African Sun 2011 annual report

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African Sun 2011 annual report

  1. 1. Annual Report cover.pdf 1 2/27/06 4:41 PM African Sun Limited Strengthening The Core For Growth THE COMPANY SECRETARY African Sun Limited 17th Floor - Office 1708 C Crowne Plaza Monomotapa 54 Park Lane, Harare M PO Box CY 1211, Causeway Harare, Zimbabwe YCM Tel: +263 4 250501-7 or +263 4 700521-4MY Email: edwinsh@africansun.co.zw or edwin.shangwa@africansunhotels.comCY Web: www.africansunhotels.com Strengthening The Core For GrowthCMY K Investor Relations Web: www.africansuninvestor.com CORPORATE OFFICE African Sun Limited 17th Floor Office No 1708 Crowne Plaza Monomotapa 54 Park Lane , Harare P O Box CY 1211 Causeway Harare , Zimbabwe Tel: +263 4 250501-7 or 700521-4 Email: edwinsh@africansun.co.zw Web: www.africansunhotels.com Annual Report 2011 Annual Report 2011
  2. 2. CONTENTSCompany Profile 3Financial Highlights 5Statement of Vision 7The African Sun Way 8Market Overview 9Our Footprint 10Historical Highlights 12Chairmans Statement 14Group Chief Executives Report 18Accounting Philosophy 20Certificate by the Company Secretary 21Directors Report 22Corporate Governance 24Directors Responsibility for Financial Reporting 26Independent Auditors Report 28Financial Statements Consolidated Statement of Financial Position 30 Company Statement of Financial Position 31 Consolidated Statement of Comprehensive Income 32 Consolidated Statement of Changes in Equity 33 Consolidated Statement of Cashflows 34 Notes to the Consolidated Financial Statements 35 Notes to the Company Statement of Financial Position 69Group Supplementary Information 75Shareholders Profile 78Group Structure 80Business Composition 81Board of Directors 82Corporate Information 85Management 86Notice to Members 87Shareholders Diary 88Corporate and Hotel Directory 89 STRENGTHENING THE CORE FOR GROWTH PAGE 1
  3. 3. COMPANY PROFILEEstablished in 1968, the African Sun Group, then known as Zimbabwe Hotel in Masvingo, which is located within walking distance of the GreatSun Limited, has evolved significantly from being just a Zimbabwe-based Zimbabwe National Monuments. The other resorts are Troutbeck Resort inhospitality management company to a Pan-African entity. In Zimbabwe, Nyanga, Caribbea Bay Resort in Kariba and Fothergill Island, a safari lodgeAfrican Sun is the leading player in the tourism and hospitality industry, also located in Kariba.with the Zimbabwe operations forming the largest business under AfricanSun. Outside Zimbabwe, the Group has presence in Nigeria. In Nigeria, the Group operates under management contracts, Obudu Mountain Resort, inAfrican Sun has interests in Zimbabwe and Nigeria. The Group also houses the Cross River State, Nike Lake Resort in Enugu State, Best Western Ikejaits regional central reservations, sales and marketing offices in Johannesburg, in Lagos, and Best Western Homeville, in Benin City, Edo State. AfricanSouth Africa. The Group is poised to capitalize on international interest Sun Limited also has a strong pipeline of additional sub-Saharan Africain the African continent and has undertaken strategic marketing and properties under development.communications initiatives at international trade events showcasing itsofferings to the global tourism community and business travellers. As a The Groups theme is “Strengthening the Core for Growth”. The theme alignsresult of our geographical spread, we are geared to take advantage of both the Group to its vision which is “to be the benchmark hotel managementbusiness and leisure travel within sub-Saharan Africa. company in Africa”. In line with this theme, the Group disposed of non- performing and non-core operations and instituted a cost alignment exerciseThe Zimbabwe portfolio currently comprises 13 hotels and resorts across through staff rationalisation. These actions strengthen African Suns positionthe nation, including three resort hotels in the town of Victoria Falls, namely as a hospitality leader and the Group is poised for growth going forward.Elephant Hills Resort, The Kingdom at Victoria Falls and The Victoria FallsHotel, which is jointly managed with Meikles Africa Limited. Close to the As we continue in our quest to grow stakeholder value we are strengtheningresort town of Victoria Falls in Hwange is African Suns safari operation, the pillars of our core, that is; people, product and processes. Our coreHwange Safari Lodge. competence that distinguishes us from other players in this industry is and will continue to be our skills and capabilities, which lie in our people.The Group also operates five city hotels for business travellers, three resort African Sun places significant importance on its human capital base andproperties and one safari lodge. The city hotels include three InterContinental this has resulted in the strengthening of its training division, HospitalityHotels Group (IHG) affiliated brands, the Crowne Plaza Monomotapa, the Training Academy (HTA). As such, we continue to drive service excellencetwo Holiday Inn branded hotels in Harare and Bulawayo. African Sun Amber by continuous training, development and through performance managementHotel Mutare and Beitbridge Express Hotel are the Group’s home grown systems.brands. In addition to these, the Group also operates the Great Zimbabwe I am a creator. If I can imagine it, it can be done. African Sun Motto STRENGTHENING THE CORE FOR GROWTH PAGE 3
  4. 4. COMPANY PROFILEWe are dedicated to the continuous improvement of our hotel products African Sun will use its own brands in markets where the Group deemsthrough periodic preventative maintenance and refurbishment. The this appropriate and these are made up of the following:refurbishment commenced with our city hotels in Zimbabwe, followed by • Five Star The Platinumthe hotels in the Victoria Falls area. Our clearly established operating • Mid-range Amberprocedures will ensure that we are predictable and consistent in our service • Value Amber Expressdelivery across all markets. • Long stay SuitesGrowing the brands regionally is a fundamental factor as the Group seeks Also under its wing, African Sun holds a 17.43% equity interest in Dawnto establish brand leadership in all markets in which we operate. As African Properties Limited, an investment property holding company formed andSuns growth strategy is implemented, a combined brand strategy involving listed on the Zimbabwe Stock Exchange in 2003 when the Group spun offthe use of InterContinental Hotels Group (IHG) brands, namely Holiday wholly owned property interests, in order to focus on the hotel managementInn and Crowne Plaza as well as the Best Western brand in emerging business. Dawn Properties Limited owns eight of the properties that Africanmarkets is key. IHG brands and the Best Western brand are tried and tested Sun leases and operates in Zimbabwe.with great brand equity and awareness, especially amongst internationaland business travellers. As the global economy continues to recover, African Sun will focus on driving revenue per available room (RevPAR) growth through the retention of existing leases and addition of fee based management contracts within the region, in line with our business model.PAGE 4 STRENGTHENING THE CORE FOR GROWTH
  5. 5. FINANCIAL HIGHLIGHTSGROUP SUMMARY (CONTINUING OPERATIONS): (US$) 2011 2010Revenue 48 796 506 39 942 218EBITDA 2 733 646 1 295 272Loss before tax (4 746 763) ( 1 902 675)Attributable loss (10 261 831) (3 503 963)Total assets 46 341 872 49 954 294Market capitalisation 9 977 675 23 281 241SHARE PERFORMANCE: US centsLoss per shareBasic earnings basis:Basic loss per share from continuing operations (0.44) (0.13)Basic loss per share for the year (1.25) (0.40)Fully diluted earnings basis:Diluted loss per share from continuing operations (0.44) (0.13)Diluted loss per share for the year (1.25) (0.39)Net asset value per share 1.82 3.01Market price per share 1.20 2.79FINANCIAL STATISTICSReturn on equity: % (24) (4)Interest cover: times (2) (1) STRENGTHENING THE CORE FOR GROWTH PAGE 5
  6. 6. The foundation of oursuccess is based on our unwaveringcommitment to service excellence.
