Nov 19, 2015 - Deposit utilised from debt service reserve account ..... The cash is held in an offshore account as secur
Unaudited Financial Results for the year ended 30 September 2015 Total
Revenue
Occupancy
RevPAR
ADR
EBITDA
Loss from continuing operations
Basic loss per share
Gearing
-8% US$50.15m
+1 percentage point 48%
-4% US$43
-7% US$90
-33% US$5.47m
(US$1.39m) from (US$0.64m)
(0.17 cents) from (0.08 cents)
35% from 58%
MESSAGE TO SHAREHOLDERS INTRODUCTION The period under review was characterized by depressed business performance due to the persistent economic challenges that are besetting the country. The deflationary environment worsened the situation by forcing price reductions. International tourism remained subdued, growing only by 2.5% during the first half of 2015. The Sub-Saharan Africa region was affected by the Ebola Epidemic, the effects of which only started wearing off recently. FINANCIAL REVIEW The Group achieved revenue of US$50.15 million, which was an 8% decline from US$54.55 million achieved in the comparable period. The drop in revenue was mainly as a result of a 7% reduction in the average daily rate (ADR) from US$96 achieved last year to US$90. The ADR was partly affected by the introduction of VAT on foreign revenue. Occupancy increased by 1 percentage point to 48% from 47%. The drop in revenue per available room (RevPAR) was thus capped at 4%, from US$45 to US43. The EBITDA achieved for the period under review was US$5.47 million which was a 33% drop from US$8.19 million achieved last year. EBITDA was impacted by the 8% drop in revenues, despite a 2.5% reduction in operating costs. Finance costs for the period under review decreased by 32% from US$3.09 million to US$2.11 million following repayment of borrowings amounting to US$9.08 million during the period under review. Loss from continuing operations was US$1.39 million from a prior year loss of US$0.64 million. The current year loss was driven by the US$4.23 million that was incurred by the Company on other expenses which include retrenchments and separation costs of US$2.02 million. Loss from discontinued operations (Amber Accra Hotel, Ghana) was US$1.97 million from a loss position of US$1.64 million (see note 10 of the condensed financial statements). The Group posted a total loss for the year of US$3.36 million from both continuing operations and discontinued operations. This was a 47% drop from last year’s loss of US$2.29 million. SIGNIFICANT FINANCIAL MATTERS Change of year end The Group changed its financial year-end from 30 September to 31 December. The change was motivated by the need to align the Company’s reporting dates to those of Brainworks Capital Management (Private) Limited, the majority shareholder. As a result of the said change, the financial statements which shall be for 15 months, running from 1 October 2014 to 31 December 2015 will be published before 31 March 2016.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
All figures in US$ Assets Non-current assets Property and equipment Biological assets Deferred income tax assets Trade and other receivables
Note
12
Current assets Inventories Trade and other receivables Cash and cash equivalents (excluding bank overdrafts)
18
Non-current assets held for sale
21
Total assets Equity and liabilities Equity attributable to owners of the parent Share capital Share premium Other reserves Equity settled share based payments reserve Foreign currency translation reserve Revaluation reserve Accumulated losses Total equity Liabilities Non-current liabilities Trade and other payables Borrowings Deferred income tax liabilities
Current liabilities Trade and other payables Provisions and other liabilities Borrowings
As at 30 September 2015 Unaudited
28,248,377 253,715 394,109 340,039 29,236,240
27,678,255 253,715 1,251,171 612,046 29,795,187
1,539,520 5,905,477 4,300,770 11,745,767 11,745,767
1,644,492 6,534,276 2,734,576 10,913,344 7,347,178 18,260,522
40,982,007
48,055,709
8,617,716 25,123,685 1,273,921 (3,068,928) (24,715,837) 7,230,557
1,252,235 2,674,010 4,779,157 8,705,402
9
As at 30 September 2014 Audited
8,314,729 24,734,304 1,273,921 100,856 (2,508,994) (21,351,348) 10,563,468
2,203,358 6,742,795 4,536,415 13,482,568
12,530,088 873,635 10,605,950 24,009,673
Total liabilities
33,751,450
37,492,241
Total equity and liabilities
40,982,007
48,055,709
