• Group Profile 2
• Group Structure 3
• Mission and Core Values 4
• Directorate and Management 5
• Chairman's Statement 6
• Corporate Governance 8
• Report of the Directors 10
• Directors' Responsibility Statement 12
• Report of the Independent Auditor 13
• Consolidated Income Statement 16
• Consolidated Balance Sheet 17
• Consolidated Statement of Changes in Equittj 18
• Consolidated Cash Flow Statement 19
• Company Balance Sheet 20
• Accounting Policies 21
• Notes to the Consolidated Financial Statements 37
• Analysis of Shareholders 45
• Notice to Members 47
• Company Details 48
• Proxy Fonn
Dawn Properties Limited (Dawn Properties), Dawn Properties provides investors with
formerly a wholly owned subsidiary of an opportunity to invest in a collection of
African Sun Limited (Afrisun), was sought after hotel properties. The counter
incorporated as a variable rate loan stock is not only a good inflation and currency
(VRLS)company by converting its ordinary hedge but also has the potential to generate
shares into linked units. Afrisun now owns strong cash flows and high yields. The
17.72%of the company enabling it to have properties are professionally managed
an independent mission. The core business ensuring that the highest standards are
of the company, which is incorporated in maintained at all times.
Zimbabwe, is that of an investment property
holding company and through its wholly The Group is well represented in all major
owned subsidiaries owns properties in the tourist destinations as detailed below.
tourism sector. Although the fact that the Group has a
predominant tourism exposure is of concern
On 9 September 2003 Dawn Properties to some investors,it is equally important to
became the first VLRSinvestment property note that it is a sector that never ceases to
holding company to be listed on the attract the attention of internationalinvestors
Zimbabwe Stock Exchange. even in hard times. This probably gives the
properties a premium ahead of other
property classessuch as industrial property,
for example. Nevertheless, the Group has
taken a view to further diversifythe portfolio
at the earliestopportune time.
Carribea Bay Sun 83 Kariba
Carribea Bay Marina NjA Kariba
Crowne Plaza Monomotapa 245 Harare
Elephant Hills Resort and Conference Centre 276 Victoria Falls
Express by Holiday Inn, Beitbridge 104 Beitbridge
Great Zimbabwe Hotel 56 Masvingo
Holiday Inn Mutare 96 Mutare
Hwange Safari Lodge 106 Hwange
Lake View Sun 42 Kariba
Troutbeck Sun 70 Nyanga
Dawn Properties LId
(listed on the ZSE)
CBRE (Pty) LId Va Laclede Investments PfL Cafpine Investments P/I
CBRE Regional I (100%) (100%)
(100%) Holds 1 property Holds 1 property
Mission and Core Values
To create sustainable value for stakeholders, We are committed to the highest standards
which is in line with the industrial index. of delivery.
This is to be achieved by;
a) Investing in high yielding properties.
We believe in creating a happy work
b) Optimising net rentals by drafting
environment premised on teamwork.
appropriate lease agreements and closely
managing costs. Environmental issues
c) Ensuring that properties are properly We are committed to safeguarding the
maintained. environment for this and future
d) Ensuring that adequate attention is given generations. The assessment of
to risk management. environmental issues is therefore critical
for all projects we are involved in. We
Vision are committed to compliance with
environmental, health and safety
To be a successful investment property
Dawn Properties intends to diversify from
the current hospitality portfolio in order to
minimize risk associated with anyone asset
class and to increase the liquidity of the
We are committed to ensuring that
employees are offered equal opportunities
and appropriate participation.
We conduct our business in an honest,
fair and transparent manner.
We believe in our products and this drives
all our innovations.
Directorate and Management
Chairman Remuneration Committee
F. Rwodzi E. 1.Manikai - Chairman
Executive Director S. A. Munyeza
Finance and Investment Committee
S. A. Munyeza - Chairman
T. P. Chimuriwo
T. P. Chimuriwo
C. A. Mataure M. Manyika
S. A. Munyeza C. B. Thorn
C. B. Thorn
Audit and Risk Committee
C. B. Thorn - Chairman
C. A. Mataure
Chief Executive Officer - M. Manyika
Adminstration and Human Resource Executive - N. M Tome (Mrs)
Finance Executive - B. Magura
Managing Director - CB Richard Ellis (Zimbabwe) - T. Matonda
Managing Director - CB Richard Ellis (Botswana) - S. Hove
A number of options to procure cheaper
The period under review was characterised materials are being investigated.
by political uncertainty that threatened the
The redevelopment of Lakeview Inn Hotel
near collapse of the country's economy and
is still under consideration. Progress was
service delivery capacity. The formation of
hampered by a number of challenges
the inclusive government couldn't have
which are now behind us. We anticipate
come at a better time as it gave respite to
that progress will be made to bring the
the ailing economy. During the last two
project to fruition. There are several projects
months of the period under review the
which the group is pursuing and amongst
multi currency regime was introduced
them is the development of a resort area in
among other measures designed to stimulate
Harare. The group owns about 16 hectares
economic activity. This made it possible for
of land along Harare Drive which is being
businesses to charge and collect revenue in
rezoned for commercial use. Once rezoned
foreign currency. The full impact of the
a mixed use development will be embarked
measures should be realised in the medium
on. The development will incorporate
residential, commercial and retail sections.
Interim land use
The group has about 280 hectares of land
The hotel operations suffered from depressed in New Marlborough which is zoned for
guest arrivals, stringent foreign exchange residential and commercial developments.
regulations and price controls for the better The current economic environment
part of the year under review. In the last few however, has made it uneconomic to
months city hotels have experienced an develop the land. Consequently your
upsurge in occupancies but this does little for board has decided to lease the land out
our fortunes as our portfolio is skewed in for niche farming as an interim measure.
favour of holiday destinations. Nevertheless, A potential operator has been identified
this is a welcome development as it signals an and discussions are currently underway.
increase in the level of interest in the country. It is envisaged that the group will have a
Our property consultancy was favoured with shareholding in the operating company.
more instructions than last year however, the This venture is expected to make a
work was executed at thin margins. The significant contribution to the cash flows
quality of earnings has improved in the last of the group.
New developments Our staff endured a very challenging year
Plans for the construction of 264 two-bed in many respects not least of all the high
flats in Marlborough were approved by cost and unavailability of medical services.
the Harare City Council. Unfortunately the Despite this our staff complement has
cost of construction is significantly higher remained steady and a couple of key
than the market value of the development, appointments have been made to position
mainly driven by the high cost of building the group for the future. Fortunately
materials. the challenges being faced by staff have
also largely subsided as the sociQ-€Conomic
------------ environment improves.
Annual Report 2009
The group made an operating loss of The political environment has ushered in
USD303 578 mainly because of the a wave of excitement in the market. The
depressed economic environment group will seize opportunities that permit
characterised by low hotel occupancies. the company to grow and diversify
The company recorded a profit before tax revenue streams.
of USD769 977. This result was achieved
after disposing of part of the residential
land bank which the group serviced last
Let me take this opportunity to thank all
the stakeholders for their invaluable
support. To the board members and
management your dedication is priceless.