  7. 7. STATEMENT OF VISIONVISIONTo be the benchmark hotel management company in Africa.MISSIONWe exist to create value for all our stakeholders through the deployment of our intellectual property and service skillsin a professional, predictable and consistent manner.WE DO SO BY:• Having a formalised and proprietary business management system.• Anticipating and meeting the needs of our guests.• Delivering a consistent return to our shareholders and owners.• Creating opportunities for personal growth, development and equitable rewards for our employees.• Building long-term partnerships through win-win relationships with our stakeholders.OUR CORE VALUES AND 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.PROFESSIONALISM We exude expert competence in the way we do business.RESPONSIBLE MANAGEMENT Conservation of our natural and other resources is integral to all we do. Caribbea Bay Resort, Kariba, Zimbabwe The Terrace Patio Sunset at Lake Kariba STRENGTHENING THE CORE FOR GROWTH PAGE 7
  8. 8. THE AFRICAN SUN WAYSHARED VISIONWe will always seek to have a buy-in whilst providing leadership.SHARED VALUESOur values are the glue that binds us together.TIMEOUS EXECUTION AND CLOSUREIt is not done until the task is complete.EFFECTIVENESSWe will deliver beyond expectations.ADAPTABILITYWe will be flexible without losing our strategic intent.EFFICIENCYWe will be disciplined in utilising resources in all we do.CONNECTIVITYIt is our responsibility to get the message across to the other party. When spider webs unite, they can tie up a lion. African ProverbPAGE 8 STRENGTHENING THE CORE FOR GROWTH
  9. 9. MARKET OVERVIEWInternational tourism grew by almost 5% globally in the first half of 2011 shows the effectiveness of the aggressive international marketing strategiestotalling a new record of 440 million arrivals. This was 19 million more employed by the Group in these markets. African Sun will continue tothan the same period in 2010. Results released by the United Nations consolidate its presence in these markets by maintaining targeted campaignsWorld Tourism Organisation (UNWTO) confirm that, in spite of multiple for major tour operators and destination management companies thatchallenges, international tourism grew in 2011, consolidating the 6.6% specialise in selling packages to Southern Africa.increase that had been registered in 2010. In 2011, growth in advancedeconomies (+4.3%) continued and closed the gap with emerging economies Economic and political stability has brought about increased confidence(+4.8%). This trend reflects the decreases registered in the Middle East in Zimbabwe as a tourist destination. The availability of investmentand North Africa, as well as a slight slowdown in the growth of some Asian opportunities in Zimbabwe has seen an influx of business travellers comingdestinations following a very strong 2010. to Harare and thus increasing our regional business by 15% year on year. The South African market remains the major source for arrivals into AfricanAll world sub-regions showed positive trends with the exception of the Sun hotels contributing 66% to regional business.Middle East and North Africa. Results were better than expected in Europe(+6%), boosted by the recovery of Northern Europe (+7%) and Central and Year to date figures as at 30th September 2011 show that regional andEastern Europe (+9%), and the temporary redistribution of travel to international markets contributed 33% to total African Sun Zimbabwedestinations in Southern and Mediterranean Europe (+7%) due to room nights. The domestic market remains the major driver of businessdevelopments in North Africa (-13%) and the Middle East (-11%). Sub- for the Zimbabwe hotels contributing 67% to room nights. DomesticSaharan Africa (+9%) continued to perform soundly. The Americas (+6%) business is mainly from conferences and conventions.was slightly above the world average, with remarkably strong results forSouth America (+15%). Asia and the Pacific grew at a comparatively slower STRENGTHENING THE CORE FOR GROWTHpace of 5%, but this more than consolidates its 13% bumper growth of2010. Following an encouraging first half of 2011, growth in the remainder African Suns vision is to be the benchmark hotel management companyof the year is expected to be subdued as recent months have brought in Africa. We continue in our quest to grow stakeholder value by strengtheningincreased uncertainty, hampering business and consumer confidence. the pillars of our core, that is; people, product and processes.Foreign arrivals into African Sun hotels for the year under review increased The key strength for the Group is that its operations and initiatives areby 20% compared to the same period last year. This growth is above the supported by a management team comprising seasoned hotel and businessglobal tourist arrivals projected by World Travel and Tourism Council (WTTC) managers. The combined intellectual capital, expertise and experience ofof 4% to 5%. Major market contributions were as follows; USA 20%; UK the team will ensure that African Sun is well positioned to achieve the10%; France 9%; Other Europe 12%; Japan 7%. The USA, UK and France Group’s targets.are the major source of international tourists into African Sun hotels. This Troutbeck Resort, Nyanga, Zimbabwe STRENGTHENING THE CORE FOR GROWTH PAGE 9
  10. 10. OUR FOOTPRINT ZIMBABWE ZIMBABWENIGERIA Nigeria Zimbabwe ZIMBABWE FRANCHISE BRANDSPAGE 10 STRENGTHENING THE CORE FOR GROWTH
  11. 11. Tomorrow belongs to the people whoprepare for it today. African Proverb Holiday Inn Harare An executive room at Holiday Inn Harare Vumba Restaurant STRENGTHENING THE CORE FOR GROWTH PAGE 11
  12. 12. HISTORICAL HIGHLIGHTSOUR JOURNEY THUS FAR 2002 - Zimbabwe Sun Limited is unbundled from Delta Corporation Limited 1952 - Rhodesia and Nyasaland Hotels (Private) Limited is formed as a wholly-owned subsidiary of Rhodesian Breweries 2003 - Zimbabwe Sun Limited owns 100% shares in the timeshare operation in Vilanculos, Mozambique 1968 - Sable Hotels (Private) Limited is established 2003 - Dawn Properties Limited is listed as the first property entity 1973 - Rhodesian Government grants first casino licence for The on the Zimbabwe Stock Exchange Victoria Falls Hotel 2003 - The Hospitality Training Academy (HTA) is re-launched 1974 - Development of the first four world-class hotels: Monomotapa Hotel in Salisbury, The Wankie Safari Lodge in Wankie, Caribbea Bay 2003 - First negotiations for management of Holiday Inn Accra Airport, at Kariba, and the Elephant Hills Country Club in Victoria Falls Ghana 1979 - Meikles Southern Sun Hotels is established, becoming the 2004 - Zimbabwe Sun Limited acquires a lease to manage The Grace largest hotel chain in Southern and Eastern Africa, with control of 13 Hotel in Rosebank, South Africa, ranked among the “Top Ten” hotels major properties in the country. in Africa and the Middle East by Conde Nast Traveller (USA) in its first year of operation 1980 - Meikles Southern Sun Hotels changes its name to Zimbabwe Sun Hotels after Zimbabwes independence 2008 - Zimbabwe Sun Limited adds The Lakes Hotel and Conference Centre, in Johannesburg, South Africa to