Contents 1Company Profile 2Financial Highlights 5Statement of Vision 6The African Sun Way 7Market Overview 8Our Footprint 9Historical Highlights 11Chairmans Statement 13Group Chief Executives Report 16Accounting Philosophy 19Certificate by the Company Secretary 21Directors Report 22Corporate Governance 24Directors Responsibility for Financial Reporting 27Independent 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 35Group Supplementary Information 66Shareholders Profile 68Group Structure 71Business Composition 73Board of Directors 74Corporate Information 77Management 78Notice of Annual General Meeting 79Shareholders Diary 81Contact Information 82Proxy Form for the Annual General Meeting 83
Company Profile 2African Sun Limited, (African Sun) has experienced strong and Established in 1968, the Group, then known as Zimbabweconsistent growth in sub-Saharan Africa this year. While the Sun Limited, was part of Delta Corporation, but has evolvedrealities of the Global Financial Crisis cannot be ignored, the significantly from being just a Zimbabwe-based hospitalityGroup has remained upbeat, carefully managing its cost base management company. That being said, in Zimbabwe, Africanwhile making plans for an ambitious acquisition trail in 2010. Sun is still the leading player in the tourism and hospitalityThis year alone, the Group’s first round of capital raising industry, with the Zimbabwe operations forming the largesthas secured US$10 million required for its refurbishment business under the African Sun Limited group of companies.and expansion programme and its shareholders haveunanimously agreed to raise a further US$25 million by way The Zimbabwe operations portfolio currently comprisesof Private Placement and Equity-Secured Debt. A strong vote thirteen hotels and resorts across the nation, including threeof confidence indeed, backed by the rise in occupancy levels resort hotels in the town of Victoria Falls, namely, Elephantin the second half of this year. Hills Resort, The Kingdom at Victoria Falls and The Victoria Falls Hotel. The Victoria Falls Hotel is jointly managed withWith the FIFA 2010 World Cup in South Africa just around Meikles Africa Limited. Close to the resort town of Victoria Fallsthe corner, African Sun plans to use some of the capital to in Hwange is one of African Sun’s safari operations, Hwangerenovate six of its Zimbabwean hotels to world-class standards Safari Lodge. These four hotels together make up the Westernin support of an already impressive secured tournament Region of African Suns Zimbabwe hotels and resorts.occupancy rate. The Group is also poised to capitalise oninternational interest in the continent and has undertaken The Eastern Region comprises mainly city hotels for businessstrategic marketing and communication initiatives at travellers, three resort properties and one safari lodge. The cityinternational trade events showcasing its offering to the global hotels are three InterContinental Hotels Group (IHG) affiliatedtourism community. African Sun has interests in a number of brands; the Crowne Plaza Monomotapa, the three Holiday InnAfrican countries, namely, Zimbabwe, South Africa, Nigeria, – branded hotels in Harare, Bulawayo, and Mutare, and theGhana and Zambia. Express by Holiday Inn Beitbridge.
Company Profile 3In addition to these, the Group also operates the Great Through HTA, African Sun will replicate its excellent serviceZimbabwe Hotel in Masvingo, which is located within walking standards via the installation of satellite training academiesdistance from the Great Zimbabwe Monument z. The three in west and east Africa, the two main areas of expansionresorts in the Eastern Region are Troutbeck Resort in Nyanga, into sub-Saharan Africa. Growing the brands regionally is aCaribbea Bay Resort and Fothergill Island Safari Lodge, both fundamental factor as the Group continues in its quest tolocated in Kariba. establish brand leadership where African Sun will dominate other brands and become the benchmark for other players inIn South Africa, operations are made up of The Grace in the region.Rosebank and The Lakes Hotel and Conference Centre,both in Johannesburg. In Nigeria, the Group operates, under As African Sun’s expansion strategy is implemented, amanagement contracts, Obudu Mountain Resort and Amber combined brand strategy of the use of IHG brands, namely,Tinapa, in Cross River State, and Nike Lake Resort in Enugu Holiday Inn, Crowne Plaza and Express by Holiday Inn inState. In Ghana, also under management contract, there is emerging markets is key. IHG brands are tried and testedHoliday Inn Accra Airport. Royal Chundu Zambezi River with great brand equity, especially for foreign and businessLodge, a 5-Star luxury lodge in Zambia, joined the property travellers, due to their high international brand awareness.portfolio this year. African Sun also has a strong pipeline ofadditional sub-Saharan Africa properties in development, African Sun will use its own brands in markets where themany scheduled to come on line in 2010. company has gained acceptance, and these are made up of the following mix:A key strength for the Group is that its operations and initiativesare supported by a management team comprising seasoned • Five Star Luxury: The Mulberryhotel and business managers. Their combined intellectual • Five Star City: Platinumcapital and expertise ensures that African Sun is well positioned • Mid-range: Amberto implement its business strategy against aggressive timeline • Value: Amber Expresstargets. • Long stay: MyPlaceAs part of its strategic thrust, African Sun places significant Also under its wing, African Sun holds 17.72% equity interestimportance on its human capital base, and this has resulted in in Dawn Properties Limited, an investment property-holdingthe strengthening of its training division, Hospitality Training company formed and listed on the Zimbabwe Stock ExchangeAcademy, commonly abbreviated as HTA. The academy in 2003 when the Group spun-off wholly-owned propertyhas grown over the years to become a fully-fledged tertiary interests, retaining the hotel management business. DawnHotel School, offering a full array of hospitality and tourism Properties Limited owns nine of the properties that Africancourses. Sun leases and operates in Zimbabwe.The main role of the training academy is to ensure andmaintain excellent service delivery within the Group throughthe implementation of correct training programmes for staff. A tree is known by its fruit. – African Proverb
A man who paysrespect to the great,paves the way for hisown greatness – African Proverb
Financial Highlights 5for the year ended 30 september 2009 2009GROUP SUMMARY ($):Revenue 35 236 138EBITDA (3 199 381)Loss before tax (5 367 659)Attributable loss (4 364 899)Total assets 46 688 071Market capitilisation 62 032 477SHARE PERFORMANCE (cents):Loss per shareBasic earnings basis (0.63)Fully diluted earnings basis (0.63)Net asset value per share 3.06Market price per share 9FINANCIAL STATISTICSReturn on equity (%) (21)Interest cover (times) (11)
Statement of VisionVISIONThe Lifestyle Company creating unforgettable leisure experiences.MISSIONWe exist to create wealth in a sustainable manner by anticipating andmeeting the needs of our stakeholders, through the provision of seamlessleisure 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 themFOCUS• We 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, equity participation and strategic alliances• We will provide a holistic hospitality and leisure product that will meet the needs and exceed the expectations of 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 amenitiesCORE VALUES AND BELIEFSINTEGRITY – We do what we say. We are true to self and true to othersRESPECT – In all our relationships, we seek to build and honourCARE – We show concern and seek the well-being of everyoneFUN – We celebrate life together
The African Sun WaySHARED VISIONWe will always seek to have a buy-in whilst providing leadershipSHARED VALUESOur values are the glue that binds us togetherTIMEOUS EXECUTION AND CLOSUREIt is not done until there is closureEFFECTIVENESSWe will deliver beyond expectationsADAPTABILITYWe will be flexible without losing our strategic intentEFFICIENCYWe will be disciplined in utilizing resources in all we doCONNECTIVITYIt is our responsibility to get the message across to the other party