The balance sheet, with assets worth
USD 75 million, is robust and
unencumbered, save for the debentures
which are indivisibly linked to the share
capital and as such may be considered as F. Rwodzi
part of equity. The investment property Chairman
portfolio was fair valued by professional
valuers as in prior years. In determining
the fair values, the valuers applied the
cost approach, market comparison and
the discounted cash flow (DCF) methods.
The results were moderated as
appropriate taking into account available
local and regional market information. In
compliance with International Financial
Reporting Standards deferred income tax
of $13.9 million has been provided by
applying a tax rate of 30.9% on the uplift
of the buildings and property. In the
event that the properties are disposed of
at the stated values, the group would in
fact be liable to 20% capital gains tax or
about $11.6 million. It should be
emphasized that this is a mere provision
as the tax liability only crystallizes in the
event that the properties are sold.
The group will approach the relevant
stakeholders at the right time to raise
capital required to fund the various
projects being currently packaged
Dawn Properties accepts and oomplies with the The committee is required to provide
principles of the Code of Corporate Practicesas satisfaction to the board that adequate and
enunciated in the King Report The Dire:tors are appropriate financial and operating controls
fully aware and oognisant of the importan::eof are in place, that significant financial, business
exffiltingtheir dutiesin keepingwith the principles and other risks have been identified and are
of transparency,integrity, airnessand accountability
f being suitably managed and that satisfactory
and in accordancewith aa:epted oorporatepractices standards of governance, reporting and
in order to enhancethe interestsof its shareholders, compliance are in operation.
employees and other stakeholders.This includes
Its responsibilities includes overseeing the
timely and meaningful reporting to all its
financial reporting process, reviewing audit
results, audit processes and risk management,
the cost effectiveness, independence and
Board of Directors objectivity of the auditors and compliance
The board currently comprises six non- issues.
executive and one executive director. The
non-executive directors bring to the board b) Risk
a wide range of skills and experience that To identify, assess, manage and monitor
enable them to contribute independent views the risks to which the business is exposed
and to exercise objective judgements in to. The most significant risk is one material
matters requiring the directors' decisions. customer exposure. Others are single
sectorial exposure, total or partial
The board is responsible for the strategic destruction of property and the
direction of the Group, reviews the replacement of electro mechanical gadgets.
investment policy and approves all
significant investments or disinvestrnents. The Group is cautiously looking for
The board has ultimate'responsibility for opportunities to diversify its portfolio and
proper management, risk management in this should give it a broader customer base.
general, compliance and ethical behaviour The tenant insures all properties at gross
of the business. To achieve this, the board replacement values.
has established three committees to give
detailed attention to each specific area. The audit and risk committee comprises two
Audit and risk committee non-executive Directors and the Chief
The committee has two mandates: Executive Officer. The external auditors
a) Audit have full access to the committee and its
chairman. The committee is expected to
To provide the board with additional
meet at least three times per year.
assurance regarding the efficacy and
reliability of the financial information
used by the directors to assist them in
the discharge of their duties.
Corporate Governance (continuation)
The remuneration committee comprises
two non-executive Directors and the Chief
Executive Officer. Its mandate is to ensure
that the company adopts market related
remuneration policies and to review and
approve remuneration for senior executives.
The committee meets quarterly.
The finance and investment committee
makes recommendations to the board on
all material investments. It also reviews
banking arrangements. It is comprised of
four non-executive Directors and the Chief
Report of the Directors
The directors have pleasure in presenting The company has the following directly
their report with the audited financial and indirectly held subsidiaries:-
statements of the Group for the year ended
31 March 2009. Nhaka Properties (private) Limited 100%
Results for the year-historical cost
Gold CoastProperties(Private) imited 100%
USD Calpine Investments (private)Limited 100%
Profit before income tax 769,977 Dawn Real Estate (private) Limited 100%
Income tax expense CB Richard Ellis (private) Limited 100%
Income tax CBRichardEllis(Proprietary)imited 100%
Deferred income tax
Property, plant and equipment
Profit attributable to Capital expenditure for the year ended 31
linked unit holders March 2009 on operating assets totalled
Share capital Debenture interest and dividends
The board has resolved that the debenture
As at 31 March 2009,the Authorised Share
interest for the year be zero and no
Capital and Debentures was 4,000,000,000
dividend be declared.
ordinary shares and Debentures of
In terms of the Articles of Association,
Messrs T. P. Chimuriwo, E. I. Manikai
The issued share capital and debentures
was 2,407,090,019 ordinary shares and and C. A. Mataure, retire by rotation at
2,407,090,019 debentures. the forthcoming Annual General Meeting
and being eligible, these directors offer
themselves for re-election.
Reserves No directors had, during or at the end
The movements in the reserves of the of the year, any material interest in any
Group are shown in the consolidated contract of significance in relation to the
statement of changes in equity. Group's business.
Members will be asked to approve the
payment of the directors' fees for the
year ended 31 March 2009 of
Members will be asked to approve the
remuneration of the auditors for the
financial year ended 31 March 2009 and
to appoint auditors of the Group to hold
office for the ensuing year.
F Rwodzi SA Munyeza
The directors of the Group are required material loss, which were reported to the
by the Companies Act (Chapter 24:03) to directors in respect of the period under
maintain adequate accounting records and review.
to prepare financial statements that present
The consolidated financial statements
a true and fair view of the financial position
for the year ended 31 March 2009, which
of the Group at the end of the financial year
appear on pages 16 to 44 have been
and of its financial performance and cash
approved by the board of directors and
flows for the year then ended. In preparing
are signed on its behalf by:
the accompanying statements, cognisance
has been taken of the current financial
reporting environment and procedures
followed to present information that C. B. Thorn M. Manyika
adequately discloses the status of the Group Director Director
in the new functional currency, being United
State Dollars (USD"). Suitable accounting
policies have been used and consistently Harare
applied, and reasonable and prudent
11 June, 2009
judgments and estimates have been made.
The directors have satisfied themselves
that the Group is in a sound financial
position and has adequate resources to
continue in operational existence for the
foreseeable future. Accordingly, they are
satisfied that it is appropriate to adopt
the going concern basis in preparing the
inflation adjusted financial statements.
The board recognises and acknowledges
its responsibility for the Group's systems
of internal financial control. Dawn
Properties maintains internal controls and
systems that are designed to safeguard
the assets of the Group, prevent and
detect errors and fraud and ensure the
completeness and accuracy of the Group's
records. There were no breakdowns in
the systems of internal control involving
To the members of Dawn Properties Limited
We have audited the accompanying consolidated financial statements of Dawn Properties
Limited and its subsidiaries ("the Group") and the accompanying balance sheet of Dawn
Properties Limited (the "Company") standing alone (together the "financial statements")
which comprise the consolidated and separate balance sheets as at 31 March 2009, and
the consolidated income statement, consolidated statement of changes in equity and
consolidated cash flow statement for the year then ended and a summary of significant
accounting policies and other explanatory notes, set out on pages 16 to 44.
Directors' Responsibility/or the Financial Statements
The company's directors are responsible for the preparation and fair presentation of
these financial statements in accordance with International Financial Reporting
Standards and in the manner required by the Companies Act (Chapter 24:03) and the
relevant Statutory Instruments ("51") 5133/99 and 5162/99. This responsibility
includes: designing, implementing and maintaining internal control relevant to the
preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the
Our responsibility is to express an opinion on these financial statements based on our
audit. We conducted our audit in accordance with International Standards on Auditing.