its portfolio 1988 - Zimbabwe Sun Hotels merges with Touch the Wild safari operations, later selling it to Rainbow Tourism Group (Private) Limited 2008 - Zimbabwe Sun Limited rebrands its name to African on 30 April 1998 Sun Limited 1990 - Zimbabwe Sun Limited is floated on the Zimbabwe Stock 2008 - African Sun Limited adds Obudu Mountain Resort to its regional Exchange (ZSE), at the time being the largest flotation in Zimbabwe, portfolio with 70 million shares offered to the public, which was over-subscribed by 28% 2008 - African Sun Limited takes over management of Holiday Inn Accra Airport 1990 - Opening of the timeshares built in Troutbeck, Nyanga and at Caribbea Bay, which received “Gold Crown Resorts” status from the 2009 - African Sun Limited acquires Hotelserve Holdings (Private) RCI in 1999 Limited 1991 - First Holiday Inn franchise in Harare 2009 - The Company raises US$10 million through a Rights Offer 1991 - The Elephant Hills Resort hosts the Commonwealth Heads of 2010 - Best Western Ikeja - Lagos, Nigeria opened its doors to the Government meeting, officially opening in 1992 public on 1 October 2010 1994 - First regional office for reservations is established in Johannesburg 2011 - Best Western Homeville - Benin City, Nigeria opened its doors to the public on 1 July 2011 1998 - The construction of Express by Holiday Inn Beitbridge is completed 2011- African Sun Limited closed The Grace in Rosebank, The Lakes Hotel and Conference Centre in South Africa and disinvested from 1999 - Zimbabwe Sun Limited acquires 40% equity and management Hotelserve Holdings (Private) Limited in Zimbabwe because of viability of Baio Do Paraiso SARL, Mozambique challenges 1999 - Makasa Sun is re-developed into The Kingdom at 2011- African Sun Limited adopts the strategy to strengthen the core Victoria Falls for growth.PAGE 12 STRENGTHENING THE CORE FOR GROWTH
  13. 13. The strength of atree lies in its roots. African Proverb
  14. 14. CHAIRMANS STATEMENT MESSAGE TO SHAREHOLDERS The performance for the financial year was mixed, with Zimbabwe hotels registering strong growth, whilst the two South African hotels reported losses due to persistently difficult trading conditions. Consequently, a decision was taken to exit the leases for these two hotels and this was implemented in the last quarter of the financial period. In addition, and pursuant to a decision taken to disinvest out of non-core operations as previously advised, Hotelserve Holdings (Private) Limited (Hotelserve) was disposed of, with completion of the transaction expected in the first quarter of the next financial year. The two South African hotels, together with Hotelserve have resultantly been accounted for as discontinued operations in the Statement of Comprehensive Income. In view of the need to further align costs to revenues, a further restructuring exercise was implemented in September 2011, at a once-off cost of $2.8 million. This is in addition to the $0.48 million for retrenchments that were effected earlier in the year. The restructuring exercise is expected to bring about savings of at least $2.4 million per year going forward. The savings to be realised from the restructuring exercise, together with the closure of the South Africa hotels, sets the Group on a stronger footing. Refurbishment for the selected Zimbabwe hotels has commenced, utilising long-term financing secured during the year. We will continue to explore ways of restructuring short term borrowings with the aim of reducing the overall borrowing costs. Following the closure of the hotels in South Africa, we have reviewed the lease agreement for Holiday Inn Gaborone, and this has led to a decision, subsequent to year end, to exit the lease. T N Chiganze - Chairman BUSINESS ENVIRONMENT The world travel industry has remained volatile, posting mixed results for 2011 owing to the failure by major economies to realise recovery after the As we have aligned our global recession, forcing tourism growth figures to be revised downwards structures to the core in the US and key European countries. However, there was growth in some parts of the world, mainly in the BRICS (Brazil, Russia, India, China and operations, the Group forecasts South Africa) with Africa recording growth of 5%. an EBITDA margin of at least Despite the mixed growth trends, the overall pattern in our Zimbabwe hotels 8% in the coming financial year, continued on the recovery path, realizing a volumes growth of 13% over supported by cost savings as last year, with the foreign room nights sold increasing by 14% over the same period. well as volumes growth. Oil exports have continued to spur growth in Ghana and Nigeria, presenting an opportunity for further rooms growth within this hub, as economic activities and attendant business travel are expected to increase.PAGE 14 STRENGTHENING THE CORE FOR GROWTH
  15. 15. CHAIRMANS STATEMENTFINANCIAL REVIEW The net current liabilities position of the Group increased fromRevenue from continuing operations grew by 22% to $48.8 million, up $1.39 million in September 2010 to $7.46 million at the end of the periodfrom $39.9 million last year, driven mainly by a strong RevPAR performance under review due to closure expenses for the two South African hotels andfrom the Zimbabwe hotels. The RevPAR growth of 21% that was achieved restructuring provisions. This position is expected to improve as we beginby the Zimbabwe hotels emanated from a 13% growth in volumes, and an the 2012 financial year in a much stronger position with only profitable8% increase in ADR over the last year. operations.Cost of sales increased by 27% over the same period last year, ahead of The Group closed the period with cash and cash equivalents ofa 22% growth in Revenue, owing to a 28% increase in NEC wages and a $4.66 million.surge in the prices of key food products due to the stronger South AfricanRand during the greater part of the financial period. DISCONTINUED OPERATIONS South AfricaOperating expenses (excluding once-off restructuring costs of $3.28 million) The South African operations remained depressed for the period underincreased by 12.7%; and were contained within the growth in RevPAR review, posting an EBITDA loss of $3.77 million. This resulted mainly fromfollowing benefits of earlier cost cutting initiatives implemented. a further drop in occupancies to an average of 30%. Revenue achieved for the 11 months amounted to $4.84 million, which was 59% of prior year.Resultantly, the Group achieved an EBITDA profit (before restructuring The leases were terminated by mutual agreement with the landlords.costs) of $2.73 million (5.6% margin) from continuing operations, whichis a 111% growth from same period last year of $1.3 million on a like- Hotelservefor-like basis. The entity was disposed of as it had become non-core to the Groups operations. Revenue from Hotelserve was depressed during the periodThe positive EBITDA performance from continuing operations was however under review, falling 39% short of what was achieved last year as volumesnegated by non-recurring charges emanating from the impairment of declined and margins were affected by the USD/Rand volatility, registeringproperty, plant