CHANGE OF BUSINESS MODEL The Group changed from its traditional Hotel Management model to a Hotel Investments model which we believe is more optimal to the needs of the Group going forward. Under the hotel investment model, the Group exited its Ghana and Nigerian foreign operations and established five strategic business divisions which are: 1. Hotels Under Management The Legacy Group of Hotels was appointed to manage five hotels with effect from 1 October 2015. The hotels are the Elephant Hills Resort and Conference Centre, Troutbeck Resort, Hwange Safari Lodge, The Kingdom at Victoria Falls and Crowne Plaza Monomotapa Hotel. The Crowne Plaza Monomotapa Hotel will be rebranded effective 1 January 2016. 2. Franchised Hotels (Holiday Inn) These hotels are run under the InterContinental Hotels Group (IHG) brand and are Holiday Inn Harare, Holiday Inn Bulawayo and African Sun Amber Hotel Mutare soon to be branded back to Holiday Inn Mutare. 3. The Victoria Falls Hotel Partnership The Victoria Falls Hotel is an affiliate of the Leading Hotels of the World, which we are currently operating with our partner, Meikles Limited. This hotel has not been affected by the change in business model and the plan is to continue with the partnership with Meikles Limited. 4. Owner Managed Hotels The remaining owner managed hotels are Caribbea Bay Resort, Great Zimbabwe Hotel and Beitbridge Express Hotel. The board is in discussions with potential strategic partners to assess the strategic fit of these hotels, with a long-term plan of reassigning them either as hotels under management or franchised hotels. 5. Other Complimentary Operations Sun Casinos and Sun Vacations (Timeshares) make up this strategic business unit. OUTLOOK Following the change of business model, discontinuation of the loss making operations in Ghana and Nigeria as well as the recent retrenchments, the Group is poised to move from a loss making to a profit position. We expect our foreign arrivals, particularly for the Victoria Falls properties, to rebound, not only due to the positive change in our business model but also due to the curbing of the Ebola epidemic and the expansion of the Victoria Falls airport. The domestic market is however expected to remain subdued; with low demand and pressure on rates.
Year ended 30 September 2015 Unaudited
Year ended 30 September 2014 Audited
50,145,475 (14,741,819) 35,403,656 2,686,834 (33,059,668) (4,230,516) 211,210 1,011,516 2,570 (2,114,794) (1,100,708) (291,163) (1,391,871) (1,972,618) (3,364,489)
54,554,518 (15,403,075) 39,151,443 111,526 (33,921,745) (630,676) (3,342,087) 249,706 1,618,167 3,952 (3,090,412) 274,315 (1,193,978) 550,031 (643,947) (1,641,755) (2,285,702)
(86,403) (473,531) -
181,136 (1,621,472) (249,706)
(559,934)
(1,690,042)
Total comphensive loss for the year
(3,924,423)
(3,975,744)
Total comprehensive loss for the period attributable to: Owners of the parent
(3,924,423)
(3,975,744)
(1,478,274) (2,446,149) (3,924,423)
(712,517) (3,263,227) (3,975,744)
Continuing Operations Revenue Cost of sales Gross profit Other income Operating expenses Other expenses Fair value adjustment and impairment of assets classified as held for sale Recycled from other comprehensive income Operating profit Finance income Finance costs Share of profit of investments accounted for using the equity method Loss before income tax Income tax (charge) / credit Loss from continuing operations Loss from discontinued operations Loss for the year
Messrs. E. T Shangwa and B. H Dirorimwe were on 17 September 2015 appointed to the substantive positions of Managing Director and Finance Director respectively. There were no other changes to the directorate during the period under review. On the same day, Mr. V. T Musimbe was also appointed to the position of Company Secretary. DIVIDEND In view of the subdued performance and the recent restructuring exercise that was undertaken by the Company, the Board has resolved not to declare an interim dividend for the 12 months ended 30 September 2015. APPRECIATION We would like to commend management, fellow directors and staff, and thank our partners and customers for their continued support as the company forges ahead. H Nkala E T Shangwa Chairman Managing Director 19 November 2015
Note 11
20
16 16 11 13 10
Other comprehensive loss-net of tax: Items that may be subsequently reclassified to profit or loss Exchange differences on translation of foreign operations Exchange differences on translation of discontinued operations Comprehensive income from associate recycled to profit or loss Total other comprehensive loss