Those standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance whether the financial statements are free from
An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the financial statements. The procedures selected depend on the
auditor's judgement, including the assessment of the risks of material misstatement of
the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the entity's internal control. An audit also includes evaiuating the
appropriateness of accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation
of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our adverse audit opinion.
Independent Auditor's Report (continuation)
Basis for adverse opinion
As explained in note 2.5 to financial statements, the functional currency of the Company
and the presentation currency of the Group and Company chan~ed on 1 February 2009
from Zimbabwe Dollar to United States of America Dollar ("USD').
As the Zimbabwe economy was recognised as being hyperinflationary for purposes of
financial reporting, the Company and the Group were required by International
Accounting Standard CIAS") 21, The Effects of Changes in Foreign Exchange Rates, to
restate their financial statements as at and for the 10 months ended 1 February 2009 in
accordance with IAS 29, Financial Reporting in Hyperinflationary Economies, before
translating the amounts (i.e assets, liabilities, equity items, income and expenses) at the
closing rate as at 1 February 2009, and to translate the comparative financial statements
at the closing rate as at 31 March 2008. The Company and Group however accounted for
their share capital, share premium and debentures as at 31 March 2009by translating the
proceeds from the issue at the exchange rate prevailing on the dates of issue. Income and
expenses for the 10 months ended 1 February 2009 were translated into USD using the
average exchange rate prevailing during the period without first restating these numbers
as required by IAS 29, Financial Reporting in Hyperinflationary Economies. The
comparative information for investment property, debentures, share capital and share
premium have been recorded at the same value as that stated in the year-end balance
sheet as at 31 March 2009. It was impracticable for us to quantify the effects of the non-
compliance with IAS 21 and IAS 29 on the Financial Statements.
The Directors have furthermore not presented comparative information for the
consolidated income statement, consolidated cash flow statement and consolidated
statement of changes in equity in accordance with IAS 1, Presentation of Financial
Statements, because they believe the information will be misleading for reasons
stated in note 2.5 (c) to the financial statements.
The accounting treatment adopted, as disclosed in note 2.5 c(ii) to the Financial
Statements, for share capital, share premium and debentures and the translation
thereof and the translation of income and expenses for the ten months ended
1 February 2009, do not comply with the requirements of the Companies Act,
(Chapter 24;03) and the relevant Statutory Instrument ("SI") 33/99 and 62/99
because of non compliance with IAS 21, The Effects of Changes in Foreign Exchange.
In our opinion, because of the significance of the matters described in the Basis for
Adverse Opinion paragraph, the financial statements do not give a true and fair view
of the financial position of the Group and of the Company as at 31 March 2009, and of
the Group's consolidated financial performance and its consolidated cash flows for
the year then ended in accordance with International Financial Reporting Standards
and the Companies Act (Chapter 24:03) and the relevant Statutory Instruments ("SI")
S133/99 and SI62/99.
Annual Report 2009
Emphasis of matter
Without further qualifying our opinion, we draw your attention to notes 2.2 and
3 (c), which along with other matters indicates that the Group and Company are
operating in an uncertain macro-economic environment.
Q. Uw cUu ~0..0()~
CHARTERED ACCOUNT ANTS (ZIMBABWE) HARARE
___________ Annual Report 2009 ('
Revenue 6 1,044,652
Operating expenses (1,348,230)
Fair value adjustment to investment property
Operating loss 7 (303,578)
Fair value adjustment to financial assets
Profit on disposal of non-current asset 1,073,555
Net finance income/ (charges) 8
Profit before tax income 769,977
Income tax expense 9
Profit attributable to linked unit holders 769,977
Fully diluted & basic earnings per linked unit (cents) 10 0.03
, 2009 2008
Investment property 69,300,000 69,300,000
Property, plant and equipment 5,695,797 440,358
Financial asset available for sale 275 275
Goodwill 120,186 120,186
Inventory 16,762 4,997
Trade and other receivables 465,878 132,093
Cash and cash equivalents 66,840 13,946
Equity and Liabilities
Capital and reserves
Ordinary share capital 17,784 17,784
Share premium 16,188,889 16,188,889
Revaluation reserve 4,160,000
Retained income 39,436,368 38,666,391
Shareholders' equity 59,803,041 54,873,064
Debentures 1,760,658 1,760,658
Deferred income tax 13,983,679 13,244,926
Trade and other payables
Consolidated Statement of Changes in Equity for the year ended 31 March 2009
Ordinary share capital
At the beginning of the year
Share capital issued during the year
A t the end of the year
At the beginning of the year
Share premium arising during the year
A t the end of the year
At the beginning of the year
Arising during the year 5,200,000
Deferred income tax (1,040,000)
At the beginning of the year 38,666,391
Arising during the year 769,977
At the end of the year 39,436,368
Shareholders equity at 31 March 2009 59,803,041
Consolidated Cash Flow Statement [or the year ended 31 March 2009
Cash generated from operations
Profit before income tax
Profit on disposal of property plant and equipment (1,073,555)
Changes in working capital
Trade and other receivables (333,784)
Trade and other payables 272,153
Net cash utiUsed by operations (286,232)
Cash flows from investing activities
Purchase of property, plant and equipment (622,382)
Proceeds from sale of property, plant and equipment 1,073,556
Net increase in cash and cash equivalents 164,942
Movement in exchange rate (112,048)
At the beginning of the year 13,946
Cash and cash equivalents at 31 March 2009 66,840
Company Balance Sheet
Group company loans
Investment in subsidiaries
Equity and liabilities
Ordinary share capital 17,784 17,784
Share premium 16,188,889 16,188,889
Retained income 8,107 8,107
Shareholders' equity 16,214,780 16,214,780
Total equity and liabilities 16,214,780 16,214,780
1 GENERAL INFORMATION It also requires management to exercise its
The principal business of the group is that judgement in the process of applying the group's
of investing in investment property and accounting policies.
property management. The areas involvinga higher degree of judgement
The Group is a limited liability company or complexity, or areas where assumptions and
incorporated and domiciled in Zimbabwe estimatesare significantto the financialstatements,
are disclosedin note 3.
and is listed on the Zimbabwe Stock
Exchange. The address of its registered (a)Interpretations effectivein 2008 but not relevant
office is 8th, Floor Beverley Court, corner The following interpretation to published
Fourth Street/Nelson Mandela Avenue, standards is mandatory for accounting periods
Harare. beginning on or after 1 January 2008 but not
These financial statements have been relevant to the company's operations:
approved for issue by the Board of IFRIC 12, 'Service concession arrangements';
Directors on 11 June 2009. IFRIC 13, 'Customer loyalty programmes';
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES IFRIC 14, 'IAS 19 - The limit on a defined
The principal accounting policies applied benefit asset, minimum funding requirements
in the preparation of these consolidated and their interaction'; and
financial statements are set out below.
These policies have been consistently (b) Standards, amendments and
applied to all years presented, unless interpretations to existing standards
otherwise stated. that are not yet effective and have not
been early adopted by the group.
