Dawn 2010 annual report


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Dawn Properties Limited 2010 annual report

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Dawn 2010 annual report

  1. 1. 2010
  2. 2. Group Profile •.•.•••••.................•••••.•••..•••••••••••••••••••••••••••••••••••••••••••••••••••••••••.•.••••••••..•••••••••••• 2• Group Stlucture ...............................••••........••.••..........•••••......••••..•.•..................••.....•........... 3 Mission .nd Core V.lues.......•••••••..........•••••..........•......•......•••••••••.••••••.•.....••••..••••••.•.••••....• Directorate .nd M.n.gement. .........•.•.••.............•............................................................... 5• Ch.nn.ns Stat8nJent........................................................................................................ 6 CotporeteGovem.nce ...............•..•••••••.............•••••••.....•......•••....•......••............•.........••...... 9• Repott of the Dlteetors •••.....••.......••••••................•.••••.....•.....••.•••••••••••••••••••••••••..••••••••.••••••• 11 Dll8CtofS Responsibility Statement. 12 Independent Auditors Report ••..............•••........•.............................................................. 13• Consolld.ted Statement of Fn.nc. Position 15 Company Statement of Fn.nc. Position •••••...••.••••••.•••••••••••••••••••••••••••••••••••••.••.•.••••••••• 16 Consolidated Comprehensive Income ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 17 Consolld.ted Statement of Ch.nges In Equity ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 18 Consolidated Cash Flow Statement................................................................................. 19 Notes to the Fn.nc. Statements................................................................................... 20 An.lysls of Sh.reholdets ••••••••••••..•••.•.....••••....••••••.....................••....••••.•......••••......••••.••••••• 56 Notlce to Metnbets •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 58 CompiJnyDettlIIs ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 59• ProJC) Fonn •..••••••••.•.••••••••••••••••••••••••••••••.•.••..........•...•••...•............••••................•................... 64-------------A-n-nu-a-/-R-e-p-o-rt-2-0-j-O-----------•
  3. 3. Dawn Properties Limited ("Dawn Properties"), Dawn Properties provides investors with anformerly a wholly owned subsidiary of opportunity to invest in a collection of sought"African Sun Limited ("Afrisun"), was after hotel properties. The counter is not onlyincorporated as a variable rate loan stock a good inflation and currency hedge but also("VRLS") Company by converting its ordinary has the potential to generate strong cash flowsshares into linked units. Afrisun now owns and high yields. The properties are professionally16.57% of the Company enabling it to have managed ensuring that the highest standards arean independent mission. The core business maintained at all times.of the company, which is incorporated in The Group is well represented in all major touristZimbabwe, is that o~n investment property destinations as detailed below. Although the factholding company and through its wholly that the Group has a predominant tourismowned subsidiaries owns properties in the exposure is of concern to some investors, it istourism sector. equally important to note that it is a sector thatOn 9 September 2003 Dawn Properties never ceases to attract the attention ofbecame the first VLRS investment property international investors even in hard times. Thisholding company to be listed on the probably gives the properties a premium aheadZimbabwe Stock Exchange. of other property classes such as industrial property, for example. Nevertheless, the Group has taken a view to further diversify the portfolio at the earliest opportune time.e------------A-n-n-u-a-I-R-e-p-o-rt-2-0-1-0-------------
  4. 4. To create sustainable value for stakeholders, We are committed to the highest standards ofwhich is in line with the industrial index. This delivery.is to be achieved by;a) Investing in high yielding properties. We believe in creating a happy work environmentb) Optimising net rentals by drafting premised on teamwork. appropriate lease agreements and closely managing costs"c) Ensuring that properties are properly We are committed to safeguarding the environment for maintained. this and future generations. The assessment of environ-d) Ensuring that adequate attention is given mental issues is therefore critical for all projects we are to risk management. involved in. We are committed to compliance with environmental, health and safety standards.To be a successful investment property holdingcompany.Investment policyDawn Properties intends to diversify from thecurrent hospitality portfolio in order to minimizerisk associated with anyone asset class andto increase the liquidity of the portfolio.Employment equityWe are committed to ensuring that employees areoffered equal opportunities and appropriateparticipation.We conduct our business in an honest, fair andtransparent manner.We believe in our products and this drives all ourinnovations.
  5. 5. DAWN PROPERTIES LIMITED(Incorporated in Zimbabwe)BUSINESSThe principal business of the Group is that of investing in investment property and propermanagement.ChairmanF. RwodziT.P. Chimuriwo •• (Outgoing (Incoming Chairman) Chairman) (Resigned (Appointed 31.03.10) 31.03.10)Executive DirectorM. ManyikaNon-executive DirectorsE.!. Manikai (Non-Executive Director)S.A. Munyeza (Non-Executive Director)C.A. Mataure (Non-Executive Director)C.B. Thorn (Non-Executive Director)G. Goldwasser (Non-Executive Director)P. Gwatidzo (Non-Executive Director) (Appointed 10.06.10)M. Tunmer (Non-Executive Director) (Appointed 10.06.10)D. Cooper (Non-Executive Director) (Appointed 10.06.10)J. Worsfold (Non-Executive Director) (Appointed 10.06.10)Remuneration Committee Finance and Investment CommitteeE. I. Manikai - Chairman S. A. Munyeza - ChairmanM. Manyika T. P. ChimuriwoS. A. Munyeza E. I. Manikai M. Manyika C. B. ThornAudit and Risk CommitteeC.B. ThornC. A. MataureManagementChief Executive Officer - M. ManyikaAdministration and Human Resource Executive - N. M Tome (Mrs)Group Finance Executive - B. MaguraManaging Director - CB Richard Ellis (Zimbabwe) - T. MatondaManaging Director - CBRE (Botswana) - S. Hove--------------A-n-n-u-al-R-ep-o-rt-2-01-0------------1
  6. 6. The founding chairman of the Board Mr Farai Rwodzi and Mr. Bryan Thorn resigned from the Board atthe end of the financial year. The Board and Management of the Group would like to convey theirutmost appreciation to the gentlemen for their contributions during their tenure and wish them well intheir future endeavours. Subsequent to this Mr. Tendayi Phineas Chimuriwo was appointed chairman.The Board and management of the Group congratulate him on the appointmentIn order to enhance the:ffectiveness of the Board and to replace outgoing Board members, Messrs PhibionGwatidzo, Mark Tunmer, Dave Cooper and James Worsfold were appointed to the Board with effect from10 June 2010.It is acknowledged and accepted that business fortunes follow political fortunes, however the tourism sectoris more susceptible to political sentiments than any other sectors of the economy. The Zimbabwe brand isladen with negative perceptions which stakeholders in the sector have to some extent managed but thepace of political reform has worked against such noble efforts. This has hampered the recovery of thetourism sector as much as the other sectors of the economy. This said the Group made significantrecovery and commences the new financial year on a stronger footing.REVIEW OF OPERATIONSHOTEL PROPERTY PORTFOLIOThe portfolio has shown recovery posting a yield of 2.5% and a rental revenue for the year ofUS$1.3 million, an increase of 364% over last year. The bulk of the improvement can be attributed tothe fact that rentals for the year were in hard currency. In the previous year rentals were in Zimbabwedollars and the fact that they were collected in arrears didnt help. However, business fundamentals alsoshowed signs of improvement. Guest arrivals into the hotels were firmer at about 38% compared to 30%last year. Occupancy in the city hotels, which are more resilient, averaged around 50% whilst our resortproperties closed the year at about 30%. Occupancy levels are expected to maintain an upward trendbefore settling at about 65%. The average daily rate reported a modest gain of about 23% but more canbe achieved on the back of a major refurbishment of the hotels, the responsibility of which lies with thetenant African Sun Limited ("Afrisun"). A refurbished product will translate into both higher room ratesand occupancies.To this end Afrisun has secured offshore funding but now requires security in the form of real estate.Your Board has been called upon to consider providing security and has seen it fit to do so and furtherdetails will be made available to shareholders at the annual general meeting.
  7. 7. At half year stakeholders were informed that rental arrangements were being renegotiated for the thirdtime. Substantial progress has been made in this respect and agreements will be signed soon.Principally, the parties have agreed to migrate from turnover rentals to fixed rentals in line with regionaltrends. A target yield of 10% has been agreed and this is expected to be achieved in year four. Atransition period of three years has been set. During this period rental income will be the higher of 10%of the tenants turnover or the guaranteed rental. The guaranteed rental for the ensuing year has beenagreed at US$2.1 million and it will be reviewed upwards annually for the next two years.PROPERTY CONSULTANCY SEGMENTThe division has re~onded well to the hard-currency operating environment and is currently operatingat above 80% of its capacity. In the short-term it is expected that revenue generation will be maintainedat current levels inferring that the divisions contribution to Group revenue of 56% will thus be dilutedfurther in the ensuing periods. The division is currently exploring opportunities within its sector toenhance its revenue streams.The Group has secured approval to construct a seven storey block of flats along Baines Avenue inHarare. The block will comprise fifty two, two-bedroom flats and four, three-bedroom penthouses. Theproject will be executed during the course of the year. The project will precede the Marlborough twohundred and sixty-four, two-bed flats because of its manageable size and proximity to the centralbusiness district.Marlborough Residential EstateTown planning work on developing the 250 hectare land bank that the Group owns in Marlborough hascommenced. The land bank will be developed into a secured residential estate. Plans are for an up-marketestate that will comprise a private school and at least two club houses among other facilities to makeit a self contained community. Civils work is expected to commence after twenty four months. The projectwill be executed over about ten years and will have a significant impact on the fortunes of the Group.The Group has a near debt free balance sheet wtVch it cannot meaningfully leverage owing to insufficientcash flow generation. Consequently, the Group "as significant tranches of development land lying idle.The Group has thus embarked on a drive to create business units that have the potential to generatestrong cash flows at minimal capital outlay. The resultant cash flows will be used to leverage on thebalance sheet size and access appropriate finance that will be used to execute property developmentprojects.Agri-business unitAs previously reported, the Group entered into a partnership with a seasoned farmer to unlock value outof its idle development land.--------------A-n-n-u-al-R-ep-o-r-t-2-01-0------------•
  8. 8. The Group owns 70% of the operations and the balance is owned by its technical partner. The periodunder review was a set up phase, with close to 60 hectares being put under Hypericum for export andvegetables for the local market. In the financial year under review this unit did not contribute to turnoverbut it is on course to contribute at least US$2 million to turnover for the year ending 31 March 2011.An appropriate site has been identified within our Hwange estate that is suitable for constructing anupmarket safari camp. The project is still at conception and design phase. The Safari business willenable the Group to tilize the vast land it owns in Hwange and increase revenue streams.FINANCIAL REVIEWIncome statementThe Group turnover increased by 255% to US$3.9 million for the period under review. The markedimprovement in turnover is a result of the stabilization of the macroeconomic environment. Operatingexpenses represent 80% of the turnover achieved during the period under review, the ratio comparesfavourably with the 129% achieved during the last fiscal year. The ratio is on the high side as a resultof deal pipeline expenditure incurred that has no corresponding income. The operating costs include thatof the agri-business segment which recorded no revenue for the period under review. The impact of thenew unit will be felt in the ensuing financial year.The major balance sheet item, investment property, was steady at US$69.3 million. While it is acceptedthat all things being equal the value of an asset, hotel properties included, is determined by the quantumof its future cash flows it is also accepted that the economy is going through a transition which rendersa purely academic valuation difficult to motivate and perhaps inappropriate. Consequently, the costbased valuation method was used to assess the reasonableness of market values. Your Board issatisfied that the valuation is a fair representation of the portfolio.The Group looks to the future with optimism and it will seek to accelerate its development pipeline.Concurrent to this a keener focus on cash generation will be emphasised.Let me take this opportunity to thank all the stakeholders for their invaluable support. To the Boardmembers, management and staff your dedication is appreciated and may it continue.T.P. ChimuriwoChairman
  9. 9. Dawn Properties accepts and complies with the The committee is required to provide assurence to theprinciples of the Code of Corporate Practices as Board that adequate and appropriate financial andenunciated in the King II Report. The Directors are fully operating controls are in place, that significant financial,aware and cognisant of the importance of executing business and other risks have been identified and aretheir duties in keeping with the principles of transparency, being suitably managed and that satisfactory standardsintegrity, faimess and a=untability and in a=rdance of governance, reporting and compliance are inwith accepted corporate practices in order to enhance operation.the interests of its shareholders, employees and otherstakeholders. This includes timely and meaningful Its responsibilitiesincludes overseeing the financialreportingreporting to all its stake Iders. process, reviewing audit results, audit processes and risk management, the cost effectiveness, independence and objectivityof the auditors and compliance issues.The Board currently comprises nine non-executive andone executive director. The non-executive directorsbring to the Board a wide range of skills and To identify, assess, manage and monitor the risks toexperience that enable them to contribute independent which the business is exposed to. The most significantviews and to exercise objective judgements in matters risk is one material customer exposure. Others arerequiring the directors decisions. single sectorial exposure, total or partial destruction of property and the replacement of electro mechanicalThe Board is responsible for the strategic direction gadgets.of the Group, reviews the investment policy andapproves all significant investments or The Group is cautiously looking for opportunities todisinvestments. The Board has ultimate diversify its portfolio and this should give it a broaderresponsibility for proper management, risk customer base. The tenant insures all properties at grossmanagement in general, compliance and ethical replacement values.behaviour of the business. To achieve this, theBoard has established three committees to give The audit and risk committee comprises two non-€xecutivedetailed attention to each specific area. directors. The extemal auditors have full aocess to the committee and its chairman. The committee meets atAudit and risk committee least three times per year.The committee has two mandates:a) AuditTo provide the Board with additional assuranceregarding the efficacy and reliability of the finan.cialinformation used by the directors to assist them inthe discharge of their duties---------------A-n-n-u-a-/-R-e-p-o-rt-2-0-j-O------------.
  10. 10. The remuneration committee comprises two non-executive directors and the chief executive officer.Its mandate is to ensure that the Group adoptsmarket related remuneration policies and to reviewand approve remuneration for senior executives.The committee •• meets guarterly .The finance and investment committee makesrecommendations to the Board on all materialinvestments. It also reviews banking arrangements.It is comprised of four non-executive directors andthe chief executive officer.
  11. 11. The directors have pleasure in presenting their Property, plant and equipmentreport with the audited financial statements of the Capital expenditure for the year ended 31 MarchGroup for the year ended 31 March 2009. 2010 on operating assets totalled US$ 3,096,958. Debenture interest and dividends The Board has resolved that the debenture interest forProfit before income tax 1,253,955 the year be zero and no dividend be declared.Income tax expense •• (479,130)Income taxDeferred income tax In tenms of the Articles of Association, Dr S.A Munyeza, E. I. Manikai and C. A. Mataure, retire by rotation at theProfit attributable to forthcoming Annual General Meeting and being eligible,linked unit holders these directors offer themselves for re-election. No directors had, during or at the end of the year,As at 31 March 2010, the Authorised Share Capital any material interest in any contract of significanceand Debentures was 4,000,000,000 ordinary shares in relation to the Groups business.and Debentures of 4,000,000,000.The issued share capital and debentures were Members will be asked to approve the payment2,457,376,507 ordinary shares and 2,457,376,507 of the directors fees for the year ended 31 Marchdebentures. 2010 of USD76,000.The movements in the reserves of the Group Members will be asked to approve the remunerationare shown in the consolidated statement of of the auditors for the financial year ended 31 Marchchanges in equity. 2010 and to appoint auditors of the Group to holdThe company has the following directly and indirectly office for the ensuing year.held subsidiaries:-Nhaka Properties (Private) Limited 100%Laclede Investments (Private) Limited 100% T.P Chimuriwo SA MunyezaGokJCoast Properties(Private)Limited 100"/0 Chairman Directorcalpine Investments (Private) Limited 100%Dawn Real Estate (Private) Limited 100%CB Richard Ellis (Private) Limited 100%CBRE (Proprietary) Limited 100%Property Facilities Systems (Private) Limited 100%Lipthong (Private) limited 100%Ekodey (Private) Limited 76%Dawn Produce (Private) Limited 70%
  12. 12. The directors of the Group are required by theCompanies Act (Chapter 24:03) and the relevant statutoryinstrument ("SI") SI 33/99 and SI 62/96 to maintainadequate aooounting records and to prepare financial C. Mataure M. Manyikastatements that present a true and fair view of thefinancial position of the Group at the end of the financial Director Directoryear and of its financial performanoe and cash flows forthe year then ended. In preparing the aooompanyingstatements, cognisanoe been taken of the currentfinancial reporting environment and procedures followedto present information that adequately discloses thestatus of the Group in the United State of America dollar(US$"). Suitable aooounting policies have been used andconsistently applied, and reasonable and prudentjudgments and estimates have been made.The directors have satisfied themselves thatthe Group is in a sound financial position andhas adequate resources to continue in operationalexistence for the foreseeable future.Accordingly, they are satisfied that it is appropriateto adopt the going concern basis in preparing thefinancial statements.The Board recognises and acknowledges itsresponsibility for the Groups systems of internalfinancial control. Dawn Properties maintains internalcontrols and systems that are designed to safeguardthe assets of the Group, prevent and detect errorsand fraud and ensure the completeness andaccuracy of the Groups records. There were nobreakdowns in the systems of internal controlinvolving material loss, which were reported to thedirectors in respect of the period under review.The consolidated financial statements for the yearended 31 March 2010, which appear on pages 15to 57 have been approved by the Board of directorsand are signed on its behalf by:e------------A-n-n-u-a-/-R-e-p-o-rt-2-0-1-0-------------
  13. 13. We have audited the consolidated financial statements of Dawn Properties Limited anIits subsidiaries (the "Group") and the statement of financial position of Dawn Propertie:Limited (the "Company") standing alone, (together the "financial statements") whiclcomprise the consolidated and separate statements of financial position at 31 March 2010and the consolidated statements of comprehensive income, changes in equity and castflows for the year then ended, and the notes to the consolidated financial statements, whiclinclude a summary of significant accounting policies and other explanatory notes set out orpages 15 to 55 .••The directors are responsible for the preparation and fair presentation of these financiastatements in accordance with International Financial Reporting Standards and in thEmanner required by the Companies Act (Chapter 24:03) and the relevant Statuto!)Instruments ("SI") SI 33/99 and SI 62/96. This responsibility includes: designingimplementing and maintaining internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whetherdue to fraud or error; selecting and applying appropriate accounting policies; and makingaccounting estimates that are reasonable in the circumstances.Our responsibility is to express an opinion on these financial statements based on ouraudit. We conducted our audit in accordance with International Standards on Auditing.Those standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance whether the financial statements are free frommaterial misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditors judgement, including theassessment of the risks of material misstatement of the financial statements, whether due to fraudor error. In making those risk assessments, the auditor considers internal control relevant to the entityspreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe entitys internal control. An audit also includes evaluating the appropriateness of accounting policiesused and the reasonableness of accounting estimates made by management, as well as evaluating theoverall presentation of the financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion.--------------A-n-n-u-al-R-e-p-o-y-t-2-01-0----------- -e
  14. 14. Basis for Qualified OpinionThe functional and presentation currency of the Company and the presentation currency of the Groupchanged on 1 February 2009 from the Zimbabwe dollar ("ZW$") to the United States of America dollar("US$"), during the prior year. The Zimbabwe economy was previously recognised as beinghyperinflationary for purposes of financial reporting. To effect the change in functional currency, theGroup and Company were required by International Accounting Standard ("IAS") 21, The Effects ofChanges in Foreign Exchange Rates, to restate their financial statements as at and for the ten monthsended 1 February 2009 in accordance with IAS 29, Financial Reporting in Hyperinflationary Economies,before translating the amounts at the closing exchange rate as at 1 February 2009 and to translate theinflation adjusted com rative financial information at the closing exchange rate as at 31 March 2008.However only those assets and liabilities that could be recovered or settled in a currency other thanZW$ or could be reasonably translated into a currency other than the ZW$ and represented an assetor liability of the Group and Company were recorded as taken on balances. The Group and Companyaccounted for share capital, share premium and debentures by translating the proceeds from issue atthe exchange rate prevailing at the dates of issue. Income and expenses for the ten months ended1 February 2009 were translated into US$ using the average exchange rate prevailing during the periodwithout first restating these numbers as required by IAS 29. It was impractical for us to quantify theeffects of non compliance with IAS 21 and IAS 29 on financial statements as at and for the year ended31 March 2009.As described above share capital, share premium and debentures were not translated in the mannerrequired by IAS 21 and IAS 29. As a result these items may also be misstated in the current year.Potential misclassifications between components of equity may also exist as a result of non-compliancewith IAS 21 and IAS 29 in the previous financial year.Non-preparation of inflation-adjusted financial infonmation as required by IAS 21 and IAS 29, was the basisfor our adverse opinion on the financial statements as at and for the year ended 31 March 2009, dated25 August 2009.Qualified OpinionIn our opinion, except for the effect of the matter described in the Basis for Qualified Opinionparagraph, the financial statements give a true and fair view of the financial position of theGroup and Company as at 31 March 2010, and of the Groups consolidated financialperformance and its consolidated cash flows for the year then ended in accordance withInternational Financial Reporting Standards and in the manner required by the ZimbabweCompanies Act (Chapter 24:03) and the relevant Statutory Instruments ("SI") SI 33/99 andSI62/96.Emphasis of matterWithout further qualifying our opinion, we draw your attention to note 30, which indicatesthat the Group and Company are operating in an uncertain economic environment.g. ~w tUu l....c-u.!&.oofl-fPricewaterhouseCoopersChartered Accountants (Zimbabwe)Harare 13 August 2010
  15. 15. Consolidated statement offinancial position as at 31 March 2010ASSETS Notes 2010 US$Non-current assetsInvestment property 5 69300000 69300000Property, plant and equipment 6 8619749 5695797Goodwill 7 120 186 120 186 - 78039935 75 115983Current assetsInventories 8 17178 16762Expenditure on next seasons crops 8 249381Trade and other receivables 9 920984 465878Financial assets available for sale 275Cash and cash equivalents 284 621 66840 1472164 549755Non-current assets classified as held for sale 10 287000Total assets 79512099 75952738EQUITYEquity attributable to the owners of the parentShare capital 11 18156 17 784Share premium 11 17680929 16188889Revaluation reserves 4942400 4 160 000Retained profits 40 211192 39436368Shareholders equity 628526n 59803041Minority interest 584 760Total equity 63 437 437 59803041LIABILITIESNon-current liabilitiesLinked unit debentures 12 1797486 1 760658Deferred income tax liabilities 13 13680409 13983679 154n 895 15744337Current liabilitiesTrade and other payables 14 596 767 405360Total liabilities 16074862 16 149697Total equity and liabilities 79512099 75952738
  16. 16. Assets NoteNon current assetsGroup company loans 680Investment in subsidiaries 15 19503998Total assets 19504678 17975438Equity and liabilitiesCapital and reservesOrdinary share capital •• 18156 17784Share premium 11 17680929 16188889Retained profits 8107 8107Shareholder equity 17707192 16214780Non current liabilitiesLinked unit debentures 1797486 1 760658Total equity and liabilities 19504678 17975438M. Manyika c. MataureDirector Director
  17. 17. • 2010 Notes US$Revenue 16 3869210 1044652Other income 17 362 580 1 073555Total income 4231790 2118207 ••Administration expenses 18 ( 3078408) ( 1 348230)Operating profit 1153 362 769977Finance income 19 100 572Profit before income tax 1253 954 769977Income tax expense 20 479130)Profit for the year 774824 769977Other comprehensive incomeTotal comprehensive income for the year 774824 769977Profit attributable to: - Owners of the parent 774824 769977 - Minority interests 32Other comprehensive income - Change in tax rate on deferred income tax on revaluation surplus 782400Total comprehensive income attributable to: - Owners of the parent 1557224 769977 - Minority interests 32 1557224 769977Basic and diluted earnings per share for profit attributable to the ownersof the parent during the year (expressed in cents per ,?hare) (note 22 tothe consolidated financial statements) 0.03 0.03--------------A-n-n-u-a-/ R-ep-O-Y-t-2-0-10------------e
  18. 18. Share capital US$Balance at 1 April 2008 17784 16188889 38666391 54 873 064 - 54 873 064Comprehensive income ••Transfer to non distributablereserves 4160 000 4160 000 4160 000Profit for the year 769977 7699n 7699nTotal comprehensive incomefor 2009 4180 000 769977 49299n 49299nBalanceat 31 March 2009 17 784 16188889 4160 000 39436368 59 603 041 - 59 603 041Comprehensive incomeProfit for the year 774824 n4824 n4824Other comprehensive income - Change in tax rate 782 400 782400 782400Total comprehensive incomefor 2010 782400 774824 1557224 1557224Transactions with ownersShare issue 372 1 492040 1492412 584760 20n172Balance at31 March 2010 18 158 17 680 929 4942400 40211192 82852m 584760 83437437
  19. 19. Cash flow from operating activitiesProfit before income taxAdjustment for: 2010 US$ 1253 955 • 769977Depreciation of properly, plant and equipment 171905 90742Interest received •• (100 572) (323 196) (1 073555)Operating surplus before working capital changes 1002092 (212 836)Changes in working capitalIncrease in inventories (415) (11 765)Increase in expenditure on next seasons crops (249 381)Increase in accounts receivable (455106) (333784)Increase in accounts payable 191407 272 153Cash generated by/(used in) operations 488 597 (286232)Income tax paid (16538) (132722)Interest received 100 572Net cash generated by/(used in) operating activities 572631 (418954)Cash flow from investing activitiesPurchase of properly, plant and equipment (977 723) (622382)Proceeds from disposal of property, plant and equipment 12677 1 073556Proceeds from disposal of non current assets held for sale 610196 (354 850) 451 174Net increase in cash and cash equivalents 217781 32220Cash and cash equivalents at the beginning of the ¥ear 66 640 34620 284821 66840Represented By:Cash and bank balances 264 621 66840
  20. 20. The principal business of the Group is that of investing in investment property and property management. The Group is a limited liability company incorporated and domiciled in Zimbabwe and is-listed on the Zimbabwe Stock Exchange. The address of its registered office is 8th Floor, Beverly Court, Corner Fourth Street and Nelson Mandela Avenue, Harare. The consolidated financial statements have been approved for issue by the Board of Directors on 13 August 20102 SUMMARY OF SI!NIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.2.1 Basis of presentation Statement of compliance The consolidated financial statements of Dawn Properties Limited have been prepared in accordance with International Financial Reporting Standards ("I FRS") as issued by the International Accounting Standard Board, except for the effects of non-compliance International Accounting Standard ("IAS") 21, The Effects of Changes in Foreign Exchange Rates and IAS 29, Financial Reporting in Hyper-inflationary Economies in the prior year ended 31 March 2009. The Group reports cash flows from operating activities using the indirect method. The acquisition of investment properties are disclosed as cash flows from investing activities because this appropriately reflects the Groups business activities. The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of investmeflf property and land and buildings. , The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Groups accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions change. Management believe that the underlying assumptions are appropriate. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4 to the consolidated financial statements.
  21. 21. On the date of change in functional currency on, 1 February 2009, the reserve that was derived fromthe translation of the assets and liabilities that could be recovered or settled in a currency other thanZW$ or could be reasonably translated into a currency other than the ZW$ and represented an assetor liability of the Group and Company, net of the amount that was allocated to share capital andshare premium was included in retained income.(a)The following standards, amendments and interpretations, which became effective in 2009, arerelevant to the Group: Applicable for financial year-. Standardl beginning Interpretation on/after Amendment: Improving disclosures about financial instrumentsA revised version of IAS 1 was issued in S~ptember 2007. The revised standard prohibits thepresentation of items of income and expense (that is, "non-owner changes in equity") in thestatement of changes in equity, requiring non-owner changes in equity to be presentedseparately from owner changes in equity in a statement of comprehensive income. As a result,the Group presents in the consolidated statement of changes in equity all owner changes inequity; all non-owner changes in equity are presented in the consolidated statement ofcomprehensive income. The adoption of this revised standard impacts only on presentationaspects; therefore; it has no impact on profit or earnings per share.
  22. 22. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)2.1 Sasis of presentation (continued)A revised version was issued in March 2007. Under the revised standard, an entity isrequired to capitalise borrowing costs directly attributable to the acquisition, constructionor production of qualifying asset (one that takes a substantial period of time to get readyfor use or sale) a art of the cost of that asset. The option of immediately expensingthose borrowing costs was removed. The capitalisation is required for qualifying assetsfor which the commencement date for the capitalisation is on or after 1 January 2009.The lASS published amendments to IFRS 7 in March 2009. The amendments requireenhanced disclosures about fair value measurements and liquidity risk. In particular, theamendment requires disclosure of fair value measurements by level of a three-level fairvalue measurement hierarchy. In addition to that, the amendment clarifies that thematurity analysis of liabilities should include issued financial guarantee contracts at themaximum amount of the guarantee in the earliest period in which the guarantee couldbe called; and secondly requires disclosure of remaining maturities of financial derivativesif the contractual maturities are essential for an understanding of the timing of cash flows.The entity has to disclose a maturity analysis of financial assets it holds for managingliquidity risk, if that information is necessary to enable users of its financial statements toevaluate the nature and extent of liquidity risk. The adoption of the amendments resultin additional disclosures but does not have an impact on profit or earnings per share.IFRS 8 replaces IAS 14, "Segment reporting", and is effective for annual periods beginningon or after 1 January 2009. The new standard requires a "management approach" underwhich segment information is presented on a similar basis to that used for internal reportingpurposes. The effects of adoption by the Group are disclosed in note 27 to the consolidatedfinancial statements.IAS 40, "Investment property" amendment (and consequential amendment to IAS 16,"Property, plant and equipment")The amendments are part of lASSs annual improvements project published in May 2008and are effective from 1 January 2009. Property that is under construction or developmentfor future use as investment property is brought within the scope of IAS 40. Where thefair value model is applied, such property is measured at fair value. However, where thefair value of property under construction is not determinable, the property is measuredat cost until the earlier of the date construction is completed and the date at which fairvalue becomes reliably measurable.
  23. 23. IFRIC 15, "Agreements for the construction of real estate" (effective from 1 January 2009)The interpretation clarifies whether IAS 18, "Revenue" or IAS 11, "Construction contracts"should be applied to particular transactions. It is likely to result in IAS 18 being applied to awider range of transactions. The Group expects to apply such sale agreements; however,IFRIC 15 is currently not relevant to the Groups operations, as it has not yet entered intoany sale agreements for property under development.The improvement roject contains numerous amendments to IFRS that the lASS considersnon-urgent but necessary. Improvements to IFRS comprise amendments that result inaccounting changes for presentation, recognition or Improvements to IFRS compriseamendments that result in accounting changes for presentation, recognition or measurementpurposes, as well as terminology or editorial amendments related to a variety of IFRSstandards. Most of the amendments are effective for annual periods beginning on or after1 January 2009. No material changes to accounting policies arose as a result of theseamendments except to the amendments to IAS 40, Investment property.(b) Interpretations and amendments to standards becoming effective in 2009 but are notrelevant to the Group Applicable for financial Y"" Standardl beginning Interpretation on/after Puttable financial instruments and obligations arising on liquidation Hedges of a net investment in a foreign operation
  24. 24. 2.1 Basis of presentation (continued) (c) Standards, amendments and interpretations that are not yet effective and expected to have a significant impact on the Groups financial statements Applicable for financial years Stand-ld/ beginning Interpretation on/after IFRS 1 and IAS 27 Cost of an investment in a subsidiary, jointly- controlled entity or associate Share-based payments - Vesting conditions and cancellations Consolidated and separate financial statements Additional exemptions for first time adopters Group cash-settled share based payment transactionsIAS 27, "Consolidated and separate financial statements" (revised 2008; effective forannual periods beginning on or after 01 July 2009. The revised standard requires the effectsof all transactions with non-controlling interests to be recorded in equity if there is no changein control and these transactions will no longer result in goodwill or gains or losses. Thestandard also specifies the accounting wtlBn control is lost. Any remaining interest in theentity is remeasured to fair value and a gain or loss is recognised in profit or loss.IFRS 3, "Business combinations" (revised 2008; effective for business combinations forwhich the acquisition date is on or after the beginning of the first annual reporting periodbeginning on or after 01 July 2009). The revised standard continues to apply theacquisition method to business combinations, with some significant changes. For example,all payments to purchase a business are to be recorded at fair value at the acquisitiondate, with contingent payments classified as debt subsequently re-measured through theincome statement. There is a choice on acquisition-by-acquisition basis to measure the
  25. 25. non-controlling interests proportionate share of the "Improvements to IFRS" (issued in Aprilacquirers net assets. All acquisition related costs 2009)should be expensed. The improvement project contains numerous amendments to IFRS that the IASB considersIFRS 9, "Financial instruments: Classification non-urgent but necessary "Improvements toand measurement" IFRS" comprise amendments that result in accounting changes for presentation,In November 2009, the Board issued the first recognition or measurement purposes, as wellpart of IFRS 9 reliing to the classification as terminology or editorial amendments relatedand measurement of financial asset. IFRS 9 to a variety of individual IFRS standards. Mostwill ultimately replace IAS 39. The standard of the amendments are effective for annualrequires an entity to classify its financial periods beginning on or after 01 January 2010assets on the basis of the entitys business respectively, with earlier application permitted.model for managing the financial assets and No material changes to accounting policies arethe contractual cash flow characteristic of expected as a result of these amendments.the financial asset, and subsequentlymeasures the financial assets as either atamortised cost or fair value. The newstandard is mandatory for annual periodsbeginning on or after 01 January 2013.(d) Standards, amendments and interpretations that are not yet effective and not expectedto have a significant impact on the Groups financial statements Applicable for financial years Standardl beginning interpretation _C;;;..;;.o.;.n;.;;te.;;.;.;n..;;,t ••c.. _ onlafter IAS 39 Financial Instruments: Recognition and measurement-Eligible hedged items First-time adoption of International Financial Reporting Standards--------------A-n-n-u-a-l R-ep-o-r-t-2-0-10------------e
  26. 26. Notes To The Consolidated Financial Statements For The Year Ended 31 March 2010(e) Early adoption of standards resulting outputs that are or will be used toIn 2009, the Group did not early adopt any new generate revenues. In the absence of suchor amended standards or interpretations. criteria, a group of assets is deemed to have been acquired. If goodwill is present in a 2.2 ConsolidationSubsidiaries are all entities (including special transferred set of activities and assets, thepurpose entities) over which the Group has transferred set is presumed to be a business.the power to go_n the financial and For acquisitions meeting the definition of aoperating policies generally accompanying a business, the purchase method of accountingshareholding of more than one half of the is used. The cost of an acquisition is measuredvoting rights. The existence and effect of as the fair value of the assets given, equitypotential voting rights that are currently instruments issued and liabilities incurred orexercisable or convertible are considered assumed at the date of exchange, plus costswhen assessing whether the Group controls directly attributable to the acquisition. Identifiableanother entity. Joint control is the contractually assets acquired and liabilities and contingentagreed sharing of control over economic liabilities assumed in a business combinationactivity. There are no jointly controlled entities are measured at their fair values at the acquisitionwithin the Group. date, irrespective of the extent of any minority interest. The excess of the cost of acquisitionAn associate is an entity, including an over the fair value of the Groups share of theunincorporated entity such as partnership, identifiable net assets acquired is recorded asover which the investor has significant goodwill. If the cost of acquisition is less than theinfluence and that is neither a subsidiary nor fair value of the Groups share of net assetsan interest in a joint venture. acquired, the difference is recognised directly in the profit or loss for the year as negative goodwill.Subsidiaries are fully consolidated from thedate on which control is transferred to the For acquisitions not meeting the definition ofGroup. They are deconsolidated from the a business, the Group allocates the costdate that control ceases. between the individual identifiable assets and liabilities in the Group based on their relativeAccounting for business combinations under fair values at the date of acquisition. SuchIFRS 3 only applies if it is considered that a transactions or events do not give rise tobusiness has been acquired.Under IFRS 3 goodwill."Business combinations", a business is defrne~ •as an integrated set of activities and assets All the Group companies have 31 March as theirconducted and managed for the purpose of year end. Consolidated financial statements areproviding a return to investors or lower costs prepared using uniform accounting policies for likeor other economic benefits directly and transactions. Accounting policies for subsidiariesproportionately to policyholders or participants. have been changed where necessary to ensureA business generally consists of inputs, consistency with the policies adopted by the Group.processes applied to those inputs and theer------------- Annual Report 2010
  27. 27. Intercompany transactions, balances and from the translation at year end exchange ratesunrealised gains on transactions between of monetary assets and liabilities denominated ingroup companies are eliminated.Unrealised foreign currencies are recognised in the profit orlosses are also eliminated unless the transaction loss for the year.provides evidence of an impairment of the asset c) Group companiestransferred. The results and financial position of all the GroupThe Group has a policy of treating transactions entities (none of which has the currency of awith minority interests as transactions with hyperinflationary economy) that have a functionalparties external to tt; Group.Minority interests currency different from the presentation currencyrepresent the portion of profit and net assets are translated into the presentation currency asnot held by the Group. They are presented follows:separately in the statement of comprehensiveincome and the consolidated statement of (i) assets and liabilities for each statement offinancial position separately from the amounts financial position presented are translated atattributable to the owners of the parent. the closing exchange rate at the date of that financial position;2.3 Operating segments (ii)income and expenses for each statement ofOperating segments are reported in a manner comprehensive income are translated atconsistent with the internal reporting provided to average exchange rates (unless this averagethe chief operating decision maker. The chief is not a reasonable approximation of theoperating decision maker is the person or group cumulative effect of the rates prevailing on thethat allocates resources to and assesses the transaction dates, in which case income andperformance of the operating segments of an expenses are translated at the rate on theentity. The Group has determined that the chief dates of the transactions).operating decision maker is the Executive (iii)all resulting exchange differences areCommittee. recognised in other comprehensive income.2.4 Foreign currencies Goodwill and fair value adjustments on thea) Functional and presentation currency acquisition of a foreign entity are treated as assets and liabilities of the foreign entity andItems included in the financial statements of each translated at the closing exchange rate.of the Groups entities are measured using, thecurrency of the primary economic environment in 2.5 Investment propertywhich the entity operates (the "functional currency"). Property that is held for long-term rental yields or forThe consolidated financial statements are capital appreciation or both; and that is not occupiedpresented in the United States of America dollar, by the companies in the Group, is classified as("US$"), the Companys and Groups functional investment property. As from 01 January 2009,currency and presentation currency. investment property also includes property that is being constructed or developed for future use asb) Transactions and balances investment property. Investment property is measuredForeign currency transactions are translated into initially at cost, including related transaction costs andthe functional currency using the exchange rate borrowing costs. Borrowing costs are incurred for theprevailing at the dates of the transactions. purpose of acquiring, constructing or produdng aForeign exchange gains and losses resulting qualifying asset. After initial recognition, investmentfrom the settlement of such transactions and--------------A-n-n-u-al-R-ep-o-r-t-2-01-0------------.
  28. 28. property is camed at fair value. Fair value is based on conditions. The fair value also reflects, on aactive market prices, adjusted, if necessary, for any similar basis, any cash outflows that could bedifference in the nature, loca~on or condition of the expected in respect of the investment property.specific asset. If this informa~on is not available, the Some of those outflows are recognised as a liabilityGroup uses a~emawe valua~on method sum as the including finance lease liabilities in respect ofmarket comparison method or discounted cash flow leasehold land classified as investment property;projedons. Valua~ons are performed as of the others, including contingent rent payments, arestatement of financial position date by professional not recognised in the financial statements.valuers who hold rerognised and relevant professional Subsequent expenditure is capitalised to the assetsqualifica~ons and have r experience in the location carrying amount only when it is probable that futureand category of investment property being valued. economic benefits associated with the expenditureThese valua~ons form the basis for the carrying will flow to the Group and cost of the item can beamounts in the financial statements. Investment property measured reliably. All other repairs and maintenancethat is being redeveloped for con~nuing use as costs are expensed when incurred. When part of aninvestment property for whim the market has become investment property is replaced, the carrying amountless active con~nues to be measured at fair value. of the replaced part is derecognised.Fair value measurement of investment property The fair value of investment property does notunder construction is applied if the fair value is reflect future capital expenditure that will improveconsidered reliably measurable. or enhance the property and does not reflect the related future benefits from this future expenditureIt may sometimes be difficult to determine reliably other than those rational market participants wouldthe fair value of the investment property under take into account when determining the value ofconstruction. In order to evaluate whether the the investment property.fair value of an investment property underconstruction can be determined reliably, Changes in fair value are recognised in themanagement considers the following factors, statement of comprehensive income. Investmentamong others: properties are derecognised either when they have been disposed of or when the investment * The provisions of the construction contract; property is permanently withdrawn from use and * The stage of completion; no economic benefit is expected from its disposal. * Whether the project/property is standard (typical for the market) or non-standard; When the Group disposes of a property at fair value in an arms length transaction, the carrying * The development risk specific to the value immediately prior to the sale is adjusted to constructiol")s; and • the transaction price, and the adjustment is recorded in the statement of comprehensive income within the net gain from fair value adjustment on The fair value of investment property reflects, investment property. among other things, rental income from current leases and assumptions about rental income from If an investment property becomes owner-occupied, future leases in the light of current market it is reclassified as property, plant and equipment. Its fair value at the date of reclassification becomes its cost for subsequent accounting purposes.e------------A-n-n-u-a-/-R-e-p-o-rt-2-0-j-O-------------
  29. 29. If an item of owner-occupied property becomes Increases in the carrying amount arising onan investment property because its use has revaluation of land and buildings are credited tochanged, any difference resulting between the revaluation reserves in shareholders equity.carrying amount and the fair value of this item Decreases ·that offset previous inj::reases of theat the date of the transfer is treated in the same same asset are charged against revaluationway as revaluation under IAS 16, Property, Plant reserves directly in equity; all other decreases areand Equipment. Any resulting increase in the charged to the statement of comprehensivecarrying amount of the property is recognised in income.the profit or loss toe extent that it reverses a Land is not depreciated.previous impairment loss, with any remaining Depreciation on other assets is calculated using theincrease recognised in other comprehensive income straight line method to allocate their cost or revaluedand increases directly to revaluation reserves within amounts to the residual values over their estimatedequity. Any resulting decrease in the carrying amount useful lives;of the property is initially charged in othercomprehensive income against any previouslyrecognised revaluation surplus, with any remaining Buildings 25 - 40 yearsdecrease charged to profit and loss. Motor vehicles 5 years Computer equipment 4 years Farm equipment and implements 10 yearsProperty, plant and equipment comprise mainly land,buildings, farm equipment and motor vehicles. Land The assets residual values and useful lives areand buildings are shown at fair value based on reviewed, and adjusted if appropriate, at eachperiod, but at least triennial, valuations by statement of financial position date. An assetsprofessional valuers, less subsequent accumulated carrying amount is written down immediately to itsdepreciation for the buildings. recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.Any accumulated depreciation at the date of Gains or losses on disposals are determined byrevaluation is eliminated against the gross carrying comparing the proceeds with the carrying amountamount of the asset, and the net amount is restated and are recognised in the statement ofto the revalued amount of the asset. All other comprehensive income.property, plant and equipment is stated at historicalcost less accumulated depreciation. Historical cost When revalued assets are sold, the amountsincludes expenditure that is directly attributable to included in revaluation reserves are transferredthe acquisition of the items. Subsequent costs aFe to retained profits.included in the assets carrying amount or recognised 2.7 Leasesas a separate asset, as appropriate, only when it is (a) Where the Group is the lessee in an operatingprobable that the future economic benefits associated leasewith the item will flow to the Group and the cost of Leases in which a significant portion of the risksthe item can be measured reliably. The carrying and rewards of ownership are retained by anotheramount of the replaced part is derecognised. All party, the lessor, are classified as operating leases.other repairs and maintenance are charged to the Payments, including prepayments, made understatement of comprehensive income during the operating leases are charged to profit or loss onperiod in which they occur. a straight line basis over the period of the lease.---------------A-n-n-u-a-/-R-e-p-o-r-t 2-0-1-0--------------1.