn Properties Limited is listed as the first properties in the country property entity on the Zimbabwe Stock Exchange • 1980 – Meikles Southern Sun Hotels changes • 2003 – The Hospitality Training Academy (HTA) its name to Zimbabwe Sun Hotels after is re-launched Zimbabwe’s Independence • 2003 – First negotiations for management of Holiday • 1988 – Zimbabwe Sun Hotels merges with Touch Inn Accra Airport, Ghana the Wild safari operations, later selling it to Rainbow • 2004 – Zimbabwe Sun Limited acquires The Grace Tourism Group (Private) Limited on 30 April 1998 Hotel in Rosebank South Africa, ranked among the • 1990 – Zimbabwe Sun Limited is floated on the "Top Ten" hotels in Africa and the Middle East by Zimbabwe Stock Exchange (ZSE), at the time being Condé Nast Traveller (USA) in its first year the largest flotation in Zimbabwe, with 70 million of operation shares offered to the public which was • 2008 – Zimbabwe Sun Limited adds The Lakes Hotel over-subscribed by 28% and Conference Centre, in Johannesburg, South • 1990 – Opening of the timeshares built in Troutbeck, Africa to its portfolio Nyanga and at Caribbea Bay, which received • 2008 – Zimbabwe Sun Limited rebrands its name to “Gold Crown Resorts” status from the RCI in 1999 African Sun Limited • 1991 – First Holiday Inn franchise in Harare • 2008 – African Sun Limited adds Obudu Mountain • 1991 – The Elephant Hills Resort hosts the Resort to its regional portfolio Commonwealth Heads of Government meeting, • 2008 – African Sun Limited takes over management officially opening in 1992 of Holiday Inn Accra AirportThe Victoria Falls Hotel 1972 Johannesburg 1898 Monomotapa Hotel 1973 African Sun Limited 2008 9
  12. 12. To our Shareholders & Partners A s we take flight and look into the future, we must acknowledge the events of the past that have given strength and provided the launch pad for African Sun Limited to soar into the future. I must hasten to add that the past is not a dwelling place but a reference point, and on that note, I must spend a little time on our not-too-distant past which has provided the building blocks for the future of the Group. African Sun Limited, formerly Zimbabwe Sun Limited, changed ownership in 2002, thus beginning a strategic journey to attain blue chip status for the Group.10 African Sun Limited 2008
  13. 13. dE-MERGER OF THE PROPERTY INTERESTS thus the hospitality training institute was re-launchedThe restructuring and unbundling of Zimbabwe Sun in 2003 as the Hospitality Training Academy (HTA).Limiteds property interests to form Dawn Properties This was a strategic decision aimed at ensuring thatLimited was undertaken to preserve the value of these the quality of the Groups human capital would remainassets and drive more value for the shareholders in line relevant to the Groups growth and superior servicewith international trends. It also allowed the Group to delivery strategies.focus its management strength on its hospitality andleisure business. Dawn Properties Limited was listed on FINANCIAL SUFFICIENCY ANd HOSTING CULTUREthe Zimbabwe Stock Exchange (ZSE) and is currently the The Group focused on its strategy to increase revenuelargest listed property company on this bourse. generation, manage cash flows and costs, and increase productivity from 2004 to 2008. Prudent and financialREGIONAL ExPANSION ANd INCORPORATION OF management saw the Group emerge as a ‘Blue Chip’AFRICAN SUN LIMITEd entity through increased market capitalization; the GroupThe strong belief by the Group’s executives that they could has paid dividends consistently.create a legacy of hospitality excellence and leadershipnot only in Zimbabwe, but in Africa, created a deliberate The gap between service expectations and serviceeffort to spread the Groups risk geographically in order delivery was recognised and in 2007 focus on thisto maximise yields and foreign currency earnings. key area gave impetus to a service culture that had previously not been experienced in the ZimbabweanThis led to the registration of African Sun Limited PCC hospitality industry. This was the introduction of thein Mauritius as a wholly-owned subsidiary of African How May I Serve You? (HMISY) service culture campaign.Sun Limited to drive the regional expansion initiative. In this campaign, the Group Chief Executive Officer heldThe Grace in Rosebank, Johannesburg, South Africa himself accountable for the service performance ofwas the Group’s first hotel outside Zimbabwe and the the whole Group and responded directly to any issuesregionalization drive thus became a reality in February of service failure from the public. This raised the bar2003. The Grace in Rosebank was to set a precedent for for hospitality operations in Zimbabwe and the Groupthe Group’s drive to achieve hospitality excellence and emerged as a market leader.brand leadership in the region. With many internationalaccolades (ranked the Ninth Best Hotel out of the Top 25 RE-bRANdINGhotels in Africa and the Middle East, and 47th of the best In May 2008, Zimbabwe Sun Limited re-branded to African100 hotels worldwide by Travel & Leisure, a United States Sun Limited in order to re-position the Group as a leadingof America-based hospitality magazine), The Grace in brand of hospitality in Africa; the name encapsulates theRosebank is aptly dubbed more than a gracious home, as synergies within the Group’s operations in sub-Saharanit epitomizes the finest in hospitality and service. Africa as we emerge as a pan-African hospitality Group within the tourism chain.RE-LAUNCH OF THE HOSPITALITY TRAINING ACAdEMYThe success of the Group was largely dependent on its As we look into the future we must remember that weskilled manpower and the quality of its human capital; have achieved our success as a result of processes Victoria Falls Hotel The Grace, Johannesburg Troutbeck Resort African Sun Limited 2008 11