2.1 Basis of presentation
The following standards and
Dawn Properties limited financial statements amendments to existing standards have
have been prepared in accordance with been published and are mandatory for
International Financial Reporting Standards the company's accounting periods
(IFRS) except for the non compliance with beginning on or after 1 January 2009 or
International Accounting Standard (IAS) 1; later periods, but the Group has not
Presentation of Financial Statements, IAS 29; adopted them early:
Financial Reporting in Hyperinflationary
Economies and IAS 21;The Effectsof Changes * IAS 1 (Revised), , Presentation of
in Foreign Exchange Rates. The financial financial statements' (effective 01
statements are based on statutory records that January 2009). The revised standard
are maintained under the historical cost will prohibit the presentation of items
convention as modified by the revaluation of of income and expenses ( that is , 'non-
investment property, land and available for owner changes in equity') in the
sale financial assets. The preparation of statement in changes in equity,
financial statements in conformity with IFRS requiring 'non -owner changes in
requires the use of certain critical accounting equity' to be presented seperately from
estimates. owner changes in equity.
All non - owner changes will be required to *IAS 27 (Revised). 'Consolidated and
be shown in a performance statement, but separate financial statements', (effective
entities can choose whether to present one from 01 July 2009). The revised standard
performance statement (the statement of requires the effects of all transactions
comprehensive income) or two statements with non-controlling interests to be
( the income statement or the statement of recorded in equity if there is no change
comprehensive income statement). in control and these transactions will no
longer result in goodwill or gains and
Where entities restate or reclassify losses. The standard also specifies the
comparative information,. they will be accounting when control is lost.
required to restate the balance sheet
Any remaining interest in the entity is
as at the beginning comparative period in
re-measured to fair value and a gain or
addition to the current requirement to
loss is recognised in profit or loss. The
present balance sheets at the end of the
group currently does not have non
current period and comparative period.
The group will apply IAS 1 (Revised)
from 1 January 2009.
!FRS 3 (Revised) , 'Business Combinations'
(effective from 01 July 2009).The revised
* IFRS 2 ( Amendment) , 'Share- based
standard continues to apply the
payment' (effective 01 January 2009).
acquisition method to business
The amended stan<;lard deals with
combinations, with some significant
vesting conditions and cancellations. It
changes. For example, all payments
clarifies that vesting conditions are
to purchase a business are to be
service conditions and performance
recorded at fair value at acquisition date,
conditions only. Other features of a
with contingent payments classified as
share-based payment are not vesting
debt subsequently re-measured through
the income statement.
These features would need to be included
in the grant date fair value for transactions There is a choice on an acquisition-by-
with employees and others providing acquisition basis to measure the non-
similar services; they would not impact controlling interest in the acquiree either
the number of awards expected to vest or at fair value or at the non-eontrolling
valuation thereof subsequent to grant date. interests proportionate share of the
All cancellations whether by the entity or acquiree's net assets. All acquisition costs
other parties, should receive the same should be expensed. The group will apply
accounting treatment. The standard is !FRS 3 (Revised) prospectively to all
expected to have immaterial impact to business combinations from 1 January
the group's financial statements. 2010.
*lAS 1 (Amendment), 'Presentation of The amendment will have an impact on the
financial statements' (effective from 1 group's operations because some of the
January 2009). The amendment is part group's companies ordinary activities may
of the lASB's annual improvements comprise renting and subsequently selling
project published in May 2008. of some assets.
*IAS 36 (Amendment), 'Impairment of
The amendment clarifies that some rather
assets'(effective from 1 January 2009).
than all financial assets and liabilities
The amendment is part of the IASB's
classified as held for trading in
annual improvements project published
accordance with lAS 39, 'Financial
in May 2008. Where fair value less costs
instruments: Recognition and
to sell is calculated on the basis of
measurement' are examples of current
discounted cash flows, disclosures
assets and liabilities respectively. The
equivalent to those for value-in-use
group will apply the IAS 39
calculation should be made. The group
(Amendment) from 1 January 2009. It
will apply the IAS 28 (Amendment) and
is not expected to have an impact on
provide the required disclosure where
the group's financial statements.
applicable for impairment tests from 1
*IAS 16 (Amendment), 'Property, plant
and equipment' (and consequential
amendment to IAS 7, 'Statement of cash *IAS 40 (Amendment), 'Investment
flows') (effective from 1 January 2009). property' (and consequential
The amendment is part of the lASB's amendments to IAS 16) (effective from
annual improvements project published 1 January 2009).The amendment is part of
in May 2008. the IASB's annual improvements project
published in May 2008. Property that is
Entities whose ordinary activities comprise under construction or development for
renting and subsequently selling assets future use as investment property is
present proceeds from the sale of those within the scope of IAS 40. Where the fair
assets as revenue and should transfer the value model is applied, such property is,
carrying amount of the asset to inventories therefore, measured at fair value.
when the asset becomes held for sale. However, where fair value of investment
A consequential amendment to IAS 7 property under construction is not reliably
states that cash flows arising from measurable, the property is measured
purchase, rental and sale of those assets at cost until the earlier of the date
are classified as cash flows from operating construction is completed and the date at
activities. which fair value becomes reliably
Theamendmentwillhavean impacton the (and consequential amendment
group's operationsas it holds investment to IFRS 1, 'First-time adoption')
property, and will be applied from 1 (effective from 1 July 2009).
*IAS 19 (Amendment), 'Employee
*There are a number of minor benefits' (effective from 1 January
amendments to IFRS 7, 'Financial 2009).
instruments: disclosures', IAS 8,
'Accounting policies, changes in *IAS 20 (Amendment), 'Accounting
accounting estimates and errors', IAS for government grants and disclosure
10, 'Events after the reporting period', of government assistance' (effective
IAS 18, 'Revenue' and IAS 34, 'Interim from 1 January 2009).
financial reporting', which are part of
the IASB's annual improvements *IAS 23 (Amendment), 'Borrowing
project published in May 2008 (not costs' (effective from 1 January 2009).
addressed above). These amendments
are unlikely to have an impact on the *IAS 28 (Amendment), 'Investments
group's accounts and have therefore in associates' (and consequential
not been analysed in detail. amendments to IAS 32, 'Financial
Instruments: Presentation', and IFRS
(c) Interpretations and amendments to 7, 'Financial instruments:
existing standards that are not yet Disclosures') (effective from 1
effective and not relevant for the January 2009).
The following interpretations and *IAS 29 (Amendment), 'Financial
amendments to existing standards reporting in hyperinflationary
have been published and are economies' (effective from 1 January
mandatory for the group's accounting 2009).
periods beginning on or after 1 January
2009 or later periods but are not *IAS 31 (Amendment), 'Interests in
relevant for the group's operations: joint ventures' (and consequential
amendments to IAS 32 and IFRS 7)
(effective from 1 January 2009).