and equipment, retrenchment costs and fair value adjustment an EBITDA loss of $279 100. As a way of unlocking value, the Groupon assets classified as held for sale, amounting to $6.45 million. This disposed of the entity effective 27 August 2011.resulted in a loss before tax from continuing operations of $4.75 million,increasing the loss by 149% from the prior year loss of $1.9 million. Refurbishment Refurbishment, which is capped at $10 million, has begun, though thereThe share of profits from associates amounted to $1.95 million and includes were delays due to the pending duty free facility which was recently gazetted$1.8 million which arose from the revaluation of investment properties. through Statutory Instrument 124, 2011. The project is funded from proceeds of a five year loan facility, which has an extension option for anNet finance costs attributable to the continuing operations increased by additional 2 years.44% from last year following a 17.5% increase in short term loans tofinance working capital. OUTLOOK Following the restructuring exercise, closure of the loss making operatingThe overall loss after tax for the period was $10.23 million after taking units and disposal of Hotelserve, the outlook for the continuing operationsinto account the impact of the discontinued operations which reported a is positive, with a forecast growth in RevPAR of at least 25% from theloss after tax of $6.62 million, with 28% of the loss arising from depreciation, $40 achieved in 2011. Foreign operations remain predominantly managementimpairment of intangible assets and a deferred tax asset reversal. contracts, and management fees are expected to grow by at least 20%.The Group closed the period with long-term interest bearing debt of As we have aligned our structures to the core operations, the Group forecasts$4.91 million following drawdown on facilities specifically obtained for an EBITDA margin of at least 8% in the coming financial year, supportedthe refurbishment of selected Zimbabwe hotels and furnishing of Holiday by cost savings as well as volumes growth.Inn Gaborone.Short-term loans closed at $8.16 million, a 17.5% increase from the sameperiod last year due to increased working capital requirements, which areexpected to ease with the closure of loss making hotels and disposal ofHotelserve. STRENGTHENING THE CORE FOR GROWTH PAGE 15
  16. 16. CHAIRMANS STATEMENTDIRECTORATEMs Y Johnston resigned from the Board on 21 April 2011. Her valuedcontribution to the development of the sales and marketing function andto the Board at large during her tenure is much appreciated.DIVIDEND DECLARATIONIn view of the subdued performance, ongoing refurbishment and staffrationalisation, the Board has resolved not to declare a dividend for theyear ended 30 September 2011.APPRECIATIONI would like to commend management and staff for their continuedcommitment throughout the period. Much appreciation also goes to myfellow Directors for their support and contribution to the business duringthe financial year under review. We look forward to consolidating the gainsof all the hard decisions we have made this year in the forthcoming financialyear.Timothy N. ChiganzeChairman27 February 2012 The Kingdom at Victoria FallsPAGE 16 STRENGTHENING THE CORE FOR GROWTH
  17. 17. Growth means change and change involves risk,stepping from the known to the unknown. Author Unknown
  18. 18. GROUP CHIEF EXECUTIVES REPORT Growth in global tourism has experienced mixed fortunes with the Eurozone contagion still weighing down on most of the European and US markets as they struggle to recover from the debt crisis. However, notable growth was experienced in some parts of the world which include Brazil, Russia, India, China and South Africa which are emerging markets and have impacted positively on our business. Our Zimbabwean operations have continued to be the bedrock of our business and we have pulled out of the South African market and divested from Hotelserve Holdings (Private) Limited (Hotelserve) as these operations had become an albatross on the Group operations due to poor performance. Management contracts in West Africa remain relevant to our business model as the management fees contribute directly to the bottom line. BUSINESS REVIEW ZIMBABWE Occupancies in the city hotels remained strong closing the year at 65%, up from 60% achieved last year, with the foreign room nights sold increasing by 14% over the same period last year. Business in the resort areas has continued to be below potential even though occupancy improved by 5% to close the financial year at 35%. Overall, the Zimbabwe hotels experienced a 3% growth in occupancy from prior year to close at 51%, with a business mix of 67% domestic room nights and 33% foreign room nights. Turnover grew by 22% from prior year closing at US$48.8 million while cost of sales was within budget at 31%. City hotels contributed 47% to revenue and 76% to EBITDA spurred by strong occupancies and room rates. The contribution by resort hotels from both revenue and EBITDA perspectives are expected to improve as business into these hotels strengthens. RETAIL Hotelserve, which was acquired mainly as a means of enabling the Group to enhance procurement efficiencies of imported hotel amenities was disposed of during the year as it had become non-core to the Group Shingirai A. Munyeza - Group Chief Executive operations. SOUTH AFRICA We continue on our quest to The South African operations remained depressed for the year under review grow stakeholder value by in the aftermath of an oversupply of rooms in the market post 2010 FIFA World Cup, posting an EBITDA loss of $3.77 million. This resulted mainly strengthening the pillars of from a further drop in occupancies to an average of 30%. Revenue achieved our core, that is; people, for the 11 months was $4.84 million, which was 59% that of prior year. With no sign of significant improvement in the short to medium term the product and processes. operations were therefore discontinued. WEST AFRICA The Nigerian operations continue to experience low volumes with Nike Lake Resort achieving the highest occupancy at 22%, followed by the newly opened Best Western, Lagos Ikeja at 21%. These low occupancies impacted negatively on the management fees from management contracts in West Africa which amounted to $0.8 million which was 37% short of budget. Occupancies remained high for Ghana with RevPAR also growingPAGE 18 STRENGTHENING THE CORE FOR GROWTH