  14. 14. and initiatives that have been carefully crafted and and superior for both the Group and the industry at large. executed, in order to derive maximum yields and create The Group’s human skills base is its greatest asset, and sustainable wealth. is a key strategic aspect of the regionalisation strategy. To this end, satellite training academies will be set up INCREASE OUR CAPACITY: GROw ROOMS UNdER in east, west and southern Africa in order to maintain MANAGEMENT FROM CURRENT 2500 TO 8500 bY 2012 standards and replicate the processes that have given Research in sub-Saharan Africa has shown that Africa African Sun Limited its winning formula. has a critical need for five times more rooms in the hospitality sector than there are available. As such, CREATING SUSTAINAbLE wEALTH African Sun Limited has targeted to increase rooms under A relevant business model is key to our operations. In management in Africa from the current 2 500 to 8 500 keeping with modern trends, the Group’s portfolio is by 2012. This pathway will clearly set the pace for brand largely dependent on a good mix of key revenue drivers dominance in the sub-region and will see the bulk of the together with identification of locations for expansion, Group’s business deriving from west, east and southern based on sound business practice. The Group’s target will Africa. Zimbabwe will contribute 28% of total rooms be primary growth in mega cities in Africa, resources rich by 2012. This expansion highlights diversification and countries (oil and minerals) and leisure enclaves. spread of risk managed by country and region. Focus will be on the profitable core business (rooms, food EMPLOYER OF CHOICE and beverage, conferencing, casinos and entertainment), The Group continues in its quest to become an employer of and any linkages that will anchor its core. However, in choice by providing competitive remuneration, an enabling order to reach critical mass and maintain a competitive and winning environment driven by personal learning and edge in a wider range of regions the Group will maximize development. In the year under review, the Group has return through pursuing a fee-based model which retained the bulk of its employees, with staff movements includes Leasing, Management and Franchise contracts below international trends. Remuneration remains in the to maximize revenue opportunities. upper quartile in the hospitality industry, with regional benchmarks being the yardstick throughout the Group. Ultimately, the long term vision is to create a franchise business from our own brands, allowing leases and The role profiling and brand alignment exercise was management contracts to anchor the Group as we work on conducted across the Group resulting in staff being our goal to achieve a market capitalisation of US$1billion. ideally placed in their roles. A mentorship programme In addition, ownership of hotels will be considered in key was implemented in order to replicate the DNA across the strategic locations such as Cape Town, Johannesburg, Group as a way of maintaining high standards. Lagos and Nairobi. As Human Capital is a key aspect of the expansion The re-modelling of the Group’s distribution channels strategy, the Group has resourced and strengthened its through the introduction of channel management will Hospitality Training Academy (HTA) in order to provide a help decrease reliance on third party intermediaries to ‘one-stop’ shop for all training requirements in hospitality drive sales, hence resulting in higher yields. Availability and to ensure that its human capital base remains relevant to a wider market segment makes it possible to manage The Grace in Rosebank Hwange Safari Lodge Crowne Plaza Monomotapa12 African Sun Limited 2008
  15. 15. rates and inventory at the point of purchase and will Pipeline projects nearing completion include: offer a direct selling approach on the back of a dynamic  Holiday Inn Kano, Nigeria with 200 rooms pricing strategy so that the hotel knows where and who  Holiday Inn Arusha, Tanzania, with 198 rooms the client is at the time of booking.  Mongomo Hotel, in Bala, with 74 rooms and Hotel 3 Augusto in Malabo, with 45 rooms, both in Equatorial Guinea. GROwING OUR bRANdS REGIONALLY Much of this report on the Group has been intentionally The Group continues in its quest to establish brand focused on the future and, as a consequence, comment leadership in which African Sun Limited will dominate on the financial results will be found in the Business other brands and become the benchmark for other players Review Report. in the region. As African Sun Limited goes into the region, combined brand strategy of the use of Intercontinental dIRECTORATE Hotels Group (IHG) brands, namely Holiday Inn, Crowne Mr D Mamvura and Mrs P Murombedzi resigned from the Plaza and Express by Holiday Inn in emerging markets, Board on 30 August and 30 September 2008, respectively. is key. IHG brands are tried and tested with great brand Their valued contribution to the Board over the years is equity and awareness, especially for foreign and business much appreciated. travellers. In markets where we have gained recognition, we will use our own brands. Not only will the Group FINAL dIVIdENd dECLARATION be able to generate higher average daily rate (ADR), In light of the Groups satisfactory performance, I am pleased occupancy and revenue per available room (REVPAR), to report that the Board of Directors has declared a final the high international brand awareness will facilitate the dividend of $229.72 per share payable out of the profits securing of funding as and when this may be required. of the company for the period ended 30 September 2008. Shareholders will be able to receive dividends wholly in cash bRANd VALUE AddITION or take a script dividend in the form of ordinary shares. The In its on-going quest to create sustainable wealth and offer price will be determined by taking the closing price unlock shareholder value, the Group will seek a dual of the African Sun Limited shares on 30 September 2008. listing on another major bourse by 2010. Through Dividend warrants will be posted and cheque payments these plans and developments, African Sun Limited made to shareholders on or about 12 February 2009. has successfully planted its footprint in strategic target markets. We will continue to increase our presence APPRECIATION across Africa and make growth objectives for wealth, As Chairman I would like to commend the management and creative brand dominance, capacity and legacy a reality. staff for the efforts made during the year and their ability to adapt to the ever-changing business environment. Much IN CLOSING appreciation also goes to my fellow directors for their support I am pleased to say that that the continental thrust into and contribution to the business of the Group over the west, east and southern Africa, is a totally co-ordinated past year. exercise based on potential projects that will fulfill laid down investment criteria. Our Groups investment strategy is endorsed by these acquisitions to date: The Grace in Rosebank, South Africa The Lakes Hotel and Conference Centre, South Africa E M Makonese Holiday Inn Accra Airport, Ghana Chairman Obudu Mountain Resort, Nigeria 12 February 2009 Utanga Lodge, Nigeria Clear Essence California Wellness Centre and Boutique Hotel, Lagos, Nigeria Nike Lake Resort, Nigeria Amber Tinapa, Nigeria African Sun Limited 2008 13