*IFRS 1 (Amendment) 'First time
adoption of IFRS', and IAS 27 *IAS 32 (Amendment), 'Financial
'Consolidated and separate financial instruments: presentation', and IAS 1
statements' (effective from 1 January (Amendment),' Presentation of
2009). financial statements' - 'Puttable
5 ' financial instruments and obligations
held-for-saleand discontinuedoperations' arising on liquidation' (effective from
1 January 2009).
*IAS 36 (Amendment), 'Impairment The inflation indices required to prepare
of assets' (effective from 1 January inflationadjusted financialstatementswere
2009). not availableat the time of reporting. The
*IAS 38 (Amendment), 'Intangible Central Statistics Office had not released
assets' (effective from 1 January 2009). consumerprice indicesfrom July 2008and,
in the opinionof management,the existence
*IAS 39 (Amendment), 'Financial of marketdistortionsmade the measurement
instruments: Recognition and of inflation by alternative means difficult.
measurement' (effective from 1 Accordingly,only historical cost financial
January 2009). statements have been provided. This is a
departure from the basis on which the
*IAS 41 (Amendment), 'Agriculture'
financialstatementsfor previousyears have
(effective from 1 January 2009).
*IFRIC 13, 'Customer loyalty
programrnes'(effective froml July 2008). 2.2 Limitations of financial
reporting in the general economic
*IFRIC15, 'Agreements for construction environment
of real estates' (effective from 1 January The uncertainties in the adverse
2009). Zimbabwe economic environment
during the period up to 31 January
*IFRIC16, 'Hedges of a net investment 2009 have resulted in limitations in
in a foreign operation' (effective from financial reporting. Management is
1 October 2008). unable to predict the extent, severity
Inflation adjustment or duration of the current economic
difficulties or their impact on the future
The financial statements have been
operations of the Group.
prepared in accordance with
International Financial Reporting
Standards ("IFRS") except for the
requirement to present inflation (i) Non availability of official inflation
adjusted financial statements in indices
accordance with International
Accounting Standard ("IAS") 29: Inflation indices have not been
Financial Reporting in Hyper- published since July 2008. Estimates of
inflationary Economies up to 31 inflation by economists ranged from
January 2009 when the functional trillions to quadrillions percent. The use
currency of the Group changed to of multiple foreign exchange rates and
United States of America dollars. The of multiple pricing methods also
financial statements are based on distorts the process of measuring
statutory records that are maintained inflation.
under the historical cost convention.
Annual Report 2009
In these circumstances, inflation adjusted 2.3 Consolidation
financial statements are not prepared as (a) Subsidiaries
required by the International Accounting
Subsidiaries are all entities (including
Standard ("IAS") 29: 'Financial Reporting
special purpose entities) over which the
Group has the power to govern the
(ii) Measurement of transactions financial and operating policies generally
The measurement of transactions in local accompanying a shareholding of more
currency was dependent on the mode of than one half of the voting rights. The
settlement. As a result, there may be existence and effect of potential voting
significant variations in the valuations of rights that are currently exercisable or
assets and liabilities. Accordingly, such convertible are considered when assessing
valuations may be inherently unreliable. whether the Group controls another entity.
Subsidiaries are fully consolidated from
the date on which control is transferred to
(iii) Multiple exchange rates the Group. They are deconsolidated from
The various exchange rates in use varied the date that control ceases.
significantly. For instance, during the year The purchase method of accounting is used
under review the market "cash" exchange to account for the acquisition of subsidiaries
rate was less than 1 % of the market" cheque" by the group.
exchange rate or the "United Nations"
The cost of an acquisition is measured as the
exchange rate. If a transaction occurred at
fair value of the assets given, equity
more than one rate and is recorded at its
instruments issued and liabilities incurred or
nominal value, this may result in distortions
assumed at the date of acquisition, plus
in financial reporting;
costs directly attributable to the acquisition.
Identifiable assets acquired and liabilities
and contingent liabilities assumed in a
The introduction of licences to operate in business combination are measured initially
foreign currencies within the country, and at their fair values at the acquisition date,
the basing of most transactions on foreign irrespective of the extent of any minority
currency equivalents for most of the non- interest. The excess of the cost of acquisition
licensed operators, created challenges for over the fair value of the Group's share of
the Group in determining its functional the identifiable net assets acquired is
currency in the latter part of 2008. As a recorded as goodwill.
result of these uncertainties and these
inherent limitations, caution is advised on If the cost of acquisition is less than the fair
the use of these financial statements for value of the net assets of the subsidiary
decision making purposes. acquired, the difference is recogrused
directly in the income statement.
Intercompany transactions, balances and monetary assets and liabilities denominated in
unrealised gains on transactions between foreign currencies are recognised in the
Group companies are eliminated. Umealised income statement.
losses are also eliminated but considered an
impairment indicator of the asset transferred. Changes in the fair value of monetary
securities denominated in foreign currency
2.4 Segment reporting
classified as available for sale are analysed
A business segment is a group of assets between translation differences resulting
and operations engaged in providing from, changes in the amortised cost of the
products or services that are subject to security and other changes in the carrying
risks and returns that are different from amount of the security. Translation
those of other business segments. A differences related to changes in the
geographic segment is engaged in amortised cost are recognised in profit or
providing products and services within loss, and other changes in the carrying
a particular economic environment that amount are recognised in equity.
are subject to risks and returns that are c (i) Comparatives
different from those of segments operating
The group could not translate comparative
in other economic environments.
figures for the income statement in line IAS
2.5 Foreign currency translation 21; The Effects of Changes in Foreign
a)Functional and presentation currency Exchange Rates requirements which state
that prior period figures should be restated
The functional and presentation currency of
for the effects of changes in the general
the Group changed on 1 February 2009
purchasing power of a currency in a
following the promulgation of the Multi-
hyperinflationary environment. In the
absence of the Central Statistics Offices
The Group therefore traded for the last two indices the Group decided against translating
(2) months of the year using the United States comparative figures for the income statement.
Dollars as the functional and the presentation
currency. cUi) Share capital, debentures,
investment property and comparative
Items included in the financial statements
information translation basis
of each Group's entIty are measured using
the currency of the primary economic IAS 21 requires that entities whose
environment in which the entity operates functional currency is the currency of a
('the functional currency'). hyperinflationary economy, restate their
b)Transactions and balances financial statements in accordance with
Foreign currency transactions are accounted IAS 29 before applying the translation
for at the exchange rates prevailing at the method set out in the standard. However
date of the transactions. Gain and losses the Group and Company did not follow
resulting from the settlement of such this basis of accounting in the following
translations and from the translation of areas:
Share capital, share premium and
2.6 Property, plant and equipment
debentures were derived by translating
Property, plant and equipment
the historical balances at the ruling spot
comprise mainly land, buildings
rates on the respective dates of issuance,
and motor vehicles. Land and
as the equity represented the value of
buildings are shown at fair value,
assets acquired at the commencement of
based on periodic , but at least
triennial, valuations by professional
Comparative information for investment valuers, less subsequent
property, financial assets available for accumulated depreciation for the
sale and goodwill have been recorded at building.
the same value as that stated in the year Land is not depreciated.
end balance sheet as at 31 March 2009. Depreciation on other assets is
Other comparative information was calculated using the straight line
derived by converting the hyperinflated method to allocate their cost to the
Zimbabwe dollar balances with the residual values over their estimated
closing old mutual implied rate ruling as useful lives, as follows;
at 31 March 2008. Buildings 25 - 40 years
The Zimbabwe economy was recognised Vehicles 5 years
as being hyperinflationary for purposes Computers 4 years
of financial reporting. Furniture and fittings 10 years
d) Redenomination of currency The assets' residual values and useful
With effect from 1 August 2008, the lives are reviewed, and adjusted if
Res e r v e Ban k 0 f Z i m b a b w e appropriate, at each balance sheet date.
re-denominated the Zimbabwe dollar An asset's carrying amount is written
by a factor of 1:10,000,000,000, i.e. 10 down immediately to its recoverable
zeroes were removed from all amount if the asset's carrying amount
monetary values. With effect from the is greater than its estimated recoverable
same date the Reserve Bank of amount. Gains or losses on disposals
Zimbabwe issued new currency which are determined by comparing proceeds
carries the same name of a 'dollar' as with carrying amount and are charged
that of the old currency. to operating profits.
