Audited Financial Report to Shareholders
For the year ended 30 September 2012
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African Sun Limited FY 2012 results

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African Sun Limited FY 2012 results

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African Sun Limited FY 2012 results

  1. 1. Audited Financial Report to Shareholders For the year ended 30 September 2012 For wealth investor information visit us on our website: www.africansuninvestor.com / www.africansunhotels.com Group Statement of Cashflows Year ended 30 September 2011 Audited As at 30 September 2011 Audited Year ended 30 September 2012 Audited As at 30 September 2012 Audited All figures in US$ All figures in US$ All figures in US$ Group Statement of Financial Position Message to Shareholders Group Statement of Changes in Equity OVERVIEW FOCUS fOR 2013 OUTLOOK BUSINESS ENVIRONMENT DIRECTORATE FINANCIAL REVIEW DIVIDEND DECLARATION APPRECIATION short-term loans and the average cost of borrowing. The performance for the year was pleasing, with results demonstrating that the Group has turned the Profit before tax of $3.37 million was a turnaround from a corner, posting an EBITDA of $6.31 million (11.6% loss of $4.75 million reported in the prior year. margin), which was more than double the $2.73 After a full drawdown on the refurbishment facility, andmillion (6% margin) achieved last year from the increase in short-term loans, net debt increased by 83%continuing operations. Resultantly, a Profit before to $15.49 million. Borrowings of $1.5 million relating to theTax of $3.37 million (6.2% margin) was realised, in Botswana project were paid off from the proceeds of thecomparison to a loss of $4.75 million (minus 10% disposal of the project.margin) last year. All hotels in Zimbabwe achieved a positive EBITDA As we begin the year, we continue to seek ways to furtherfor the period under review, with Elephant Hills improve our cost position, profitability and capitalResort and The Victoria Falls Hotel, registering the structure.most recovery. Consequently, the Group reported its first profit since dollarization. By close of the year, we target to reduce borrowings from the current levels through a number of initiatives which areCost reduction initiatives implemented last year are currently being explored. This will see short-term loansbearing fruit, having realised $3.2 million in savings either replaced by medium to long-term loan facilities orat Head Office, representing a drop of 44% reduced partially.compared to last year. As a result, Head Office costs have dropped to 8% of Revenue, down from 15% To enhance accessibility of our hotels in the digital marketlast year. place, we will complete the roll-out of OPERA property management system and install a seamless reservationsThe first phase of the refurbishment program has and distribution platform to manage bookings andstarted to yield positive results, with RevPAR payments online.improving by 18% compared to prior year. Some aspects of the refurbishment program were delayed After the completion of the first phase of the refurbishmentby unforeseen difficulties in obtaining customs duty program, we intent to commence the second phaserebates. Crowne Plaza Monomotapa, the most covering the resort hotels in Victoria Falls by April 2013.affected by the delays will only be completed in the first quarter of 2013. The UNWTO conference to be held in Victoria Falls next year will provide the tourism sector with a unique marketingWorld travel is expected to continue growing in 2013, platform, which will enhance the visibility of thealbeit at a slower rate than anticipated average of destination going forward.3%. However, inbound travel from our major source markets has been strong compared to last year with It is envisaged that, the on-going refurbishment programthe Americas registering the highest increase of 24%, and further cost reduction will consolidate growth in ourfollowed by Australia and Europe at 23% and 11% operations.respectively. The increase in foreign arrivals benefited the hotels in Victoria Falls primarily. The The Group is expecting to achieve a full year EBITDA margincurrent Euro zone crisis and Hurricane Sandy which of 12% and Revenue growth of at least 10% in the financialhit the eastern seaboard of the United States are year 2013.expected to cause a minor drop in arrivals from these markets. During the year Ms E Chitiga and Mr T N Chiganze resignedDomestic travel was constricted due to the adverse from the board on the 5th and 24th of July 2012liquidity situation that has persisted in the economy. respectively. Their valued contribution over the years isResultantly, domestic room nights into our hotels much appreciated and I wish them well in their futuredeclined by 8% compared to the prior period. The endeavours.business suffered cancellations leading to a $2 million Revenue loss due to failure by the national I would like to announce the appointment to the Board oncarrier to service the domestic routes. Business was 17 October 2012 of Messrs Emmanuel Fundira and Alexfurther affected by reduced room availability during Makamure and Ms Nyaradzo G Maphosa. I look forward topeak season, as a result of the on-going a fruitful working relationship with them and the rest of therefurbishment program. Board. Revenue grew by 12% to $54.43 million in In view of the need to conserve cash for the operations andcomparison to the prior year. The growth was the on-going refurbishment, the Board has resolved not tospurred by a stronger performance particularly from declare a dividend for the year ended 30 September 2012.the resort hotels in Victoria Falls and a 14% growth in the ADR. RevPAR grew by 18% to close the year under review at $47, from $40 last year. I would like to commend management, staff and my fellow directors for their continued commitment throughout theThe increase in operating expenses was limited to 2%, financial year. The challenges we faced in this year could3 percentage points behind average inflation, as not have been overcome without their dedication and teamsavings from the staff restructuring exercise were effort.realised in this financial year. The positive effect of all these factors enabled the Group to achieve EBITDA We look forward to an improved performance goingof $6.31 million (11.6% margin), compared to $2.73 forward, riding on the initiatives implemented in the lastmillion (6% margin) from continuing operations financial year.reported last year. The EBITDA margin achieved was a 3.5 percentage points higher than the 8% forecast. B L NkomoNet interest expense increased by 86% from last year Chairman 30 November 2012to close at $2.86 million following an increase in Group Supplementary Information 1 STATEMENT OF COMPLIANCE The financial statements for year ended 30 September 2012 have been prepared in accordance with International Financial Reporting Standards (IFRS), Zimbabwe Stock Exchange Act (Chapter 24:18) and Companies Act (Chapter 24:03). All accounting policies have been applied consistently to all periods presented and throughout the Group. Group Statement of Comprehensive Income Directors: B L Nkomo (Chairman), S A Munyeza (Group Chief Executive)*, D W Birch, E Fundira, V W Lapham, N Mangwiro (Group Finance Director)*, A Makamure, N G Maphosa, N R Ramikosi. *Executive Directors Company Secretary: E T Shangwa Registered Office: 17th Floor, Office No. 1708, Crowne Plaza Monomotapa, 54 Park Lane, P.O. Box CY 1211 Causeway, Harare, Zimbabwe. Transfer Secretary: Corpserve (Private) Limited, 4th Floor, ZB Centre, Cnr Kwame Nkrumah Avenue/First Street, P.O. Box 2208, Harare, Zimbabwe. Auditors: PricewaterhouseCoopers, Building No.4, Arundel Office Park, Norfolk Road, Mount Pleasant, P.O. Box 453, Harare, Zimbabwe. REVENUE RevPAROCCUPANCY 12% $54.43m 131% $6.31m 285% $5.16m 131% $7.75m 1 p.p. 52% EBITDA EXCLUDING NON- RECCURING ITEMS CAPITAL EXPENDITURE ADR 14% $91 Year ended 30 September 2011 Audited Year ended 30 September 2012 AuditedAll figures in US$ Year ended 30 September 2011 Audited Year ended 30 September 2012 AuditedAll figures in US$ CASH GENERATED FROM OPERATIONS Continuing Operations Revenue 54 426 751 48 796 506 Cost of sales (15 837 052) (14 560 854) Gross profit 38 589 699 34 235 652 Operating expenses (32 281 164) (31 502 006) EBITDA before restructuring costs 6 308 535 2 733 646 Other income 1 733 446 - Depreciation, usage and amortisation (2 193 465) (1 926 427) Restructuring costs - (3 282 844) Impairment of property and equipment, and investments (70 959) (2 682 434) Other expenses (866 017) - Net financing costs (2 855 597) (1 533 718) Equity accounted earnings 1 309 505 1 945 014 Profit / (loss) before tax 3 365 448 (4 746 763) Income tax (expense) / credit (711 395) 1 132 982 Profit / (loss) after tax from continuing operations 2 654 053 (3 613 781) Loss from discontinued operations - (6 620 891) Profit / (loss) for the year 2 654 053 (10 234 672) Other comprehensive income net of tax: Fair value adjustment on available-for-sale financial assets - 461 Share of associate's other comprehensive income 24 063 406 808 Foreign currency translation differences 669 986 (434 428) Total other comprehensive income / (loss) 694 049 (27 159) TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE YEAR 3 348 102 (10 261 831) Profit / (loss) attributable to: Owners of company 2 654 053 (10 234 672) Total comprehensive income / (loss) attributable to: Owners of company 3 348 102 (10 261 831) Number of shares in issue 823 940 874 823 940 874 Weighted average number of shares in issue 823 940 874 820 843 029 Earnings per share from continuing operations: cents Basic basis: earnings / (loss) 0.32 (0.44) Diluted basis: earnings / (loss) 0.32 (0.44) Earnings per share for the year :cents Basic basis: earnings / (loss) 0.32 (1.25) Diluted basis: earnings / (loss) 0.32 (1.25) Assets Non-current assets Property and equipment 20 959 952 17 074 087 Biological assets 274 678 234 937 Investment in associate 17 221 409 12 184 001 Other receivables 238 665 535 512 38 694 704 30 028 537 Current assets Inventories 1 472 627 1 324 690 Trade and other receivables 8 436 132 7 342 790 Loans - 1 130 504 Available-for-sale financial assets - 10 000 Cash and cash equivalents 4 607 088 4 657 480 14 515 847 14 465 464 Assets of a disposal group classified as held-for-sale - 1 847 871 14 515 847 16 313 335 Total assets 53 210 551 46 341 872 Equity and liabilities Equity attributable to owners of the company Share capital 8 239 409 8 239 409 Share premium 23 006 435 23 701 165 Non-distributable reserves 1 327 001 1 327 001 Foreign currency translation reserve (946 582) (1 616 568) Revaluation reserve 430 871 406 808 Accumulated losses (13 925 388) (16 909 494) Total equity 18 131 746 15 148 321 Liabilities Non-current liabilities Borrowings 6 443 381 4 914 134 Deferred income tax liability 2 848 575 2 497 281 9 291 956 7 411 415 Current liabilities Trade and other payables 12 136 967 14 618 077 Borrowings 13 649 882 8 164 598 25 786 849 22 782 675 Liabilities of disposal group classified as held-for-sale - 999 461 25 786 849 23 782 136 Total liabilities 35 078 805 31 193 552 Total equity and liabilities 53 210 551 46 341 872 Cash flows from operating activities Profit / (loss) before tax 3 365 448 (10 835 913) Depreciation and other non-cash items 2 057 681 7 849 262 Net interest expense 2 855 597 1 734 055 Changes in working capital (3 123 538) 2 589 067 Cash generated from operations 5 155 188 1 336 471 Net interest paid (3 129 495) (1 631 634) Income tax paid (80 369) (37 747) Net cash generated from / (used in) operating activities 1 945 324 (332 910) Cash flows from investing activities Investments acquired (3 710 442) - Additions to property and equipment (7 754 548) (3 417 995) Deposit to debt service reserve account (748 389) - Proceeds from disposal of property and equipment 2 107 698 31 763 Dividend received - 9 600 Net cash used in investing activities (10 105 681) (3 376 632) Cash flows from financing activities Proceeds from long-term borrowings 6 500 000 4 701 881 Proceeds from short-term borrowings 8 754 125 7 952 443 Repayment of long-term borrowings (2 108 741) - Repayment of short-term borrowings (8 164 598) (7 223 351) Net cash generated from financing activities 4 980 786 5 430 973 (Decrease) / increase in cash and cash equivalents (3 179 571) 1 721 431 Cash and cash equivalents at beginning of the year 4 657 480 2 810 406 Exchange (loss) / gain on cash and cash equivalents (14 967) 125 643 Cash and cash equivalents at end of the year 1 462 942 4 657 480 Non- Available-for-sale Foreign currency Revaluation Share Share distributable investments translation reserve Accumulated Total capital premium reserve reserve reserve from associate losses equity Balance at 1 October 2010 8 165 069 23 368 576 1 327 001 (461) (1 182 140) - (6 674 822) 25 003 223 Comprehensive income Loss for the year - - - - - - (10 234 672) (10 234 672) Other comprehensive income / (loss) Currency translation differences - - - - (434 428) - - (434 428) Reclassification to income statement - - - 461 - - - 461 Share of associate's other comprehensive income - - - - - 406 808 - 406 808 Transactions with owners Issue of shares 74 340 332 589 - - - - - 406 929 Balance at 30 September 2011 8 239 409 23 701 165 1 327 001 - (1 616 568) 406 808 (16 909 494) 15 148 321 Comprehensive income Profit for the year - - - - - - 2 654 053 2 654 053 Reversal on disposal of subsidiary - - - - - - 330 053 330 053 Other comprehensive income Currency translation differences - - - - 669 986 - - 669 986 Share of associate's other comprehensive income - - - - - 24 063 - 24 063 Transactions with owners Reversal on disposal of subsidiary - (694 730) - - - - - (694 730) Balance at 30 September 2012 8 239 409 23 006 435 1 327 001 - (946 582) 430 871 (13 925 388) 18 131 746 2 CASH AND CASH EQUIVALENTS FOR THE PURPOSES OF STATEMENT OF CASH FLOWS 3 BORROWINGS 4 TAXATION 5 SEGMENT ANALYSIS 6 CAPITAL COMMITMENTS 7 AUDIT OPINION Cash and cash equivalents 4 607 088 4 657 480 Bank overdrafts (2 395 757) - Restricted cash (748 389) - Cash and cash equivalents 1 462 942 4 657 480 Restricted cash relates to a deposit to the debt service reserve account as security to non-current borrowings. Non-current: Foreign loans 6 443 381 4 914 134 Current: Foreign loans 2 500 000 235 086 Local loans 8 754 125 7 929 512 Bank overdrafts 2 395 757 - Total current 13 649 882 8 164 598 Total borrowings 20 093 263 13 078 732 Withholding tax expense (360 101) (37 747) Deferred income tax (charge) / credit (351 294) 1 170 729 Income tax (expense) / credit (711 395) 1 132 982 Revenue Zimbabwe 54 139 869 48 018 485 West Africa 286 882 778 021 Total revenue 54 426 751 48 796 506 Earnings before interest, tax, depreciation and amortisation (EBITDA) Zimbabwe 6 433 432 2 610 650 South Africa (313 872) - West Africa 188 975 122 996 Total EBITDA 6 308 535 2 733 646 Authorised by Directors and contracted for 1 504 563 2 399 162 Authorised by Directors, but not contracted for 6 532 363 6 046 838 Total capital expenditure 8 036 926 8 446 000 The Auditors of the Group, PricewaterhouseCoopers Chartered Accountants (Zimbabwe) have audited the financial statements of the Group for the year ended 30 September 2012. The audit report is unqualified. 18% $47

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