  16. 16. Business Review I am pleased to share with you some of the highlights that have made this year exciting. African Sun Limited re-branded in May and this gave realization to a bigger vision which has seen the Group’s thrust to increase its rooms under management in sub-Saharan Africa take wing. The Group attained an additional 1 100 rooms in the year under review, which when averaged, reflected an opening of a new hotel every six weeks! This has taken place under some global challenges which have affected the hospitality industry in various ways. On the African front, this has included the Zimbabwe elections scenario, and on a worldwide scale the global credit crunch which dampened arrivals from some of our source markets in Europe and America. More recently, the bombings in Mumbai, India have also affected international travel. Going forward, African Sun Limiteds stance has been to adopt a growth mode instead of merely operating14 African Sun Limited 2008
  17. 17. The Grace in Rosebank The Graceon survival mode. This has paid off handsomely as the until there is closurebusiness model, geared at growth, has enabled the EFFECTIVENESS – We will deliver beyond expectationscompany to meet some of its targets in pursuance to the AdAPTAbILITY – We will be flexible without losing ourquest to become big in Africa. strategic intent EFFICIENCY – We will be disciplined in utilizing resourcesThe Group has also taken a position to ensure in all we dostandardization in the way of doing business and has called CONNECTIVITY – It is our responsibility to get ourthis the African Sun Way. This was adopted at the annual message across to the other partyManagement Conference and will see predictability beingan integral part of the business regardless of physical zimbabwelocation. The African Sun way entails the following: The economy has continued to deteriorate, resulting in aSHAREd VISION – We will always seek to have a buy-in reversal of growth trend in foreign arrivals experiencedwhilst providing leadership over the last two years. Governments of some of theSHAREd VALUES – Our values are the glue that binds international source countries downgraded the countryus together as a destination, in the aftermath of the electionsTIMEOUS ExECUTION ANd CLOSURE – It is not done resulting in significant cancellations by foreign guests. African Sun Limited 2008 15
  18. 18. Foreign room nights therefore recorded a 6% decrease FINANCIAL PERFORMANCE compared to prior year. Group Hotel occupancy remained steady at 41% compared to 40% achieved in 2007, whilst operating However, hotel occupancy increased to 41% from margins grew to 53.5% compared to 29.5% in 2007, 39% last year, on the back of an upsurge in domestic owing to the contribution of exchange gains on debtors patronage, albeit at lower yields due to the regulated and foreign currency denominated balances. Operations in prices. Yields achieved by African Sun Limiteds hotels the rest of Africa, which constitute 11% of current room remained suppressed compared to similar properties capacity, contributed US$8.7million in turnover, up from in other regional countries. Cost containment measures US$5.5million in the prior period. This represents 27% of continued to be used with the effect of improving the consolidated turnover in comparison to a contribution of suppressed margins caused by the skewed pricing 15% in the previous financial year. Zimbabwe hotels, which structure. This assisted in cushioning the Group from constitute 89% of the current room capacity contributed the inflationary environment. The new pricing structure 73%. The growth in operations in the rest of Africa, which came into effect in October 2008, which allows revaluation of Plant and Equipment and the surge in fair hotels to peg rates in hard currency, should however value of the investment in Dawn Properties Limited and assist in improving yields in the future. other approved hedging instruments, contributed to the significant growth of the Statement of Financial Position. South Africa Economic growth continues to be spurred by fixed capital bUSINESS MOdEL formation as the 2010 Soccer World Cup draws near. As African Sun Limited pursues its expansion, the Group Prospects for travel therefore remain positive after FIFA will target primary and growth cities in Africa to establish endorsed South Africa to host the Confederations Cup in hotel operations. These are cities where operations are 2009 just before the World Cup. Contribution to Group likely to thrive owing to the great potential inherent in their turnover from South African operations increased to 27%, resources and people. Hotel operations run by the Group compared to 15% in the prior reporting period, owing to will continue to focus on rooms, food and beverage, casinos, the acquisition of a long term lease on the operations conferencing and entertainment. As the company’s own of the 151 roomed The Lakes Hotel and Conference brands are set to dominate on the African continent, the Centre in Johannesburg and the 37% improvement in the Group is able to earn franchise fees to augment main line average daily rate (ADR) at The Grace in Rosebank. business activities of lease and management contracts. The Group will seek to obtain lease and management Nigeria contracts as it expands into Africa so as to minimize Nigeria’s economy benefited from high oil prices experienced risk, but ownership will be considered in strategic in the first half of 2008 and the resultant economic growth locations. Where necessary, mergers and acquisitions has translated directly into increased hotel rates and will be used to gain entry into more mature markets. occupancies within Nigeria’s top destinations. In May 2008, African Sun Limited assumed management of Obudu STRATEGIC GOALS Mountain Resort, a leading leisure facility in Cross River  To grow rooms in Africa under African Sun Limiteds State, having agreed a plan with the state government to management from the current 2 500 to 8 500 by 2012. bring the resort to its full operational potential through an  To become an employer of choice by providing competitive improvement in access and regional marketing initiatives. remuneration, an enabling and winning environment driven by personal learning and development. Ghana  To achieve a market capitalization of US$1billion. Macroeconomic stability, an increasingly business friendly  To establish brand leadership where we dominate other environment and the recent discovery of oil in Ghana, will brands and become the benchmark for other players. spur growth and demand for accommodation. African Sun  To seek a dual listing on a major bourse by 2012. Limited assumed management of the Holiday Inn Accra These goals have continued to be the guiding factor as the Airport on 15 August, 2008. The hotel performed above Group realizes its vision of attaining 8 500 rooms under industry average, achieving a revenue per available room management by 2012. In view of this strategic positioning, (RevPAR) of US$124 in the first few months of opening, it is appropriate that I furnish you with an update on these which was 11% ahead of the hotel’s competitive set. goals for the period under review.16 African Sun Limited 2008
  19. 19. Hwange Safari Lodge Hwange Safari Lodge Express by Holiday Inn Beitbridge REVIEw OF THE STRATEGIC GOALS excellence remain the dominant factor in our strategy.1. Capacity Growth Initiatives such as role profiling for all staff as well as At the beginning of the 2008, the Group had 73 rooms brand alignment were embarked upon to ensure that under management outside Zimbabwe, but as our vision the correct people are aligned to the correct job and the took wing we closed the year with nearly 1 100 rooms correct hotel to ensure high service delivery at all times. and eight operational hotels. The Group has experienced exponential growth with the addition of a total of With the growth that the Group is experiencing, it is 877 rooms in West Africa, namely, Obudu Mountain paramount that service standards are adhered to. This Resort in Cross River State, Nigeria with 159 rooms has been addressed by the inclusion of the Hospitality and Holiday Inn Accra Airport with 168 rooms. These Training Academy (HTA) in all pre-openings of new came on board in July and August 2008 respectively. properties to ensure that the gap between new units and the African Sun way of doing things is closed. In Of these 877 rooms, 548 came on board in the latter existing properties, the Hospitality Training Acacemy part of the year and were effectively under Africa Sun (HTA) will focus on Service Revitalization Programmes Limited Management between November and December group wide through strategic alliances with industry 2008. These are Utanga Lodge with 90 rooms and leaders in training such as Cornell University and Swiss Amber Tinapa with 243 rooms, both in Cross River Hotel School. Attention will be paid to the following: State, Nigeria. In addition, Nike Lake Resort in Enugu  Service Quality State, also in Nigeria added 215 rooms to the portfolio.  Quality Control In South Africa, The Lakes Hotel and Conference Centre  The African Sun Way with 144 rooms came on board in August 2008.  People  Brand Going forward, the Group will see West Africa having the largest number of rooms under management As the expansion drive comes to fruition, a sustainable given the potential that is represented by that region. service support system is imperative and this has Projected regional contributions by 2012 will be been addressed through the introduction of satellite as follows: training academies in both West Africa and Equatorial West Africa 35% Guinea in order to manage the service gaps and provide East Africa 7% continuous training which is a vital component of the Southern Africa 33% (excluding Zimbabwe) hospitality industry. Zimbabwe 25% The main Hospitality Training Academy in Zimbabwe will2. Human Resources and Hospitality Training continue to seek strategic alliances with other accredited Academy (HTA) institutes of higher learning in order to upgrade the level People continue to be the backbone of African Sun Limited of qualifications. The Hospitality Training Academy will and as the Group grows, it is imperative that systems are not only provide training for African Sun Limited hotels put in place to ensure that skills development and service in Zimbabwe, but for the industry as a whole. African Sun Limited 2008 17
  20. 20. 3. Market Capitalization in selected areas with linen and crockery. In addition, the Research conducted by Renaissance Capital has valued Group has partnered with World Vision Zimbabwe to assist African Sun Limited at US$0.54 per share (Market in their eradication of poverty and hunger programme Capitalization of US$389 million assuming confirmed with specific reference to identified children who have rooms of 3500 including the existing rooms). According been orphaned as a result HIV and AIDS. to this research, and taking into account the target of 8500 rooms, African Sun Limited value grows to US$762 LOYALTY PROGRAMMES million, a clear indication of the attainability of our goal Loyalty Programmes, notably Sunset Club and Sun to reach US$1 billion market capitalization by 2012. Rewards mainly active in the Zimbabwe market continue to add value to the business, and in the period under 4. brand Leadership review have contributed significantly to room nights The Group is on course with its quest of establishing brand to Zimbabwe operations. Sunset Club achieved a leadership in the areas within which it has chosen to operate. contribution of 13% to room nights and Sun Rewards The period under review saw the introduction of African contributed 40% room nights for the period ending Sun Limiteds own mid range brand, Amber, in Tinapa, 30 September 2008. As the pan-African expansion Cross River State, Nigeria. On the Zimbabwean front, the programme takes shape, loyalty programmes will plans for building an Amber branded hotel in the border be adopted to gain market share as well as develop town of Beitbridge were signed off which will introduce customer allegiance to the African Sun Limited brands. a total of two African Sun Limited Amber branded hotels within the group, in the period under review. African Sun CONCLUSION Limited continues to expand its IHG branded properties This year the Group made a conscious decision to increase with the addition of Holiday Inn Accra Airport in Ghana. rooms and grow brand equity. This has largely been This hotel performed 11% ahead of its peers within its first successful as evidenced by the many accolades received few months under management by African Sun Limited. throughout 2008. The Grace in Rosebank continued to raise high the African Sun Limited Flag and was named CORPORATE SOCIAL RESPONSIbILTY the Best Hotel in Johannesburg in the United States based As African Sun Limited, the Group has a robust corporate Condé Nast Traveller Choice Readers awards.The Victoria social investment programme which has several initiatives Falls Hotel was given the accolade of Zimbabwe’s leading under the banner of its Suncare Corporate Responsibility resort by the World Travel Awards awarded at Indaba held Programme. The basis of the African Sun Limited social in Durban in May 2008. In addition, African Sun Limited responsibility programme is in line with the United was recognised by the Institute of Personnel Management Nations eight Millennium Development Goals which (Zimbabwe) for its keen interest and success in Human cover the following areas of need throughout the world: Resource Development in the training of its personnel  Eradicate Extreme Poverty and Hunger across the Group. It has indeed been an exciting year  Achieve Universal Primary Education which will be used as the launch pad to soar higher in the  Promote Gender Equality quest to achieve the stipulated goals.  Reduce Child Mortality  Improve Maternal Health In conclusion, I would like to acknowledge my executive  Combat HIV and AIDS, Malaria and Other Diseases team, management and staff for their valued contribution  Ensure Environmental Stability and direction. In addition, I would like to express my  Develop a Global Partnership for Development. utmost appreciation for the leadership shown by the African Sun Limited has adopted the following board and my fellow directors which has enabled our specific goals: Group to attain the success it has seen this year.  "Achieve Universal Primary Education"  "Health Improvement"  "Eradication of Poverty and Hunger" The Group’s initiatives include distribution of primary school text books for every child in selected schools in the S A Munyeza areas within which it operates. African Sun Limited has Group Chief Executive Officer also undertaken to assist less privileged district hospitals 12 February 200918 African Sun Limited 2008
  21. 21. Caribbea BayElephant Hills Resort The Grace in Rosebank Obudu Mountain Resort African Sun Limited 2008 19
  22. 22. Clear Essence California Wellness Centre and Boutique Hotel Report of the Directors The Directors present their Annual Report and the Audited Financial Statements of the Company and the Group for the twelve months ended 30 September 2008. YEARS RESULT HISTORICAL COST $ Profit attributable to shareholders 473 336 928 670 Dividends Interim: $556.40 (old currency) per share paid in August 2008. Final: $229.72 (revalued) per share paid in November 2008. CAPITAL ExPENdITURE Capital expenditure for the twelve months to 30 September 2008 on properties and operating assets amounted to $120 711 871 625.00. The programmed capital expenditure for the year to 30 September 2009 totals $1 138 019 250 000.00, of which $548 125 000 000 has been set aside for Product Improvement, Safety and Essential Services and new projects.20 African Sun Limited 2008
  23. 23. INVESTMENTSThe Group holds equity investments in the following organisations to the extent indicated below:African Sun Limited PCC (Mauritius) 100%African Sun Zimbabwe (Private) Limited 100%RCI (Zimbabwe) (Private) Limited 24%Dawn Properties Limited 17,72%SHARE CAPITALThe issued share capital was increased, by the issue of 43 035 081 ordinary shares, to 687 967 404 ordinary shares.The shares were issued in terms of share option schemes and interim scrip dividend. Accordingly, the issued share capitaland share premium totals $8 832.00. There are no unexercised shares under the current employee share option scheme.RESERVESThe movement in the reserves of the Group are shown in the Group Statement of Comprehensive Income, GroupStatement of Changes in Shareholders’ Equity and in the Notes to the Financial Statements.dIRECTORSMessrs N Mangwiro, T N Chiganze and L T Kapungu retire by rotation. All being eligible, they will offer themselves forre-election at the Annual General Meeting.AUdITORSMembers will be asked to re-appoint PricewaterhouseCoopers as auditors to the Group for the ensuing year.ANNUAL GENERAL MEETINGThe Thirty-Seventh Annual General Meeting of members of the Company will be held on Friday 27 March 2009 at12:00 at Holiday Inn Harare.by the order of the board:E M MakoneseChairmanS A MunyezaGroup Chief Executive OfficerE T ShangwaCompany Secretary12 February 2009 African Sun Limited 2008 21
  24. 24. Accounting Philosophy ACCOUNTING PhILOSOPhY A frican Sun Limited is dedicated to achieving meaningful and responsible reporting through comprehensive disclosure and explanation of its financial results. This is done to ensure objective corporate performance measurement, to enable returns on investment to be assessed against the risks inherent in their achievement and to facilitate appraisal of the full potential of the Group. The core determinant of meaningful presentation and disclosure of information is its validity in supporting management’s decision-making process. While the accounting philosophy encourages the pioneering of new techniques, it endorses the fundamental concepts underlying both the financial and management accounting disciplines as enunciated by The Institute of Chartered Accountants of Zimbabwe, The International Accounting Standards Board and The International Federation of Accountants. The Group is committed to regular review of financial reporting standards and to the development of new and improved accounting practices. This is practised to ensure that the information reported to the management and stakeholders of the Group continues to be internationally comparable, relevant and reliable. This includes, wherever it is considered appropriate, the early adoption of financial reporting standards. During the year, the Group early adopted 1FRS 8 Operating Segments for its half-year results. This was an endeavour to adhere to the standards of disclosure of all relevant information so as to influence economic decisions by all of our shareholders. For the final results, International Accounting Standard 1 (IAS1) – Presentation of Financial Statements (revised) was also adopted early in the year. This resulted in significant changes in primary statements being changed from Income Statement, Balance Sheet, Cash flow Statement and Statement of Changes in Equity, to Statement of Comprehensive Income, Statement of Financial Statement, Statement of Cash flow and Statement of Changes in Equity respectively. This is to disclose fully the financial effect of non-owners increase in equity in the Statement of Comprehensive Income so that only changes resulting from shareholders contributions will be recognised directly in equity. This therefore enhances reliability and relevance of the Groups financial information.22 African Sun Limited 2008
  25. 25. Financial Reporting DIRECTORS RESPONSIbILITY FOR FINANCIAL REPORTINGAfrican Sun Limiteds Directors are required by the a Risk and Audit Committee of the Board of Directors,Companies Act (Chapter 24:03) to maintain adequate which meets quarterly with Management, the internalaccounting records and to prepare financial statements auditors and external auditors, to review specificfor each financial year which present a true and fair view accounting, reporting and internal control matters,of the state of affairs of the Group at the end of the and to satisfy itself that the system of internal controlfinancial year, and of the profit or loss and cash flows is operating effectively. Both the internal auditors andfor the period. In preparing the accompanying financial the external auditors have unlimited access to the Riskstatements, generally accepted accounting practices and Audit Committee. The Committee also reviews thehave been followed and suitable accounting policies have interim and annual results of the Company prior to theirbeen used and applied consistently and reasonable and publication. In addition, the Group’s external auditorsprudent judgements and estimates have been made. The review and test appropriate aspects of the internalfinancial statements incorporate full and responsible financial control systems during the course of theirdisclosure in line with the accounting philosophy of the statutory examinations of the Group.Group stated on page 22. The Group’s Risk and Audit Committee has met theThe Directors have reviewed the Group’s budget internal and external auditors to discuss their reports onand cash flow forecast for the twelve months to 30 the results of their work, which include assessments of theSeptember 2009. On the basis of the review of the relative strengths and weaknesses of key control areas. Inoperating forecasts and in light of the current financial a Group of the size, complexity and geographical diversityposition and existing borrowing facilities, the Directors of African Sun Limited, it may be expected that occasionalare satisfied that African Sun Limited is a going concern breakdowns in established control procedures can occur.and have continued to adopt the going concern basis No breakdowns involving material loss have been reportedin preparing the financial statements. The Group’s to the Directors in respect of the year under review and itexternal auditors, PricewaterhouseCoopers, have is believed that none of any significance exist.audited the financial statements and their reportappears on pages 26 and 27. The historical cost financial statements for the twelve months ended 30 September 2008 which appear onThe Group has an independent internal audit function, pages 28 to 61 have been approved by the Board ofwhich has the objective of assisting executive Directors and are signed on its behalf by:management and the Risk and Audit Committee in thedischarge of their responsibilities, and which monitorsthe effectiveness of the accounting system and relatedinternal financial controls on a continuing basis. Theinternal audit function performs a critical examination of E M Makonesethe financial and operating information for Management, Chairmanand reports its findings and its recommendations toManagement and to the Risk and Audit Committee.Procedures are in place to identify key business riskstimeously, to determine the likelihood of the risks S A Munyezacrystallising, and to determine the significance of the Group Chief Executive Officerconsequential financial impact on the business. There is 12 February 2009 African Sun Limited 2008 23
  26. 26. Hwange Safari Lodge Clear Essence California Wellness Centre and Hwange Safari Lodge Express by Holiday Inn Beitbridge Boutique Hotel24 African Sun Limited 2008
  27. 27. Company Secretary CERTIFICATE bY ThE COMPANY SECRETARY I, the undersigned, in my capacity as Company Secretary, hereby confirm to the best of my knowledge and belief that for the financial year ended 30 September 2008, the Company has lodged with the Registrar of Companies all returns required of a public quoted Company in terms of the Companies Act (Chapter 24:03) and that all such returns are true, correct and up to date. E T Shangwa Company Secretary 12 February 2009 African Sun Limited 2008 25
  28. 28. PricewaterhouseCoopers Building Number 4, Arundel Office Park Norfolk Road Mount Pleasant Po Box 453 Harare Zimbabwe REPORT OF ThE INDEPENDENT AUDITORS TO ThE MEMbERS OF AFRICAN SUN LIMITED W e have audited the accompanying financial statements of African Sun Limited set out on pages 28 to 61, which comprise the statements of financial position as at 31 December 2008 and the statements of comprehensive income, cash flows and changes in equity for the year then ended and a summary of significant accounting policies and other explanatory notes. dIRECTORS RESPONSIbILITY FOR THE FINANCIAL STATEMENTS The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and the provisions of the Zimbabwe Companies Act (Chapter 24:03). This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances. AUdITORS RESPONSIbILITY Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. bASIS FOR AdVERSE OPINION ON COMPLIANCE wITH INTERNATIONAL FINANCIAL REPORTING STANdARdS The Zimbabwe economy is recognised as being hyperinflationary for purposes of financial reporting. As discussed under Accounting Policies Note 1.3, the accompanying financial statements have been prepared on the historical cost basis and, therefore, have not been stated in terms of a measuring unit current at 30 September 2008 as required by IAS 29 Financial Reporting in Hyperinflationary Economies. That Standard requires that financial statements that report in the currency of a hyperinflationary economy should be stated in terms of the measuring unit current at the year-end date. The non-compliance with IAS 29 arises from the unavailability of official inflation indices, and the difficulty to reliably measure inflation, as explained under Accounting Policies Note 1.3. However these financial statements would form the basis of the adjustments required in terms of IAS 29.26 African Sun Limited 2008
  29. 29. AdVERSE OPINION ON NON-COMPLIANCE wITH INTERNATIONAL FINANCIAL REPORTING STANdARdSIn our opinion, because of the effects of the matter referred to in the Basis for Adverse Opinion paragraph, the accompanyingfinancial statements do not give a true and fair view of the financial position of African Sun Limited company and group as at30 September 2008 and their financial performance and cash flows for the year then ended in accordance with InternationalFinancial Reporting Standards.REPORT ON LEGAL ANd REGULATORY REqUIREMENTSThese financial statements have been prepared in accordance with the accounting policies set out on page 34 to 43, andcomply with the disclosure requirements of the Zimbabwe Companies Act (Chapter 24:03).EMPHASIS OF MATTERWithout further qualifying our opinion, we draw attention to Note 32 to the financial statements, in respect of the following:• The Zimbawe operations of the Group have been significantly affected by the adverse effects of the country’s unfavourable economic environment characterised by, inter-alia, chronic hyperinflation, the erosion of the purchasing power of the local currency, multiple exchange rates and pricing mechanisms and significant distortions in the market.• Given the chronic hyperinflation, the time lapse between the year-end and reporting dates may render the financial information presented in the financial statements less useful and relevant for making economic decisions.CHARTEREd ACCOUNTANTS (zIMbAbwE)HARARE12 February 2009 African Sun Limited 2008 27
  30. 30. STATEMENT OF FINANCIAL POSITION As at 30 September 2008 GROUP Historical Cost 2008 2007 ASSETS Notes $ $ Non-current assets Property, plant and equipment 2 7 736 692 907 318 643 Intangible assets 3 281 105 379 180 49 Biological assets 4 90 693 000 000 – Investments in associate 5.1 6 815 892 994 859 307 Other investments 5.2 – 16 Receivables 6 147 129 696 000 – Deferred income tax asset 17.2 15 111 529 101 1 15 086 625 506 458 1 016 Current assets Financial assets at fair value through profit or loss 7 28 250 242 727 – Inventories 8 74 597 183 769 23 Trade and other receivables 9 859 588 144 734 82 Cash and cash equivalents 10 544 337 448 446 55 1 506 773 019 676 160 Total assets 16 593 398 526 134 1 176 EqUITY ANd LIAbILITIES Equity Share capital 11 – – Share premium 12 8 832 1 Share option reserve – 1 Other reserves 12 376 289 715 079 768 Retained earnings 13.1 473 336 925 033 35 Total equity 12 849 626 648 944 805 LIAbILITIES Non-current liabilities Deferred income tax liability 17.2 2 418 353 197 146 197 Current liabilities Trade and other payables 14 1 286 490 951 448 152 Borrowings 16 38 927 728 596 22 1 325 418 680 044 174 Total equity and liabilities 16 593 398 526 134 1 176 These financial statements were approved by the board on the 12th of February 2009 and signed on its behalf by: E M Makonese S A Munyeza Chairman Group Chief Executive Officer28 African Sun Limited 2008
  31. 31. STATEMENT OF FINANCIAL POSITIONAs at 30 September 2008 COMPANY Historical Cost 2008 2007 ASSETS Notes $ $ Non-current assets Property, plant and equipment 26 543 707 424 857 31 Investments in subsidiaries 27 13 13 Investments in associate 5.1 6 815 892 994 859 307 7 359 600 419 729 351 Current assets Financial assets at fair value through profit/loss 28 60 212 237 – Trade and other receivables 29 23 048 678 1 83 260 915 1 Total assets 7 359 683 680 644 352 EqUITY ANd LIAbILITIES Equity Share capital 11 – – Share premium 12 8 832 1 Share option reserve – 1 Other reserves 7 193 585 319 041 332 (Accumulated losses)/Retained earnings 13.2 (14 147 235 065) 3 Total equity 7 179 438 092 808 337 Non-current liabilities Deferred income tax 30 167 548 948 659 8 Current liabilities Trade and other payables 31 4 241 087 086 1 Amounts owing to group companies 8 455 507 644 6 Borrowings 44 447 – 12 696 639 177 7 Total equity and liabilities 7 359 683 680 644 352 These financial statements were approved by the board on the 12th of February 2009 and signed on its behalf by: E M Makonese S A Munyeza Chairman Group Chief Executive Officer African Sun Limited 2008 29
  32. 32. STATEMENT OF COMPREhENSIVE INCOME For the year ended 30 September 2008 GROUP Historical Cost 2008 2007 Notes $ $ Revenue 811 829 069 449 173 Materials and consumables used (24 048 687 832) (38) Depreciation, amortisation and impairment charges (5 126 818 650) (1) Staff costs (138 027 147 999) (31) Other operating expenses (208 739 325 961) (52) Operating profit 18 435 887 089 007 51 Other income 19 109 248 997 036 – Share of loss of associate (1 990 493 631) (2) Interest income 542 462 346 – Interest costs (4 058 426 463) (1) Profit before taxation 539 629 628 295 48 Taxation 17 (66 292 699 625) (13) Profit for the year 473 336 928 670 35 Other comprehensive income net of tax: Exchange differences on translating foreign operations 388 504 605 870 54 Gains on property revaluation 5 169 901 620 283 411 Share of other comprehensive income of associate 6 817 883 488 158 300 Other comprehensive income for the year net of tax 12 376 289 714 311 765 TOTAL COMPREHENSIVE INCOME FOR THE YEAR 12 849 626 642 981 800 Profit attributable to: 473 336 928 670 35 Company and subsidiaries 475 327 422 301 37 Associated companies (1 990 493 631) (2) Total comprehensive income attributable to: 12 849 626 642 981 800 Company and subsidiaries 6 031 743 154 823 500 Associated companies 6 817 883 488 158 300 Earnings per share ($) Basic earnings basis 20 706.13 – Fully diluted earnings basis 20 706.13 –30 African Sun Limited 2008
  33. 33. STATEMENT OF CAShFLOWSFor the year ended 30 September 2008 GROUP Historical Cost 2008 2007 Notes $ $ Cash flows from operating activities Cash generated from trading 21 674 375 610 778 35 Interest paid (4 058 426 463) (1) Cash generated from operating activities 670 317 184 315 34 Cash flows from investing activities Investments to maintain operations: - Interest received 542 462 346 – - Replacement of property, plant and equipment (120 351 526 448) (33) (119 809 064 102) (33) Investment to expand operations: - Property, plant and equipment additions (360 345 177) (1) Net cash utilised in investing activities (120 169 409 279) (34) Cash flows from financing activities Increase in short term loans 38 927 728 574 22 Net cash generated from financing activities 38 927 728 574 22 Net movement in cash and cash equivalents during the year 589 075 503 610 22 Cash and cash equivalents at the beginning of the year 55 – Exchange (gains)/losses on cash and cash equivalents (44 738 055 219) 33 Cash and cash equivalents at the end of the year 544 337 448 446 55 Represented by: Cash on hand and balances with banks 10 544 337 448 446 55 African Sun Limited 2008 31
  34. 34. STATEMENT OF ChANGES IN EqUITY For the year ended 30 September 2008GROUP Share capital Share premium Share option reserve $ $ $HISTORICAL COSTBalance at 30 September 2006 – – –Recognition of share based payments – – 1Dividends paid – – –Issue of shares – 1 –Total comprehensive income for the year – – –Balance at 30 September 2007 – 1 1Recognition of share based payments – – (1)Dividends paid – – –Issue of shares – 8 831 –Total comprehensive income for the year – – –balance at 30 September 2008 – 8 832 –32 African Sun Limited 2008
  35. 35. Foreign currency Total shareholdersRevaluation reserve translation reserve Fair value reserve Retained earnings equity $ $ $ $ $ 2 – 1 – 3 – – – – 1 – – – – – – – – – 1 411 54 300 35 800 413 54 301 35 805 – – – – (1) – – – (3 672) (3 672) – – – – 8 831 5 169 901 620 283 388 504 605 870 6 817 883 488 158 473 336 928 670 12 849 626 642 981 5 169 901 620 696 388 504 605 924 6 817 883 488 459 473 336 925 033 12 849 626 648 944 African Sun Limited 2008 33
  36. 36. STATEMENT OF ACCOUNTING POLICIES For the year ended 30 September 2008 1. ACCOUNTING POLICIES IFRS 1 (Amendment), First time adoption of IFRS. The following paragraphs set out the principal accounting IAS 27, Consolidated and separate financial policies of the Group in compliance with International Financial statements (effective 1 January 2009). Reporting Standards promulgated by the International IAS 28 (Amendment), Investments in associates. Accounting Standards Board (IASB) (International Financial IAS 32, Financial instruments: Presentation. Reporting Standards incorporate all International Accounting IFRS 7, Financial instruments: Disclosures. Standards previously issued by the IASB). Unless otherwise IAS 36 (Amendment), Impairment of assets (effective stated, these are consistent with prior years. 1 January 2009). IAS 38 (Amendment), Intangible assets (effective 1.1 bASIS OF PREPARATION 1 January 2009). The financial statements of the Group are prepared in IAS 19 (Amendment), Employee benefits (effective accordance with International Financial Reporting Standards 1 January 2009). (IFRS),exceptforcompliancetoInternationalAccountingStandard IAS 37, Provisions, contingent liabilities and (IAS) 29 Financial Reporting in Hyperinflationary Economies, contingent assets. which require for purposes of fair presentation that historical IAS 39 (Amendment), Financial instruments: Recognition information be restated for changes in the general purchasing and measurement. power of the Zimbabwe Dollar. Inflation-adjusted financial statements could not be produced for reasons outlined in 1.3. Interpretation and amendments to existing standards that are not yet effective and not relevant for the Groups operations The preparation of financial statements in conformity with IAS 20 (Amendment), Accounting for government grants International Financial Reporting Standards (IFRS) requires and disclosure of government assistance (effective the use of certain critical accounting estimates. It also requires 1 January 2009). management to exercise its judgement in the process of IFRIC 15, Agreements for construction of real estates (effective applying the Groups accounting policies. The areas involving 1 January 2009). a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated 1.3 INFLATION AdJUSTMENT financial statements, are disclosed in Policy 23. IAS 29 requires that Financial Statements prepared in the currency of a hyperinflationary economy be stated in terms of a 1.2 AdOPTION OF STANdARdS measuring unit current at the year-end, and that corresponding Standards and amendments early adopted by the Group figures for previous periods be stated in the same terms to IAS 1, Presentation of financial statements. the latest reporting date. At the time of producing these IFRS 8, Operating segments replaces IAS 14. financial statements, the Central Statistical Office (CSO) had not released the August and September 2008 consumer price Interpretations effective in 2008, but not relevant indices. Further, due to the existence of multiple economic IFRIC 11, IFRS 2 – Group and treasury shared transactions. factors and market distortions which are pervasive to the IFRIC 12, Service concession arrangements. Zimbabwean economic environment inflation cannot be IFRIC 13, IAS 18 – Customer loyalty programmes. accurately measured by other means. As a result, inflation- IFRIC 14, IAS 19 – The limit on a defined benefit asset. adjusted financial statements have not been produced. Standards, amendments and interpretations to existing 2. SEGMENT REPORTING standards that are not yet effective and have not been early A business segment is a group of assets and operations adopted by the Group engaged in providing products or services that are subject IAS 23 (Amendment), Borrowing costs (effective to risks and returns that are different from those of other 1 January 2009). business segments. A geographical segment is engaged in IFRS 2 (Amendment), Share-based payment (effective providing products or services within a particular economic 1 January 2009). environment that is different from those of segments IAS 32 (Amendment), Financial instruments. operating in other economic environments.34 African Sun Limited 2008

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