The Reserve Bank of Zimbabwe further When revalued assets are sold, the
redenominated the Zimbabwe currency by amounts included in other
dividing by 1 000 000000000i.e 12 zeros on reserves are transferred to retained
1 February 2009. All transactions in the income.
current and comparative accounting period 2.7 Investment property
have been restated in the new Zimbabwe Property that is held for long-term rental
Dollar, as defined at 1 August 2008 and yields or for capital appreciation or both,
1 February 2009. and that is not occupied by the Group is
classified as investment property.
Investment property comprises freehold Separately recognised goodwill is tested
land and freehold buildings which are annually for impairment and carried at cost
used principally for hotel operations. less accumulated impairment losses.
Investment property is measured initially Impairment losses on goodwill are not
at its cost, including related transaction reversed. Gains and losses on the disposal
costs. of an entity include the carrying amount of
goodwill relating to the entity sold.
After initial recognition, investment property
is carried at fair value. Fair value is based on Goodwill is allocated to the cash-generating
alternative valuation methods such as recent units for the purpose of impairment testing.
prices on less active markets or discounted
The allocationis made to those cash-generating
cash flow projections. units or groups of cash-generating units that are
These valuations are reviewed armually by a expected to benefit from the business
firm of professional property valuers. combination in which the goodwill arose. Dawn
Investment property that is being redeveloped Properties limited allocates goodwill to each
for continuing use as investment property or businesses segment in which it operates.
for which the market has become less active
continues to be measured at fair value. 2.9 Non-current assets (or disposal groups)
The fair value of investment property held for sale
reflects, among other things, rental income Non-current assets (or disposal groups) are
from current leases and assumptions about classified as assets held for sale when their
rental income from future leases in the light carrying amount is to be recovered principally
of current market conditions. through a sale transaction and a sale is
Fair value also reflects, on a similar basis, any considered highly probable. They are stated
cash outflows that could be expected in at the lower of carrying amount and fair
respect of the property. value less costs to sell if their carrying
amount is to be recovered principally
Some of those outflows are recognised as a
through a sale transaction rather than
liability, including finance lease liabilities in through continuing use.
respect of land classified as investment
2.10 Financial assets
property; others, including contingent rent
The Group classifies its financial assets in
payments, are not recognised in the financial
the following categories: at fair value
through profit or loss, loans and
2.8 Intangible assets
receivables, and available for sale. The
classification depends on the purpose
Goodwill represents the excess of the cost of for which the financial assets were
an acquisition over the fair value of Group's acquired.
share of the net identifiable assets of the
acquired subsidiary/associate at the date of Management determines the classification
acquisition. of its financial assets at initial recognition.
a) Financial assets at fair value through Assets that are subject to amortisation
profit or loss are reviewed for impairment whenever
Financial assets at fair value through profit or events or changes in circumstances
loss are financial assets held for trading or indicate that the carrying amount may
designated as financial assets through profit not be recoverable.
and loss upon initial recognition. A financial
An impairment loss is recognised for
asset is classified in this category if acquired the amount by which the asset's
principally for the purpose of selling in the carrying amount exceeds its recoverable
short term. Derivatives are also categorised as amount.
held for trading unless they are designated as
hedges. Assets under this category are classified The recoverable amount is the higher of
an asset's fair value less costs to sell and
as current assets.
value in use. For the purpose of assessing
impairment, assets are grouped at the
b) Loans and receivables
lowest levels for which they are separately
Loans and receivables are non-derivative identifiable cashflows (cash generating
financial assets with fixed or determinable units).
payments that are not quoted in an active Non-financial assets other than
market. They are included in current assets, goodwill that suffered an impairment
except for maturities greater than 12 months are reviewed for possible reversal of the
after the balance sheet date. These are impairment at each reporting date.
classified as non-arrrent assets. The Group's
loans and receivables comprise 'trade and other
Inventories are stated at the lower of
receivables' and cash and cash equivalents in
cost or net realisable value. Cost is
the balance sheet.
determined using the first-in, first-
c) Available-Jor-sale financial assets out (FIFO) method. The cost of
Available for sale financial assets are non- finished goods and work in progress
derivatives that are either designated in this comprises raw materials, direct labour,
category or not classified in any of the other other direct costs and related
categories. They are included in non-current production overheads (based on
assets unless management intends to dispose of normal operating capacity) but
the investment within 12 months of the balance excludes borrowing costs.
Net realisable value is the estimated
At the balance sheet date the group had selling price in the ordinary course of
no available for sale securities. business, less the costs of completion and
2.11 Impairment of non-financial assets selling expenses.
Assets that have an indefinite useful life 2.13 Borrowings
are not subject to amortisation and are
Borrowings are recognized initially at
tested annually for impairment.
fair value, net of transaction costs
Annual Report 2009
Borrowings are subsequently stated at 2.15 Current and deferred income tax
amortised cost; any difference between The tax expense for the period comprises
the proceeds (net of transaction costs) and current and deferred tax. Tax is
the redemption value is recognised in the recognised in the income statement,
income statement over the period of the except to the extent that it relates to
borrowings using effective interest method. items recognised directly in equity. In
this case, the tax is also recognised in
Borrowings are classified as current liabilities
unless the Group has an unconditional right
to defer settlement of the liability for at least The current income tax expense is
12 months after balance sheet date. calculated on the basis of the tax laws
enacted or substantively enacted at
2.14 Provisions the balance sheet.
Provisions are recognised when the Group
Deferred income tax is provided in full,
has a present legal or constructive obligation
using the liability method, on temporary
as a result of a past event, it is probable that
differences arising between the tax bases
an outflow will be required to settle the
of assets and liabilities and their carrying
obligation, and a reliable estimate of the
amounts in the financial statements.
amount can be made. Provisions are not
Currently enacted tax rates are used in the
recognised for future operating losses.
determination of deferred income tax.
Where there are a nurnl:u of similar obligations,
Deferred income tax assets are recognised
the likelihoodthat an outflow will be Iff£Uiredin
to the extent that it is probable that future
settlement is detennined by considering the class
taxable profit will be available against which
of obligationsas a whole.
the temporary differences can be utilised.