  19. 19. GROUP CHIEF EXECUTIVES REPORTby $14 from prior year to close at $171. West Africa remains a vital cog OUTLOOKin our business model as it provides additional contribution from management As the Group strenghtens its core, the future looks bright since the businessfees without incremental costs. has streamlined. With the anticipated continual improvement of the global economy, the Group will focus on driving RevPAR growth. Foreign operationsREFURBISHMENT will remain predominantly management contracts in line with our businessZimbabwe hotels have not been able to grow their ADR due to the state model.of the infrastructure which is in need of refurbishment. The first phase ofthe refurbishment project was completed during the year with the completion In conclusion, I would like to thank my executive team, management andof the mock rooms. The main refurbishment commences in our traditional staff for their sterling efforts and hard work during 2011. My sincerelow season which starts in January. The exercise has been capped at $10 appreciation also goes to the Board and my fellow Directors for the leadershipmillion which is funded from proceeds of a five year facility which has an and guidance shown throughout the year.extension option of an additional two years.AWARDSDuring the period under review, we received several awards for our SHINGIRAI A. MUNYEZAcontribution and achievements in the hospitality and tourism industry. Group Chief ExecutiveMost notable is the “Best Tourism Infrastructure of Zimbabwe Award” 27 February 2012conferred by the Infrastructural Development Fund (IDF). Other awardsinclude sectoral awards for some of the individual hotels throughout theGroup. Elephant Hills Resort, Victoria Falls, Zimbabwe Pool Area STRENGTHENING THE CORE FOR GROWTH PAGE 19
  20. 20. ACCOUNTING PHILOSOPHYAfrican Sun Limited is dedicated to achieving meaningful and responsible (IFAC). The Group is committed to the regular review of financial reportingreporting through comprehensive disclosure and explanation of its financial standards and to the development of new and improved accounting practices.results. This is done to ensure objective corporate performance measurement, This is practised to ensure that the information reported to managementto enable returns on investment to be assessed against the risks inherent and stakeholders of the Group continues to be internationally comparable,in their achievement and to facilitate appraisal of the full potential of the relevant and reliable. This includes, wherever it is considered appropriate,Group. the early adoption of financial reporting standards.The core determinant of meaningful presentation and disclosure of information The Group adopts all accounting standards and interpretations applicableis its validity in supporting managements decision-making process. While that are issued by the IASB and the International Financial Reportingthe accounting philosophy encourages the pioneering of new techniques, Interpretations Committee (IFRIC). Unless otherwise stated, these standardsit endorses the fundamental concepts underlying both the financial and are applied consistently to enhance comparability of financial informationmanagement accounting disciplines as enunciated by the Institute of relating to different financial periods.Chartered Accountants of Zimbabwe (ICAZ), the International AccountingStandards Board (IASB) and the International Federation of Accountants Mock room at Crowne Plaza MonomotapaPAGE 20 STRENGTHENING THE CORE FOR GROWTH
  21. 21. CERTIFICATE BY THE COMPANY SECRETARY I the undersigned, in my capacity as Company Secretary, hereby confirm, to the best of my knowledge and belief that for the financial year ended 30 September 2011, the Company has complied with Zimbabwe Stock Exchange Listing Requirements, lodged with the Registrar of Companies all returns required of a public quoted Company in terms of the Companies Act (Chapter 24:03) and that all such returns are true, correct and up to date. EDWIN T. SHANGWA Company Secretary 27 February 2012E.T. Shangwa - Company Secretary STRENGTHENING THE CORE FOR GROWTH PAGE 21
  22. 22. DIRECTORS’ REPORTThe directors present their Annual Report and the Audited Financial Statements of the Company and the Group for the 12 months ended 30 September2011.YEARS RESULT 2011 2010 US$ US$EBITDA from continuing operations (Before restructuring costs) 2 733 646 1 295 272Loss attributable to shareholders (10 234 672) (3 139 687)DividendNo dividend was declared for the year ended 30 September 2011.CAPITAL COMMITMENTS 2011 2010 US$ US$Authorised by directors and contracted for 2 399 162 3 000 000Authorised by directors but not contracted for 6 046 838 8 885 782Total Commitments 8 446 000 11 885 782INVESTMENTSThe Company holds equity investments in the following organisations to the extent indicated below:African Sun Limited PCC (Mauritius) 100%African Sun Zimbabwe (Private) Limited 100%Dawn Properties Limited 17.43%RCI Zimbabwe (Private) Limited 24%SHARE CAPITALThere were no changes to the issued shares which stands at 831 472 907 ordinary shares. However, the change in share capital and share premiumto $31 940 574 arose from issuing treasury shares to external parties (note 16.2).The Company has an approved share option scheme and no shares were granted as at 30 September 2011.RESERVESThe movement in the reserves of the Group are shown in the Group statement of comprehensive income, Group statement of changes in shareholdersequity and in the notes to the financial statements.DIRECTORSDuring the year Ms Y E Johnston resigned. Mr David W Birch, Mr Vernon W Lapham and Ms Elizabeth Chitiga retire by rotation. All being eligible,they will offer themselves for re-election at the Annual General Meeting.AUDITORSMembers will also be asked to re-appoint PricewaterhouseCoopers as Auditors to the Group for the ensuing year.ANNUAL GENERAL MEETINGThe Fortieth Annual General Meeting of members of the Company will be held on Friday 30 March 2012 at 1000hrs at Crowne Plaza Monomotapa1st Floor, Ophir Room, 54 Park Lane, Harare.By order of the Board:TIMOTHY N. CHIGANZE SHINGIRAI A. MUNYEZA EDWIN T. SHANGWAChairman Group Chief Executive Company Secretary27 February 2012PAGE 22 STRENGTHENING THE CORE FOR GROWTH
  23. 23. He who wants to be king in the future must first learn to serve. African Proverb PAGE 23
  24. 24. CORPORATE GOVERNANCETHE AFRICAN SUN CHARTER of Directors through independent evaluations and examinations of theAfrican Sun Limited personnel are committed to a long-published code of Groups activities and resultant business risks.ethics. This incorporates the Groups operating, financial and behaviouralpolicies in a set of integrated values, including the ethical standards BOARD MEETINGSrequired of members of the African Sun Limited family in their interface The Board meets at least four times per financial year in order to monitor,with one another and with all stakeholders. consider and review, inter alia, matters of a strategic, financial, non- financial and operational nature. Special Board meetings may be convenedThere are detailed policies and procedures in place across the Group, on an ad hoc basis, when necessary, to consider issues requiring urgentcovering the regulation and reporting of transactions in securities of the attention or decision. During the year under review, seven Board meetingsGroup by the directors and officers. The Group adopted a Corporate were held.Governance Charter and the recommendations made in the King ReportIII. The Board works to a formal agenda prepared by the Company Secretary in consultation with the Chairman and the Group Chief Executive, which,STAKEHOLDERS inter alia, covers operations, finance, capital expenditure, acquisitions andFor many years, African Sun Limited has had a formalised stakeholder strategy. Any Board member may request the addition of an item to thephilosophy and structures of corporate governance to manage the interface agenda and will liaise with the Company Secretary in this regard. Boardwith the various stakeholder groups. African Sun Limited has in place papers comprising the agenda, minutes of Board and Board committeeresponsive systems of governance and practice which the Board and meetings and the relevant supporting documentation are circulated to allmanagement regard as entirely appropriate and in accordance with the directors in advance of each meeting in order that they can adequatelyCode of Corporate Practices and Conduct contained in the Cadbury and prepare and participate fully, frankly and constructively in Board discussionsKing Reports I, II and III. and bring the benefit of their particular knowledge, skills and abilities to the Board table.DIRECTORATEThe Board of Directors of African Sun Limited is constituted with an BOARD COMMITTEESequitable ratio of executive to non-executive directors and meets at least The Board is authorised to form committees to assist in the execution ofquarterly. The African Sun Limited Board is chaired by a non-executive its duties, powers and authorities. The Board has five standing committees,director. namely: Risk and Audit, Human Resources and Remuneration, Finance and Investments, Marketing and Nominations. In addition, there is theDIRECTORS INTERESTS Corporate Governance Committee, which is an ad hoc committee. TheAs provided by the Companies Act (Chapter 24:03) and the Companys terms of reference and composition of the committees are determined andArticles of Association, the directors are bound to declare at any time approved by the Board and have been adopted by the Board on an annualduring the year, in writing, whether they have any material interest in any basis.contract of significance with the Company which could have given rise toa related conflict of interest. No such conflicts were reported this year. THE RISK AND AUDIT COMMITTEE The Risk and Audit Committee deals, inter alia, with compliance, internalINTERNAL CONTROL control and risk management. It is regulated by specific terms of reference,The Board of Directors is responsible for the Groups systems of internal chaired by a non-executive director, has one non-executive director andcontrol. These systems are designed to provide reasonable, but not absolute, incorporates the Group Chief Executive and Group Finance Director asassurance as to the integrity and reliability of the financial statements and members. It meets with the Companys external auditors to discussto safeguard, verify and maintain accountability of its assets and to detect accounting, auditing, internal control and financial reporting matters. Theand minimise significant fraud, potential liability, loss and material external and internal auditors have unrestricted access to the Risk andmisstatement while complying with applicable laws and regulations. Audit Committee.The controls throughout the Group concentrate on critical risk areas. All THE HUMAN RESOURCES AND REMUNERATION COMMITTEEcontrols relating to the critical areas in the casino and hotel operating The Group has a Human Resources and Remuneration Committee whichenvironments are closely monitored by the directors and subjected to is made up of a non-executive Chairman, the Group Chief Executive andinternal audit reviews. Furthermore, assessments of the information one non-executive director. The committee acts in accordance with thetechnology environment are also performed. Boards written terms of reference to review remuneration of all African Sun Limited executive directors, senior management and other membersAn Audit Services Manager, who reports directly to the Chairman of the of staff.Risk and Audit Committee, heads the Internal Audit department. TheInternal Audit department is designed to serve management and the BoardPAGE 24 STRENGTHENING THE CORE FOR GROWTH
  25. 25. CORPORATE GOVERNANCETHE FINANCE AND INVESTMENTS COMMITTEE decision-making process and also discuss employees concerns with topThe Group has a Finance and Investments Committee which is made up management. The Group believes in and practices worker participationof a non-executive Chairman, the Group Chief Executive, Group Finance throughout the different levels. All hotels have Workers Committees, whichDirector and one non-executive director. It is chaired by a non-executive serve as a communication channel with shop floor employees.director. The committee is responsible for the review and preliminaryapproval of the major investment decisions of the Company. ANALYST BRIEFING The Group reports formally to shareholders twice a year when its half andTHE MARKETING COMMITTEE full year results are announced. The Group Chief Executive and the GroupThe Group has a Marketing Committee comprising, a non-executive Finance Director give presentations on these results to institutional investors,Chairman, the Group Chief Executive and one non-executive director. The analysts and the media. The data used in these presentations may be foundcommittee is responsible for the review of all sales and marketing programmes at www.africansuninvestor.com.of the Group. ANNUAL GENERAL MEETINGTHE NOMINATIONS COMMITTEE The Annual General Meeting provides a useful interface with privateThe Nominations Committee is now a standing, as opposed to an ad hoc, shareholders, many of whom are also customers.committee, pursuant to the recommendations made in the King III Report.It is made up of a non-executive Chairman, the Group Chief Executive, The Chairman of the Board and the Group Chief Executive are availableand one non-executive director. It assists with the identification and at the Annual General Meeting to answer questions. Information about therecommendation of potential directors to the Board. Group is maintained and available to shareholders at www.africansuninvestor.com.CORPORATE GOVERNANCE COMMITTEEThe Corporate Governance Committee is an ad hoc committee which sits DIRECTORS ATTENDANCE OF MEETINGS IN 2011as and when it is necessary. It is made up of a non-executive Chairman, Individual director attendance at Board and Committee meetings appearsthe Group Chief Executive and two other non-executive directors. in the table below. Where a director has not been able to attend a Board meeting, any comments which he or she had arising out of the papers toNATIONAL WORKS COUNCIL AND WORKERS COMMITTEES be considered at that meeting have been relayed in advance to the ChairmanThe Group holds National Works Council meetings at least twice a year. of the Board.Each hotel within the Group has a Works Council representative who attendsthese meetings, which is a forum where employees participate in the Main Board Finance and Marketing Risk and Audit Human Resources Investments Committee Committee and Remuneration Committee Committee Number of meetings 7 4 4 4 6 T N Chiganze 7 - - - *1 B L Nkomo 6 3 - 4 - S A Munyeza 7 3 4 4 6 D W Birch 7 - - 4 5 E Chitiga 5 - 1 - 4 Y E Johnston 2 - 2 - - V W Lapham 6 3 - - - N Mangwiro 5 4 - 4 - N R Ramikosi 3 - 4 - - * By invitation Ms Y E Johnston did not attend most of the meetings as she resigned during the year. STRENGTHENING THE CORE FOR GROWTH PAGE 25
  26. 26. DIRECTORS RESPONSIBILITY FOR FINANCIAL REPORTINGAfrican Sun directors are required by the Companies Act (Chapter 24:03) of internal control is operating effectively. Both the internal and externaland the Zimbabwe Stock Exchange listings requirements, to maintain auditors have unlimited access to the Risk and Audit Committee. Theadequate accounting records and to prepare financial statements for each committee also reviews the interim and annual results of the Companyfinancial year which present a true and fair view of the state of affairs of prior to their publication.the Group at the end of the financial year, and of the profit or loss andcash flows for the period. In preparing the accompanying financial statements, In addition, the Groups external auditors review and test appropriategenerally accepted accounting practices have been followed and suitable aspects of the internal financial control systems during the course of theiraccounting policies have been used and applied consistently. Reasonable statutory examinations of the Group.and prudent judgements and estimates have been made. The financialstatements incorporate full and responsible disclosure in line with the The Risk and Audit Committee has met the internal and the externalaccounting philosophy of the Group stated on page 20. auditors to discuss their reports on the results of their work, which include assessments of the relative strengths and weaknesses of key control areas.The directors have reviewed the Groups budget and cash flow forecast forthe twelve months to 30 September 2012. On the basis of the review of In a Group of this size, complexity and geographical diversity, it may bethe operating forecasts and in light of the current financial position and expected that occasional breakdowns in established control proceduresexisting borrowing facilities, the directors are satisfied that African Sun may occur. No breakdowns involving material loss have been reported toLimited is a going concern and have continued to adopt the going concern the directors in respect of the year under review and it is believed thatbasis in preparing the financial statements. The Groups external auditors, none of any significance exist.PricewaterhouseCoopers, have audited the financial statements and theirreport appears on pages 28. The financial statements for the 12 months ended 30 September 2011 which appear on pages 30 to 74 have been approved by the Board ofThe Group has an independent internal audit function, which has the Directors and are signed on their behalf by:objective of assisting executive management and the Risk and AuditCommittee in the discharge of their responsibilities, and which monitorsthe effectiveness of the accounting system and related internal financialcontrols on a continuing basis. The internal audit function performs acritical examination of the financial and operating information formanagement, and reports its findings and its recommendations to TIMOTHY N. CHIGANZEmanagement and to the Risk and Audit Committee. ChairmanProcedures are in place to identify key business risks timeously, to determinethe likelihood of the risks crystallising, and to determine the significanceof the consequential financial impact on the business.The Risk and Audit Committee meets quarterly with management, the SHINGIRAI A. MUNYEZAinternal auditors and external auditors, to review specific accounting, Group Chief Executivereporting and internal control matters, and to satisfy itself that the system 27 February 2012 Great Zimbabwe Hotel, Masvingo, Zimbabwe.PAGE 26 STRENGTHENING THE CORE FOR GROWTH
  27. 27. With an added passion in everything we do, we have mastered the art of hospitality, ensuring thevery best experience for our guests.
  28. 28. INDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDERS OF AFRICAN SUN LIMITEDWe have audited the consolidated financial statements of African Sun Limited and its subsidiaries (the “Group”), and the accompanying statementof financial position of African Sun Limited (the “Company”) standing alone, together the “financial statements”, which comprise the consolidatedand separate statements of financial position at 30 September 2011, and the consolidated statements of comprehensive income, changes in equityand of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes as set out on pages 30 to74.Directors responsibility for the financial statementsThe directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial ReportingStandards, and in the manner required by the Companies Act (Chapter 24:03) and the relevant Statutory Instruments (“SI”) SI 33/99 and SI 62/96and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from materialmisstatement.Auditors responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with InternationalStandards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurancewhether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The proceduresselected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether dueto fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation ofthe financial statements, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness 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.OpinionIn our opinion, the consolidated financial statements present fairly, in all material respect, the financial position of the Group and of the Company asat 30 September 2011, and of the Groups consolidated financial performance and its consolidated cash flows for the year then ended, in accordancewith International Financial Reporting Standards and in the manner required by the Companies Act (Chapter 24:03) and the relevant StatutoryInstruments 33/99 and SI 62/96.PRICEWATERHOUSECOOPERSCHARTERED ACCOUNTANTS (ZIMBABWE)HARARE29 FEBRUARY 2012PricewaterhouseCoopers, Building No. 4, Arundel Office Park, Norfolk Road, Mount PleasantP O Box 453, Harare, ZimbabweT: +263 (4) 338362-8, F: +263 (4) 338395, www.pwc.comTI Rwodzi - Senior PartnerThe Partnerships principal place of business is at Arundel Office Park, Norfolk Road, Mount Pleasant, Harare, Zimbabwe where a list of the Partnersnames is available for inspection.
  29. 29. The marksman hitteth the targetpartly by pulling, partly by letting go. The boatsman reacheth the landingpartly by pulling, partly by letting go. Egyptian Proverb
  30. 30. 2011 2010 Assets Note US$ US$ Non-current assets Property, equipment and motor vehicles 6 17 074 087 18 712 600 Intangible assets 7 - 1 495 535 Biological assets 8 234 937 255 776 Investment in associate 9 12 184 001 9 605 727 Available-for-sale financial assets 11 - 220 000 Deferred income tax asset 21 - 644 000 Deferred expenditure - 16 876 Other receivables 14 535 512 498 614 30 028 537 31 449 128 Current assets Inventories 13 1 324 690 2 159 514 Available-for-sale financial assets 11 10 000 32 050 Loans 12 1 130 504 1 114 650 Trade and other receivables 14 7 342 790 12 388 546 Cash and bank 15 4 657 480 2 810 406 14 465 464 18 505 166 Assets of a disposal group classified as held for sale 28.3 1 847 871 - 16 313 335 18 505 166 Total assets 46 341 872 49 954 294 Equity and liabilities Equity attributable to owners of the parent Share capital 16 8 239 409 8 165 069 Share premium 16 23 701 165 23 368 576 Non-distributable reserve 17.1 1 327 001 1 327 001 Foreign currency translation reserve 17.3 (1 616 568) (1 182 140) Available-for-sale investments reserve 17.4 - (461) Revaluation reserve 17.5 406 808 - Accumulated losses (16 909 494) (6 674 822) Total equity 15 148 321 25 003 223 Liabilities Non-current liabilities Other payables 18 - 756 958 Borrowings 20 4 914 134 694 125 Deferred income tax liabilities 21 2 497 281 3 602 076 7 411 415 5 053 159 Current liabilities Trade and other payables 18 10 941 593 12 085 486 Provisions 19 3 676 484 863 265 Borrowings 20 8 164 598 6 949 161 22 782 675 19 897 912 Liabilities of a disposal group classified as held for sale 28.3 999 461 - 23 782 136 19 897 912 Total liabilities 31 193 551 24 951 071 Total equity and liabilities 46 341 872 49 954 294 These financial statements were approved by the Board of Directors on the 27th of February 2012 and signed on its behalf by: Timothy N. Chiganze Shingirai A. Munyeza Chairman Group Chief ExecutivePAGE 30 STRENGTHENING THE CORE FOR GROWTH
  31. 31. Note 2011 2010Assets US$ US$Non-current assetsProperty, equipment and motor vehicles 32 679 414 163 816Investments in subsidiaries 33 26 273 284 27 477 008Investments in associate 34 9 985 587 9 605 727Other receivables 38 535 513 28 149Deferred income tax asset 44 21 291 74 908 37 495 089 37 349 608Current assetsInventory 47 338 -Other receivables 38 893 419 1 857 261Available-for-sale financial assets 37 113 188 69 421Cash and cash equivalents 39 3 306 616 2 968 4 360 562 1 929 650Non-current assets held for sale 35 2 672 001 - 7 032 563 1 929 650Total assets 44 527 652 39 279 258Equity and liabilitiesEquity attributable to owners of the companyShare capital 43 8 314 729 8 314 729Share premium 43 24 734 304 24 734 304Accumulated losses (362 619) (318 837)Total equity 32 686 414 32 730 196LiabilitiesNon-current liabilitiesBorrowings 42 3 180 290 -Current liabilitiesOther payables 40 661 877 272 122Provisions 41 46 628 23 871Borrowings 42 7 952 443 6 253 069 8 660 948 6 549 062Total liabilities 11 841 238 6 549 062Total equity and liabilities 44 527 652 39 279 258These financial statements were approved by the board on the 27th of February 2012 and signed on its behalf by:Timothy N. Chiganze Shingirai A. MunyezaChairman Group Chief Executive STRENGTHENING THE CORE FOR GROWTH PAGE 31
  32. 32. 2011 2010 Note US$ US$ Continuing Operations Revenue 5 48 796 506 39 942 218 Cost of sales 24 (14 560 854) (11 461 421) Gross profit 34 235 652 28 480 797 Other income 23 9 600 4 863 Operating expenses 24 (36 724 877) (28 354 639) Other expenses 23 (2 678 434) (869 695) Operating loss (5 158 059) (738 674) Finance income 25 138 373 193 785 Finance costs 25 (1 672 091) (1 258 415) Share of income / (loss) of associate 9 1 945 014 (99 371) Loss before income tax (4 746 763) (1 902 675) Income tax credit 21 1 132 982 880 276 Loss for the year from continuing operations (3 613 781) (1 022 399) Discontinued operations Loss for the year from discontinued operations 28.1 (6 620 891) (2 117 288) Loss for the year (10 234 672) (3 139 687) Other comprehensive income: Fair value adjustment on available-for-sale financial assets 11 - (1 145) Recycling of fair value loss on available-for-sale financial assets 17.6 466 - Foreign currency translation reserve 17.6 (434 428) (363 142) Share of other comprehensive income of associate 9 406 808 - Income tax relating to components of other comprehensive income 17.6 (5) 11 Other comprehensive loss net of income tax for the year (27 159) (364 276) Total comprehensive loss for the year (10 261 831) (3 503 963) Attributable to: Owners of the parent (10 261 831) (3 503 963) Total comprehensive income attributable to equity shareholders arises from: Continuing operations (3 640 940) (1 386 675) Discontinued operations (6 620 891) (2 117 288) (10 261 831) (3 503 963) Earning per share: cents Basic and diluted from continuing operations 26 (0.44) (0.13) Basic and diluted from discontinued operations 26 (0.81) (0.27) Earning per share for the year: cents 26 (1.25) (0.40)PAGE 32 STRENGTHENING THE CORE FOR GROWTH
  33. 33. ATTRIBUTABLE TO OWNERS OF THE PARENT Amount Foreign currency Available-for-sale Total Share Share awaiting Non-distributable translation investments Revaluation Accumulated shareholders capital premium allotment reserve reserve reserve reserve losses equity US$ US$ US$ US$ US$ US$ US$ US$ US$At 1 October 2009 - - 21 690 721 1 327 001 (818 998) 673 - (3 535 135) 18 664 262Transfer from amountawaiting allotment 6 892 497 14 798 224 (21 690 721) - - - - - -Comprehensive incomeLoss for the year - - - - - - - (3 139 687) (3 139 687)Other comprehensive lossCurrency translation differences - - - - (363 142) - - - (363 142)Fair value adjustment onavailable-for-sale financial assets - - - - - (1 134) - - (1 134)Transactions with ownersIssue of shares 1 272 572 8 570 352 - - - - - - 9 842 924At 30 September 2010 8 165 069 23 368 576 - 1 327 001 (1 182 140) (461) - (6 674 822) 25 003 223Comprehensive incomeLoss for the year - - - - - - - (10 234 672) (10 234 672)Other comprehensive income / (loss)Currency translation differences - - - - (434 428) - - - (434 428)Reclassified to income statement - - - - - 461 - - 461Share of associates othercomprehensive income - - - - - - 406 808 - 406 808Transactions with ownersIssue of shares 74 340 332 589 - - - - - - 406 929At 30 September 2011 8 239 409 23 701 165 - 1 327 001 (1 616 568) - 406 808 (16 909 494) 15 148 321 STRENGTHENING THE CORE FOR GROWTH PPAGE33 AGE 1
  34. 34. Note 2011 2010 Cash flows from operating activities US$ US$ Cash generated from / (used in) operations 27 1 336 471 (4 987 787) Interest paid 25 (1 754 153) (1 513 169) Income tax paid 21 (37 747) ( 30 771) Net cash used in operating activities (455 429) (6 531 727) Cash flows from investing activities Purchase of property, equipment and motor vehicles (1 420 218) (2 306 303) Investment to expand operations (Zimbabwe and Botswana project CWIP) (1 997 777) (101 288) Proceeds from sale of equipment 27 31 763 50 Purchase of available-for-sale financial assets 11 - (26 936) Proceeds from sale of shares in associate 9 - 487 606 Interest received 25 122 519 153 859 Dividend received 23 9 600 4 863 Net cash used in investing activities (3 254 113) (1 788 149) Cash flows from financing activities Proceeds from issuance of ordinary shares - 9 619 760 Purchase of treasury shares - (97 521) Proceeds from short-term borrowings 7 952 443 6 125 145 Proceeds from long-term borrowings 4 701 881 - Repayment of short-term borrowings (7 223 351) (5 617 051) Repayment of long-term borrowings - (47 418) Net cash generated from financing activities 5 430 973 9 982 915 Net increase in cash and cash equivalents 1 721 431 1 663 039 Cash and cash equivalents at beginning of the year 15 2 810 406 937 582 Exchange gains on cash and cash equivalents 125 643 209 785 Cash and cash equivalents at the end of the year 15 4 657 480 2 810 406PAGE 34 STRENGTHENING THE CORE FOR GROWTH

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