Total comprehensive loss for the period attributable to owners of the parent arises from: Continuing operations Discontinued operations
Earnings per share from continuing operations attributable to: Owners of the parent: cents Basic earnings Diluted basic
14 14
(0.17) (0.17)
(0.08) (0.08)
Earnings per share attributable to: Owners of the parent: cents Basic earnings Diluted basic Headline earnings Diluted headline earnings
14 14 14 14
(0.40) (0.40) (0.67) (0.67)
(0.28) (0.27) 0.13 0.12
CONSOLIDATED STATEMENT OF CASH FLOWS
All figures in US$
DIRECTORATE AND MANAGEMENT CHANGES
22 9
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME All figures in US$
Cash flows from operating activities Cash generated from operations Interest received Interest paid Net cash generated from operating activities Cash flows from investing activities Purchase of property and equipment Proceeds from sale of property and equipment Proceeds from sale of non-current assets held for sale Dividend received Net cash generated from investing activities
Year ended Year ended 30 September 30 September 2015 2014 Note Unaudited Audited
15 16
17 17 21
Cash flows from financing activities Proceeds from issue of shares Proceeds from disposal of treasury shares Proceeds from short-term borrowings Proceeds from long-term borrowings Deposit utilised from debt service reserve account Repayment of short-term borrowings Repayment of long-term borrowings Cash used in financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Exchange losses on cash and cash equivalents Cash and cash equivalents at end of the year
Balance as at 1 October 2013
18
8,183,133 2,570 (2,525,069) 5,660,634
6,736,433 3,952 (3,876,313) 2,864,072
(1,316,519) 154,568 5,825,248 4,663,297
(3,943,632) 184,589 4,224,720 39,602 505,279
469,633 1,287,063 219,020 (6,173,617) (3,082,570) (7,280,471)
205,713 891,856 1,713,572 183,215 (3,707,157) (3,063,844) (3,776,645)
3,043,460 1,103,491 (144,804) 4,002,147
(407,294) 1,608,123 (97,338) 1,103,491
Share capital
Share premium
Foreign currency translation Revaluation Accumulated reserve reserve losses
Total equity
(1,068,658)
249,706
(23,132,766)
14,252,814
-
-
-
-
-
(2,285,702)
(2,285,702)
-
-
(4,614,610) (4,614,610)
-
(1,440,336) (1,440,336)
(249,706) (249,706)
4,614,610 2,328,908
(1,440,336) (249,706) (3,975,744)
-
205,713 547,490 753,203
-
80,685 80,685
-
-
(547,490) (547,490)
205,713 80,685 286,398
8,314,729 24,734,304
-
1,273,921
-
Other comprehensive loss: Currency translation differences Reclassified to profit and loss Transfer to accumulated losses Total comprehensive loss for the year
-
Transaction with owners: Proceeds from disposal of treasury shares Loss from disposal of treasury shares Value of employee services Total transactions with owners
-
Balance as at 1 October 2014
Equity settled share based payments reserve 20,171
24,734,304
Balance as at 30 September 2014
NonTreasury distributable shares reserve 5,888,531
8,314,729
Comprehensive loss Loss for the year
(753,203)
100,856 (2,508,994)
- (21,351,348) 10,563,468 (21,351,348) 10,563,468
8,314,729
24,734,304
-
1,273,921
100,856
(2,508,994)
-
Comprehensive loss: Loss for the year
-
-
-
-
-
-
-
(3,364,489)
(3,364,489)
Other comprehensive loss: Currency translation differences Total comprehensive loss for the year
-
-
-
-
-
(559,934) (559,934)
-
(3,364,489)
(559,934) (3,924,423)
Transaction with owners: Employee share scheme - value of employee services Share option exercised by employees Total transactions with owners
302,987 302,987
389,381 389,381
-
-
121,881 (222,737) (100,856)
-
-
-
121,881 469,631 591,512
8,617,716 25,123,685
-
1,273,921
- (24,715,837)
7,230,557
Balance as at 30 September 2015
- (3,068,928)
NOTES TO THE ABRIDGED FINANCIAL STATEMENTS 1.
16,865,342 2,588,535 5,592,171 25,046,048
Discontinued operations On 31 August 2015, the Group mutually terminated the lease agreement for its Ghana hotel (Amber Accra Hotel) due to continued losses. The losses were due to a high fixed costs structure, and a slow revenue upturn. Loss for the year from the Ghana operations was US$1.97 million, from a loss position of US$1.64 million. (Details of the discontinued operations are shown in note 10 of the condensed financial statements).
All figures in US$
2.
3.
4.
5.
GENERAL INFORMATION African Sun Limited (“the Company”) and its subsidiaries (together, “the Group”) leases and manages the hotel properties. The Group now operates in Zimbabwe and South Africa only following the exit from Ghana and Nigeria during the period under review. The Group leases twelve hotels in Zimbabwe and operates a regional sales office in South African which focuses on international and regional sales. The Company is a public listed company, which is incorporated and domiciled in Zimbabwe and listed on the Zimbabwe Stock Exchange. The address of its registered office is African Sun House, Number 6, Seagrave Road, Mount Pleasant, Harare, Zimbabwe. These condensed financial statements were approved for issue by the directors on 19 November 2015. BASIS OF PREPARATION These condensed interim financial statements for the year ended 30 September 2015 have been prepared in accordance with IAS 34, ‘Interim financial reporting’. The condensed interim financial statements do not include all the notes of the type normally included in the annual financial statements. Accordingly, these condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 30 September 2014 which were prepared in accordance with International Financial Reporting Standards (“IFRS”). The condensed interim financial statements are expressed in United States of America dollars (“US$”). The condensed interim financial statements have been prepared under the historical cost conventions as modified by the revaluation of biological assets. CHANGE OF FINANCIAL YEAR END The Group changed its financial year end from 30 September to 31 December. The change was to align to the reporting dates with Brainworks Capital Management (Private) Limited, the majority shareholder. These interim financial statements cover one year period ended 30 September 2015. Audited financial statements for the 15 months ending 31 December 2015 will be published before 31 March 2016. ACCOUNTING POLICIES The accounting policies adopted are consistent with those of the previous financial year, unless otherwise stated. Taxes on income in the interim periods are accounted using the tax rate that would be applicable to the expected total annual profit or loss. There are no new IFRSs or International Financial Reporting Interpretations (“IFRICs”) that are effective for the first time in this interim period that would be expected to have a material effect on the Group. Management continuously assess the impact of the new standards on the financial statements. CHANGE IN ACCOUNTING POLICY
The Group changed its measurement policy after initial recognition of property and equipment from the revaluation model to the cost model. The change is to align with Brainworks Capital Management (Private) Limited who are the major shareholder of the Company. The change in the accounting policy has been applied retrospectively. The comparative figures have not changed because there was no revaluation surplus recorded since 2009 upon dollarisation, hence the carrying amounts under the previously used revaluation model are the same as under the newly adopted cost model. An impairment assessment is currently being carried by the Group’s consultants, and if any assets are impaired, the impairment charge will be posted in the financial statements for the 15 months ending 31 December 2015. 6. ESTIMATES The preparation of interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed consolidated interim financial statements, the significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 30 September 2014, with the exception of changes in estimates that are required in determining the liability for income taxes. 7. FINANCIAL RISK The Group’s activities expose it to a variety of financial risks: market risk (including price risk, currency risk, cashflow, and fair value interest rate risks), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The condensed interim financial statements do not include all financial risk management information and disclosures required in the annual financial statements, and should therefore be read in conjunction with the Group’s annual financial statements as at 30 September 2014. There have been no significant changes in the risk management department since year end or in any risk management policies. Liquidity risk The Group repaid a significant amount of its short-term and long-term borrowings as was disclosed in the financial statements for the year ended 30 September 2014. As at 30 September 2015, the Group’s total liabilities reduced by 10% from the September 2014 position. The maturity profile for other liabilities remains unchanged to a large extent. 8. GOING CONCERN
During the period under review, the Group repaid US$9.08 million bank borrowings, which resulted in a 52% reduction in bank borrowings from US$17.35 million reported as at 30 September 2014. The repayments were financed through the disposal of the investment in Dawn Properties Limited which raised US$5.83 million and the difference was financed from operating cash flows. The Group’s negative working capital increased during the year as a result of repayment of longterm bank borrowings and reclassification of fixed property from current assets (non-current assets held for sale) back into property and equipment. To improve the working capital position management is at an advanced stage of negotiating a long-term refinancing facility to pay short-term loans. Working capital position will further improve as a result of increase in cash generated from operations and savings on finance costs. To improve cash generation, the following strategies have been implemented: - exiting loss making operations (Amber Accra Ghana Hotel) – through a mutual termination of the lease agreement of the Amber Accra Hotel. The exit was as result of sustained losses which emanated from depressed revenues and a huge fixed costs structure; - signed a management contract with a reputable regional hotel group (Legacy Hospitality Management Services Limited) to manage five hotels; this will improve revenue generation through improved market reach and service offering; and - reduce operating costs through negotiated supplier deals and retrenchments which were concluded in August 2015. Based on the aforementioned, the Directors have assessed the ability of the Group to continue operating as a going concern, and are of the view that the preparation of these financial statements on a going concern basis is appropriate.
Directors: H. Nkala (Chairman), E. T. Shangwa (Managing Director)*, B. H. Dirorimwe (Finance Director)*, E.A. Fundira, W.T. Kambwanji, A. Makamure, G. Manyere, N.G. Maphosa, T. Ndebele, T. Nuy. *Executive Registered Office African Sun House, No. 6 Seagrave Road, Mount Pleasant, Harare, Zimbabwe, Email:
[email protected], Web: www.africansunhotels.com Auditors PricewaterhouseCoopers Chartered Accountants (Zimbabwe), Building Number 4, Arundel Office Park, Norfolk Road, Mount Pleasant, Harare, Zimbabwe.
Unaudited Financial Results for the year ended 30 September 2015 NOTES TO THE ABRIDGED FINANCIAL STATEMENTS (CONTINUED) 9. Borrowings As at 30 September 2015 Unaudited
All figures in US$ Non-current: Foreign bank loans Finance lease liability Local bank loans
16. Finance costs paid and interest received
12. Property and equipment (Continued)
All figures in US$
As at 30 September 2014 Audited
1,175,000 1,499,010
3,524,875 35,139 3,182,781
Total non-current
2,674,010
6,742,795
Current: Foreign bank loans Bank overdrafts Finance lease liability Local bank loans Total current
2,546,856 148,190 67,469 2,829,656 5,592,171
3,087,500 1,261,632 138,494 6,118,324 10,605,950
Total borrowings
8,266,181
17,348,745
Bank borrowings including bank overdrafts bear an average interest cost of 13.10% annually (2014: 16.57%) Current bank borrowings include US$4 086 925 secured loans (2014: US$8 551 912). The loans are secured by; - cession of debtors and movable furniture, fittings and equipment US$1 500 000 - bank guarantees US$1 959 356 - immovable property US$627 569 Bank borrowings amounting to US$4 179 256 (2014: US$8 796 832) are unsecured.
Freehold properties
Leasehold properties Equipment
Service stocks
2015 Opening net book amount Additions - cost Disposals - cost Impairment Accumulated depreciation on
-
5,132,140 122,403 (61,470) -
18,714,720 737,938 (1,301,829) (23,396)
2,389,394 254,421 (170,060) -
785,343 32,087 (497,081) -
656,658 169,670 (36,613) (38,484)
27,678,255 1,316,519 (2,067,053) (61,880)
-
14,590 111,031
258,115 205,093
56,790
315,516
(316,124)
645,011 -
4,257,640 (70,240)
(10,290) (602,500)
(213,757) (2,023,677)
(20,158) (403,672)
(4,016) (170,315)
(1,490) -
4,257,640 (249,711) (3,270,404)
4,705,904 16,353,207 2,106,715
461,534
disposals Transfer in / (out) Transfer from non-current assets
Closing net book amount
4,187,400
As at 30 September 2015 Cost Accumulated depreciation and
4,538,600
impairment
(351,200) 4,187,400
25,383,123
2,856,597
(4,622,439)
(9,029,916)
(749,882)
(515,252)
- (15,268,689)
4,705,904 16,353,207 2,106,715
461,534
433,617 28,248,377
Current income tax Deferred income tax Income tax (charge) / credit
4,4952,371 (892,715) 3,559,656 (4,200,231) (410,275) (1,050,850) (579,091) (1,629,941) (342,677)
2,161,627 (496,719) 1,664,908 (3,127,795) (447,720) (1,910,607) 268,852 (1,641,755) -
Loss from discontinued operations
(1,972,618)
(1,641,755)
(473,531)
(1,621,472)
(473,531)
(1,621,472)
775,309 (107,387) (619,848)
(126,621) (932,667) 567,946
48,074
(491,342)
Consideration receivable Carrying amount of operating assets sold -property and equipment -inventory
754,928 (1,097,605) (1,060,560) (37,045)
-
Loss from sale of operating assets
(342,677)
-
Total other comprehensive income from discontinued operations
per share: From continuing operations From discontinued operations Adjusted for; Fair value adjustment and impairment of assets classified to non-current assets
Net cash generated from / (used in) discontinued operations 10.3 Analysis of the disposal of operating assets
Year ended 30 September 2015 Unaudited
Revenue Zimbabwe Other Intersegment transactions
50,145,475 1,042,901 (1,042,901) 50,145,475
Gross profit Zimbabwe Other
35,403,656 35,403,656
Year ended 30 September 2014 Audited
(145,791) (954,917) (1,100,708)
Total assets Zimbabwe Other Total liabilities Zimbabwe Other
39,151,443 39,151,443
7,723,720 467,410 8,191,130
43,288,829 4,766,880 48,055,709
28,685,024 5,066,426 33,751,450
33,468,318 4,023,923 37,492,241
As at 30 September 2014 Cost Accumulated depreciation and impairment
Net book amount
Service stocks
Capital Motor work vehicles in progress
6,988,307
27,512,471
2,411,214
1,365,091
(210,720)
(3,554,247)
(9,992,127)
(207,247)
(654,456)
3,434,060 17,520,344 2,203,967
3,919,497
550,031
-
-
(1,391,871) (1,972,618) (3,364,489)
(643,947) (1,641,755) (2,285,702)
267,332 3,050,229 (33,064) (249,706)
Headline (loss) / earnings attributable to parent
(5,617,916)
1,040,946
Weighted average number of shares used as the denominator Number of shares in issue Weighted average number of shares in issue for basic earnings / (loss) per share Weighted average number of shares in issue for diluted earnings / (loss) per share
861,771,777 837,698,478 837,698,478
831,472,953 830,217,607 854,520,614
Basic loss per share attributable to: Owners of the parent: cents Continuing operations Discontinued operations Total
(0.17) (0.23) (0.40)
(0.08) (0.20) (0.28)
Diluted loss per share attributable to: Owners of the parent: cents Continuing operations Discontinued operations Total
(0.17) (0.23) (0.40)
(0.08) (0.19) (0.27)
(0.67) (0.67)
0.13 0.12
Disposals Cost of property and equipment disposed Accumulated depreciation of property and equipment disposed Net book amount Loss on disposal of property and equipment including discontinued operation Proceeds accounted for under receivables
2,067,053 (645,011) 1,422,042 (550,064) (717,410)
839,002 (387,080) 451,922 (267,333) -
Cash proceeds from disposal of property and equipment
154,568
184,589
As at 30 September 2015 Unaudited
As at 30 September 2014 Audited
4,300,770 (148,190) (150,433)
2,734,576 (1,261,632) (369,453)
4,002,147
1,103,491
Cash and bank balances Bank overdrafts Cash security on long-term loan Cash and cash equivalents at the end of the period
The cash security on long-term loan of US$150,433 (2014: US$369,453) has been deducted from cash and bank balances to determine cash and cash equivalents as the use of the cash is restricted and is not available within a 90 day period. The cash is held in an offshore account as security for a foreign loan which has an outstanding balance of US$1.96 million. The amount equates to 8% of the outstanding loan. Cash from this restricted account is available only to the extent that the balance is more than 8% of the loan outstanding. 19. Related party transactions
All figures in US$
(i) Lease rentals paid to Dawn Properties Limited (Dawn)
710,635 3,919,497 32,116,383
2,203,967 507,134 -
710,635 352,432 (108,872)
3,919,497 1,158,483 (130,518)
32,116,383 3,943,632 (839,002)
-
1,753,930
311,394 1,863,623
89,713
75,686 (4,732) (3,702,534)
387,080 -
(4,257,640)
2,965 (482,133)
27,168 (1,910,462)
(8,420) (403,000)
(27,547) (212,259)
(588,270) -
5,132,140 18,714,720 2,389,394
785,343
656,658 27,678,255
656,658
(4,257,640) (594,104) (3,078,094)
30,305,914
2,792,394
1,576,372
44,499,858
-
(4,036,380) (11,591,194)
(403,000)
(791,029)
- (16,821,603)
-
5,132,140 18,714,720 2,389,394
785,343
656,658 27,678,255
Year ended 30 September 2015 Unaudited
Year ended 30 September 2014 Audited
2,328,621
2,094,259
African Sun Limited disposed its 16.54% investment in Dawn Properties Limited (Dawn) to Lengrah (Private) Limited (“Lengrah”) on 27 March 2015. The investment was classified as non-current assets held for sale as at 30 September 2014. Dawn and African Sun are related parties due to common shareholding by Lengrah, which owns 61.5% in Dawn and 57.43% in African Sun Limited as at 30 September 2015. (ii) Balance arriving from transaction with related parties -Rent payables to Dawn
277,496
283,381
The payables arose from rentals charged by Dawn Properties Limited on the 8 hotels leased by African Sun. The rentals are due one month after billing and bear no interest. 20. Expenses by nature
All figures in US$
Year ended 30 September 2015 Unaudited
Year ended 30 September 2014 Audited
14,741,819 3,129,930 5,518,957 2,182,386 22,228,395
15,403,075 2,961,432 5,754,275 2,120,871 23,085,167
47,801,487
49,324,820
shares bought back or issued during the year multiplied by a time weight factor. The time weighting factor is the
Cost of sales Depreciation, usage and amortization Operating lease costs Repairs and maintenance Other expenses
number of days that the shares are outstanding as a proportion of the total number of days in a year.
Total cost of sales and administrative expenses
Weighted average number of shares for diluted earnings are calculated by adjusting the weighted number of ordinary
The cost of inventories recognized as expense and included in “cost of sales” amounted to US$5 038 637 (2014: US$5 522 995). Items of inventory amounting to US$52,225 were impaired during the year (2014: US$42,859). 21. Non-current assets held for sale
All figures in US$
As at 30 September 2015 Unaudited
As at 30 September 2014 Audited
7,347,178
4,354,381
(4,257,640) 211,210 (129,661) (3,171,087)
3,171,087 4,046,430 (4,224,720)
-
7,347,178
Opening balance Year ended 30 September 2015 Unaudited
Year ended 30 September 2014 Audited
(1,100,708) (1,393,527) (2,494,235)
(1,193,978) (1,910,607) (3,104,585)
3,270,404 207,386 61,880 342,677 52,225 -
3,078,094 267,332 (249,706) 3,050,229 42,859 82,775 (33,064)
(211,210)
-
121,881 129,661 (2,654,161) 2,522,499 -
291,858 80,685 3,534,180 (274,315)
Total non-cash items
3,843,243
9,870,927
Changes in working capital Inventories -Decrease / (increase) in inventories -Inventory written off during the year Current trade and other receivables and trade and other payables -Decrease in current trade and other receivables -Increase / (decrease) in current trade and other payables -Accrued interest prior year -Receivables from sale of non-current assets -Foreign translation differences Decrease / (increase) in non-current trade and other receivables -Decrease / (increase) in non current trade and other receivables -Adjusted to current -Allowance for impairment of housing loans and motor vehicle loans -Decrease / (increase) in non-current trade and other payables
52,747 104,972 (52,225) 7,460,494 628,799 6,050,154 717,411 64,130 272,007 272,007 (951,123)
(43,688) (829) (42,859) (241,628) 1,642,073 (1,494,363) 338,181
Net changes in working capital
6,834,126
(29,909)
Cash generated from operations
8,183,133
6,736,433
Loss before income tax from; Continuing operations Discontinued operations Loss before income tax including discontinued operations Adjusted for: Non-cash items including discontinued operations Depreciation and hotel equipment usage Loss on disposal of property and equipment Impairment of property and equipment Loss on sale of Ghana non-current assets Amounts recycled from other comprehensive income Impairment of investment in associate Impairment of inventory Impairment of other long-term receivables Fair value gains on biological assets Fair value gains on assets classified to property and equipment from non-current assets held for sale Fair value loss on assets classified to non-current assets held for sale from property and equipment Value of employee service under employee share ownership scheme Impairment of assets of a disposal group Gain on sale of non-current assets held for sale Finance costs net Share of income from equity accounted investments
- (14,618,797)
17,520,344 1,502,265 (599,612)
9,168,520
(291,163)
550,064 (2,654,161) 61,880 -
All figures in US$
46,735,180
3,434,060 423,318 -
-
3,943,632
For the purposes of the statement of cash flows, cash and cash equivalents comprise the following;
15. Cash generated from operations
Total
4,327,880 -
-
1,316,519
shares determined using the described method is compared with the number of shares that would have been issued
(1,505,362) 311,384 (1,193,978)
38,425,010 2,556,997 40,982,007
4,538,600
(70,240)
550,031
based on the monetary value of the subscription rights attached to outstanding share options. The number of
12. Property and equipment
Closing net book amount
(291,163)
have been acquired at fair value (determined as the average annual market share price of the company’s shares)
Following the discontinuance of all foreign operations and the implementation of the new business model, the Group is reconfiguring its reportable segments which will be used to report in the ensuing year.
4,327,880
(3,952)
All figures in US$
options (2014: 32 926 655). For the share options, a calculation is done to determine the number of shares that could
Revenue and profit measures excludes discontinued operations.
Year ended 30 September 2014 Opening net book value amount Additions - cost Disposals - cost Accumulated depreciation on disposals Transfer in / (out) Transfer to non-current assets held for sale Exchange differences Depreciation charge
(2,570)
18. Cash and cash equivalents
shares with the potentially dilutive ordinary shares. As at 30 September 2015 there were no potential dilutive share
EBITDA has been calculated excluding extra ordinary items relating to profit from disposal of the investment in Dawn Properties Limited and provisions relating to non-core operations.
Net book amount
Year ended 30 September 2014 Audited -
2014, 30 298 870 share options were exercised on 17 July 2015 and the balance were forfeited.
Profit / (loss) before income tax Zimbabwe Other
As at 1 October 2013 Cost Accumulated depreciation and impairment
Year ended 30 September 2015 Unaudited -
year is the number of ordinary shares outstanding at the beginning of the year, adjusted by the number of ordinary
54,554,518 1,320,894 (1,320,894) 54,554,518
5,206,697 267,221 5,473,918
Leasehold properties Equipment
3,876,313
assuming the exercise of the share options. Of the potentially dilutive share options of 32 926 655 as at 30 September
(“EBITDA”) Zimbabwe Other
Freehold properties
2,525,069
Additions to property and equipment
For the purpose of basic earnings per share, the weighted average number of ordinary shares outstanding during the
Earnings before interest, tax, depreciation and amortisation
All figures in US$
447,720 124,325 213,856
17 Investing activities
43,517,066
291,857
Headline (loss) / earnings attributable to: Owners of the parent: cents Headline (loss) / earnings Diluted headline (loss) / earnings
11. Segment analysis
All figures in US$
433,617
(211,210)
held for sale Loss on disposal of non-current assets including discontinued operations Gain on disposal of non-current assets held for sale Impairment of non-current assets Impairment of investment in associate Fair value adjustment on biological assets Recycled from other comprehensive income
10.2 Net cash generated from / (use in) discontinued operations Net cash inflow / (outflow) from operating activities Net cash outflow from investing activities Net cash (outflow) / inflow from financing activities
3,090,412
410,275 -
Total finance costs paid
14. EarningS / (loss) per share
10.1 Statement of comprehensive income
Exchange differences on translation of discontinued operations
976,786
Loss attributable to owners of the parent used in calculating basic loss
Revenue Cost of sales Gross profit Operating expenses Finance costs Loss before income tax Income tax (charge) / credit Loss after income tax Loss from sale of assets after tax
2,114,794
Finance costs from continuing operations per statement of comprehensive income Finance costs from discontinued operations Accrued finance costs from prior year Accrued borrowing costs capitalized
433,617 28,248,377
9,328,343
All figures in US$
Financial information relating to the Ghana discontinued operations is set out below;
As at 30 September 2014 Audited
Year ended 30 September 2014 Audited
All figures in US$
13. Income taxes
As at 30 September 2015 Unaudited
Year ended 30 September 2015 Unaudited
Finance income on bank deposits
held for sale Exchange differences Depreciation charge
Net book amount
During the year the Board resolved to exit its foreign operations in Ghana and Nigeria. There was no financial impact from the exit of Nigeria as the company was in a net liabilities position on the effective date of exit, which was 30 September 2015. The exit from Ghana was effective 31 August 2015. The decision to exit Ghana was premised on the sustained losses of the operations. The losses were driven by low revenues and high fixed costs which were pushed by fixed operating lease costs. Management’s efforts to engage the landlord to revise the operating lease costs were fruitless resulting in a mutual termination of the lease contract and disposal of the operating assets to the landlord on 31 August 2015. Proceeds from the sale of the operating assets were outstanding as at the reporting date.
All figures in US$
Total
Year ended 30 September
10. Discontinued operations
Capital Motor work vehicles in progress
Assets classified as held for sale from investment in associate Assets classified as held for sale from property and equipment Reclassification to property and equipment Remeasurement of non-current assets held for sale Impaired during the Sold during the year Closing balance
The 16.54% investment in Dawn Properties Limited disposal was approved in 2014 at a price of US$0.0147 per share. The disposal of the shares was completed during the year and realised net proceeds of US$5,825,248. Gain on the disposal of the investment of USD2,654,161 is included in other income. The freehold property was classified as held for sale in September 2014 with the intention to utilise the proceeds to repay short-term loans. The freehold properties (staff houses) were reclassified into property and equipment during the year after significant repayment of borrowings which was funded mainly by the disposal of 16.54% investment in Dawn Properties Limited. The freehold property will be used as as collateral to secure borrowings in the future. Fothergill operating assets with a carrying amount US$129,661 previously classified as a disposal group held for sale in 2013 were impaired during the year following notice of termination of the lease agreement from Parks and Wildlife. The operating assets can not be used in any other hotel. Management is still in negotiations with the Parks and Wildlife to renew the lease. 22. Provisions
All figures in US$ Leave pay Provision for other expenses
As at 30 September 2014 Audited
Increase in provision
As at 30 September 2015 Unaudited
509,168 364,467
254,690 1,460,210
763,858 1,824,677
873,635
1,714,900
2,588,535
Year ended 30 September 2015 Unaudited
Year ended 30 September 2014 Audited
3,173,991
4,490,080
3,173,991
4,490,080
23. Capital commitments
(727,519) (189,849) (85,672) (21,402) (82,775) 445,256
All figures in US$ Authorized by Directors and contracted for Authorized by Directors, but not contracted for
Capital commitments will be financed from normal operating cash flows. 24. Events after reporting date
There were no events after the reporting date requiring additional or separate disclosure.
Directors: H. Nkala (Chairman), E. T. Shangwa (Managing Director)*, B. H. Dirorimwe (Finance Director)*, E.A. Fundira, W.T. Kambwanji, A. Makamure, G. Manyere, N.G. Maphosa, T. Ndebele, T. Nuy. *Executive Registered Office African Sun House, No. 6 Seagrave Road, Mount Pleasant, Harare, Zimbabwe, Email:
[email protected], Web: www.africansunhotels.com Auditors PricewaterhouseCoopers Chartered Accountants (Zimbabwe), Building Number 4, Arundel Office Park, Norfolk Road, Mount Pleasant, Harare, Zimbabwe.