Deferred income tax assets are recognised
to the extent that it is probable that future Deferred income tax is provided on temporary
taxable profit will be available against differences arising on investments in
which the temporary differences can be subsidiaries,associatesand joint ventures, except
utilised. where the timing of the reversal of the temporary
A provision is re:ognised even if the likelihood differences can be controlled and it is probable
of an outflow with respect to anyone item that the temporary differences will not reverse
irduded in the same class of obligationsmay be in the foreseeablefuture.
small. Provisions are measured at the present
value of the expenditures expectedto be Iff£Uired 2.16 Revenue recognition
to settle the obligation using a pre-tax rate that Revenue comprises the fair value of the
reflects current market assessments of the time consideration received or receivable for
value of money and the risks 5Jnilic to the the rendering of services in the ordinary
obligation.The ircrease in the provision due to course of the Group's activities. Revenue
~ge of time is re:ognised as interestexpnse. is shown net of value-added tax. Revenue
is recognised as follows:
Rental income For defined contribution plans, the Group
Revenue includes rental income, service pays contributions to publicly or privately
charges and management charges from administered pension insurance plans on
properties, and income from property a mandatory, contractual or voluntary basis.
The Group has no further payment
Rendering of services obligations once the contributions have
Sales of services are recognised in the
been paid. The contributions are
accounting period in which the services
recognised as employee benefit expense
are rendered, by reference to completion
when they are due. Prepaid
of the specific transaction assessed on the
contributions are recognised as an asset
basis of the actual service provided as a to the extent that a cash refund or a
proportion of the total services to be reduction in the future payments is
Interest income National Social Security Authority
Interest income is recognized on a time-portion
basis using the effective interest method.
The Group and its employees contribute
Interest income on impaired loan is recognised
to the National Social Security Authority.
either as cash is collected or on a cost-recovery
This is a social security scheme which
basis as conditions warranty.
was promulgamated under the National
Dividend income Social Security Statutory Instrument.
Dividend income is recognised when the
The Group's obligations under this scheme
right to receive payment is established.
are limited to the specific contributions
2.17 Employee benefits legislated from time to time.
Group companies operate various pension Share based compensation
schemes. The schemes are generally funded The Group operates a share based
through payments to insurance companies or compensation plan. The fair value of
the employee services received in
trustee-administered funds determined by
exchange for the grant of the options
periodic actuarial calculations.
is recognised as an expense.
The Group has defined contribution plans. The total amount to be expensed over the
A defined contribution plan is a pension vesting period is determined by reference
plan under which the Group pays fixed to the fair value of the options granted,
contributions into a separate entity. The excluding the impact of any non-market
Group has no legal or constructive vesting conditions(for example,
obligation to pay further contributions if profitability and sales growth targets).
the fund does not hold sufficient assets to Non-market vesting conditions are
included in assumptions about the number
pay all employees the benefits relating to
of options that are expected to vest.
employee service in the current and prior
------------ Annual Report 2009
At each balance sheet date, the entity 2.18 Accounting for leases
revises its estimates of the number of (a) As Lessee
options that are expected to vest. It The Group leases certain property, plant
recognises the impact of the revision to and equipment. Lease of property, plant
original estimates, if any, in the income and equipment where the group has
statement, with a corresponding substantially all the risks and rewards of
adjustment to equity. ownership are classified as finance lease.
The proceeds received net of any directly The corresponding rental obligation, net
attributable transaction costs are credited of finance charges, are included in non
to the share capital(norninal value) and current borrowings. The interest element
share premium when the options are of the lease payments is charged to the
exercised. income statement over the lease period.
Termination benefits are payable when The property, plant and equipment
employment is terminated by the Group acquired under the leasing contracts is
before retirement date, or whenever employee depreciated over the useful life of the
accepts voluntary redundancy in exchange asset.
for these benefits.
(b) As lessor
The Group recognizes termination benefits Assets leased out under operating leases
when it is demonstrably committed to are included in investment property in the
either: terminating the employment of balance sheet. The Group does not lease
current employees according to a detailed out assets under finance lease.
formal plan without possibility of
withdrawal; or providing termination 3 CRITICAL ACCOUNTING ESTIMATES
benefits as a result of an offer made to AND JUDGMENTS
encourage voluntary redundancy.
The Group makes estimates and
Benefits falling due more than 12 months assumptions concerning the future. The
after the balance sheet date are discounted resulting accounting estimates will, by
to present value. definition, seldom equal the related
actual results. The estimates and
Profit-sharing and bonus plans
assumptions that have a significant risk
The Group recognises a liability and an of causing a material adjustment to the
expense for bonuses and profit-sharing, carrying amounts of assets and
based on a formula that takes into liabilities within the next financial year
consideration the profit attributable to the are discussed below.
Company's shareholders after certain
a) Fair value of investment property
adjustments. The Group recognises a
provision where contractually obliged or In determining the open market value
where there is a past practice that has CBRE first considered the market
created a constructive obligation. comparison method.
Thismethod considerscurrent prices in an c) Going concern
active market for similar property in the Despite the challenging operating
same location and condition subject to environment, and after the assessing
similar lease and other covenants. the going concern assumption, the
Appropriate adjustments are made for Directors believe the Group will
the differences in nature, location or continue to operate for the
condition of the property, or in the terms foreseeable future. Management has
of the lease and other contracts relating put in place strategies to mitigate
to the property. against the challenges the Group is
As there is no active market for hotel facing and the Group's ability to pay
properties in Zimbabwe, current prices its maturing obligations.
were drawn from recent transactions of 4 FINANCIAL RISK MANAGEMENT
commercial properties in general. The
prices were adjusted for contractual, 4.1 Financial risk factor s
location and inherent differences. The The Group's activities expose it to a
discounted cash flow method (DCF)was variety of financial risks: market risk
including currency risk, price risk and
cash flow risk and interest rate: credit
The DCF method is only as reliable as the
risk and liquidity risk. The financial
cash flows and valuer drivers (discount
risks relate to the following financial
factor, rate of inflation, growth rate) that
instruments; trade receivables, cash and
are fed into the model. The DCF model is
very sensitiveto all the three variablesand cash equivalents, trade and other
therefore not suitable for use in a volatile payables and borrowings.
economy. Risk management is carried by the
Consequently, a relatively normal ChiefExecutiveOfficerand management
economy was assumed in order to apply under policies approved by the Board
the model. Two models were run, a of Directors. The Chief Executive
Zimbabwean dollar model and a US Officer identifies and evaluates financial
dollar model. The resulting valuations risks in close co-operation with the
were assessed and reasons for differences Group's operating units.
were considered in arriving at the most The Board provides written principlesfor
suitable reliable estimate of fair value. overall risk, interest-rate risk, credit risk,
b) Income taxes use of derivativefinancialinstrumentsand
Significant judgment is required in non-derivative financial instruments, and
determining the provision for income investingexcessliquidity.
taxes. There are many transactions and The reports on the risk management
calculations for which the ultimate tax are produced on a quarterly basis at
determination is uncertain during the legal entities level to the key manageme nt
ordinary course of business. personnel of the gnap.
Annual Report 2009
a) Market risk
The prevailing interest rates are punitive
1) Price risk
and unsustainable in the long run. The
The Group is exposed to property price group will embark on medium to long
and property rentals risk. The rental risk term projects which will expose the group
arise from the fact that all the hotel cash flow risk due to high interest rates.
properties are occupied by a single tenant.