Market Overview 8the business environment in africaAfrica is on the move, and African Sun with hotels and resorts across Africa has, over the years, gained in-depth knowledgeand understanding of the broad African business environment. In particular, African Sun operates in those regions ofdynamic growth and opportunity – regions with different business cultures and environments, from Ghana and Nigeria inWest Africa to Zimbabwe, South Africa and Zambia in sub-Saharan Africa.This understanding and knowledge comes at an opportune time with the growth and prospects for business in Africa lookingbrighter. In the past millennium, trading in Africa was limited to the old trading ports along the east and west coasts – thecommodities sold being palm oil, rubber, peanuts, cocoa, ivory and much underpinned by the slave trade. The tradingwas primarily with Europe and mostly agriculture. In more recent times, Africa’s business has become more focused onsupplying partners across the globe with resources, driven by the vast mineral regions of the south and the oil and miningsectors of the central and west African regions. Today, Africa is a carte blanche for business and we are proud to be part ofthe new chapter – opening the doors to a revitalized business future across the African continent.The growth of African business has escalated in recent years. A look at some published trade figures showsthat in 2008 the United States of America (US) imports from Africa were valued by the US Census Bureauas worth some US$113 billion. This is up nearly tenfold from the US$15.8 billion in imports only ten yearspreviously. Every day the media reports new developments, "China pledges $10 billion in low cost loans"; "Anew German loan to African Development Bank is announced"; "Niger Delta and NPC partner in a new naturalgas development".The latest UNWTO World Tourism Barometer reports excellent growth for Africa. The continent has confirmed its goodmomentum in sustaining the growth of 5% in 2009 spearheaded by sub-Sahara destinations against the background ofdeclining global tourism trends in other markets.As a result of these positive developments, there is an upsurge in the flow of visitors to African Sun hotels and resorts.Stepping through African Suns doors daily are business and industrial leaders from China, Europe, India and America,travelling to Africa on a mission to develop and negotiate contracts and establish new relationships and partners.Why African Sun opens doors to business in AfricaFirstly, African Sun is the fastest-growing hotel Group in Africa, putting in place a range of hotels in all the targeted highgrowth regions. In Johannesburg, South Africa, the Group operates The Grace in Rosebank – the award winning, five-starhotel in the heart of the select suburb of Rosebank. We manage the popular The Lakes Hotel and Conference Centre, tenminutes from OR Tambo Airport – the air transport hub of southern Africa catering for over seventeen million passengersin the last year.In Zimbabwe, the Groups hotels and resorts cover all the main business and popular tourist destinations with no less thanfour famous hotels and resorts in the Victoria Falls area, including the the world-renowned grand lady of southern Africa,The Victoria Falls Hotel. In Ghana and Nigeria, African Suns hotels and resorts under management contracts are at the heartof new business developments. These include Holiday Inn Accra Airport – recently host to President Obama and his family,Amber Tinapa hotel located at the heart of Nigerias only Free Trade Zone, adjacent to the city of Calabar, Obudu MountainResort and Nike Lake in bustling Enugu State.Secondly, the Group is moving fast to become an international organisation of hospitality service excellence, with staffdedicated to African Suns motto “How May I Serve You”. Accommodation and facilities are being upgraded to meet the newand increasing demands of the business and tourist traveller and to offer customers a world-class experience.Today, there is an open book for business in Africa. African Sun, with its long history in the hotel industry on the continent,is proud to be part of this new and exciting chapter in Africa’s trading growth and expansion.
Our Footprint 9 geographical locations zimbabwe western regionghana zimbabwe eastern regionACC R A A I R P O R Tnigeria Egypt Nigeria Ethiopia Ghana Cameroon Cote Uganda dIvoire Equatorial Kenya DRC Guinea Tanzania zimbabwe zambia franchise brands Angola Zambia Malawi Zimbabwe Madagascar Namibia south africa Botswana Mozambique South Africa
There are three kinds of people;those who make things happen,those who watch things happenand those who dont knowwhats happening. – African Proverb The Victoria Falls, line drawing by Gwelo Goodman – Circa 1920
Historical Highlights 11our journey thus far• 1952 – Rhodesia and Nyasaland Hotels (Private) Limited • 1999 – Zimbabwe Sun Limited acquires 40% equity and is formed as a wholly-owned subsidiary of Rhodesian management of Baio Do Paraiso Breweries • 1999 – Makasa Sun is re-developed into The Kingdom at• 1968 – Sable Hotels (Private) Limited is established Victoria Falls• 1973 – Rhodesian Government grants first casino licence • 2002 – Zimbabwe Sun Limited is unbundled from for The Victoria Falls Hotel Delta Corporation• 1974 – Development of first four world-class hotels: • 2003 – Zimbabwe Sun Limited owns 100% shares in the Monomotapa Hotel in Salisbury, The Wankie Safari Lodge, timeshare operation in Vilanculos, Mozambique Caribbea Bay at Kariba, and the Elephant Hills Country Club in Victoria Falls • 2003 – Dawn Properties Limited is listed as the first property entity on the Zimbabwe Stock Exchange• 1979 – Meikles Southern Sun Hotels is established, becoming the largest hotel chain in southern and eastern • 2003 – The Hospitality Training Academy (HTA) is re-launched Africa, with control of thirteen major properties in the country • 2003 – First negotiations for management of Holiday Inn Accra Airport, Ghana• 1980 – Meikles Southern Sun Hotels changes its name to Zimbabwe Sun Hotels after Zimbabwe’s independence • 2004 – Zimbabwe Sun Limited acquires The Grace Hotel in Rosebank, South Africa, ranked among the “Top Ten” hotels in• 1988 – Zimbabwe Sun Hotels merges with Touch the Wild Africa and the Middle East by Condé Nast Traveller (USA) in its safari operations, later selling it to Rainbow Tourism Group first year of operation (Private) Limited on 30 April 1998 • 2008 – Zimbabwe Sun Limited adds The Lakes Hotel and• 1990 – Zimbabwe Sun Limited is floated on the Zimbabwe Conference Centre, in Johannesburg, South Africa to Stock Exchange (ZSE), at the time being the largest its portfolio flotation in Zimbabwe, with 70 million shares offered to the public, which was over-subscribed by 28% • 2008 – Zimbabwe Sun Limited rebrands its name to African Sun Limited• 1990 – Opening of the timeshares built in Troutbeck, Nyanga and at Caribbea Bay, which received “Gold Crown • 2008 – African Sun Limited adds Obudu Mountain Resort to its Resorts” status from the RCI in 1999 regional portfolio• 1991 – First Holiday Inn franchise in Harare • 2008 – African Sun Limited takes over management of Holiday Inn Accra Airport• 1991 – The Elephant Hills Resort hosts the Commonwealth Heads of Government meeting, officially opening in 1992 • 2009 – African Sun Limited aquires Hotelserve Holdings (Private) Limited• 1994 – First regional office for reservations is established in Johannesburg • 2009 – African Sun Limited opens Royal Chundu Zambezi River Lodge• 1998 – The construction of Express by Holiday Inn in Beitbridge is completed • 2009 – The company raises US$10 million through a Rights Offer
Chairmans Statement 13to our shareholders and potential partners OPEN FOR BUSINESS IN AFRICA A s we look to the future, we have every reason to believe that our footprint across Africa will continue to grow based on our rate of expansion over the past three years. Our previous achievements have left us in a very strong position as we have created many advocates for our brand across the continent, and we must build upon this base as the global economy recovers. Despite the capacity growth setbacks we have experienced as a result of the Global Financial Crisis, we remain focused on our destination 2012 goals. These are: • to achieve market capitalisation of US$1 billion; • growing room capacity to 8500 rooms; and • seeking a dual listing on a major international bourse.Timothy Chiganze – ChairmanWHERE WE ARE COMING FROMThe year 2009 was a year fraught with challenges for us as the effects of the Global Financial Crisis took hold. Our strategicgoals were affected in several ways as low liquidity on international capital markets increased the cost of capital. As a result,capacity growth was stifled by delays and non-openings of new projects.At the beginning of the year we saw a multiple currency regime come into effect in Zimbabwe, predominantly through theusage of the United States of America Dollar and South African Rand. We had to re-align our strategy and mindsets fromthe hyperinflationary environment that had become the norm. Although the new currency regime has given us the benefit ofbeing able to compare the performance of our Zimbabwean operations to those in the rest of the continent, the imminentresurgence of the local hospitality industry has also meant that we have had to start scouting capital markets to refurbishour Zimbabwean properties. We have now moved to using Earnings Before Interest, Taxes, Depreciation and Amortisation(EBITDA) to measure our performance and for the period under review we incurred an EBIDTA loss of US$3.2 million onrevenues of US$35.2 million, owing to the challenges alluded to earlier. The coming year is, however, looking positive, as weare set to benefit from the 2010 FIFA World Cup and the resurgence of the Zimbabwean economy.CAPACITY BUILDINGWe have invested in skills retention and capacity building through several developmental programmes and the establishmentof the Hospitality Training Academy (HTA) as a stand-alone training institution.CORPORATE SOCIAL RESPONSIBILITYWe are currently running a Corporate Social Responsibility Programme with several initiatives under the banner of Sun Care.The objective of this programme is in line with the United Nations eight Millennium Development Goals and the company hasadopted the following specific goals:• to achieve universal primary education;• to improve health; and• to eradicate poverty and hunger.The above initiatives have seen the company distributing primary school textbooks to selected schools in the areas withinwhich African Sun operates. We have also undertaken to assist less privileged hospitals with linen and crockery in the areaswithin which we operate. Recipient institutions under this initiative include Mpilo General Hospital and United BulawayoHospitals, both in Bulawayo. Other hospitals that have benefited from donations include Beitbridge District Hospital, Nyanga
Chairmans Statement 14to our shareholders and potential partnersHospital, Morgenster Hospital in Masvingo and Matthew We will continue to improve on service excellence in ourRusike Children’s Home in Harare, catering for orphans. expansion beyond Zimbabwe.In addition to the primary school and hospital donations, we The increase in rooms to 8500 by 2012 (Destination 2012)are also involved with the following organisations: remains one of the main objectives targeted by our business• World Vision Zimbabwe, to assist in their efforts towards model. Pipeline projects nearing completion include hotels poverty and hunger eradication with specific reference to in Botswana and Nigeria. identified children who have been orphaned as a result of HIV/AIDS Royal Chundu Zambezi River Lodge in Livingstone, Zambia• In partnership with the United States Embassy Public came on board and began operations on 10 December Affairs department, we provided air tickets to three 2009. deserving scholarship students from disadvantaged backgrounds under the United States Achievers DIRECTORATE Programme (USAP) Mr Eben Makonese and Dr Leonard Kapungu resigned from• The company partnered with the City of Harare towards the Board with effect from 1 June 2009 after thirteen years the maintenance of Mbare Swimming Pool with an and eight years of service, respectively, and Mr Farai Rwodzi outreach of nine primary schools and five secondary resigned from the Board from 1 December 2009 after schools in the community faithfully serving on the Board since 2002. I would like to take this opportunity to thank all three members for theirOUTLOOK service, valuable contribution, and wise counsel. Their valuedAs the larger global economies climb out of recession, contribution to the Board over the years is much appreciatedbusiness will inevitably strengthen and we can expect to see and their active involvement in the affairs of the company willa measurable improvement in our hotels, especially those be greatly missed. I wish them all the best in their respectivein Zimbabwe as a result. The 2010 FIFA World Cup soccer endeavours.showcase will present a wealth of opportunities, providingfresh impetus into the southern African tourism industry, Mr Bekithemba Nkomo and I were appointed Board Deputywith the effect going beyond the event, as this will be a Chairman and Chairman, respectively. Mr Vernon Laphamhuge marketing event for the region’s tourism industry. It is and Ms Yvonne Johnston joined the African Sun Limitedvital that we use this opportunity to establish African Sun’s Board effective 1 July 2009 and bring with them a wealth ofreputation as the leading pan-African hospitality Group. experience and expertise. DIVIDENDIn the short term, our financing needs will be met through the In light of the Group’s capital requirements and the depressedfollowing mechanisms for which we were granted approval on performance, the Board has resolved not to declare a dividend13 November 2009: for the year ended 30 September 2009.• rights offer;• private placement; and APPRECIATION• equity secured credit. I would like to commend management and staff for their commitment throughout the financial year. Much appreciationThe rights offer was successful with the Group raising $10 also goes to my fellow Directors for their support andmillion dollars. Part of the proceeds will be used to refurbish contribution to the business of the Group over the past twelvethe following Zimbabwe hotels: months.• Crowne Plaza Monomotapa;• Holiday Inn Harare;• Holiday Inn Bulawayo;• Elephant Hills Resort;• The Victoria Falls Hotel; and TIMOTHY CHIGANZE• The Kingdom at Victoria Falls. Chairman 8 January 2010
Tomorrow belongsto the peoplewho prepare for it today. – African Proverb
Group Chief Executives Report 16business review T he year under review has been one with many challenges; the most notable of which is the Global Financial Crisis, which has left no sector untouched. As a result, the hospitality industry has witnessed a general slowdown in available capital for hotel and leisure developments from the international investment community. Closer to home, the regions within which we operate have not been spared either, with some of them, as in the case of Zimbabwe, experiencing unprecedented changes in the political arena. I will expand on these as I appraise each region on an individual basis. The year 2009 has been a watershed and I am happy to point out that as we look into the future, we expect more positive developments globally with the onset of green shoots in the various economic segments, and in the Africa region, which will result in an increase in revenue and occupancies for the Group.Shingirai Munyeza – Group Chief ExecutiveZIMBABWEHotel operationsThe first four months of the financial year were characterised by chronic hyper-inflation, price distortions and unreliable exchangerates. This, compounded by the Global Financial Crisis and travel warnings issued by several traditional source markets, led to asharp decline in foreign arrivals of 19% year-on-year from 48 159 to 38 811 by August 2009. Zimbabwe has seen a drastic shiftin economic variables when it ceased to be a low cost producer soon after the implementation of the Global Political Agreementand resultant Government of National Unity, as well as the multi-currency system.More optimistically, the period after dollarisation saw lifting of travel warnings by the traditional source markets such asGermany, United States of America and Japan resulting in our operations achieving an average growth in occupancies of 2%per month from an average of 23% in February to 41% in September. This year, the Zimbabwe hotel operations contributedUS$24 million in revenue to the Group at an average occupancy of 32%, compared to 41% recorded in 2008.Distribution – Hotelserve Holdings (Private) LimitedThe newly acquired subsidiary achieved turnover of US$2 million (6% of the Group’s turnover) for the five months sinceacquisition. The integration of this subsidiary to the Group has been accomplished successfully and it is expected that it willcontribute positively to the Group in the future.SOUTH AFRICASouth African hotels suffered a sharp decline in occupancies as a result of the Global Financial Crisis. However, the hosting ofthe 2010 FIFA World Cup in South Africa is expected to spur growth in occupancies in the coming year. These hotels achievedoccupancies of 38% and RevPar of US$40 with an ADR of US$106 compared to occupancies of 52%, RevPar of US$54 withan ADR of US$104 in the prior period.NIGERIAThe hotels under management in Nigeria now constitute 22% of room capacity, following the opening of Amber Tinapa andNike Lake Resort in December 2008. Occupancies in the Nigerian hotels averaged 15% for the period under review, however,contribution from these hotels is set to improve as the underlying performance improves.
Group Chief Executives Report 17business reviewGHANA area during that period. We shall also be targeting displacedGhana achieved a third consecutive decline in annual inflation business in-bound into South Africa and from South Africato 18.37% owing to tighter fiscal policy and low domestic itself. We will be playing a key role in bringing the World Cupfood prices. The recovery of the global economy will see an to thousands of Zimbabweans by facilitating the set up of Fanincrease in export prices increasing real economic growth to Parks in conjunction with local authorities, thereby generating5.2%. additional food and beverage revenues for the participating hotels.Holiday Inn Accra Airport achieved an occupancy of 70% withthe highest ADR and RevPar in the Group of US$187 and MOBILIZATION AND SKILL-BASE CONSOLIDATIONUS$131, respectively. The Hospitality Training Academy (HTA), an academy for the learning and development of hospitality operationalBRAND LEADERSHIP skills, was created by African Sun Hotels in 1995 as HTIIt has been a year since we opened Amber Tinapa, our first mid- (Hospitality Training Institution) to spearhead and enhancemarket city brand, in Nigeria. This brand has been received skills development within the Group. The Institution waspositively by developers and has led to the foundation of a subsequently named HTA on 1st of January 2004.select service hotel brand under the name Amber Express.This replaces the Adrenal-Inn brand which we had developed Following the repositioning and rebranding of African Sunfor the value segment. Amber Express therefore becomes Limited in 2008, as well as the direction given by our strategicthe value brand that African Sun will drive into the African goals, the focus of the Academy has changed significantly.continent as we continue with our regional expansion. The following reflects the new thrust of HTA: • to become a viable and competitive strategic businessOur relationship with InterContinental Hotels Group continues unit within the African Sun Group;to strengthen with the signing on of Holiday Inn Gaborone • to become the renowned hospitality academy and centrethis year. The hotel is currently under construction and is of excellence for leadership in the Service Industry inexpected to open its doors in the second quarter of 2010. southern Africa within three years of operation; • to contend with, and earn a name within, the top five2010 FIFA WORLD CUP STRATEGY ranked hospitality academies and leadership centresSouth Africa internationally within five years of operation; andBoth our South African Hotels are fully booked for the duration • to provide products that will service the Retail Sector,of the tournament, with The Lakes Hotel and Conference Airline Industry, Tour Operators, Banking and FinanceCentre contracted to MATCH, FIFAs hospitality arm. Industry and Hospitality Industry.Zimbabwe The corporate vision for HTA is to become a change agentFrom a Zimbabwe perspective, we believe that the 2010 FIFA for its clients, while its mission is to create wealth for itsWorld Cup presents an opportunity for many international stakeholders. HTA’s product offering is summarised in thetravellers to experience The Victoria Falls. There is an following three key pillars:opportunity for us to benefit from the captive market for theentire period as international fans cannot go home between Pillar 1 Pillar 2 Pillar 3matches because the venue is a long haul destination for themajority of teams and fans. As a result, extended length of Skills (Competencies) Organizational Consultancy Generation Capacity Building Servicesstay packages will be a viable option. • Certified Operative • Supervisory • Service AuditsAs an organization, we are working closely with Tour Operators Programmes • Management • Process Auditsin South Africa to drive business into our hotels during the • Certified Degree & • Leadership • OrganizationalWorld Cup period, targeting mainly the Victoria Falls area as Diploma Programmes • Coaching Effectivenesswell as the two major cities, Harare and Bulawayo. We are • Refresher Courses • Career – Path • Head Hunting Determination • Assessment Centrescognisant that there is limited access to Zimbabwe via air with • Research &little scope for additional capacity. However, we intend to get Developmenta significant share of the available seats for the Victoria Falls
Group Chief Executives Report 18business reviewAccreditation of programmes is a critical component for any increase as corporate and leisure business is expected toAcademy’s reputation. HTA’s long term programmes for 2010 strengthen from an almost zero base.will be accredited by the Higher Examinations Council ofZimbabwe (HEXCO), and for west Africa, the American Hotels In the short term, management will focus on skills retentionand Lodges Institution. From 2011, programmes will be and refurbishment of Zimbabwe hotels in order to improve theaccredited by the reputable Swiss School, Cornell University guest experience and make them regionally competitive. Otherand Wits Business School. areas of preference will be cash protection, cost management through procurement efficiencies and restructuring of shortIMPACT OF REFURBISHMENT AND CAPITAL RAISING term loans to reduce the interest burden. Negotiations haveThe Group embarked on a capital raising initiative through started with several trade partners with the aim of reviewingthree vehicles, namely, a Rights Issue, Private Placement and pricing of goods and services to align costs to revenues andEquity-Secured Debt. The exercise was targeted at raising to match the rest of the southern Africa region.funds for refurbishment of existing hotels as well as fundingthe regional expansion. The expansion will take the Group from its current 2940 rooms to 8500 rooms by 2012, focusing mainly on the managementThe refurbishment exercise, targeted at Zimbabwe hotels, contracts model due to country risks and the inherent riskwill allow us to deliver our promise to our guests in terms of associated with leases. December 2009 saw Royal Chunduoffering a world class product and service, thereby maximising Zambezi River Lodge, our first five-star lodge, coming onguest satisfaction and experience, as is expected of our brand. board. Management is working on several pipeline projects,Upgrading the facilities to internationally accepted standards with more than six-hundered rooms coming on board in Southis critical ahead of the 2010 FIFA World Cup. This project Africa, Nigeria, Ghana, Botswana and Kenya.will be conducted in phases, with the six hotels that will havemaximum exposure to travellers during the 2010 World Cup In conclusion, I would like to thank my executive team,tournament being upgraded first. management and staff for their hard work during 2009. In addition, I would like to express my appreciation for theAs a result, Incentive and Conferencing business guests leadership shown by the Board and my fellow directorscan expect modern, up-to-date facilities, in keeping with throughout this year. Furthermore, I would also like tointernational standards. The refurbishment will enable us to thank the former Chairman, Mr Eben Makonese, Dr Leonardattract additional business from these segments and improve Kapungu and Mr Farai Rwodzi who resigned who resigned fromour yields on rooms. Currently Zimbabwes ADR is 30% below the Board, for their invaluable contribution to African Sun. Iregional rates. also take this opportunity to welcome the new Chairman, Mr Timothy Chiganze, and his Deputy Chairman, Mr BekithembaOUTLOOK Nkomo, and acknowledge the addition of Ms Yvonne JohnstonThe year under review was besieged with the Global Financial and Mr Vernon Lapham to the Board.Crisis which had a negative impact on pipeline projectsresulting in the slowing down of new developments. However,the worst is now behind us and we can see the emergence ofgreen shoots, as powerhouse economies such as the UnitedStates of America, Japan, Germany and France officially SHINGIRAI MUNYEZAemerge from the recession. From an African Sun perspective, Group Chief Executiveour RevPar outlook is positive. We are expecting to grow it 8 January 2010from 28% to approximately 48% as occupancies and ADRimprove.With Zimbabwe still constituting 64% of the room capacity,the Group is ready to capitalise on the country’s increasingstability, improved business environment, growth and abilityto attract the foreign tourist market. Yields are expected to
Accounting Philosophy 19African Sun Limited is dedicated to achieving meaningfuland responsible reporting through comprehensive disclosureand explanation of its financial results. This is done toensure objective corporate performance measurement, toenable returns on investment to be assessed against the risksinherent in their achievement and to facilitate appraisal of thefull potential of the Group.The core determinant of meaningful presentation anddisclosure of information is its validity in supportingmanagement’s decision-making process. While theaccounting philosophy encourages the pioneering of newtechniques, it endorses the fundamental concepts underlyingboth the financial and management accounting disciplinesas enunciated by the Institute of Chartered Accountants ofZimbabwe (ICAZ), the International Accounting StandardsBoard (IASB) and the International Federation of Accountants(IFA). The Group is committed to the regular review offinancial reporting standards and to the development ofnew and improved accounting practices. This is practisedto ensure that the information reported to management andstakeholders of the Group continues to be internationallycomparable, relevant and reliable. This includes, whereverit is considered appropriate, the early adoption of financialreporting standards.The Group adopts all accounting standards and interpretationsapplicable that are issued by the IASB and the InternationalFinancial Reporting Interpretations Committee (IFRIC). Unlessstated, these standards are applied consistently to enhancecomparability of financial information relating to differentfinancial periods.
The Victoria Falls Hotel, ZimbabweThe Grace in Rosebank, Johannesburg
Certificate By The Company Secretary 21 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 2009, the Company has complied with Zimbabwe Stock Exchange Listing Requirements, lodged with the Registrar of Companies all returns required of a public quoted Company in terms of the Companies Act (Chapter 24:03) and that all such returns are true, correct and up to date. EDWIN SHANGWA Company Secretary 8 January 2010Edwin Shangwa – Company Secretary
Directors Report 22The Directors present their Annual Report and the Audited Financial Statements of the Company and the Group forthe twelve months ended 30 September 2009.YEARS RESULTLoss attributable to shareholders US$4 364 899.DividendsNo dividend was declared for the year ended 30 September 2009.CAPITAL COMMITMENTS $Authorised by Directors and contracted for 3 196 538Authorised by Directors but not contracted for 22 100 316Total 25 296 854INVESTMENTSThe 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%Hotelserve Holdings (Private) Limited 100%RCI (Zimbabwe) (Private) Limited 24%Dawn Properties Limited 17.72%SHARE CAPITALThe issued share capital was increased, by the issue of 1,282,335 ordinary shares to 689,249,739. The shareswere issued as scrip dividend. The share capital and share premium remained nil in United States Dollars as thepar value of the ordinary shares was still denominated in Zimbabwe Dollars. There are no unexercised sharesunder 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.DIRECTORSShingirai A Munyeza, David W Birch and Elizabeth Chitiga retire by rotation. All being eligible, they will offerthemselves for re-election at the Annual General Meeting.Members will be asked to confirm the appointment of Vernon W Lapham and Yvonne E Johnston to the Board byan ordinary resolution to this effect.
Directors Report 23AUDITORSMembers will also be asked to re-appoint PricewaterhouseCoopers as Group auditors for the ensuing year.ANNUAL GENERAL MEETINGThe Thirty-Eighth Annual General Meeting of members of the Company will be held on Thursday 18 March 2010 at 10h00at Crowne Plaza Monomotapa, 54 Park Lane, Harare.By the order of the Board:TIMOTHY CHIGANZEChairmanSHINGIRAI MUNYEZAGroup Chief ExecutiveEDWIN SHANGWACompany Secretary8 January 2010
Corporate Governance 24 THE AFRICAN SUN CHARTERCORPORATE GOVERNANCE and minimise significant fraud, potential liability, loss andA frican Sun Limited personnel are committed to a material misstatement while complying with applicable laws long-published code of ethics. This incorporates the and regulations.Group’s operating, financial and behavioural policies in aset of integrated values, including the ethical standards The controls throughout the Group concentrate on criticalrequired of members of the African Sun Limited family in risk areas. All controls relating to the critical areas intheir interface with one another and with all stakeholders. the casino and hotel operating environments are closely monitored by the Directors and subjected to internal auditThere are detailed policies and procedures in place across the reviews. Furthermore, assessments of the informationGroup, covering the regulation and reporting of transactions technology environment are also performed.in securities of the Group by the Directors and officers. TheGroup recently adopted a Corporate Governance Charter and An Audit Services Manager, who reports directly to thethe recommendations made in the King Report III. Chairman of the Risk and Audit Committee, heads the internal audit department. The internal audit department isSTAKEHOLDERS designed to serve management and the Board of DirectorsFor many years, African Sun Limited has had a formalised through independent evaluations and examinations of thestakeholder philosophy and structures of corporate governance Group’s activities and resultant business risks.to manage the interface with the various stakeholder groups.African Sun Limited has in place responsive systems of BOARD MEETINGSgovernance and practice which the Board and Management The Board meets at least four times per financial year inregard as entirely appropriate and in accordance with the order to monitor, consider and review, inter alia, matters ofCode of Corporate Practices and Conduct contained in the a strategic, financial, non-financial and operational nature.Cadbury and King Reports I, II and III. Special Board meetings may be convened on an ad hoc basis, when necessary, to consider issues requiring urgentDIRECTORATE attention or decision. During the year under review, fourThe Board of Directors of African Sun Limited is constituted Board meetings were held.with an equitable ratio of executive to non-executive Directorsand meets at least quarterly. The African Sun Limited Board The Board works to a formal agenda prepared by theis chaired by a non-executive Director. Company Secretary in consultation with the Chairman and the Group Chief Executive, which, inter alia, covers operations,DIRECTORS INTERESTS finance, capital expenditure, acquisitions and strategy. AnyAs provided by the Companies Act (Chapter 24:03) and the Board member may request the addition of an item toCompany’s Articles of Association, the Directors are bound to the agenda and will liaise with the Company Secretary indeclare any time during the year, in writing, whether they have this regard. Board papers comprising the agenda, minutesany material interest in any contract of significance with the of Board and Board committee meetings and the relevantCompany which could have given rise to a related conflict of supporting documentation are circulated to all Directors ininterest. No such conflicts were reported this year. advance of each meeting in order that they can adequately prepare and participate fully, frankly and constructively inINTERNAL CONTROL Board discussions and bring the benefit of their particularThe Board of Directors is responsible for the Group’s systems knowledge, skills and abilities to the Board table.of internal control. These systems are designed to providereasonable, but not absolute, assurance as to the integrity BOARD COMMITTEESand reliability of the financial statements and to safeguard, The Board is authorised to form committees to assist in theverify and maintain accountability of its assets and to detect execution of its duties, powers and authorities. The Board has
Corporate Governance 25five standing committees, namely: Risk and Audit, Human THE NOMINATIONS COMMITTEEResources and Remuneration, Finance and Investments, The Nominations Committee is now a standing, as opposedMarketing and Nominations Committees. In addition, there to an ad hoc, committee pursuant to the recommendationsis the Corporate Governance Committee, which is an ad hoc made in King III Report. It is made up of a non-executivecommittee. The terms of reference and composition of the Chairman, the Group Chief Executive, and one non-committees are determined and approved by the Board and Executive Director. It assists with the identification andhave been adopted by the Board on an annual basis. recommendation of potential Directors to the Board.THE RISK AND AUDIT COMMITTEE CORPORATE GOVERNANCE COMMITTEEThe Risk and Audit Committee deals, inter alia, with The Corporate Governance Committee is an ad hoccompliance, internal control and risk management. It committee which sits as and when it is necessary. It is madeis regulated by specific terms of reference, chaired by a up of a non-executive Chairman, the Group Chief Executivenon-executive Director, has one non-executive Director and and two other non-executive Directors.incorporates the Group Chief Executive and Chief FinanceOfficer as members. It meets with the Company’s external NATIONAL WORKS COUNCIL AND WORKERSauditors to discuss accounting, auditing, internal control COMMITTEESand financial reporting matters. The external and internal The Group holds National Works Council meetings at leastauditors have unrestricted access to the Risk and Audit twice a year. Each hotel within the Group has a Works CouncilCommittee. representative who attends these meetings, which is a forum where employees participate in the decision-makingTHE HUMAN RESOURCES AND REMUNERATION process and also discuss employees’ concerns with topCOMMITTEE management. The Group believes in and practises workerThe Group has a Human Resources and Remuneration participation throughout the different levels. All hotels haveCommittee which is made up of a non-executive Chairman, Workers’ Committees, which serve as a communicationthe Group Chief Executive and one non-executive Director. channel with shop floor employees.The Committee acts in accordance with the Board’s writtenterms of reference to review remuneration of all African Sun ANALYST BRIEFINGLimited Executive Directors, senior management and other The Group reports formally to shareholders twice a yearmembers of staff. when its half year and full year results are announced. The Group Chief Executive and the Chief Finance Officer giveTHE FINANCE AND INVESTMENTS COMMITTEE presentations on these results to institutional investors,The Group Finance and Investments Committee is made up analysts and the media. The data used in these presentationsof a non-executive Chairman, the Group Chief Executive, may be found at www.africansuninvestor.com.Chief Finance Officer and two non-executive Directors. TheCommittee is responsible for the review and preliminary ANNUAL GENERAL MEETINGapproval of the major investment decisions of the The Annual General Meeting provides a useful interface withCompany. private shareholders, many of whom are also customers.THE MARKETING COMMITTEE The Chairman of the Board and the Group Chief ExecutiveThe Group has a Marketing Committee comprising a non- are available at the Annual General Meeting to answerexecutive Chairman, the Group Chief Executive and one questions. Information about the Group is maintained andnon-executive Director. The Committee is responsible for available to shareholders at www.africansuninvestor.com.the review of all sales and marketing programmes of theGroup.
Corporate Governance 26DIRECTORS ATTENDANCE OF MEETINGS IN 2009Individual Director attendance at Board and Committeemeetings appears in the table below. Where a Director hasnot been able to attend a Board meeting, any commentswhich he or she has had arising out of the papers to beconsidered at that meeting have been relayed in advance tothe Chairman of the Board. Main Board Finance and Marketing Risk and Audit Human Resources Investments Committee Committee and Committee Remuneration Committee Number of 4 4 4 4 4 meetings Timothy Chiganze 3 3 – – – Bekithemba Nkomo 3 4 4 4 – Shingirai Munyeza 4 4 3 4 4 David Birch 4 – – 4 4 Elizabeth Chitiga 4 – – – – Yvonne Johnston 1 – 1 – – Vernon Lapham 1 1 – – – Nigel Mangwiro 4 4 *3 4 – Farai Rwodzi 4 4 – 1 –* by invitation• Vernon Lapham and Yvonne Johnston did not attend all of the meetings because they were both appointed to the Boardwith effect from 1 July 2009
Directors Responsibility For Financial Reporting 27A frican Sun’s Directors are required by the Companies unlimited access to the Risk and Audit Committee. The Act (Chapter 24:03) and the Zimbabwe Stock Exchange Committee also reviews the interim and annual results oflisting requirements, to maintain adequate accounting the Company prior to their publication.records and to prepare financial statements for eachfinancial year which present a true and fair view of the In addition, the Group’s external auditors review andstate of affairs of the Group at the end of the financial test appropriate aspects of the internal financial controlyear, and of the profit or loss and cash flows for the period. systems during the course of their statutory examinationsIn preparing the accompanying financial statements, of the Group.generally accepted accounting practices have been followedand suitable accounting policies have been used and The Group’s Risk and Audit Committee has met the internalapplied consistently. Reasonable and prudent judgements and the external auditors to discuss their reports on theand estimates have been made. The financial statements results of their work, which include assessments of theincorporate full and responsible disclosure in line with the relative strengths and weaknesses of key control areas. Inaccounting philosophy of the Group stated on page 19. a Group of the size, complexity and geographical diversity of African Sun Limited, it may be expected that occasionalThe Directors have reviewed the Group’s budget and cash breakdowns in established control procedures may occur.flow forecast for the twelve months to 30 September No breakdowns involving material loss have been reported2010. On the basis of the review of the operating to the Directors in respect of the year under review and itforecasts and in light of the current financial position and is believed that none of any significance exist.existing borrowing facilities, the Directors are satisfiedthat African Sun Limited is a going concern and have The financial statements for the twelve months ended 30continued to adopt the going concern basis in preparing September 2009 which appear on pages 30 to 65 havethe financial statements. The Group’s external auditors, been approved by the Board of Directors and are signedPricewaterhouseCoopers, have audited the financial on its behalf by:statements and their report appears on pages 28 to 29.The Group has an independent internal audit function,which has the objective of assisting executive managementand the Risk and Audit Committee in the discharge of theirresponsibilities, and which monitors the effectiveness TIMOTHY CHIGANZEof the accounting system and related internal financial Chairmancontrols on a continuing basis. The internal audit functionperforms a critical examination of the financial andoperating information for Management, and reports itsfindings and its recommendations to Management and tothe Risk and Audit Committee. SHINGIRAI MUNYEZAProcedures are in place to identify key business risks Group Chief Executivetimeously, to determine the likelihood of the risks 8 January 2010crystallising, and to determine the significance of theconsequential financial impact on the business.There is a Risk and Audit Committee of the Board ofDirectors, which meets quarterly with Management, theinternal auditors and external auditors, to review specificaccounting, reporting and internal control matters, and tosatisfy itself that the system of internal control is operatingeffectively. Both the internal and external auditors have
PricewaterhouseCoopers Building Number 4, Arundel Office Park Norfolk Road Mount Pleasant P Box 453 .O. Harare ZimbabweINDEPENDENT AUDITORS REPORTTO THE MEMBERS OF AFRICAN SUN LIMITEDW e have audited the accompanying consolidated financial statements of African Sun Limited and its subsidiaries (the “Group”) and the accompanying statement of financial position of African Sun Limited (the “Company”) standing alone, together the“financial statements”, which comprise the consolidated and separate statements of financial position as at 30 September 2009, andthe consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement ofcashflows for the year then ended and a summary of significant accounting policies and other explanatory notes, set out on pages 30to 65.DIRECTORS RESPONSIBILITY FOR THE FINANCIAL STATEMENTSThe directors are responsible for the preparation and fair presentation of these financial statements in accordance with InternationalFinancial Reporting Standards and the provisions of the Zimbabwe Companies Act (Chapter 24:03) and the relevant StatutoryInstruments ("SI") SI 33/99 and SI 62/96. This responsibility includes designing, implementing and maintaining internal controlrelevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due tofraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in thecircumstances.AUDITORS RESPONSIBILITYOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance withInternational Standards on Auditing. These Standards require that we comply with ethical requirements and plan and perform the auditto 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. Theprocedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of thefinancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevantto the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriatein the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An auditalso includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bymanagement, 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 adverse audit opinion.BASIS FOR ADVERSE OPINIONAs explained in note 2.2 to the financial statements, the functional and presentation currency of the Company and the presentationcurrency of the Group changed on 1 February 2009 from the Zimbabwe Dollar (ZWD) to the United States of America Dollar (USD). TheZimbabwe economy was previously recognised as being hyperinflationary for purposes of financial reporting. To effect the change infunctional currency, the Group and the Company were required by International Accounting Standard ("IAS") 21, The Effects of Changesin Foreign Exchange Rates, to restate their financial statements as at and for the four months ended 31 January 2009 in accordancewith IAS 29, Financial Reporting in Hyperinflationary Economies, before translating the amounts at the closing rate as at 1 February2009. However, the Group and the Company translated ZWD balances to USD at 1 February 2009 at fair value and transactions forthe four months to 31 January 2009 at market exchange rates prevailing during the period, as disclosed in note 2.6(d) to the financialstatements, without first restating and translating these transactions and balances as required by IAS 29 and IAS 21, respectively.
Furthermore, IAS 21 and IAS 29 require that the inflation adjusted comparative financial information should be translated at theclosing exchange rate as at 30 September 2008. The directors have however not presented any comparative information for the reasonsdisclosed in note 2.3 to the financial statements. Presentation of comparative information is required by IAS 1, Presentation of FinancialStatements.It was impracticable for us to quantify the effects of non-compliance with IAS 1, IAS 21 and IAS 29 on the financial statements.Non-preparation of inflation-adjusted financial information as required by IAS 29 was the basis for our adverse opinion on the financialstatements as at and for the year ended 30 September 2008, dated 12 February 2009.ADVERSE OPINIONIn our opinion, because of the significance of the matters 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 the Group and of the Company as at 30 September2009 and of the Group’s consolidated financial performance and consolidated cash flows for the year then ended in accordancewith International Financial Reporting Standards and the Zimbabwe Companies Act (Chapter 24:03) and the relevant StatutoryInstruments SI 33/99 and SI 62/96.EMPHASIS OF MATTERWithout further qualifying our opinion, we draw attention to note 32 which indicates that the Group and the Company operate in anuncertain macro-economic environment in Zimbabwe.PRICEWATERHOUSECOOPERSCHARTERED ACCOUNTANTS (ZIMBABWE)HARARE29 JANUARY 2010
Consolidated Statement Of Financial Position 30as at 30 september 2009 2009 ASSETS Note US$ Non-current assets Property, plant and equipment 6 22 543 389 Intangible assets 7 2 110 675 Biological assets 8 238 610 Investment in associate 9.1 10 397 720 Other investments 9.2 1 074 724 Deferred income tax asset 20 519 195 Receivables 10 199 556 37 083 869 Current assets Inventories 11 2 331 495 Non-current assets held for sale 12 300 000 Trade and other receivables 13 5 573 650 Available-for-sale financial assets 6 259 Cash and bank 1 392 798 9 604 202 Total assets 46 688 071 EQUITY AND LIABILITIES Equity attributable to owners of the company Share capital 15 – Amount awaiting allotment 17.2 21 690 721 Non-distributable reserve 17.1 3 728 407 Other reserves 17.3 (818 325) Accumulated loss 16 (3 535 135) Total equity 21 065 668 Liabilities Non-current liabilities Other payables 18 405 124 Borrowings 19 741 543 Deferred income tax liability 20 5 270 257 6 416 924 Current liabilities Trade and other payables 18 12 764 412 Borrowings 19 6 441 067 19 205 479 Total liabilities 25 622 403 Total equity and liabilities 46 688 071These financial statements were approved by the board on the 8th of January 2010 and signed on its behalf by:TIMOTHY CHIGANZE SHINGIRAI MUNYEZAChairman Group Chief Executive
Company Statement Of Financial Position 31as at 30 september 2009 2009ASSETS Note US$Non-current assetsProperty, plant and equipment 6 1 641 380Investment in subsidiaries 34 12 819 982Investment in associate 9.1 10 397 720 24 859 082Current assetsReceivables 35 866 552Cash and bank 1 378 867 930Total assets 25 727 012EQUITY AND LIABILITIESEquity attributable to owners of the companyShare capital 15 –Amount awaiting allotment 22 890 721Accumulated loss 16 (253 525)Total equity 22 637 196LiabilitiesNon-current liabilitiesDeferred income tax 37 453 393Current liabilitiesPayables 36 663 340Borrowings 1 973 083 2 636 423Total liabilities 3 089 816Total equity and liabilities 25 727 012These financial statements were approved by the board on the 8th of January 2010 and signed on its behalf by:TIMOTHY CHIGANZE SHINGIRAI MUNYEZAChairman Group Chief Executive
Consolidated Statement Of Comprehensive Income 32for the year ended 30 september 2009 2009 Note US$Revenue 5 35 236 138Cost of sales 23 (12 103 404)Gross profit 23 132 734Operating expenses 23 (29 066 886)Other income 22 119 154Gain on acquisition of subsidiary 28 884 568Operating loss (4 930 430)Finance income 24 78 442Finance costs 24 (461 364)Share of loss from associate 9.1 (54 307)Loss before taxation (5 367 659)Taxation 25 1 002 760Loss for the year (4 364 899)Other comprehensive income net of tax:Fair value adjustment on available-for-sale financial assets 673TOTAL COMPREHENSIVE LOSS FOR THE YEAR (4 364 226)Loss attributable to:Owners of the company (4 364 899)Total comprehensive loss attributable to:Owners of the company (4 364 226)Earnings per share (cents)Basic and diluted 26 (0.63)The loss for the parent company for the year ended 30 September 2009 was US$253 525
Consolidated Statement Of Changes In Equity 33 for the year ended 30 september 2009 ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY Share Amount awaiting Non-distributable Foreign currency Fair value Accumulated Total capital allotment reserve translation reserve reserve loss shareholders equity US$ US$ US$ US$ US$ US$ US$Balance at 1October 2008 – – – 109 064 – 829 764 938 828Arising fromrestatement onchange in functionalcurrency – – 25 419 128 – – – 25 419 128Transfer to amountawaiting allotment – 21 690 721 (21 690 721) – – – –Currency translationdifferences – – – (928 062) – – (928 062)Othercomprehensiveincome – – – – 673 – 673Loss for the year – – – – – (4 364 899) (4 364 899)Balance at 30September 2009 – 21 690 721 3 728 407 (818 998) 673 (3 535 135) 21 065 668
Consolidated Statement Of Cashflows 34for the year ended 30 september 2009 2009 Note US$Cash flows from operating activitiesCash used in operations 27 (4 373 600)Net interest paid 24 (576 208)Income tax paid (38 207)Net cash used in operations (4 988 015)Cash flows from investing activitiesAdditions to property, plant and equipment 6 (83 870)Replacement of property, plant and equipment 6 (2 112 668)Investment to expand operations (1 000 000)Disposal of property, plant and equipment 9 727Net cash used in investing activities (3 186 811)Cash flows from financing activitiesDisposal of investments 483 774Increase in long term borrowings 741 543Increase in short term borrowings 5 617 051Net cash generated from financing activities 6 842 368Net decrease in cash and cash equivalents (1 332 458)Cash and cash equivalents at the beginning of the year 2 260 207Exchange loss on cash and cash equivalents 9 833Cash and cash equivalents at the end of the year 14 937 582
Notes to the Consolidated Financial Statements 35for the year ended 30 september 20091. GENERAL INFORMATION 2.1.1 ADOPTION OF NEW AND REVISED STANDARDSEstablished in 1968, the company was part of beverage (a) Standards and interpretations early adopted by themanufacturer Delta Corporation. It has grown significantly Group:into a pan-Africa hospitality group with interests in Zimbabwe, IAS 1: Presentation of Financial Statements. Effective fromSouth Africa, Nigeria, Ghana and Zambia and is listed on the 1 January 2009Zimbabwe Stock Exchange. IFRS 8: Operating Segments. Effective from 1 January 2009To reflect its pan-African ambitions, the company changed its (b) Standards and interpretations effective but not relevant:name from Zimbabwe Sun Limited to African Sun Limited in IFRIC 11, IFRS 2: Group and Treasury Share Transactions.May 2008. Effective from 1 January 2008. IFRIC 13: Customer Loyalty Programme. Effective 1 JanuaryAfrican Sun Limited owns 100% of African Sun Zimbabwe 2008.(Private) Limited, 100% of African Sun Limited (PCC) IFRIC 14, IAS 19: The Limit on a Defined Benefit Asset,Mauritius, its regional investment vehicle, 100% of Hotelserve Minimum Funding Requirements and their Interaction.Holdings (Private) Limited, a procurement and distribution Effective 1 January 2008.company as well as 17.72% in Dawn Properties Limited.The Group leases most of its hotels from Dawn Properties (c) Standards and interpretations issued or revised not yetLimited. effective but relevant to the Group: IFRS 2: Share-based Payments (revised). Effective from 12. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES January 2009The following paragraphs set out the principal accounting IFRS 3: Business Combinations (revised). Effective from 1policies of the Group in compliance with International Financial January 2009Reporting Standards (IFRS) promulgated by the International IFRS 5: Non-current Assets Held for Sale and DiscontinuedAccounting Standards Board (IASB). (International Operations (revised). Effective from 1 January 2009Financial Reporting Standards incorporate all International IFRS 7: Financial Instruments: Disclosures. Effective from 1Accounting Standards previously issued by the IASB). Unless January 2009otherwise stated, these are consistent with previous years. IAS 16: Property, Plant and Equipment (revised). Effective from 1 January 2009 2.1 BASIS OF PREPARATION IAS 19: Employee Benefits (revised). Effective from 1The consolidated financial statements have been prepared in January 2009accordance with International Financial Reporting Standards IAS 23: Borrowing Costs (revised). Effective from 1 January(IFRS) except for non-compliance with International 2009Accounting Standards (IAS) 1; "Presentation of Financial IAS 27: Consolidated and Separate Financial StatementsStatements", IAS 21; "The Effects of Changes in Foreign (revised). Effective from 1 July 2009Exchange Rate" and IAS 29; "Reporting in Hyperinflationary IAS 28: Investment in Associates (revised). Effective from 1Economies". The financial statements are based on statutory July 2009records that are maintained under the historical cost IAS 23: Financial Instruments: Presentation (revised).convention as modified by the revaluation of property, plant Effective from 1 January 2009and equipment and biological assets. IAS 36: Impairment of Assets (revised). Effective from 1 January 2009The preparation of financial statements in conformity with IAS 38: Intangible Assets (revised). Effective from 1 JanuaryIFRS requires the use of certain critical accounting estimates. 2009It also requires management to exercise its judgement in the IAS 39: Financial Instruments: Recognition andprocess of applying the Groups accounting policies. The Measurement (revised). Effective from 1 July 2009areas involving a higher degree of judgement or complexity, IAS 40: Investment Property (revised). Effective from 1or areas where assumptions and estimates are significant to January 2009the consolidated financial statements, are disclosed in note4.