The Board and Management mitigates the b) Credit risk
risk by continuously engaging the tenant The Group's properties are all leased out
and reviewing the lease agreements. to African Sun Limited and there is
ii) Foreign exchange risk significant concentrations of credit risk.
The Multi Currency regime enunciated The Company has policies in place to
during the last quarter of the period under manage its exposures to African Sun.
review ushered in the foreign exchange Credit risk also arises from credit
risk as the Group is operating in an exposures with respect to rental
environment where the United States customers, including outstanding
Dollars, the Great Britain Pound, the receivables.
South African Rand and the Botswana c) Liquidity risk
Pula are generally accepted as legal
tenders. The currencies noted are The Group's policy is to negotiate borrowings
susceptible to currency fluctuations and facilities from approved financial institutions
spikes. The risk is managed by converting based on the existing asset base of the company.
all currencies received into United States The borrowing powers of the Group are limited
Dollars. by the memorandum and articles of association.
The Group's liquidity position is monitored by
iii) Cash flow and fair value interest rate management.
The Group has no interest-bearing assets
and liabilities, the group's income and
operating cash flows are substantially The groups objectives when managing capital
independent of changes in the market are to safeguard the group's ability to continue
interest rates. as a going concern in order to provide returns
Trade and other receivables and payables for shareholders and benefits for other
are interest-free and have settlement dates stakeholders and to maintain optimal capital
within one year. structure to reduce the cost of capital.
Cashflow from operations will be affected The group monitors capital on the basis of the
gearing ratio, the group is currently debt free
by the cash flow interest risk in future when
save for debentures.
the group embarks on envisaged projects
which require funding from financial
During the period under review the
Zimbabwe operating environment
continued to deteriorate, driven by
chronic levels of hyperinflation, multiple
and distorted interest rates and
exchange rates, distorted pricing
mechanisms, a fast deteriorating local
currency unit, and other significant
The group's operations have, therefore,
been significantly affected, and may
continue to be affected, by these conditions.
Given the developments as of February
2009 with the deregulation of foreign
currency transactions, and the effective
dollarisation of the economy, the functional
and presentation currency of the financial
statements for the year ending 31 March
2009, and periods following, is likely to be
United States dollars. Having assessed the
group's ability to continue as a going
concern, the Directors believe that, despite
the challenging operating environment, the
group will continue to operate for the
foreseeable future. Management strategies
have been put in place to address the
challenges the group is facing and to
address the group's ability to pay its
------------- Annual Report 2009
The group leases out all its investment property under operating leases. The leases
are for terms of five and ten years. Revenue excludes value added tax.
7 Operating loss
The following have been charged in arriving at the operating loss:
Auditors' remuneration 13,210
Directors' fees - for services as directors 27,424
- for other services
Salaries and wages 442,505
Social security costs 763
Staff welfare 12,327
Average number of employees 75
8 Net finance income
Interest expense on bank borrowings
9 Income tax expense
Current year income tax
Deferred income tax (note 18)
----------- Annual Report 2009
Reconciliation of current tax charge
Current rate of tax 30.90%
Utilised tax losses -30.90%
Other permanent differences 0.00%
Fair value adjustment 0.00%
Monetary adjustment 0.00%
Effective rate 0.0%
The group made a loss of $371,981 to be assessed in 2009.
10 Fully diluted and basic earnings per share
Profit attributable to linked unit holders
Weighted average number of linked units in issue at the
beginning of the year
Adjustments for - share options
- shares issued during the year 3,555,000
Weighted average number of diluted earnings per linked unit 2,407,090,019
11 Investment property
At beginning of the year
Fair value gains
At 31 March 2009
Consistent with the accounting policy, investment properties were fair valued
to open market value by professional valuers CB Richard Ellis (Private) Limited
(CBRE), who are a related party, on 31 March 2009.
Land and Motor Computer Office Furniture & Total
Buildings Vehicle Equipment Equipment Fittings Other US$
At beginning of the year
Additions during the year - 546,997 1,050 74,335 622,382
currency adjustment 5,439,001 1 9,054 1,420 1,682 5,451,158
Transfer to non-
current assets ( 287,000) (287,000)
Disposals (1) (1)
At end of 31 March 2009 5,152,000 546,998 10,104 1,420 1,682 74,335 5,786,539
At beginning of the year
Provision for the year (88,105) (1,304) (76) (1,257) (90,742)
At end of 31 March 2009 (88,105) (1,304) (76) (1,257) 74,335 (90,742)
Net Book Value
At end of 31 March 2009 5,152,000 458,893 8,800 1,344 425 74,335 5,695,797
Opening net book amount
Goodwill on acquisition
Closing net book value
14 Trade and other receivables
Trade receivables 241,281
Staff loans 3,895
Receivables from related parties 16,024
Loans to related parties
The fair values of trade and other receivables are as follows:
Trade receivables 241,281
Staff loans 3,895
Receivables from related parties 16,024
Loans to related parties
15 Non current assets held for sale
At the beginning of the year
Reclassification during the year
Fair value adjustment
This consists of land that is in the process of being disposed of. The transaction had
not been concluded as at 31 March 2009.
16 Share capital
4,000,000,000 ordinary shares of a nominal value
of Z$.OOOO1each (at time of issue)
Ordinary shares of a nominal value
each (at time of issue)
2,403,535,019 shares at the beginning of the year
3,555,000 of $0.00001 shares issued during the year
At 31 March 2009
The directors are authorised to allot or dispose of unissued linked units under their
control at their discretion in accordance with the provisions of the articles of
Association of the Company and the Companies Act (Chapter 24:03), and the rules
of the Zimbabwe Stock Exchange.
Share options are granted to directors and selected employees. The exercise price
of the granted options is equal to the market price of the shares on the grant date.
Authorised debentures of a nominal value
4,000,000,000 ordinary shares of a nominal
of Z$0.00099 each (at time of issue)
Debentures of a nominal value
of Z$0.00099 each (at time of issue)
2,403,535,019 debentures at the beginning of the year
Debentures issued during the year
At 31 March 2009
-----~-~--_. Annual Report 2009
The debentures bear interest at such rate as is determined by and at the sole
discretion of the Directors. There are no repayment terms for the debentures.
18 Deferred income tax
The gross movement on the deferred income tax account is as follows:
Beginning of the year 13,244,926
Income statement charges (note 9)
Through equity 738,753
End of the year 13,983,679
19 Trade and other payables and borrowings
Trade payables 25,843
Value added tax 47,434
20 Directors' shareholding
C. A. Mataure 2,000
S. A. Munyeza 8,675,518
C. B.Thorn 12,927
Messrs F. Rwodzi, M. Manyika and S. A. Munyeza hold a total shareholding of
18.07% of Dawn Properties through various investment vehicles.
21 Related party disclosure
African Sun Limited (AfriSun) owns 17.15% of the Group. All the Group's
hotel properties are leased to AfricaSun on lease agreements ranging for periods
between 5 and 10 years. Total rentarevenue of the Group relates to rentals
invoiced to African Sun Limited. The following transactions were carried out
with related parties: