POISED FOR THE FUTURE · • 2015 - The Company exited from all foreign operation and refocused on...

POISED FOR THE

ANNUAL REPORT 2015

FUTURE

Corporate Profile 2

Our Business Overview 4

- Statement of Vision 4

- Our Brands 5

- Property Portfolio 7

- Historical Highlights 8

Financial Highlights 9

Message From The Chairman 10

Corporate Social Responsibility 13

Our Strategy 15

Managing Director’s Operations Review 16

Accounting Philosophy 20

Certificate by The Company Secretary 21

Directors’ Report 22

Corporate Governance 24

Directors’ Responsibility for Financial Reporting 29

Independent Auditor’s Report 31

Statement of Financial Position 32

Consolidated Statement of Comprehensive Income 33

Consolidated Statement of Changes in Equity 34

Consolidated Statement of Cash Flows 35

Notes to the Financial Statements 36

Group Supplementary Information 94

Shareholders’ Profile 95

Group Structure 98

Board of Directors 99

Corporate Information 102

Management 103

Notice to Members 104

Shareholders’ Diary 105

Corporate and Hotel Directory 106

Contents

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Corporate Profile

African Sun Limited (The Group/The Company) is a leading hotel investment company in Zimbabwe operating internationally recognised brands, with a clear vision to become the benchmark hotel investment company in this market.

OUR BUSINESSThe Group currently has four divisions which are: Hotels Under Management, Hotels under Franchise, Owner Managed Hotels and the Victoria Falls Hotel Partnership. The Company’s hotels are located in all the tourist resorts in Zimbabwe, as well as in four out of the five cities. The Company also operates timeshare units in Nyanga and Kariba. It also operates a stand alone Charity Casino, Harare Sun Casino and Hotel based Casinos at Holiday Inn Bulawayo and Amber Hotel Mutate.

Hotels Under ManagementLegacy Hospitality Management Services Limited (“Legacy”), a regional Management Company with international acclaim, manages five of the Company’s prime hotels. Of these five, four are located in the country’s major tourist destinations. These include two resort hotels in Victoria Falls namely Elephant Hills Hotel and Conference Centre And The Kingdom at Victoria Falls. Close to the Victoria Falls

is the safari operation, Hwange Safari Lodge and the Troutbeck Resort nestled in the rolling Eastern Highlands mountains of Nyanga. Monomotapa Harare is located in the capital city Harare, with its iconic structure overlooking the lush, colourful and perennially evergreen Harare Gardens.

Hotels Under FranchiseThe Hotels Under Franchise are operated under the InterContinental Hotels Group (“IHG”) brand. There are two Holiday Inn branded hotels in Harare and Bulawayo respectively, with African Sun Amber Hotel Mutare soon to be rebranded back to Holiday Inn Mutare.

Owner Managed HotelsThe other resort hotels that are managed by the Group are; Great Zimbabwe Hotel in Masvingo, located within walking distance of the Great Zimbabwe National Monument, a UNESCO World Heritage Site, the largest ancient structure south of the Sahara and second only to the pyramids of Egypt in size and grandeur. The Caribbea Bay Resort in Kariba which is among the four largest man-made lakes in the world and second largest reservoir by volume in Africa.

The Victoria Falls Hotel PartnershipAlso in Victoria Falls is The Victoria Falls Hotel which the Group jointly operates with Meikles Hospitality (Private) Limited. The Hotel is affiliated to The Leading Hotels of the World and adheres to the requirements that come with this affiliation.

TimesharesThe Group manages the Blue Swallow and the Kingfisher Cabanas timeshare units situated in Nyanga and Kariba, respectively.

Sun CasinosSun Casinos comprises of one stand alone casino, Harare Sun Casino and the Manica Sun and Bulawayo Sun Casino’s operations are hotel based casino operations, with the Makasa Sun Casino in Victoria Falls coming under the purview of Legacy Hospitality Management Services Limited.

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The Group has streamlined its operations to

ensure future sustainability. We continue with

our quest to grow shareholder value, anchored

by the four pillars of:

• People;

• Product;

• Processes; and

• Promotion

4

Our Business Overview

STATEMENT OF VISIONTo be the benchmark Hotel Investment Company in Zimbabwe.

MISSIONWe exist to create value for all our stakeholders.

WE DO SO BY:• Anticipating and exceeding the needs of our guests.• Creating opportunities for growth.• Building long-term partnerships through win-win relationships with our stakeholders.

OUR CORE VALUES AND BELIEFS

Sustainable value creation is at the core of what we do. Our ethos is guided by the following core values and beliefs:

DILIGENCE – Focusing on important things, we apply ourselves and execute our obligations in a smart, careful and conscientious manner.

INTEGRITY – Truthfulness and honesty are an integral part of all our interactions.

PROFESSIONALISM – Leveraging on our expertise and skills, our conduct is of the highest possible standard as we go about our business.

RESPONSIBLE CITIZEN – Conservation of our natural and other resources to ensure our sustainability, as well as caring for the less fortunate and those in need in our communities, is critical in all our operations.

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OUR BRANDS

Our premier brand, The Victoria Falls Hotel, offers world-class hospitality with signature touches that define luxury travel. Legacy Hospitality Management Services Limited (Legacy Hotels / Legacy Hotels and Resorts), a regional based and internationally acclaimed Hotel Manager, provides luxury accommodation all over Africa. The Management Company prides itself in not only providing excellent places to stay, but offers a lifestyle brand to its customers through its innovative product offering. We expect travellers within Africa to enjoy the Legacy Hotels and Resorts’ luxurious and innovative product experience that they have become accustomed to when traveling on the continent. At the same time, Legacy Hotels avails to the Zimbabwe domestic market a world class product and service in tourism and hospitality.

The InterContinental Hotels Group (IHG) is one of the world’s leading hotel companies and franchises the Holiday Inn brand in Zimbabwe. Consistent with global benchmarks, the Holiday Inn hotels cater for the needs of global travellers with an international touch for both business and leisure. The IHG goal is to create great hotels that guests love, and in Zimbabwe, both foreign and local African Sun Limited guests get to enjoy that experience.

Our home-grown brands, the African Sun stand alone brands, are targeted at middle range business and leisure travellers seeking warm and comfortable hotels. Zimbabwean timeshare owners enjoy access to 3 700 holiday resorts in over 100 countries through the Resort Condominium International (“RCI”) exchange. International timeshare owners get to access the 2 resort properties in Kariba and Nyanga at the Carribea Bay and Troutbeck Resort respectively.


and soon

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HOTELS ROOMS CONFERENCE CAPACITY RESTAURANTS

Amber Hotel Mutare (Soon to be rebranded to Holiday Inn Mutare) 96 200 1

Beitbridge Express Hotel 104 150 1

Caribbea Bay Resort 83 120 1

Monomotapa Hotel Harare 243 280 2

Elephant Hills Resort - Victoria Falls 276 500 4

Great Zimbabwe Hotel 47 250 1

Holiday Inn Bulawayo 157 300 2

Holiday Inn Harare 201 180 2

Hwange Safari Lodge 100 100 2

The Kingdom at Victoria Falls 294 100 4

The Victoria Falls Hotel 161 40 3

Troutbeck Resort 70 300 2

Total 1832 2 520 25

SUN CASINOS GAMES AVAILABLE

Bulawayo Sun Casino Slot Machines

Harare Sun Casino American Roulette Blackjack

Slot Machines

Makasa Sun Casino American Roulette Blackjack

Slot Machines

Manica Sun Casino American Roulette Blackjack

Varyjack Poker

Slot Machines

TIMESHARES NUMBER OF LODGES

Blue Swallow Lodges 24

Kingfisher Cabanas 11

Please NoteBeitbridge Express Hotel was closed on the 31 January 2016.

Property Portfolio

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Historical Highlights

Our Journey Thus Far

• 1952 – Rhodesia and Nyasaland Hotels (Private) Limited is formed as a wholly-owned subsidiary of Rhodesian Breweries (Private) Limited

• 1968 – Sable Hotels (Private) Limited is established.

• 1973 – Rhodesian Government grants first casino licence for The Victoria Falls Hotel.

• 1974 – Development of the first four world-class hotels: Monomotapa Hotel in Salisbury, The Wankie Safari Lodge in Wankie, Caribbea Bay in Kariba, and the Elephant Hills Country Club in Victoria Falls.

• 1979 – Meikles Southern Sun Hotels is established, becoming the largest hotel chain in Southern and Eastern Africa, with control of 13 major properties in the country.

• 1980 – Meikles Southern Sun Hotels changes its name to Zimbabwe Sun Hotels after Zimbabwe’s independence.

• 1988 – Zimbabwe Sun Hotels merges with Touch the Wild safari operations, later sold to Rainbow Tourism Group (Private) Limited on 30 April 1998.

• 1990 – Zimbabwe Sun Limited is floated on the Zimbabwe Stock Exchange (“ZSE”), at the time being the largest flotation in Zimbabwe, with 70 million shares offered to the public, which was over-subscribed by 28%.

• 1990 – Opening of the timeshares built in Troutbeck, Nyanga and at Caribbea Bay, which received “Gold Crown Resorts” status from the Resort Condominium International (“RCI”) in 1999.

• 1991 – First Holiday Inn franchise in Harare.

• 1992 – The Elephant Hills Resort and Conference Centre officially opens its doors.

• 1994 – First regional office for reservations is established in Johannesburg.

• 1998 – The construction of Express by Holiday Inn Beitbridge is completed.

• 1999 – Zimbabwe Sun Limited acquires 40% equity and management of Baio Do Paraiso SARL, Mozambique.

• 1999 – Makasa Sun is re-developed into The Kingdom at Victoria Falls.

• 2002 – Zimbabwe Sun Limited is unbundled from Delta Corporation Limited.

• 2003 – Zimbabwe Sun Limited owns 100% shares in the timeshare operation in Vilanculos, Mozambique.

• 2003 – Dawn Properties Limited is listed as the first property entity on the Zimbabwe Stock Exchange.

• 2003 – The Hospitality Training Academy (“HTA”) is re-launched.

• 2004 – Zimbabwe Sun Limited acquires The Grace Hotel in Rosebank, South Africa, ranked among the “Top Ten” hotels in Africa and the Middle East by Condé Nast Traveller (USA) in its first year of operation.

• 2008 – Zimbabwe Sun Limited adds The Lakes Hotel and Conference Centre, in Johannesburg, South Africa to its portfolio.

• 2008 – Zimbabwe Sun Limited rebrands its name to African Sun Limited.

• 2008 – African Sun Limited adds Obudu Mountain Resort to its regional portfolio.

• 2008 – African Sun Limited takes over management of Holiday Inn Accra Airport.

• 2009 – African Sun Limited acquires Hotelserve Holdings (Private) Limited.

• 2009 – The Company raises US$10 million through a Rights Offer.

• 2010 – Best Western Ikeja – Lagos Nigeria opened its doors to the public on 1 October 2010.

• 2011 – Best Western Homeville, Benin City, Nigeria opened its doors to the public on 1 October 2011.

• 2011 - African Sun Limited closed The Grace in Rosebank, The Lakes Hotel and Conference Centre in South Africa and

disinvested from Hotelserve Holdings (Private) Limited in Zimbabwe.

• 2012 - African Sun Limited exits the Holiday Inn Accra Airport Hotel management contract.

• 2012 - African Sun Amber Residence GRA Ikeja, Lagos Nigeria opened its doors to the public on 2 November 2012.

• 2012 - African Sun realised the first profit before tax since dollarisation.

• 2013 - African Sun exited Obudu Mountain Resort after expiry of management contract.

• 2013 - African Sun Amber Hotel Accra Airport, Ghana opened its doors to the public on 10 December 2013.

• 2014 - African Sun Airport Hotel Lagos, Nigeria opened its doors to the public on 15 December 2014.

• 2015 - The Company exited from all foreign operation and refocused on the Zimbabwean operations.

• 2015 - Engaged a regionally based, renowned Hotel Management Company, Legacy Hospitality Management Services Limited, to operate five ASL hotels in Zimbabwe.

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GROUP15 months

ended31 December

2015US$

Yearended

30 September 2014US$

GROUP SUMMARY Revenue 63,154,973 53,559,970

Loss before tax (6,149,529) (975,442)

EBITDA 7,092,333 8,342,346

Attributable loss (8,310,441) (2,285,702)

Total assets 33,385,291 48,055,709

Market capitalisation 14,650,120 17,302,758

SHARE PERFORMANCE: US cents

Number of shares outstanding 861,771,777 831,472,907

Loss per share (0.98) (0.28)

Basic earnings basisBasic loss per share (0.98) (0.28)

Fully diluted earnings basisDiluted loss per share (0.98) (0.27)

Headline (loss) / earnings (0.96) 0.09

Net asset value per share 0.29 1.27

Market price per share 1.70 2.10

Financial Highlights

10

Message From The Chairman

Herbert Nkala | Chairman

INTRODUCTIONThe Zimbabwe economy remained depressed as reflected by the negative inflation of 2.47%, weak aggregate demand, tight liquidity conditions, downward correction in both food and non-food prices and the depreciation of regional currencies against the United States Dollar. The South African market which contributes significantly to Zimbabwe tourist arrivals has suffered from the depreciation of the South African Rand making Zimbabwe an expensive destination.

The Group undertook major cost rationalization measures and changed its business model during the period under review. The following are the major highlights of the changes implemented which will help the Group return to profitability;i. A staff reduction exercise that reduced the Group employees from 1 490 to 1 179. This was

done at a cost of US$2.24 million. Annual savings expected from this initiative are about US$2.7 million;

ii. Change in business model from a hotel operator to hotel investment company. This resulted in the appointment of Legacy Hotels as a manager for selected hotels, and retaining the IHG franchise on others. This business review resulted in the shrinkage of the head office staff complement from 42 to 14, and reduced annual costs from US$4.1 million to US$2.77 million;

iii. Closure of loss making hotels namely Amber Accra Hotel, Ghana and Beitbridge Express Hotel. The two hotels were not self-sustaining, and had a consolidated loss of US$2.63 million for the period under review, which will be avoided going forward;

iv. Abandoned the regional strategy to focus on the Zimbabwe operations. Consequently all foreign operations (Nigeria, Ghana, South Africa and Mauritius) were closed, and this will stop the cash drain from the profitable Zimbabwe operations; and

v. Continued the drive to clean the balance sheet by reducing borrowings, from a total of US$17.35 million reported in September 2014, to US$7.74 million. This has helped reduce our financing costs on a like for like basis by 31%, and our effective cost of funds to 11% from 13.5% reported in September 2014.

The Group made significant progress in debt reduction. As

at 31 December 2015, bank borrowings were US$7.74

million, a 55% reduction from US$17.35 million reported in

September 2014.

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FINANCIAL REVIEW Group revenue for the fifteen-month period ended 31 December 2015 was US$63.15 million. On a like for like basis, revenue decreased by 8% as the Group experienced a noticeable decline in the average monthly revenues during the period under review. The drop in average monthly revenue was mainly as a result of a 5% reduction in the average daily rate (“ADR”) from US$98 achieved last year to US$93. The ADR drop is partially attributable to the introduction of VAT on foreign revenue. Occupancy marginally increased to 49% from 48%. The effect of the drop in ADR and the marginal increase in occupancy was a 4% drop in revenue per available room (“RevPAR”), from US$47 to US$45.

Despite the additional three months of trading, EBITDA dropped by 15% to US$7.09 million from US$8.34 million achieved last year. On a positive note, finance costs for the period under review decreased by 19% from US$3.09 million to US$2.5 million following a net repayment of borrowings amounting to US$9.61 million during the period under review. Loss for the period was US$8.31 million compared to a loss of US$2.29 million posted last year. The loss for the period was a result of the following once-off significant events: i. impairment loss on property and equipment of US$2.34 million

as a result of change in accounting policy;ii. change in accounting estimate for service stocks which

increased the depreciation charge for the period by US$1.93 million;

iii. staff retrenchments and separation costs of US$2.24 million; and

iv. provision for closure costs of foreign operations of US$1 million.

The Group made significant progress in debt reduction. As at 31 December 2015, bank borrowings were US$7.74 million, a 55% reduction from US$17.35 million reported in September 2014. The reduction in debt was made possible through the disposal of the investment in Dawn Properties Limited which raised US$5.8 million, while the difference was financed from operating cash flows. Post year-end, the Group secured a facility to refinance short-term debt to long-term, therefore easing pressure on working capital.

It is anticipated that the streamlined overheads arising from the Group’s change in business model; bringing in an international hotel operating partner and focusing on branded hotels will relieve pressure on operating cash flows.

SIGNIFICANT FINANCIAL MATTERS

Discontinued operationsThe Board made a decision to exit all operations that were not self-sustaining to avoid subsidisation by other business operations. Pursuant to this decision, the Group ceased operations at the Amber Accra Hotel, Ghana and the Beitbridge Express Hotel on 31 August 2015, and 31 January 2016 respectively. Both business units were not contributing positively to the Group’s performance. The aggregate loss from both operations was US$2.63 million which was 32% of the US$8.31 million loss for the period.

The losses from the Ghana hotel were due to a high fixed costs structure and slow revenue upturn whilst those of the Beitbridge

hotel were from depressed revenues from a shrinking market.

Impairment of property and equipmentThe change in accounting policy from revaluation to cost model, resulted in an re-assessment of the Group’s assets, which necessitated an impairment of US$2.34 million.

Change in accounting estimate for service stocksThe Group changed its accounting estimate for useful life of linen stocks from seven years to two years. The impact of this change was an increase in usage for the period of US$1.93 million. All the other service stocks will be charged to cost of sales in the month of purchase.

RetrenchmentsThe Group undertook a restructuring exercise between March and August 2015. This was done to align the employee costs to the current business performance and to ensure optimal staffing of the hotel operating units. Total cost of this exercise was US$2.4 million.

Change of year endThe Group changed its financial year-end from 30 September to 31 December to align the Company’s reporting dates to those of Brainworks Capital Management (Private) Limited, the majority shareholder. As a result of the change, the financial statements under review are for the fifteen months ended 31 December 2015.

CHANGE IN BUSINESS MODEL The Group has now moved away from being a hotel management company to being a hotel investment company. We have engaged premier world and regional brands to assume management and franchising of our assets in order to sweat them for the benefit of our shareholders and other stakeholders. Additionally, the Group exited all foreign operations (South Africa, Ghana and Nigeria) that had sustained losses, with accumulated retained losses of US$16.72 million as at 31 December 2015. The Group established five strategic business divisions which are:

1. Hotels under management The Legacy Group of Hotels was appointed to manage five

hotels on 1 October 2015. The hotels are the Elephant Hills Resort, Troutbeck Resort, Hwange Safari Lodge, The Kingdom at Victoria Falls and Monomotapa Hotel.

Legacy Group owns and manages a collection of four and five star hotels, bush lodges, leisure resorts and casino resorts in key tourism and business locations throughout Africa and is expanding into European and Middle Eastern markets. Legacy Group’s brand, associated volume purchasing power and international relationships will allow the Group to avail special rates and promotions to clients. This is expected to improve; occupancy levels, the average amount spent and in turn the revenues earned by the Group.

2. Franchised hotels (Holiday Inn) These hotels are run under the InterContinental Hotels Group

(“IHG”) brand and are Holiday Inn Harare, Holiday Inn Bulawayo with African Sun Amber Hotel Mutare soon to be branded back to Holiday Inn Mutare.

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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 Hospitality (Private) Limited. This hotel has not been affected by the change in business model.

4. Owner managed hotels The remaining owner managed hotels are Caribbea Bay Resort

and Great Zimbabwe 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 operations Harare Sun Casino and Sun Vacations Timeshares (Kariba and

Nyanga) make up this strategic business unit.

OUTLOOK The following key initiatives underpinning the Group’s strategy continue to progress well:• embedding of the new business model;• reducing of cost of sales and overheads; and • volume growth drive.

The Group is therefore poised to improve from its current loss making position. We expect our foreign arrivals, particularly for the Victoria Falls properties, to rebound due to the recently introduced friendly visa regime for foreigners who will now access visas at port of entry. The opening of the refurbished and expanded Victoria Falls Airport will result in increased airline arrivals to the destination as most of the airlines being currently engaged by Civil Aviation Authority of Zimbabwe will then be able to fly directly into Victoria Falls from source markets. The nascent improvement in the attitude towards the Ebola epidemic will go a long way in driving arrivals into Victoria Falls, particularly from the Asian market. The domestic market is however expected to remain subdued; with low demand and pressure on rates.

CORPORATE SOCIAL RESPONSIBILITYThe Group has continued to plough back into the community in which it operates to improve their livelihood. Without being exhaustive, some of the initiatives in this regard are the:

- Refurbishing of the a housing unit at Matthew Rusike children’s home in Epworth as well as the provision of linen , cookery and cutlery and providing lunch for 150 people by Holiday Inn Harare.

- Donation of bedding and bath towels to the adult ward at St. Giles Medical Rehabilitation Centre by The Victoria Falls Hotels.

- The hosting of christmas lunches for 65 children from Thembiso Children’s Home and Pecy Illbertons Correction Centre by Holiday Inn Bulawayo.

- Sponsoring of school fees for three disadvantaged students of Mosi oa Tunya High School as well as donating quarterly food hampers to Rose of Charity Orphanage Home; both are in Victoria Falls.

- The provision of linen and crockery to Mutare Provincial Hospital and Simukai Children’s home by African Sun Amber Hotel Mutare. The same hotel also hosted a lunch for 50 people at Mutare Provincial Hospital.

- The refurbishment of bathrooms at Chinotimba Clinic and donations of a television set and a satellite dish to the same institution by The Kingdom at Victoria Falls Hotel.

- Distribution of a total of US$93 544 to various charity institutions through the charity and corporate casinos from Harare Sun Casino.

DIRECTORATE AND MANAGEMENT CHANGESThere were no changes to the directorate since the last publication in November 2015.

DIVIDEND DECLARATIONIn view of the aforementioned subdued performance and the recent restructuring exercise undertaken by the Company, the Board has resolved not to declare a final dividend for the fifteen months ended 31 December 2015.

APPRECIATIONWe would like to commend fellow directors, management and staff for their hard work under tough conditions, and to thank our partners and customers for their continued support as the company forges ahead.

H NkalaChairman

28 April 2016


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Corporate Social Responsibility

Chinotimba Clinic bathrooms –tiled by the Kingdom at Victoria Falls.

Rose of Charity Orphanage Home – Food hamper handover by Elephant Hills Hotel & Conference Centre, Victoria Falls.

Mathew Rusike Children’s Home painting and refurbishment by Holiday Inn Harare.

St Giles Medical Rehabiliatation Centre, Harare - Adult ward bedding and bathing towels donated by

The Victoria Falls Hotel.

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Our Strategy

We aim to ensure that our association with

regional and international brands has sustainable long

term returns

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Managing Director’s Operations Review

Edwin T. Shangwa | Managing Director

Business OverviewAccording to the UNWTO World Tourism Barometer International, tourist arrivals grew by 4.4% in 2015 to reach a total of 1.184 billion. Europe’s International tourist arrivals grew by 5% supported by a weaker Euro vis-à-vis the United States dollar and other main currencies. Asia and the Pacific international tourist arrivals grew by 5%. The Americas grew by 5%, as the appreciation of the US dollar stimulated outbound travel from the United States, benefiting the Caribbean and Central America, both recording 7% growth. Middle East International tourist arrivals grew by an estimated 3% to a total of 54 million, consolidating the recovery initiated in 2014 whilst in Africa tourist arrivals decreased by 3%. In North Africa arrivals declined by 8% and in Sub-Saharan Africa by 1%. Based on data released by the Zimbabwe Tourism Authority, the country recorded a total of 2.05 million international tourist arrrivals from January to December 2015, representing a 10% increase from 1.9 million achieved in the same period last year. This was driven by growth in arrivals from the Americas (15%), Africa (10%), Europe (9%). Asia and the Middle East declined by 16%, and 38% respectively as the region struggled to rebound from a two year slump attributed to the Ebola virus and terrorism in North and East Africa.

In the full year results January to December 2015, the Group’s international tourist arrivals decreased by 13.4% to 82,239 down from 94,975 achieved in the same period last year. From the five major regions, only Africa registered growth from 31,640 to 34,640 (+9%). America dropped from 17,276 to 15 644 (-9%) followed by Australia from 14,353 to 8,791 (-7%), Europe also registered negative growth of (-4%).

The domestic market continued to be suppressed by the liquidity crunch, resulting in a declining trend of local leisure travellers. The bulk of local business emanates from conferencing by NGOs and Government, albeit at lower rates as they are impacted by to the economic pressures

We will leverage on internationally recognised

brands, a better product and continuously improving our service offering to have an edge over our competitors in the markets in which we

operate.

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Managing Director’s Operations Review

that are bedevilling the country and are therefore highly price sensitive. The group continued to run promotions aimed at local leisure travellers in a bid to arrest the decline in this segment.

Strategy ReviewAfrican Sun Limited went through a transition from a hotel operating company to a hotel investment management company with effect from 1 October 2015. The change in business model resulted in the strategic business units being classified as Hotels Under Management, Franchised hotels (Holiday Inns), Owner managed hotels and The Victoria Falls Hotel Partnership.

This resulted in the appointment of the Legacy Group of Hotels to manage five hotels. Legacy Hotels and Resorts owns and manages a collection of four and five star hotels, bush lodges, leisure resorts and casino resorts in key tourism and business locations throughout Africa and is expanding into the emerging European and Middle Eastern markets.

This new model also saw an enhanced and improved relationship with Intercontinental Hotels Group (IHG). The relationship between the Group and Meikles Limited on The Victoria Falls Hotel Partnership, which is affiliated to The Leading Hotels of the World, remained unchanged.

Below is the summarised overall strategic intent for African Sun;

1. We aim to consistently achieve a pre-tax return on equity of 15%.

During the year under review, the target return on equity could not be met due to the restructuring exercise, which resulted in closure of loss making entities, closure of dormant entities, retrenchment of excess staff, impairment of assets and change of accounting estimates. Going forward the Group is expected to improve its performance.

2. We will seek to be in the top three measured by Revenue Generation Index (“RGI”) in markets where we operate.

We will leverage on internationally recognised brands, a better product and continuously improving our service offering to have an edge over our competitors in the markets in which we operate.

3. Partnering with regional and international hotel operators to improve the competitiveness of our hotels.

The Group collaborated with the Legacy Group of Hotels, which has been contracted to manage five of our hotels, with a view to adding more facilities and enhancing the product offering. The partnership will herald the improvement of the product and service at our hotels as well as improving the international marketing reach.

The process of engaging InterContinental Hotel Group (“IHG”) for the re-introduction of Amber Hotel Mutare to the Holliday Inn brand is at an advanced stage.

The board has processes underway to ascertain the eventual positioning of Caribbea Bay and Great Zimbabwe Hotels in relation to regional and international branding.

4. Create solid bench-strength for talent pipeline through focused talent development for long-term sustainability, succession and growth.

We are as good as our people. The group has internal and external training and development programs which cater for employees at all levels. We believe in continuous improvement of our people to keep pace with international standards.

Hotels Under Management Legacy Group of hotels was contracted to manage five hotels namely; Monomotapa Hotel, Elephant Hills Resort, The Kingdom at Victoria Falls, Hwange Safari Lodge and Troutbeck Resort. The management agreement was effective 1 October 2015. Below is a summary of the key performance indicators for the hotels under management;

2015 2014 % GrowthOccupancy 42% 41% 1%Average Room Rate $91 $95 (4%)Revenue Per Available Room (RevPAR) $38 $39 (3%)

RevPAR declined due to the competitive operating environment which softened rate levels/pricing generally. Volumes increased slightly, mainly from the local market. The introduction of Value Added Tax (VAT) on foreign revenues had a negative impact on the room rate as the company absorbed most of the VAT. Our rates are perceived as high relative to regional room rates, thus passing the VAT to foreign clients had a detrimental effect on foreign arrivals.

The Victoria Falls properties will benefit from the Victoria Falls airport and runway expansion, which is scheduled for completion by end of the year. This development will see an increase in foreign arrivals into the Victoria Falls benefiting hotels in the area as well as Hwange. Relaxation of the visa regime will benefit the foreign market as they will be able to obtain visas at the port of entry.

The Group is at an advanced stage in raising funds for the refurbishment of the hotels. This will see the modernisation of the Monomotapa Hotel foyer, construction of an outdoor restaurant, 1,000 seater conference centre and spacious car park behind the hotel. The Great Enclosure at The Kingdom at Victoria Falls will be converted to an 800 to 1000 conference centre to take advantage of the regional and international conferences. Victoria Falls remains one of the key destinations which is well sought after as a rotational conference venue within the region. However, this has not been maximised due to limited conferencing capacity available in Victoria Falls. The exterior at Elephant Hills Resort was painted and some of the public areas were refurbished during the year. During the period under review, the hotels in this division benefited from the hosting of the 21st February Movement Celebrations in Victoria Falls, recording good volumes at an improved yield during the period.

The division reduced its staff complement by 19% to 565 in August 2015 when the Group undertook a staff rationalisation exercise. The exercise was meant to ensure that the Group returns to profitability, improve productivity ratios, thus creating shareholder value.

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Franchised hotelsThis segment is made up of Holiday Inn Harare, Holiday Inn Bulawayo and Amber Hotel Mutare (soon to be branded to Holiday Inn Mutare). Below is a summary of the key performance indicators for the franchised hotels;


RevPAR declined due to the declining room rate as the occupancy was flat on prior year. The segment thrives on NGO, corporate and Government business. The room rates were reduced during the year as hotel operators were competing for the limited business available.

The Group is at an advanced stage in raising funds for the branding of Amber Hotel Mutare and refurbishment of the hotels to comply with the Intercontinental Hotels Group’s (IHG) requirements.

During the period under review, this division co-hosted the International Conference on Aids and STI’s in Africa (ICASA) for one week in Harare. This event had a positive impact on the performance of the Holiday Inn Harare.

The division reduced its staff complement by 18% to 311 in August 2015 when the group undertook a staff rationalisation exercise. The benefits of the staff rationalisation will be evident in 2016, as profitability and productivity ratios will improve.

The Victoria Falls HotelAfrican Sun Zimbabwe (Private) Limited operates The Victoria Falls Hotel under an equal Partnership arrangement with Meikles Hospitality (Private) Limited. The hotel thrives on its rich history, spanning 111 years . Below is a summary of the key performance indicators for the hotel;

2015 2014 % GrowthOccupancy 53% 57% (4%)Average Room Rate $243 $241 1%Revenue Per Available Room (RevPAR) $128 $138 (7%)

Managing Director’s Operations Review Report

RevPAR declined due to the decline in volumes. Major cancellations were recorded at the beginning of the year due to the Ebola scare. This negatively affected the occupancy and RevPAR. The room rate however was resilient, managing to grow by 1% despite the introduction of VAT on foreign revenues

The Partnership is sourcing funds for the second phase refurbishment of the hotel, having successfully concluded the first phase in 2013. The hotel’s financial performance improved after the first phase of refurbishment, reflecting in improved room rate and positive guest feedback.

The hotel reduced its staff complement by 15% to 153 in August 2015 when the Group undertook a staff rationalisation exercise.

Owner Managed HotelsThis division is made up of Caribbea Bay Resort and Great Zimbabwe Hotel. Beitbridge Express Hotel, which was formally under this division, was closed on 31 January 2016 after a mutual agreement with the property owner. Below is a summary of the key performance indicators for the hotels which are owner managed.;


RevPAR declined due to the declining room rate. The occupancy for the division grew as the segment went for volumes at lower rates. The segment thrives on NGO and Government business. The room rates were reduced during the year as hotel operators were competing for the limited business available.

The division reduced its staff complement by 34% to 150 in August 2015 when the group undertook a staff rationalisation exercise. The owner managed staff complement includes Casinos and Head Office staff. The benefits of the staff rationalisation will be evident in 2016, as profitability and productivity ratios improve.

Human Resources

Training & DevelopmentWe maintained focus on our Graduate, Supervisory and Management Development Programs in order to ensure a working talent bench strength as well as future talent pipeline viability.

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Wellness All our businesses consolidated initiatives in this area to ensure a healthy and well-balanced workforce.

Outlook The future of our business looks promising, underpinned by the following;• Improved connectivity between Harare and Victoria Falls will

improve domestic business, although we envisage that the domestic rate will remain soft due to the prevailing economic environment.

• The expansion of the Victoria Falls airport and runway which is likely to increase the foreign arrivals, will improve the hotels’ performance.

• The staff rationalisation carried out in 2015 will result in improved efficiency. In 2015, our corporate oversight structure was streamlined for cost and operational efficiency resulting in a headcount reduction from forty two (42) to fourteen (14) purpose fit and focussed professionals. Our hotels shed two hundred and nineteen employees by way of retrenchment to ensure employment cost shifts closer to a semi variable as opposed to fixed cost model as our business is highly seasonal and cyclical. The gains of the headcount restructuring process are expected to manifest, embed and deliver financial value in 2016 and operational efficiencies.

• Cost reduction initiatives which are already underway will certainly drive performance.

AppreciationI would like to thank the executive team, management and staff for their unwavering support during the difficult time we have been through. The invaluable support from our customers and various stakeholders will never be over emphasised. My sincere appreciation also goes to the Board of Directors for their leadership and guidance throughout the year.

E T ShangwaManaging Director

28 April 2016

Managing Director’s Operations Review Report

20

Accounting Philosophy

African Sun Limited is dedicated to achieving meaningful and responsible reporting through comprehensive disclosure and explanation of its financial results. This is done to ensure objective corporate performance measurement, to enable returns on investment to be assessed against the risks inherent in their achievement and to facilitate appraisal of the full potential of the Group.

The core determinant of meaningful presentation and disclosure of information is its validity in supporting management’s decision making process. While the accounting philosophy encourages the pioneering of new techniques, it endorses the fundamental concepts underlying both the financial and management accounting disciplines as enunciated by the Public Accountants and Auditors Board of Zimbabwe (“PAAB”), the Institute of Chartered Accountants of Zimbabwe (“ICAZ”), the International Accounting Standards Board (“IASB”) and the International Federation of Accountants (“IFAC”). The Group is committed to the regular review of financial reporting standards and to the development of new and improved accounting practices. This is practised to ensure that the information reported to management and stakeholders of the Group continues to be internationally comparable, relevant and reliable. This includes, wherever it is considered appropriate, the early adoption of financial reporting standards.

The Group adopts all accounting standards and interpretations applicable that are issued by the IASB and the International Financial Reporting Interpretations Committee (“IFRIC”). Unless otherwise stated, these standards are applied consistently to enhance comparability of financial information relating to different financial periods.

21

Certificate by the Company Secretary

Venon T. Musimbe | Company Secretary

I, the undersigned, in my capacity as the Company Secretary, hereby confirm, to the best of my knowledge and belief, that for the fifteen months period ended 31 December 2015, the Company has complied with Zimbabwe Stock Exchange Listing Requirements, lodged with the Registrar of Companies all returns required of a public company in terms of the Zimbabwe Companies Act (Chapter 24:03) and that all such returns are true, correct and up to date. I also confirm that the Memorandum and Articles of Association of the Company are in line with the provisions of the Zimbabwe Companies Act (Chapter 24:03).

V.T MusimbeCompany Secretary 28 April 2016

22

The directors present their Annual Report and the Audited Financial Statements of the Company and the Group for the 15 months period ended 31 December 2015. 2015 2014PERIOD’S RESULT US$ US$EBITDA 7 092 333 8 342 346Loss for the year (8 310 441) (2 285 702)Headline (loss) / earnings (8 087 023) 773 614

DIVIDEND No dividend was declared for the 15 months period ended 31 December 2015 (September 2014: US$nil).

2015 2014CAPITAL COMMITMENTS US$ US$Authorised by directors and contracted for - -Authorised by directors but not contracted for 11 992 386 4 490 080Total Commitments 11 992 386 4 490 080

INVESTMENTSThe Company holds equity investments in the following entities to the extent indicated below:African Sun Limited PCC (Mauritius) 100.00%African Sun Zimbabwe (Private) Limited 100.00%

SHARE CAPITALThere was an increase in the issued share capital from 831 472 907 to 861 771 777 ordinary shares as a result of employees exercising their share options. The issued share capital and share premium total is US$33 741 401. There are no unexercised ordinary shares currently under the employee share option scheme.

RESERVESThe movement in the reserves of the Group is shown in the Group statement of changes in shareholders’ equity and in the relevant notes to the financial statements.

DIRECTORSPursuant to the recent amendments to the Companies Memorandum and Articles of Association, all the Non-Executive Directors will be subject to re-election at the Annual General Meeting. All the Non-Executive Directors being eligible will offer themselves for re-election at the Annual General Meeting.

INDEPENDENT AUDITORMembers will be asked to re-appoint PricewaterhouseCoopers Chartered Accountants (Zimbabwe) as independent auditor of the Group for the ensuing year.

ANNUAL GENERAL MEETINGThe Forty Fourth Annual General Meeting of Shareholders of African Sun Limited will be held in the Inyangani Room, ground floor at Holiday Inn Harare, Corner 5th Street and Samora Machel Avenue, Harare on Thursday, 30 June 2016 at 1200 hours.

By Order of the Board:

Edwin T Shangwa Believemore H Dirorimwe Venon T Musimbe Managing Director Finance Director Company Secretary

28 April 2016

Directors’ Report

24

Corporate Governance

THE AFRICAN SUN CHARTERAfrican Sun Limited personnel are committed to a long-published code of ethics which runs through the whole Group. This incorporates the Group’s operating, financial and behavioral policies in a set of integrated values, including the ethical standards required of members of the African Sun Limited family in their interface with one another and with all stakeholders.

There are detailed policies and procedures in place across the Group, covering the regulation and reporting of transactions in securities of the Group by the directors and officers. The Group adopted a Corporate Governance Charter and certain recommendations made in the King Report III.

THE NATIONAL CODE ON CORPORATE GOVERNANACE The National Code on Corporate Governance was launched on 9 April 2015. As previously advised the Company is committed to adhering to the principles therein.

STAKEHOLDERSFor many years, African Sun Limited has had a formalised stakeholder philosophy and structures of corporate governance to manage the interface with the various stakeholder groups. African Sun Limited has in place responsive systems of governance and practice which the Board and management regard as entirely appropriate to ensure that our commitment to good governance remains underpinned by the pillars of responsibility, fairness, transparency and accountability to all stakeholders. These pillars preserve our long term sustainability, thereby delivering value to all stakeholders.

DIRECTORATEThe Board of directors of African Sun Limited is constituted with an equitable ratio of executive to non-executive directors and meets at least quarterly. A non-executive director chairs the African Sun Limited Board.

DIRECTORS’ INTERESTSAs provided by the Companies Act (Chapter 24:03) and the Company’s Articles of Association, the directors are bound to declare any time during the year, in writing, whether they have any material interest in any contract of significance with the Company, which could give rise to a related conflict of interest.

INTERNAL CONTROLThe Board of directors is responsible for the Group’s systems of internal control. These systems are designed to provide reasonable, but not absolute, assurance as to the integrity and reliability of the financial statements and to safeguard, verify and maintain accountability of its assets and to detect and minimise significant fraud, potential liability, loss and material misstatement while complying with applicable laws and regulations.

The controls throughout the Group concentrate on critical risk areas. All controls relating to the critical areas in the casino and hotel operating environments are closely monitored by the directors and subjected to internal audit reviews. Furthermore, assessments of the information technology environment are also performed.

An Audit Services Manager, who reports directly to the chairman of the Finance and Audit Committee, heads the Internal Audit department. The Internal Audit department is designed to serve management and the Board of directors through independent evaluations and examinations of the Group’s activities and resultant business risks.

BOARD MEETINGSThe Board meets at least four times per financial year in order to monitor, consider and review, inter alia, matters of a strategic, financial, non-financial and operational nature. Special Board meetings may be convened on an ad hoc basis, when necessary, to consider issues requiring urgent attention or decision.

The Board works to a formal agenda prepared by the Company Secretary in consultation with the Chairman and the Managing Director, which, inter alia, covers operations, finance, capital expenditure, acquisitions and strategy. Any Board member may request the addition of an item to the agenda and will liaise with the Company Secretary in this regard. Board papers comprising the agenda, minutes of Board and Board committee meetings and the relevant supporting documentation are circulated to all directors in advance of each meeting in order that they can adequately prepare and participate fully, frankly and constructively in Board discussions and bring the benefit of their particular knowledge, skills and abilities to the Board table.

25

Corporate Governance (continued)

BOARD COMMITTEESThe Board is authorised to form committees to assist in the execution of its duties, powers and authorities. The Board has four standing committees, namely: Finance and Audit, Human Resources and Remuneration, Marketing and Nominations. In addition, there is the Corporate Governance Committee, which is an ad hoc committee. The terms of reference and composition of the committees are determined and approved by the Board and have been adopted by the Board on an annual basis.

THE FINANCE AND AUDIT COMMITTEEThe Finance and Audit Committee incorporates the audit, risk and finance oversight functions. The Committee deals, inter alia, with compliance, internal control risk management and the review and preliminary approval of the major investment decisions of the Company. It is regulated by specific terms of reference and is chaired by a non-executive director. All members of the Committee not being less than (3) three at any given time are non-executive directors. Executives of the Company including the Managing Director and Finance Director attend the meeting by invitation. It meets with the Company’s external auditors to discuss accounting, auditing, internal control and financial reporting matters. The external and internal auditors have unrestricted access to the Finance and Audit Committee.

THE HUMAN RESOURCES AND REMUNERATION COMMITTEEThe Group has Human Resources and Remuneration Committee, which is made up of a non-executive Chairman, and at least two other Non-Executive Directors. Executive directors and Management attend its meetings by invitation. The committee acts in accordance with the Board’s written terms of reference to review remuneration of all African Sun Limited executive directors, senior management and other members of staff.

THE MARKETING COMMITTEEThe Group has a Marketing Committee comprising a non-executive Chairman and at least two other non-executive directors. Executive directors and Management attend its meetings by invitation. The committee is responsible for the review of all sales and marketing programmes of the Group.

THE NOMINATIONS COMMITTEEThe Nominations Committee is now a standing, as opposed to an ad hoc, committee, pursuant to the recommendations made in the King Report III. It is made up of a non-executive Chairman and at least two other non-executive directors. It assists with the identification and recommendations of potential directors to the Board.

CORPORATE GOVERNANCE COMMITTEEThe Corporate Governance Committee is an ad hoc committee, which sits as and when it is necessary. It is made up of a non-executive Chairman and at least two other non-executive directors.

NATIONAL WORKS COUNCIL AND WORKERS’ COMMITTEESThe Group holds National Works Council meetings at least twice a year. Each hotel within the Group has a Works Council representative who attends these meetings, which is a forum where employees participate in the decision-making process and also discuss employees’ concerns with top management. The Group believes in and practices worker participation throughout the different levels. All hotels have Workers’ Committees, which serve as a communication channel with shop floor employees.

ANALYST BRIEFINGThe Group reports formally to shareholders twice a year when its half and full year results are announced. The Managing Director and the Finance Director give presentations on these results to institutional investors, analysts and the media. The data used in these presentations may be found at www.africansuninvestor.com.

ANNUAL GENERAL MEETINGThe Annual General Meeting provides a useful interface with private shareholders, many of whom are also customers.

The Chairman of the Board and the Managing Director are available at the Annual General Meeting to answer questions. Information about the Group is maintained and available to shareholders at www.africansuninvestor.com.

26


Main Board

Finance and Investments Committee

Marketing Committee

Risk and Audit Committee

Human Resources and Remuneration

CommitteeFinance and

Audit ****

NominationCommittee

Number of meetings 12 5 5 7 6 1 1

B.L Nkomo* 4 - - - - -

S.A Munyeza* 3 2 1 4 1 - -

E. Fundira 12 5 5 - 1 -

W.T. Kambwanji 11 2 - 6 6 - 1

A. Makamure 11 4 - 7 - 1 1

N. Mangwiro* 4 2 2 3 2 - -

N.G Maphosa 11 - - 6 5 - -

T. Nuy 5 2 - - - - -

N.R. Ramikosi** 3 - 2 - 2 - -

G. Manyere 11 3 1 1 2 - -

H. Nkala 11 - - - 1 - 1

T. Nebele 10 - 3 - 4 - -

E.T. Shangwa*** 8 3 3 3 4 1 1

B.H Dirorimwe*** 8 3 2 3 1

*Messrs. B. L Nkomo, S.A Munyeza and N. Mangwiro resigned from the Board on the 31st of March 2015.**Mrs N.Ramikosi resigned from the Board on the 12th of April 2015.***Messrs. E. T Shangwa and B.H Dirorimwe were appointed in acting capacities with effect from 31 March 2015 and subsequently in substantive capacities on 17 September 2015. **** The Finance and Investments Committee and the Risk and Audit Committee were merged into the Finance and Audit Committee on the 19th of November 2015.

DIRECTORS’ ATTENDANCE OF MEETINGS IN 2015Individual director attendance at Board and Committee meetings appears in the table below. Where a director has not been able to attend a Board meeting, any comments , which he or she had arising out of the papers to be considered at that meeting, are relayed in advance to the Chairman of the Board.

27


INFORMATION TECHNOLOGY (IT) GOVERNANCEThe Group recognizes the importance of Information Systems and the need to co-opt the systems into the strategy of the business with the risks involved in Information Technology Governance becoming significant. The King III Report has highlighted that there are operational risks when one deals with a service provider because confidential information leaves the Group exposed. In IT governance, the Company seeks confidentiality, integrity and availability of the functioning of the system, authenticity of system information and assurance that the system is usable and useful. In this regard, in exercising the duty of care, directors ensure that prudent and reasonable steps have been taken in respect to IT governance.

PRINCIPLES RELATING TO IT GOVERNANCEIn monitoring implementation and adherence to proper IT Governance the Group is guided by the following principles;

1. Board Responsibility This embraces establishing and promoting an ethical governance culture as well as gaining independent assurance on the effectiveness

of the internal controls. The structures, processes and mechanisms that are required and guided by the IT governance framework are implemented, controlled and monitored by management who have suitable experience and qualifications. In summary, the responsibility of the Board entails;

• Direction; • Evaluation; and • Monitoring of the use of IT to support business strategy.

2. Performance and sustainability IT plays a support function to the Group’s business and assists business in reaching its strategic objectives and goals. Business goals

are cascaded into IT goals that in turn are translated into IT processes and procedures. Through effective controls, IT ensures that its processes are aligned to the business objectives, which in turn ensure that the business operates in a sustainable and well-governed manner. Management has implemented strategic IT planning processes that are integrated with the business strategy development process.

3. IT Governance framework The Board delegates to management the responsibility for the implementation of an IT governance framework into the Group, while still

retaining accountability for overall IT governance.

4. IT investments and expenditure The Board’s responsibilities include: • Monitoring and evaluating the extent to which IT actually sustains and enhances the Group’s strategic objectives; • Monitoring and evaluating the acquisition and use of IT resources to ensure that they support business requirements; • Monitoring and evaluating the acquisition and appropriate use of technology, processes and people; and • Overseeing IT investment to ensure that IT expenditure is in proportion to the delivery of business value.

5. Risk management Risk identification does not rely solely on the perceptions of a select group of managers. The Group adopts a thorough approach to risk

identification with consideration being given to reputation risk and IT legal risks.

6. Information security According to King III, “information security deals with the protection of information, in its electronic and paper-based forms, as

it progresses through the information lifecycle of capture, processing, use, storage, and destruction”. For this reason, the Group’s information security has been designed to address people, processes and technology related dimensions.

The key core principles of information security that the Group abides by are encapsulated in the following three components; • Confidentiality - ensuring that information is accessible only to those authorised to have access; • Integrity – safeguarding the accuracy and completeness of information and processing methods; and • Availability - ensuring that authorised users have access to information and processing methods.

7. Governance structures The Finance and Audit Committee assists the Board in carrying out its IT responsibilities as follows; • ensures that IT risks are adequately addressed; • considers IT as it relates to financial reporting and the going concern of the Group; • obtains appropriate assurance that controls are in place and effective in addressing IT risks; and • considers the use of technology to improve audit coverage and efficiency.

29

Directors ’ Responsibility for Financial Reporting

African Sun Limited directors are required by the Zimbabwe Companies Act (Chapter 24:03) and the Zimbabwe Stock Exchange Listing Requirements, to maintain adequate accounting records and to prepare financial statements for each financial year which present a true and fair view of the state of affairs of the Group at the end of the financial year, and of the profit or loss and cash flows for the year then ended. In preparing the financial statements, generally accepted accounting practices have been followed and suitable accounting policies have been used and applied consistently. Reasonable and prudent judgements and estimates have been made. The financial statements incorporate full and responsible disclosure in line with the accounting philosophy of the Group stated on page 20.

The directors have reviewed the Group’s budget and cash flow forecast for the twelve months to 31 December 2016. On the basis of the review of the operating forecasts and in light of the current financial position and existing borrowing facilities, the directors are satisfied that African Sun Limited is a going concern and have continued to adopt the going concern basis in preparing the financial statements. The Group’s Independent auditor, PricewaterhouseCoopers Chartered Accountants (Zimbabwe), have audited the financial statements and their report appears on page 31.

The Group has an internal audit department, which has the objective of assisting executive management and the Finance and Audit Committee in the discharge of their responsibilities, and which monitors the effectiveness of the accounting system and related internal financial controls on a continuing basis. The internal audit department performs a critical examination of the financial and operating information for management, and reports its findings and its recommendations to management and to the Finance Risk and Audit Committee.

Procedures are in place to identify key business risks timeously, to determine the likelihood of the risks crystallising, and to determine the significance of the consequential financial impact on the business.

The Finance and Audit Committee meets quarterly with management, the internal audit department and the independent auditor, to review specific accounting, reporting and internal control matters, and to satisfy itself that the system of internal control is operating effectively. Both the internal and independent auditors have unlimited access to the Finance and Audit Committee. The Committee also reviews the interim and annual results of the Group prior to their publication.

The Finance and Audit Committee also reviews the IT governance framework and monitors the IT function against risk and performance imperatives. In exercising its duty of care, the Committee ensures that prudent and reasonable steps have been taken in regard to IT governance.

In addition, the Group’s independent auditor reviews and tests appropriate aspects of the internal financial control systems during the course of their statutory audit of the financial statements of the Group.

The Group’s Finance and Audit Committee has met the internal and the independent auditor to discuss their reports on the results of their work, which include assessments of the relative strengths and weaknesses of key control areas.

In a Group of the size, complexity and geographical diversity of African Sun Limited, it may be expected that occasional breakdowns in established control procedures may occur. No breakdowns involving material loss have been reported to the directors in respect of the period under review and it is believed that none of any significance exists.

The financial statements for the fifteen months ended 31 December 2015 which appear on pages 32-93 have been approved by the Board of Directors and are signed on their behalf by:

Alex Makamure Believemore H DirorimweFinance and Audit Committee Chairman Finance Director

28 April 2016

INDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDERS OF AFRICAN SUN LIMITED We have audited the consolidated financial statements of African Sun Limited and its subsidiaries (the “Group”), and the accompanying statement of financial position of African Sun Limited (‘the Company’) standing alone, together the “financial statements”, which comprise the consolidated and separate statements of financial position as at 30 September 2013, and the consolidated statements of comprehensive income, changes in equity and of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information set out on pages 44 to 109. Directors’ responsibility for the financial statements The 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 Zimbabwe Companies Act (Chapter 24:03) and the relevant Statutory Instruments (“SI”) SI 33/99 and SI 62/96 and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibilityOur 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 about whether the financial statements are free from material misstatement. 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 evaluating 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 audit opinion. OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial position of the Group and the Company as at 30 September 2013, and the Group’s consolidated financial performance and its consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards and in the manner required by the Zimbabwe Companies Act (Chapter 24:03) and the relevant Statutory Instruments SI 33/99 and SI 62/96.

PricewaterhouseCoopers Chartered Accountants (Zimbabwe)Harare23 January 2014

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF AFRICAN SUN LIMITED We have audited the consolidated financial statements of African Sun Limited and its subsidiaries (together “the Group”), and the separate statement of financial position of African Sun Limited (the “Company”), standing alone, (together “the financial statements”) which comprise the consolidated and separate statements of financial position as at 31 December 2015 and the consolidated statements of comprehensive income, changes in equity and cash flows for the fifteen months then ended, and notes comprising a summary of significant accounting policies and other explanatory information set out on pages 32 to 93.

Directors’ responsibility for the consolidated financial statementsThe 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 Zimbabwe Companies Act (Chapter 24:03), and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditor’s responsibilityOur 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 about whether the financial statements are free from material misstatement.

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 evaluating 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 audit opinion.

OpinionIn our opinion, the financial statements present fairly, in all material respects, the financial positions of the Group and of the Company as at 31 December 2015, and the Group’s consolidated financial performance and its consolidated cash flows for the fifteen months then ended in accordance with International Financial Reporting Standards and in the manner required by the Zimbabwe Companies Act (Chapter 24:03).

PricewaterhouseCoopers Chartered Accountants (Zimbabwe) Harare 28 April 2016

32

Statement of Financial PositionAs at 31 December 2015

GROUP COMPANY

Note

As at31 December

2015 US$

As at30 September

2014 US$

As at31 December

2015 US$

As at30 September

2014 US$

ASSETS

Non-current assetsProperty and equipment 8 23 978 944 27 678 255 351 177 693 818 Biological assets 9 165 137 253 715 - - Investments 10 - - 24 701 731 24 701 731 Deferred tax assets 22 - 1 251 171 674 576 119 577 Trade and other receivables 14 389 971 612 046 389 971 612 046

24 534 052 29 795 187 26 117 455 26 127 172

Current assetsInventories 13 1 639 079 1 644 492 3 359 6 110 Trade and other receivables 14 4 132 627 6 534 276 1 828 366 1 742 651 Cash and cash equivalents(excluding bank overdrafts) 15 3 079 533 2 734 576 613 337 161 186

8 851 239 10 913 344 2,445,062 1 909 947 Non-current assets held for sale 11 - 7 347 178 - 3 171 087

8 851 239 18 260 522 2 445 062 5 081 034

Total assets 33 385 291 48 055 709 28 562 517 31 208 206

EQUITY AND LIABILITIES

Equity attributable to owners of the parentShare capital 16 8 617 716 8 314 729 8 617 716 8 314 729 Share premium 16 25 123 685 24 734 304 25 123 685 24 734 304 Other reserves 18 (1 615 451) (1 134 217) - 100 856 Accumulated losses (29 661 789) (21 351 348) (10 596 895) (11 437 638)

Total equity 2 464 161 10 563 468 23 144 506 21 712 251

LIABILITIES

Non-current liabilitiesTrade and other payables 19 1 165 237 2 203 358 1 165 237 2 203 358 Borrowings 21 2 317 534 6 742 795 890 308 35 139 Deferred tax liabilities 22 3 589 137 4 536 415 - -

7 071 908 13 482 568 2 055 545 2 238 497

Current liabilitiesTrade and other payables 19 14 938 712 12 530 088 2 299 682 3 193 813 Provisions for other liabilities 20 3 491 077 873 635 527 825 100 433 Borrowings 21 5 419 433 10 605 950 534 959 3 963 212

23 849 222 24 009 673 3 362 466 7 257 458

Total liabilities 30 921 130 37 492 241 5 418 011 9 495 955

Total equity and liabilities 33 385 291 48 055 709 28 562 517 31 208 206

The above Statement of Financial Position should be read in conjunction with accompanying notes.

These financial statements on pages 32 to 93 were approved by the Board of Directors on 19 March 2016 and signed on its behalf by: Alex Makamure Believemore H DirorimweFinance and Audit Committee Chairman Finance Director

33

Consolidated Statement of Comprehensive Income For the 15 months ended 31 December 2015

Note

15 months ended31 December

2015 US$

Year ended30 September

2014 US$

Continuing operations Revenue 6 63 154 973 53 559 970 Cost of sales 26 (18 282 442) (15 059 583)

Gross profit 44 872 531 38 500 387 Other income 25 2 952 491 111 526 Operating expenses 26 (43 455 105) (33 052 154)Impairment of assets 25 (2 197 264) - Other expenses 25 (5 822 728) (630 675)Fair value adjustment and impairment of assets classified as held for sale - (3 342 087)Recycled from other comprehensive income - 249 706 Operating (loss) / profit (3 650 075) 1 836 703 Finance costs - net 27 (2 499 454) (3 086 460)Finance income 27 4 554 3 952 Finance costs 27 (2 504 008) (3 090 412)Share of profit of investments accounted for using the equity method 10 - 274 315

Loss before income tax (6 149 529) (975 442)Income tax credit 22 464 839 550 031

Loss for the year from continuing operations (5 684 690) (425 411)

Discontinued operations Loss from discontinued operations 23 (2 625 751) (1 860 291)

Loss for the year (8 310 441) (2 285 702)

Other comprehensive loss - net of tax Items that may be subsequently reclassified to profit or loss Exchange differences on translation of foreign operations (23 487) 181 136 Exchange differences on translation of discontinued operations (356 891) (1 621 472)Comprehensive income from associate recycled to profit or loss - ( 249 706)

Total other comprehensive loss (380 378) (1 690 042)

Total comprehensive loss for the period (8 690 819) (3 975 744)

Total comprehensive loss for the period attributable to: Owners of the parent (8 690 819) (3 975 744)

Total comprehensive loss for the period attributable to owners of the parent arises from: Continuing operations (5 708 177) (493 981)Discontinued operations (2 982 642) (3 481 763)

(8 690 819) (3 975 744)

Loss per share from continuing and discontinued operations attributable to: Owners of the parent during the year: cents Basic loss From continuing operations 28 (0.67) (0.05)From discontinued operations 28 (0.31) (0.23)From loss for the period 28 (0.98) (0.28)

Diluted loss From continuing operations 28 (0.67) (0.05)From discontinued operations 28 (0.31) (0.22)From loss for the period 28 (0.98) (0.27)

Total loss per share attributable to: Owners of the parent: cents

Basic 28 (0.98) (0.28)Diluted 28 (0.98) (0.27)Headline (loss) / earnings 28 (0.96) 0.09

The above Consolidated Statement of Comprehensive Income should be read in conjunction with accompanying notes.

34

Consolidated Statement of Changes in EquityFor the 15 months ended 31 December 2015

Share capital

US$

Share premium

US$

Treasury shares

US$

Non-distributable

reserve US$

Equity settledshare based

paymentsreserve

US$

Foreigncurrency

translationreserve

US$

Revaluationreserve

US$

Accumulated losses

US$

Totalequity

US$

Year ended 30 September 2014

Balance as at 1 October 2013 8 314 729 24 734 304 (753 203) 5 888 531 20 171 (1 068 658) 249 706 (23 132 766) 14 252 814

Loss for the year - - - - - - - (2 285 702) (2 285 702)

Other comprehensive loss:

Currency translation differences - - - - - (1 440 336) - - (1 440 336)

Recycled to profit or loss - - - - - - (249 706) - (249 706)

Transfer to accumulated losses - - - (4 614 610) - - - 4 614 610 -

Total comprehensive loss for the year - - - (4 614 610) - (1 440 336) (249 706) 2 328 908 (3 975 744)

Transactions with owners:

Proceeds from disposal of treasury shares - - 205 713 - - - - - 205 713

Loss from disposal of treasury shares - - 547 490 - - - - (547 490) -

Value of employee services - - - - 80 685 - - - 80 685

Total transactions with owners - - 753 203 - 80 685 - - (547 490) 286 398

Balance as at 30 September 2014 8 314 729 24 734 304 - 1 273 921 100 856 (2 508 994) - (21 351 348) 10 563 468

Fifteen months ended 31 December 2015

Balance as at 1 October 2014 8 314 729 24 734 304 - 1 273 921 100 856 (2 508 994) - (21 351 348) 10 563 468

Loss for the period - - - - - - - (8 310 441) ( 8 310 441)

Other comprehensive loss:

Currency translation differences - - - - - (380 378) - - (380 378)

Total comprehensive loss for the period - - - - - (380 378) - (8 310 441) (8 690 819)

Transactions with owners:

Employee share scheme - value of employee services - - - - 121 881 - - - 121 881

Share option exercised by employees

(note 16.1) 302 987 389 381 - - (222 737) - - - 469 631

Total transactions with owners 302 987 389 381 - - (100 856) - - - 591 512

Balance as at 31 December 2015 8 617 716 25 123 685 - 1 273 921 - (2 889 372) - (29 661 789) 2 464 161

The above Consolidated Statement of Changes in Equity should be read in conjunction with accompanying notes.

35

Consolidated Statement of Cash Flows For the 15 months ended 31 December 2015

Note

15 months ended31 December

2015 US$

Year ended30 September

2014 US$

Cash flows from operating activitiesCash generated from operations 29 8 516 051 6 736 433 Interest received 27 4 554 3 952 Interest paid 27 (2 964 082) (3 876 313)

Net cash generated from operating activities 5 556 523 2 864 072

Cash flows from investing activitiesAdditions to property and equipment 29 (2 005 231) (3 943 632)Disposals of property and equipment 29 184 658 184 589 Dividend income 11 - 39 602 Proceeds from non-current assets held for sale 10.2 5 825 247 4 224 720

Net cash raised from investing activities 4 004 674 505 279

Cash flows from financing activitiesProceeds from long-term borrowings - 1 713 572 Proceeds from short-term borrowings 2 611 036 891 856 Repayment of long-term borrowings (3 610 590) (3 063 844)Repayment of short-term borrowings (7 862 769) (3 707 157)Proceeds from issue of shares 469 633 -Proceeds from sale of treasury shares - 205 713 Deposit released from debt service reserve account 264 851 183 215

Net cash used in financing activities (8 127 839) (3 776 645)

Net increase/(decrease) in cash and cash equivalents 1 433 360 (407 294)

Cash and cash equivalents at beginning of period 1 103 491 1 608 123 Exchange losses on cash and cash equivalents (74 097) (97 338)

Cash and cash equivalents at end of period 15 2 462 754 1 103 491

The above Consolidated Statement of Cash Flows should be read in conjunction with accompanying notes.

36

1 GENERAL INFORMATION African Sun Limited (“the Company”) and its subsidiaries (together, “the Group”) leases and manages 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 eleven hotels in Zimbabwe and operates a regional sales office in South Africa 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 ultimate parent of the Company is Brainworks Capital Management (Private) Limited, which owns 57.43% (2014: 43.14%) of the

ordinary share capital of the Company. On 1 January 2016 the Company changed the address of its registered office from African Sun House, Number 6 Seagrave Road,

Mount Pleasant, Harare, Zimbabwe to Monomotapa Hotel, Number 54 Park Lane Road, Harare, Zimbabwe. 2 CHANGE IN THE FINANCIAL YEAR The Group changed its financial year end from 30 September to 31 December. The change was to align the financial year of the Group

with that of Brainworks Capital Management (Private) Limited, the majority shareholder. These financial statements are therefore for a 15 months period from 1 October 2014 to 31 December 2015.

The cut-off date for each financial year is the 3rd of January as it is difficult to conduct cut-off procedures on 31 December due to the

volumes of guests in the majority of the hotels during the Christmas and new year holiday season. 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been

consistently applied to all the years presented, unless otherwise stated. 3.1 Basis of preparation 3.1.1 Compliance with IFRS The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting

Standards (“IFRS”) and interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS and in the manner required by the Zimbabwe Companies Act (Chapter 24:03).

The financial statements have been prepared on a historical cost basis. 3.1.2 Going concern The Group posted a loss of US$8.31 million for the fifteen (15) months ended 31 December 2015. The loss was mainly a result of the

once off expenses incurred by the Group in restructuring its operations to ensure sustainability and predictability in earnings going forward. This loss has resulted in reduction of equity from US$10.56 million reported in September 2014 to US$2.46 million as at 31 December 2015.

The once-off costs incurred by the Group are; (i) A restructuring exercise which resulted in total retrenchment and separation costs of US$2.24 million. The restructuring exercise

also involved the downsizing of the head office from the former 42 employees to a current of 14. Total savings expected per month going forward are at least US$300,000 in employment costs;

(ii) Impairment of property and equipment of US$2.34 million. This was after an assessment of the Group’s assets following the change in accounting policy from revaluation model to cost model;

(iii) Write down of hotel service stocks of US$1.93 million, brought about by the change in accounting estimate (see note 7.1); (iv) Costs associated with closure of foreign dormant entities of US$0.83 million; and (v) Once off write off of other receivables of US$1.07 million relating to deferred tax asset and amount receivable from West Africa

Sun Hotels Limited (‘’WASHL”), an associate. To complement the above, the Group is consistently implementing other initiatives in line with the new strategy and business model

to reduce costs and ensure that the Group returns to profitability. Some of these initiatives include; (i) Closure or discontinuance of all loss making operations (Amber Accra Hotel, Ghana), and (Beitbridge Express Hotel, Zimbabwe),

(see note 23 for more details on discontinued operations) (ii) The Group has revised its business model, partnering with renowned hotel operators to ensure compliance with modern standards

and improve on competiveness. To this end, five (5) of the Group’s hotels are now managed by Legacy Hospitality Management Services Limited and three (3) are with the renowned InterContinental Hotel Group (“IHG”), operating under the Holiday Inn Brand

Notes to the Financial StatementsFor the 15 months ended 31 December 2015

37

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

3.1 Basis of preparation (continued)

3.1.2 Going concern (continued) (Holiday Inn Harare and Bulawayo, and Amber Hotel Mutare, soon to be rebranded back to a Holiday Inn). The Board is still assessing

the fit of the remaining stand-alone hotels (except for The Victoria Falls Hotel which will continue to operate under the partnership) with a view to allocating them to either managed, or operating under global franchise; and

(iii) The Group has significantly reduced its borrowings, from US$17.35 million reported in September 2014 to US$7.74 million as at 31 December 2015. This reduction will go a long way in reducing financing costs. For the period ended 31 December 2015, the Group reduced its interest charge from US$3.09 million last year to US$2.5 million, which is a 19% reduction. The effective cost of the facilities was also reduced from 13.5% to 11.29% over the period under review.

Excluding the once off costs, and loss from discontinued operations, the continuing operations made a profit before income tax of US$0.33 million, an improvement from a loss of US$0.98 million recorded last year demonstrating the potential in the Group’s forecast going forward. The other major challenge facing the Group is the negative working capital of US$ 14.6 million, an increase from US$5.75 million reported last year. The gap has been widened by part disposal of the non-current assets which were classified as held for sale last year, and the reversal of the disposal of the staff houses which had a value of US$4 million under current assets last year (see note 10). Of the US$23.78 million current liabilities, below is a further analysis to provide insight into when these are likely to be paid and what the Group has put in place to ensure that there is no default;

(i) US$5.42 million borrowings – US$2.02 million relates to short-term portion of long-term facilities, and US$3.4 million relates to

short-term loans from local banks. Of the amounts relating to short-term portions of long-term facilities, the Group paid US$0.62 million at the end of February 2016. For the remaining short-term loans, the Group has secured a US$5.2 million 5 year facility with a local bank to restructure all loans within the short-term bracket. Currently the Group is working on perfecting conditions precedent among which is security. Drawdown is likely to happen in June 2016.

(ii) US$3.49 million provisions for other liabilities – this amount represents mainly US$1.25 million provisions for audits and closure

costs of foreign entities. Payment of these will only be upon provision of certain services by various consultants which will be timed to coincide with the peak trading season. There is likelihood that, some of these services will extend beyond the financial year of 2016. Also included in this figure are provisions for legal claims of US$1 million. The Group is optimistic that these amounts will not be payable based on the opinions obtained from legal advisors. However the Board deemed it prudent that these be provided for in the financial statements.

From the above, it is clear that the immediate attention of the Group on current liabilities will be directed towards US$14 million of

trade and other payables. This position will be addressed through the improvement of the Group’s continuing operations which are expected to return to profitability in the 2016 financial year. Based on the Group budgets for 2016, revenue is expected to grow by 11%, which will result in improved earnings. The Board is committed to working with management to ensure that these liabilities are managed in a manner that will ensure business continuity.

It is based on the aforementioned, and the significant strides made to reduce debt, change the business strategy and operating

model, that 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.



38



3.1.3 Changes in accounting policy and disclosures (a) New standards, amendments and interpretations, effective on or after 1 January 2014 The following new standards, amendments and interpretations are effective for accounting periods beginning on or after 1 January 2014 and are relevant to the Group;

Standard/Interpretation Content

Applicable for financial years

beginning on/afterInternational Accounting Standards (“IAS”) 32 (amendment) Asset and Liability Offsetting 1 January 2014IAS 36 (amendment) Disclosure 1 January 2014IAS 39 (amendment) Financial Instruments: Recognition and Measurement’ 1 January 2014IFRS 2 (amendment) Share Based Payments 1 July 2014IFRS 8 (amendment) Operating Segments 1 July 2014IFRIC 21 (new) Accounting for Levies 1 January 2014IFRS 3 (amendment) Business Combinations 1 July 2014IFRS 13 (amendment) Fair Value Measurement 1 July 2014IAS 16 and IAS 38 (amendment) Property, Plant and Equipment and Intanglible Assets 1 July 2014IAS 24 (amendment) Related Party Disclosures 1 July 2014IAS 40 (amendment) Investment Property 1 July 2014

Amendments to International Accounting Standard (“IAS”) 32, ‘Financial instruments: Presentation’ effective 1 January 2014. The IASB has issued amendmentsto the application guidance that clarify some of the requirements for offsetting financial assets and financial liabilities on thebalance sheet. However, the clarified offsetting requirements for amounts presented in the statement of financial position continue to be different from US GAAP.

Narrow-scope amendments to IAS 36, ‘Impairment of assets’ effective 1 January 2014 - These amendments address thedisclosure of information about the recoverable amount of impaired assets if that amount is based on fair value less cost ofdisposal.

Amendment to IAS 39, ‘‘Financial Instruments: Recognition and Measurement’. The IASB has amended IAS 39 to provide relief from discontinuing hedge accounting when novation of a hedging instrument to a Central Counter Party (“CCP”) meets specified criteria. Similar relief will be included in IFRS 9, ‘Financial Instruments’.

Amendment to IFRS 2, ‘Share Based Payments’ effective 1 July 2014 - The amendment clarifies the definition of a ‘vestingcondition’ and separately defines ‘performance condition’ and ‘service condition’.

Amendment to IFRS 8, ‘Operating Segments’ effective 1 July 2014 - The standard is amended to require disclosure of the judgements made by management in aggregating operating segments. This includes a description of the segments which have been aggregated and the economic indicators which have been assessed in determining that the aggregated segments share similar economic characteristics. The standard is further amended to require a reconciliation of segment assets to the entity’s assets when segment assets are reported.

IFRIC 21, ‘Accounting for Levies’ effective 1 January 2014, sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses diversity in practice around when the liability to pay a levy is recognised. The IASB has issued IFRIC 21, ‘Levies”, an interpretation on the accounting for levies imposed by governments. IFRIC 21 is an interpretation of IAS 37, ‘Provisions, contingent liabilities and contingent assets’. IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event). The interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy.

Amendment to IFRS 3, ‘Business combinations’ effective 1 July 2014 - The standard clarifies that an obligation to pay contingent consideration which meets the definition of a financial instrument is classified as a financial liability or equity, on the basis of the definitions in IAS 32, Financial Instruments: Presentation’. It also clarifies that all non-equity contingent consideration is measured at fair value at each reporting date, with changes in value recognised in profit or loss.

The standard is also amended to clarify that IFRS 3 does not apply to the accounting for the formation of any joint arrangement under IFRS 11. The amendment also clarified that the scope exemption only applies in the financial statements of the joint arrangement itself.


39



3.1.3 Changes in accounting policy and disclosures (continued)

(a) New standards, amendments and interpretations, effective on or after 1 January 2014 (continued) Amendment to IFRS 13, ‘Fair Value Measurement’ effective 1 July 2014. When IFRS 13 was published, paragraphs B5.4.12 of IFRS

9 and AG79 of IAS 39 were deleted as consequential amendments. This les to a concern that entities no longer had the ability to measure short-term receivables and payables at invoice amounts where the impact of not discounting is immaterial. The IASB has amended the basis for conclusions of IFRS 13 to clarify that it did not intend to remove the ability to measure short-term receivables and payables at invoice amounts in such cases.

The amendment alsoclarified that the portfolio exception in IFRS 13, which allows an entity to measure the fair value of agroup of financial assets and financial liabilities on a net basis, applies to all contracts (including non-financial contracts) within the scope of IAS 39 or IFRS 9.

Amendment to IAS16, ‘Property, Plant and Equipment’ and IAS 38 ‘Intangible assets’ effective 1 July 2014, are amended to clarify how the gross carrying amount and the accumulated depreciation are treated where an entity uses the revaluation model.

Amendment to IAS24, ‘Related Party Disclosures’ is amended to include, as a related party, an entity that provides key management personnel services to the reporting entity or to the parent of the reporting entity (‘the management entity’). Disclosure of the amounts charged to the reporting entity is required.

Amendment to IAS 40, ‘Investment Property’ effective 1 July 2014 is amended to clarify that IAS 40 and IFRS 3 are not mutually exclusive. IAS 40 assists users to distinguish between investment property and owner-occupied property. Preparers also need to consider the guidance in IFRS 3 to determine whether the acquisition of an investment property is a business combination.

(b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 October 2014 and not early adopted

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 October 2014, and have not been applied in preparing these consolidated financial statements. The following, set out below, are

expected to have an effect on the consolidated financial statements of the Group;



beginning on/afterIFRS 9 (new) Financial Instruments 1 January 2018IFRS 15 (new) Revenue from Contracts with Customers 1 January 2018IFRS 16 (new) Leases 1 January 2019IFRS 11 (amendment) Joint Arrangements 1 January 2016IAS 16 and IAS 38 (amendment) Property, Plant and Equipment and Intangible Assets 1 January 2016IAS 16 and IAS 41 (amendment) Property, Plant and Equipment and Agriculture 1 January 2016IFRS 10 and IAS 28 (amendment) Sale or Contribution of Assets 1 January 2016IAS 27 (amendment) Separate Financial Statements 1 January 2016IFRS 5 (amendment) Non-current Assets Held for Sale 1 January 2016IFRS 7 (amendment) Financial Instruments Disclosure 1 July 2016IAS 1 (amendment) Disclosure Initiative 1 January 2015IAS 34 (amendment) Interim Financial Reporting 1 July 2016IAS 7 (amendment) Cash Flow Statement 1 January 2017IAS 12 (amendment) Income taxes 1 January 2017

IFRS 9, ‘Financial Instruments (2009)’, amended and effective 1 January 2018. This IFRS is part of the International Accounting Standards Board (“IASB”) project to replace IAS 39. IFRS 9 addresses classification and measurement of financial assets and replaces the multiple classification and measurement models in IAS 39 with a single model that has only two classification categories: amortised cost and fair value.

The IASB has updated IFRS 9, ‘Financial Instruments’ to include guidance on financial liabilities and derecognition of financial instruments. The accounting and presentation for financial liabilities and for derecognising financial instruments has been relocated from IAS 39, ‘Financial Instruments: Recognition and measurement’, without change. Except for financial liabilities that are designated at fair value through profit or loss.

IFRS 15, ‘Revenue from Contracts with Customers’ - effective 1 January 2017 - Establishes principles for reporting useful information to users of the financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers.


40

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.1 Basis of preparation (continued) 3.1.3 Changes in accounting policy and disclosures (continued) (b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 October 2014 and not early adopted (continued) IFRS 16, ‘Leases’ effective 1 January 2019 - IFRS 16 sets out the principles for the recognition, measurement, presentation and

disclosure of leases for both parties to a contract, i.e. the customer (‘‘lessee’’) and the supplier (‘‘lessor’’). IFRS 16 is effective from 1 January 2019. A company can choose to apply IFRS 16 before that date but only if it also applies IFRS 15, Revenue from Contracts with Customers. IFRS 16 completes the IASB’s project to improve the financial reporting of leases. IFRS 16 replaces the previous leases standard, IAS 17 Leases, and related Interpretations.

Amendment to IFRS 11, ‘Joint Arrangements’ regarding acquisition of an interest in a joint operation effective 1 January 2016. The amendment provides new guidance on how to account for the acquisition.

Amendment to IAS 16, ‘Property, Plant and Equipment’ and IAS 38, ‘Intangible Assets’ regarding depreciation and amortisation effective 1 January 2016. The amendment clarifies that the use of revenue based method to calculate depreciation of an asset is not appropriate.

Amendment to IAS 16, ‘Property, Plant and Equipment’ and IAS 41, ‘Agriculture’ regarding bearer plants effective 1 January 2016. The amendment changes the reporting for bearer plants such as grape vines, rubber trees and oil palms. Bearer plants should be accounted for in the same way as property, plant and equipment.

Amendments to IFRS 10 and IAS 28 regarding the sale or contribution of assets between an investor and its associate or joint venture effective - Postponed (initially 1 January 2016). The postponement applies to changes introduced by the IASB in 2014 through narrow-scope amendments to IFRS 10 ‘Consolidated Financial Statements’ and IAS 28 ‘Investments in Associates and Joint Ventures’. Those changes affect how an entity should determine any gain or loss it recognises when assets are sold to contributed between the entity and an associated or joint venture in which it invests. The changes do not affect other aspects of how entities account for their investments in associates and joint ventures.

Amendments to IAS 27 ‘Separate Financial Statements’ regarding the equity method effective 1 January 2016. The amendment allows entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements.

Amendments to IFRS 5 ‘ Non-current Assets Held for Sale and Discontinued Operations’ effective 1 January 2016. The amendment clarifies that, when an asset (or disposal group) is reclassified from ‘held for sale’ to ‘held for distribution’, or vice versa, this does not constitute a change to a plan of sale or distribution, and does not have to be accounted for as such. This means that the asset (or disposal group) does not need to be reinstated in the financial statements as if it had never been classified as ‘held for sale’ or ‘held for distribution’ simply because the manner of disposal has changed. The amendment also explains that the guidance on changes in a plan of sale should be applied to an asset (or disposal group) which ceases to be held for distribution but is not reclassified as ‘held for sale’.

IFRS 7, ’Financial Instruments: Disclosures’ effective 1 January 2016 outlines two amendments:

Servicing contracts – If an entity transfers a financial asset to third party under conditions which allow the transferor to derecognise the asset, IFRS 7 requires disclosure of all types of continuing involvement that the entity might still have in the transferred assets.

Applicability of the offsetting disclosures to condensed interim financial statements. The amendment removes the phrase ‘and interim periods within those annual periods’ from paragraph 44R, clarifying that these IFRS 7 disclosures are not required in the condensed interim financial report. However, the Board noted that IAS 34 requires an entity to disclose ‘ an application of events and transactions that are significant to an understanding of the changes in financial position and performance of the entity since the end of the last annual reporting period’. Therefore, if the IFRS 7 disclosures provide a significant update to the information reported in the most recent annual report, the Board would expect the disclosures to be included in the entity’s condensed interim financial report.

Amendments to IAS 1 ‘Presentation of financial statements’ disclosure initiative effective 1 January 2016. In December 2014 the IASB

issued amndments to clarify guidance in IAS 1 on materiality and aggregation, the presentation of subtotals, the structure of financial statements and the disclosure of accounting policies. These amendments merely clarify the existing requirements, they do not affect the Group’s accounting policies or any of the disclosures.

IAS 34, ‘Interim Financial Statements’ effective 1 January 2016 disclosure of information ‘elsewhere in the interim financial report. The amendment clarifies that the additional disclosure required by the amendments to IFRS 7, ‘Disclosure – Offsetting financial assets and financial liabilities’ is not specifically required for all interim periods unless required by IAS 34. The amendment states that the required interim disclosures must either be in the interim financial statements or incorporated by cross-reference between the interim financial statements and wherever they are included within the greater interim financial report (e.g., in the management commentary or risk report). The Board specified that the other information within the interim financial report must be available to users on the same terms as the interim financial statements and at the same time. If users do not have access to the other information in this manner, then the interim financial report is incomplete. This amendment is retrospective.


41

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.1 Basis of preparation (continued) 3.1.3 Changes in accounting policy and disclosures (continued) (b) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 October 2014 and not early adopted (continued) Amendment to IAS 7, ‘Cash flow statements’ effective 1 January 2017 - In January 2016, the International AccountingStandards

Boards (IASB) issued an amendment to IAS 7 introducing an additional disclosures that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. The amendment responds to requests from investors for information that helps them better understand changes in an entity’s debt. The amendment will affect every entity preparing IFRS financial statements. However, the information required should be readily available. Preparers should consider how best to present the additional information to explain the changes in liabilities arising from financing activities

Amendment to IAS 12, ‘Income Taxes’ effective 1 January 2017 - The amendments were issued to clarify the requirements for recognising deferred tax assets on unrealised losses. The amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base. They also clarify certain other aspects of accounting for deferred tax assets. The amendments clarify the existing guidance under IAS 12. They do not change the underlying principles for the recognition of deferred tax assets.

The Group is considering the implications of these new standards, amendments and interpretations, their impact on the Group and the timing of their adoption.

(c) New standards, amendments and interpretations effective for accounting periods beginning on or after 1 October 2014 and not relevant to the Group

The following new standards, amendments and interpretations have been issued and are effective and are not relevant to the Group:



beginning on/afterIAS 19 (amendment) Defined Benefit Plan 1 January 2014IFRS 10, IFRS 12 and International Accounting Standard (“IAS”) 27 (amendment) Investment Entities 1 January 2014

IFRS 1 (amendment)First-time adoption of International Financial Reporting Standards 1 July 2014

Amendment to IAS19, ‘Defined Benefit Plan’ effective 1 January 2014 - These narrow scope amendments apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service, for example, employee contributions that are calculated according to a fixed percentage of salary.

Amendments to IFRS 10, ‘Consolidated Financial Statements’ effective 1 January 2014, IFRS 12, ‘Disclosure of Interests in Other Entities’ and IAS 27, ‘Separate Financial Statements’ for investment entities. The amendments mean that many funds and similar entities will be exempt from consolidating most of their subsidiaries. Instead they will measure them at fair value through profit or loss. The amendments give an exception to entities that meet an ‘investment entity’ definition and which display particular characteristics. Changes have also been made in IFRS 12 to introduce disclosures that an investment entity needs to make.

IFRS 1, ‘First-time adoption of International Financial Reporting Standards’ effective 1 July 2014. The basis for conclusions on IFRS 1 is amended to clarify that, where a new version of a standard is not yet mandatory but is available for early adoption; a first-time adopter can use either the old or the new version, provided the same standard is applied in all periods presented.

(d) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 October 2014 The following new standards, amendments and interpretations have been issued and are not effective and are not relevant to the

Group:



beginning on/afterIFRS 14 (new) Regulatory Deferral Accounts 1 January 2016IAS 19 (amendment) Discount Rate 1 July 2016IFRS 10 and IAS 28 (amendment) Sale or Contribution of Assets Postponed (initial 1 January 2016)

The IASB has issued (“IFRS 14”), ‘Regulatory Deferral Accounts’ , effective 1 January 2016, an interim standard on the accounting for certain balances that arise from rate-regulated activities (‘regulatory deferral accounts’). Rate regulation is a framework where the price that an entity charges to its customers for goods and services is subject to oversight and/or approval by an authorised body.

“IAS 19, ’Employee Benefits’ – The amendment clarifies that, when determining the discount rate for post-employment benefit

obligations, it is the currency that the liabilities are denominated in that is important, not the country where they arise. The assessment of whether there is a deep market in high-quality corporate bonds is based on corporate bonds in that currency, not corporate bonds in a particular country. Similarly, where there is no deep market in high-quality corporate bonds in that currency, government bonds in the relevant currency should be used. The amendment is retrospective but limited to the beginning of the earliest period presented.


42

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.1 Basis of preparation (continued) 3.1.3 Changes in accounting policy and disclosures (continued)

(d) New standards, amendments and interpretations issued but not effective for the financial year beginning 1 October 2015 (continued)

Amendments to IFRS 10 and IAS 28 regarding the sale or contribution of assets between an investor and its associate orjoint venture effective - effective date postponed (initially 1 January 2016). The postponement applies to changes introduced by the IASB in 2014 through narrow-scope amendments to IFRS 10 ‘Consolidated Financial Statements’ and IAS 28 ‘Investments in Associates and Joint Ventures’. Those changes affect how an entity should determine any gain or loss it recognises when assets are sold or contributed between the entity and an associate or joint venture in which it invests. The changes do not affect other aspects of how entities account for their investments in associates and joint ventures.

The reason for making the decision to postpone the effective date is that the IASB is planning a broader review that may result in the simplification of accounting for such transactions and of other aspects of accounting for associates and joint ventures.

3.2 Consolidation (a) Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the

Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition

of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest

in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such re-measurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39, ‘Financial Instruments: Recognition and Measurement’ either in profit or loss or as a change too the comprehensive income. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income.

Inter-company transactions, balances, and unrealised gains or losses on transactions between group companies are eliminated. When necessary, amounts reported by subsidiaries have been adjusted to confirm with the Group’s accounting policies. All subsidiaries in the Group are 100% owned, have 31 December year ends and are consolidated in the presented financial

statements. In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less accumulated allowance

for impairment. (b) Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions –that is,

as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.


43

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.2 Consolidation (continued)

(c) Disposal of subsidiaries When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is

lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

(d) Associates Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of

between 20% and 50% of the voting rights. If the holding is less than 20%, the Group will be presumed not to have significant influence unless such influence can be clearly demonstrated. The existence of significant influence by the Group is usually evidenced in one or more of the following ways:

-representation on the board of directors or equivalent governing body of the investee -participation in the policy-making process -material transactions between the investor and the investee -interchange of managerial personnel -provision of essential technical information

Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost and the carrying amount is increased or decreased to recognise the investor’s share of profit or loss of the investee and movements in other reserves after the date of acquisition. The Group’s investment in associates includes goodwill identified on acquisition.

When the investment, or portion of an investment, meets the criteria to be classified as held for sale, the portion so classified is

accounted for in accordance with IFRS 5, ‘Non-Current Assets Held for Sale and Discontinued Operations’. Any remaining portion is accounted for using the equity method until the time of disposal, at which time the retained investment is accounted under IAS 39, ‘Financial Instruments Recognition and Measurement’, unless the retained interest continues to be an associate.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts

previously recognised in other comprehensive income is reclassified to profit or loss where appropriate. The Group’s share of post-acquisition profit or loss is recognised in the statement of comprehensive income and its share of

post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest

in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired.

If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profit / (loss) of an associate’ in the statement of comprehensive income.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the

Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Accounting polices of associates have been changed where necessary to ensure consistency with the polices adopted by the Group. Dilution gains and losses arising in investments in associates are recognised in the statement of comprehensive income. In the Company’s separate financial statements, investments in associates are accounted for at cost less accumulated allowance for

impairment. (e) Joint arrangements Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and

obligations of each investor. The Group has assessed the nature of its joint arrangements and determined the West African Sun Limited Hotel to be a joint venture and The Victoria Falls Hotel to be a joint operation. Joint operations are proportionally consolidated and joint ventures are accounted for using the equity method

For joint operations, the Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation

in accordance with the accounting standards applicable to the particular assets, liabilities, revenues and expenses. When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a sale or contribution of assets), the Group is considered to be conducting the transaction with the other parties to the joint operation, and gains and losses resulting from the


44

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.2 Consolidation (continued)

(e) Joint arrangements (continued) transactions are recognised in the Group’s consolidated financial statements only to the extent of other parties’ interests in the joint

arrangement. When a group entity transacts with a joint operation in which a group entity is a joint operator (such as a purchase of assets), the Group does not recognise its share of the gains and losses until it resells those assets to a third party.

Joint ventures are accounted for using the equity method. Under the equity method of accounting, interests in joint ventures are

initially recognised at cost and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group’s share of losses in a joint arrangement equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint venture. Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the

asset transferred. Accounting policies of the joint arrangements have been changed where necessary to ensure consistency with the policies adopted by the Group. In the Company’s separate financial statements, arragements are accounted for at cost less accumulated allowance for impairment.

3.3 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-

maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the “executive committee” which is made up of all executive directors that makes strategic decisions.

3.4 Foreign currency translation (a) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic

environment in which the entity operates (“the functional currency”). The financial statements are presented in the United States of America dollar (“US$”), which is the Company’s and the Group’s functional and presentation currency.

(b) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the

transactions or valuation where items are re-measured. Foreign exchange gains or losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and

other financial instruments designated as hedges of such investments, are recognised in other financial instruments, are recognised in other comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are

recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available for sale are included in other comprehensive income.

(c) Group companies The results and financial position of all the Group entities that have a functional currency different from the presentation currency

(none of which has the currency of a hyper-inflationary economy) are translated into the presentation currency as follows: (i) assets and liabilities for each statement of financial position presented are translated at the closing exchange rate at the date of that statement of financial position. (ii) income and expenses for each statement of comprehensive income are translated at average exchange rates (unless this average

is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and

(iii) all resulting exchange differences are recognised in other comprehensive income. On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings

and other currency instruments designated as hedges of such investments, are taken to shareholders’ equity. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognised in the statement of comprehensive income as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign

entity and translated at the closing exchange rate. Exchange differences arising are recognised in other comprehensive income.


45

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.5 Property and equipment All property and equipment is stated at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly

attributable to the acquisition of the items. During the year, the Group changed its measurement policy after initial recognition of property and equipment from the revaluation model to the cost model. More information with regards to the change in accounting policy has been disclosed in note 7. Subsequent costs are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits

associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

Land is not depreciated.

Depreciation is recognised so as to write off the cost of assets (other than land) less their residual values over their useful lives, using the straightline method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The estimated useful lives are as below:

Leasehold properties 8-25 years Freehold properties 50 years Equipment 6-15 years Motor vehicles 5 years Hotel Linen 2 years

The Group revised the useful lives of service stocks from depreciating such stocks over 7 years to writing off to cost of sales in the initial year of purchase, with the exception of linen which is now depreciated over 2 years. The impact of the change in accounting estimate is disclosed in note 7.1.

Capital work in progress comprise items of equipment not yet commissioned and is not depreciated. Depreciation of an asset begins

when it is available for use, ie when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

The useful lives and residual values of assets are reviewed and adjusted if appropriate at each reporting date. Where the residual

value of an asset increases to an amount equal to or greater than the asset’s carrying amount, depreciation will cease to be charged on the asset until its residual value subsequently decreases to an amount below its carrying amount.

Profit or losses arising from the disposal of property, equipment and motor vehicles are determined by comparing proceeds with the

carrying amount. These are included in the statement of comprehensive income within other income or other expenses. The Group capitalises borrowing costs directly attributable to the construction of new projects or re-development of existing hotels

as part of the cost of that asset, where construction of new projects or re-development (refurbishment) of existing hotels takes a substantial period of between 6 and 12 months to complete.

3.6 Biological assets The Group engages in agricultural activity through management of biological assets for sale as agricultural produce. Timber plantation Timber plantations are measured at their fair value less estimated point-of-sale costs. The fair value of timber plantations is

determined by a professional valuer based on fair values for the stages of forest development. 3.7 Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for

impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount my not be recoverable. An impairment loss is recognised for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and the value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or group of assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

3.8 Non-current assets (or disposal groups) held for sale and discontinued operations Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a

sale transaction rather than through continuing use and sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets arising from employee benefits, and financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.


46

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.8 Non-current assets (or disposal groups) held for sale and discontinued operations (continued) An impairment loss is recognised for any initial or subsequent write down of the asset (or disposal group) to fair value less costs to

sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of sale of the non-current asset (or disposal group) is recognised at the date of derecognition

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as

held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately for the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance sheet.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents

a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit or loss.

3.9 Financial assets 3.9.1 Classification The Group classifies its financial assets in the following categories: held-to-maturity investments, loans and receivables, at fair value

through profit or loss and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and in the case of assets classified as held-to-maturity, re-evaluates this designations at the end of each period. In the current and prior year, the Group only had financial assets in the loans and receivables category.

(a) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payment terms that are not quoted in active

markets. They are included in current assets, except for maturities greater than twelve months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise “trade and other receivables” and “cash and cash equivalents” in the statement of financial position.

3.9.2 Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade-date – the date on which the Group commits to purchase

or sell the asset. Investments are initially recognised at fair value plus transaction costs. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently carried at amortised cost using the effective interest method.

3.10 Off-setting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally

enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

3.11 Impairment of financial assets (a) Assets carried at amortised cost The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of

financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or a group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that the debtor or a group of debtors is experiencing significant financial difficulty,

default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicates that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.


47

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 3.11 Impairment of financial assets (continued)

(a) Assets carried at amortised cost (continued) For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount

and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and theamount of the loss is recognised in the statement of comprehensive income.

If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event

occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the statement of comprehensive income.

3.12 Inventories Inventories, which consist of foodstuffs, beverages, shop merchandise and consumable stores are stated at the lower of cost and

net realisable value. Cost is determined on weighted average cost method. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to make the sale.

3.13 Trade receivables Trade receivables are amounts due from customers for food, beverages, shop merchandise and rooms sold in the ordinary course of

business. If collection is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets, if not they are presented as non-current assets. Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less allowance for impairment.

An allowance for impairment of trade receivables is established where there is objective evidence that the Group will not be able to

collect all amounts due according to the original terms of the receivables. The amount of the allowance is the difference between the carrying amount and the present value of future cash flows, discounted at the effective interest rate. The amount of the allowance is recognised in the statement of comprehensive income.

3.14 Cash and cash equivalents For purposes of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash in hand, deposits

held at call with banks, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts in the statement of financial position, bank overdrafts are shown within borrowings in current liabilities.

3.15 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in

equity as a deduction, net of income tax from the proceeds. Where any Group company purchases the Company’s equity share capital (“treasury shares”), the consideration paid, including

any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects is included in equity attributable to the Company’s equity holders.

3.16 Trade payables Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.

Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

3.17 Borrowings Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at

amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are


48


3.17 Borrowings (continued) recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this

case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable over the period of the facility to which it relates

Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged,

cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Where the terms of a financial liability are renegotiated and the entity issues equity instruments to a creditor to extinguishall or part of the liability (debt for equity swap), a gain or loss is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial liability and the fair value of the equity instruments issued.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at

least 12 months after the reporting period. 3.18 Income tax The income tax expense for the period comprise current income and deferred tax. Tax is recognised in the statement of comprehensive

income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively. The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes liabilities where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and

liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. The deferred tax liability in relation to investment property that is measured at fair value is determined assuming the property will be recovered entirely through sale. Deferred tax assets are recognised only if it is probable that future taxable amounts

will be available to utilise those temporary differences and losses. Deferred tax assets are recognised on deductible temporary differences arising from investments in subsidiaries, associates and

joint arrangements only to the extent that is probable, the temporary difference will reverse in the future and there is sufficient taxable profit available against the temporary difference can be utilised.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax

liabilities and when the deferred taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

3.19 Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable

that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognised for future operating losses.

Where there is a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by

considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax

rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.


49


3.20 Employee benefits (a) Pension obligations The Group has a defined contribution plan. A defined contribution plan is a pension plan under which the Group pays fixed contributions

into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current period and prior periods.

The Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary

basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as an employee benefit expense when they are due. Pre-paid contributions are recognised as an asset to the extent that a cash refund or reduction in the future payments is available.

(b) Termination benefits Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an

employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at either of the following dates: (a) when the group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

(c) Bonus plans The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration key performance

indicators measured on a quarterly basis. The Group recognises a provision where it is contractually obliged or where there is a past practice that has created a constructive obligation.

(d) Share-based payments: share options The Group operates an equity-settled, share-based compensation plan, under which the entity receives services from employees as

consideration for equity instruments (“options”) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted:

- including any market performance conditions (for example, an entity’s share price); - excluding the impact of any service and non-market performance vesting conditions (for example, profitability, sales growth targets

and remaining an employee of the entity over a specified time period); and - including the impact of any non-vesting conditions (for example, the requirement for employees to save). Non-market performance and service conditions are included in assumptions about the number of options that are expected to vest.

The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.

In addition, in some circumstances employees may provide services in advance of the grant date and therefore the grant date fair

value is estimated for the purposes of recognising the expense during the period between service commencement period and grant date.

At the end of each reporting period, the Group revises its estimates of the number of options that are expected to vest based

on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity.

When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction

costs are credited to share capital (nominal value) and share premium. 3.21 Revenue recognition Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary

course of the Group’s activities. Revenue is shown net of value-added tax, rebates and discounts. The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits

will flow to the entity and when specific criteria have been met for each of the Group’s activities as described below: (i) Revenue from sale of goods Revenue from sale of goods is primarily derived from the sale of room nights, sale of food and beverages and sale of shop merchandise.

Revenue is recognised when room nights, food, beverages and shop merchandise are sold.


50

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.21 Revenue recognition (continued)

(ii) Revenue from gaming (casinos) Net gaming win comprises the net table and slot machine win derived by casino operations from gambling patrons. In terms of

accounting standards, betting transactions concluded under gaming operations meet the definition of derivatives and therefore income from gaming operations represents the net position arising from financial instruments. The net gaming win is measured as the net cash received from betting transactions from casino operations. Due to the short-term nature of the Group’s casino operations, all income is recognised in profit or loss immediately, at fair value.

(iii) Timeshare revenue The extended reservations system involves the sale of timeshare weeks owned by the Group and management fees earned from

running the administration for the timeshare associations. Revenue is accounted when timeshare weeks are sold and management fees are earned.

(iv) Interest income Interest income on loans and receivables is recognised using the effective interest rate method. When a loan and receivable is

impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans and receivables are recognised using the original effective interest rate.

Interest income on bank deposits is recognised using the effective interest method when it is due and payable to the Group. 3.22 Cost of sales Cost of sales includes purchase price of goods and other costs incurred in bringing the inventories to the location and condition ready

for use or sale. The costs include costs of purchasing, storing, transport to the extent it relates to bringing the inventories to the location and condition ready for use or sale.

Salaries and wages of employees directly related with the sale of room nights, food, beverages and other items of merchandise are

included in cost of sales. 3.23 Dividend income Dividend income is recognised when the dividends have been declared by the investee’s company’s Board of Directors. 3.24 Leases Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating

leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of comprehensive income on a straight-line basis over the period of the lease. Leases of property and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance

outstanding. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the statement of comprehensive income over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Items of property and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term.

3.25 Dividend distribution Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in the period in

which the dividends are declared by the Company’s directors. 4 FINANCIAL RISK MANAGEMENT 4.1 Financial risk factors The Group’s activities expose it to a variety of financial risks; market risk (including currency risk, fair value interest rate risk, cash

flow interest rate risk and price risk), 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.

Risk management is carried out by the Group Finance Department (“Group Finance”)under policies approved by the Board of

Directors. Group Finance identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides principles for overall risk management, as well as policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.


51

4 FINANCIAL RISK MANAGEMENT (continued)

4.1 Financial risk factors (continued)

(i) Market risk (a) Foreign exchange risk The Group operates regionally and is exposed to foreign exchange risk arising from various currency exposures, primarily with

respect to the Ghanaian Cedi’ and the South African Rand. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations.

Management has set up a policy that allows Group Finance to manage the Group’s foreign exchange risk against the various

functional currencies. To manage the Group’s foreign exchange risk arising from future commercial transactions and recognised assets and liabilities, Group Finance may use forward contracts and the asset and liability matching methods, where applicable. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency.

The table below summarises the Group’s exposure to foreign exchange risk as at 31 December 2015. Included in the table are the Group’s assets and liabilities at carrying amounts categorised by currency.

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

AssetsSouth African Rand 572 333 2 024 166 2 034 16 333 Botswana Pula 81 217 120 168 - - Australian Dollar 57 1 080 - - Euro 11 950 58 849 - - British Pound 1 954 - - -Ghanaian Cedi 575 383 2 693 436 - -

1 242 894 4 897 699 2 034 16 333

LiabilitiesSouth African Rand 1 193 492 1 366 811 - - Botswana Pula 364 825 243 058 - -Ghanaian Cedi 572 693 392 138 - -

2 131 010 2 002 007 - -

Net currency position (888 116) 2 895 692 2 034 16 333

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. The Group is in the process of closing all dormant foreign entities, this will mitigate foreign currency risk exposure

As at 31 December 2015, if the United States of America dollar strengthened by 10% against all the other currencies with all other

variables held constant, post tax profit / (loss) for the period would have been US$61 847 (2014: US$289 579) lower, mainly as a result of foreign exchange losses on translation of South African Rand and Ghanaian Cedi’ denominated cash and bank balances, trade receivables, trade payables and borrowings.


52

4 FINANCIAL RISK MANAGEMENT (CONTINUED)

4.1 Financial risk factors (continued) (i) Market risk (continued) (a) Foreign exchange risk (continued) The table below summarises the changes in assets and liabilities denominated in the South African Rand and Ghanaian Cedi’ arising

from a 10% appreciation of the United States of America dollar:

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

AssetsSouth African Rand 515 100 1 821 749 1 830 14 700 Ghanaian Cedi' 517 845 2 424 092 - -

1 032 945 4 245 841 1 830 14 700

LiabilitiesSouth African Rand 1 074 143 1 230 130 - - Ghanaian Cedi' 515 424 352 924 - -

1 589 567 1 583 054 - -

Net currency position (556 622) 2 662 787 1 830 14 700

There were no hedges in place as at 31 December 2015 (2014: US$nil). (b) Price risk The Group is exposed to equity price risk because of the investment held by the Group and classified on the consolidated statement

of financial position as a non current asset held for sale. The Group is not exposed to commodity price risk.

The table below summarises the impact of increases or decreases of the Zimbabwe Stock Exchange (“ZSE”) on the Group’s post-tax profit for the year. The analysis is based on the assumption that the equity index has increased or decreased by 25% with all other variables held constant and the Group’s equity instruments moved according to the historical correlation with the index.

Impact of 25% equity index:

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

Equity accounted investments - 812 934 - 812 934

(c) Cash flow and fair value interest rate risk The Group’s interest rate risk arises from long-term and short-term borrowings. Borrowings issued at variable rates expose the

Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group analyses its interest rate exposure on a dynamic basis. Various scenarios are simulated taking into consideration

refinancing, renewal of existing positions and alternative financing. Based on these scenarios, the Group calculates the impact on profit or loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run for all interest-bearing positions.

Based on the simulations performed, the impact on post tax loss and equity of a 1% shift in interest rates, with all other variables held

constant would be a maximum increase / (decrease) of US$174 168 (2014: US$223 210). The simulations are done quarterly given the nature of the current loan facilities to verify that the maximum loss potential is within the limit set by management.

Currently, the Group does not undertake any hedging of its short-term loans due to the nature and terms of the loan facilities. On

long-term loans, the Group assesses risks and considers hedging where necessary. As at 31 December 2015, there were no hedges in place (2014: US$nil).


53


4.1 Financial risk factors (continued) (c) Cash flow and fair value interest rate risk (continued)

(i) Credit risk Credit risk is managed on group basis by the Group Finance. Credit risk arises from cash and cash equivalents, and deposits with

banks and financial institutions, as well as credit exposures to hotel customers including outstanding receivables and committed transactions. For banks and financial institutions, only well established and reliable institutions are used.

For corporate customers, the Group Finance assesses the credit quality of the customers taking into account their financial position,

past experience and other factors in the market. Individual limits are set based on internal and external information. The utilisation of credit limits is regularly monitored by the Group Finance. As at 31 December 2015, customers with balances of US$703 246 exceeded their credit limits (2014: US$485 017 ).

Counterparty risk is further managed by constant engagement of credit customers to determine the current position and

recoverability. All credit granted is subject to terms and conditions, where upon breach by the customers, the Group takes legal action where amounts are material and recovery is possible. As at 31 December 2015,customers with balances of US$245 647 were handed over to debt collectors (2014: US$198 528 ). Receivables handed over for legal action are generally written off as uncollectible and are reversed when recovered.

There is no risk associated with receivables from related parties and staff. In the view of management, the credit quality of unimpaired trade receivables is considered sound. Management does not expect any

losses from non-performance by these counter parties.

The Group ‘s maximum exposure to credit risk by class of financial asset is as follows:

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

Trade and other receivables (excludingpre-payments) 4 258 821 6 860 942 2 193 735 2 336 697 Cash and cash equivalents (excluding bankoverdrafts) 3 079 533 2 734 576 613 337 161 186

7 338 354 9 595 518 2 807 072 2 497 883

The fair value of cash and cash equivalents as at 31 December 2015 approximates the carrying amount. Trade and other receivables excluding pre-payments are shown after specific allowance for impairment.

The credit quality of trade receivables can be assessed by reference to historical information about counterparty default rates. Trade receivables from counterparties without external rating are shown below:

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

Group 1 1 598 467 3 031 862 - - Group 2 685 057 1 299 370 - -

2 283 524 4 331 232 - -

Group 1-Existing customers with no defaults in the past Group 2-Existing customers with some defaults in the past. The above receivables are shown after specific allowance for impairment on certain customers. There is no concentrations of credit risk with respect to cash and cash equivalents as the Group holds cash accounts with high quality

financial institutions with sound financial and capital cover. The financial institutions holding the cash and cash equivalents of the Group have the following external credit ratings:


54


4.1 Financial risk factors (continued) (ii) Credit risk (continued)

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

AA 638 686 - 7 594 - AA- - 1 140 750 - 161 186 A 880 855 - 462 661 AA- 446 212 - 18 621 A+ 2 725 304 439 - - A- 678 550 494 371 103 891 - BBB+ - 2 217 - - BBB - 642 613 - - BB+ 152 236 70 877 741 - BB - - - - B+ - 79 309 - - BB- 171 342 - 18 833 - BBB- 108 927 - 996 -

3 079 533 2 734 576 613 337 161 186

The ratings have been obtained from the latest available ratings on the financial institutions. (iii) Liquidity risk Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group Finance. Group Finance monitors

rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal financial position ratio targets and, if applicable external regulatory or legal requirements, for example, currency restrictions.

Surplus cash held by the operating entities in excess of the balance required for working capital management are transferred to

Group Finance. Group Finance invests surplus cash in interest bearing current accounts, time deposits and money markets deposits, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient head-room as determined by the above-mentioned forecasts.

The table below analyses the Group’s liquidity gap in to relevant maturity groupings based on the remaining period at the reporting

date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

GROUP

Less than 1month

US$

Between 2 and

3 monthsUS$

Between 3 and

12 monthsUS$

Between 2 and

5 yearsUS$

TotalUS$

As at 31 December 2015LiabilitiesBorrowings 1 275 472 2 180 041 1 963 919 2 317 535 7 736 967 Trade and other payables 5 303 595 872 910 8 762 207 1 165 237 16 103 949

Total liabilities 6 579 067 3 052 951 10 726 126 3 482 772 23 840 916

Assets held for managing liquidity riskTrade and other receivables (excluding pre-payments) 2 283 525 559 788 1 289 314 389 971 4 522 598 Cash and cash equivalents (excluding bank overdrafts) 3 079 533 - - - 3 079 533

Total assets held for managing liquidity risk 5 363 058 559 788 1 289 314 389 971 7 602 131

Liquidity gap (1 216 009) (2 493 163) (9 436 812) (3 092 801) (16 238 785)

Cumulative liquidity gap (1 216 009) (3 709 172) (13 145 984) (16 238 785) -


55



(iii) Liquidity risk (continued)

COMPANY

Less than 1month

US$

Between 2 and

3 monthsUS$

Between 3 and

12 monthsUS$

Between 2 and

5 yearsUS$

TotalUS$

As at 31 December 2015LiabilitiesBorrowings - 125 000 409 949 890 308 1 425 257 Trade and other payables 450 160 294 726 1 554 796 1 165 237 3 464 919

Total liabilities 450 160 419 726 1 964 745 2 055 545 4 890 176 Assets held for managing liquidity riskTrade and other receivables (excludingpre-payments) 108 205 - 1 035 638 389 971 1 533 814Cash and cash equivalents (excludingbank overdrafts) 613 337 - - - 613 337 Non-current assets held for sale - - - - - Total assets held for managingliquidity risk 721 542 - 1 035 638 389 971 2 147 151

Liquidity gap 271 382 (419 726) (929 107) (1 665 574) (2 743 025)

Cumulative liquidity gap 271 382 (148 344) (1 077 451) (2 743 025) -

GROUP

Less than 1month

US$

Between 2 and

3 monthsUS$

Between 3 and

12 monthsUS$

Between 2 and

5 yearsUS$

TotalUS$

As at 30 September 2014LiabilitiesBorrowings 481 970 2 294 106 7 829 872 6 742 795 17 348 743 Trade and other payables 3 202 965 1 735 428 7 591 695 2 203 358 14 733 446

Total liabilities 3 684 935 4 029 534 15 421 567 8 946 153 32 082 189 Assets held for managing liquidity riskTrade and other receivables (excluding pre-payments) 4 331 232 653 918 1 549 127 612 046 7 146 323 Cash and cash equivalents (excluding bank overdrafts) 2 734 576 - - - 2 734 576 Non-current assets held for sale - - 7 347 178 - 7 347 178

Total assets held for managing liquidity risk 7 065 808 653 918 8 896 305 612 046 17 228 077

Liquidity gap 3 380 873 (3 375 616) (6 525 262) (8 334 107) (14 854 112)

Cumulative liquidity gap 3 380 873 5 257 (6 520 005) (14 854 112) -

COMPANY

Less than 1month

US$

Between 2 and

3 monthsUS$

Between 3 and

12 monthsUS$

Between 2 and

5 yearsUS$

TotalUS$

As at 30 September 2014LiabilitiesBorrowings 336 259 1 023 082 2 603 869 35 141 3 998 351 Trade and other payables 465 809 265 026 2 462 978 2 203 358 5 397 171

Total liabilities 802 068 1 288 108 5 066 847 2 238 499 9 395 522 Assets held for managing liquidity riskTrade and other receivables (excluding pre-payments) 226 853 343 800 1 171 998 612 046 2 354 697 Cash and cash equivalents (excluding bank overdrafts) 161 283 - - - 161 283 Non-current assets held for sale - - 3 171 087 - 3 171 087

Total assets held for managing liquidity risk 388 136 343 800 4 343 085 612 046 5 687 067

Liquidity gap (413 932) (944 308) (723 762) (1 626 453) (3 708 455)

Cumulative liquidity gap (413 932) (1 358 240) (2 082 002) (3 708 455) -


56



(ii) Credit risk (continued) Below is an explanation of how the Group’s liquidity gap will be managed: -There is an imminent restructuring of short term loans of US$5.2 Million from short term loans to long term loans. The facility has

been approved with one local bank and management is finalising approvals of an all in one lower rate than the current rate -The Group closed its loss making hotels (Beitbridge Express Hotel, Zimbabwe and Amber Accra Hotel, Ghana). This will help

improve the profitability and cash generation by the Group hence cover the liquidity gap. -The Group is working on a plan to institute voluntary liquidation, particularly in South Africa and have some of its obligations

released. 4.2 Capital management The capital of the Group consists of debt (borrowings as detailed in note 21) and equity which comprises issued ordinary share

capital, accumulated losses and other reserves as detailed in note 16. There were no changes in the components of debt and equity from last year.

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide

returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. The decrease in debt from last year resulted from repayment towards long-term borrowings and repayment of short-term borrowings

from the proceeds of disposal of shares in Dawn Properties Limited. Decrease in equity resulted from current year losses from Ghana and foreign currency translation losses on consolidation of foreign subsidiaries.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital

to shareholders, issue new shares or sell assets to reduce debt. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is

calculated as total borrowings (including current and non-current borrowings as shown in the statement of financial position) less cash and cash equivalents. Total capital is calculated as “equity” as shown in the statement of financial position plus net debt.

During the financial year ended 31 December 2015, the Group’s strategy was to maintain gearing ratio within 40% to 45%. The gearing ratio at 31 December 2015 and 2014 were as follows:

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

Total borrowings (note 21) 7 736 967 17 348 745 1 425 257 3 998 351 Less cash and cash equivalents (note15) (3 079 533) (2 734 576) (613 337) (161 186)

Net debt 4 657 434 14 614 169 811 920 3 837 165 Total equity 2 464 161 10 563 468 23 144 506 21 712 251

Total capital 7 121 595 25 177 637 23 956 426 25 549 416

Gearing ratio 65% 58% 3% 15%

4.3 Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions, leasing transactions, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in ‘Inventories’ or value in use in ‘Impairment of Assets’


57


4.3 Fair Value Measurements (continued) In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to

which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the

measurement date. Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Plan has the ability to access;

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either

directly or indirectly. Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally from or corroborated by observable market data by correlation or other means; and

Level 3 inputs are unobservable inputs for the asset or liability inputs to the valuation methodology are unobservable and significant

to the fair value measurement.

5 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. 5.1 Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom

equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

(a) Income taxes The Group is subject to income taxes in numerous jurisdictions, Zimbabwe, South Africa and Mauritius. Significant judgment is

required in determining the liability for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax assets and liabilities in the period in which such determination is made.

(b) Going concern The Directors assess the ability of the Group to continue operating as a going concern at the end of each financial year. As at 31

December 2015, the Directors have assessed the ability of the Group to continue operating as a going concern and believe that the preparation of these financial statements on a going concern basis is still appropriate. Some of the initiatives implemented to ensure the Group returns to profitability and continues as a going concern are discussed under note 3.1.2.

(c) Valuation of biological assets The Group owns biological assets in the form of a timber plantation. The fair value of the plantation is determined by an expert

through obtaining the stumpage value of the trees, using the Faustmann model. Variables are input into the formula (including international rates) to derive the fair value. The following variables were used for the valuation as at 31 December 2015;

-estimated area of plantation: 567 hectares (2014: 567 hectares) -age of trees 3-25 years (2014: 2-23 years) -valuation based on trees 9 years and older (2014: 8 years and older) -discount rate: 15% (2014: 15%) The upper age limit of the trees moved to 25 years in 2015 from 24 years in 2014 as the oldest trees in the plantation matured by a

year older. The lower age limit was reassessed to 3 years in 2015 from 2 years in 2014 as a result of regenerations in the plantation. As at 30 September 2014, the regenerations had not yet matured to the level of being valued.

(d) Valuation of share options The Group operates an equity-settled, share-based compensation plan, under which the entity receives services from employees

as consideration for equity instruments (options) of the Company. The fair value of the employee services received is calculated making certain assumptions which require critical judgment. For the period ended 31 December 2015, the amount charged to the statement of comprehensive income as employee cost was based on the valuation performed by an expert using the following agreed assumptions with management;


58

5 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

5.1 Critical accounting estimates and assumptions (continued)

(d) Valuation of share options (continued) -volatility of the African Sun Limited shares: 70.23% (2014: 70.23%); -risk free rate: 2.13% (2014: 2.13%) ; based on the Federal Reserve Bank of United States of America 10 year treasury bills; The basis is supported by the fact that Zimbabwe is a United States of America dollar based economy; -92% of the granted share options were exercised of 17 July 2015 which the remained being fortified.

5.2 Definitions of non IFRS measures Taxed interest payable This is calculated by taxing interest payable at the standard rate of income tax applicable to the different tax jurisdictions. Interest cover times This is the ratio of income before income tax and interest to interest expensed. Net assets These are equivalent to shareholders’ equity. Revenue generation index (“RGI”) This a measure used to assess the rate at which a hotel generates revenue compared to its market. It is calculated by dividing the

hotel’s RevPAR by the total market RevPAR. Revenue per available room (“RevPAR”) This is calculated by dividing the total rooms revenue by the outstanding rooms for the year. Earning before interest and tax (“EBIT”) This is the profit before financing costs and income, and income tax. Earnings before interest, tax, depreciation and amortisation (“EBITDA”) This is the profit before financing costs or income, income tax, depreciation and amortisation. Pre-tax return on equity This is calculated by dividing operating income plus dividend income and equity accounted earnings by closing total shareholders’ equity. Pre-tax return on total assets This is calculated by dividing profit before financing costs and income and income tax by closing total assets. Taxed operating return This is calculated by dividing income after income tax plus taxed interest payable by closing total capital employed. Headline earnings per share Calculation of headline earnings accounts for all the profits and losses from operational, trading, and interest activities, that have

been acquired at any point during the year. Excluded from this figure are profits or losses associated with the sale or termination of discontinued operations, fixed assets or related businesses, or from any permanent devaluation or write off of their values. Diluted headline earnings per share Diluted headline earnings per share are calculated by dividing the headline earnings / (loss) by the adjusted weighted average number of ordinary shares, assuming conversion of all dilutive potential ordinary shares. Financial gearing ratio This represents the ratio of interest bearing debt, less cash to total shareholders’ equity.


59

6 SEGMENT INFORMATION Management has determined the operating segments based on the reports reviewed by the executive committee (executive

management team), who make strategic decisions for the purposes of allocating resources and assessing performance. The executive committee assesses the performance of the operating segments based on: - hotel occupancies; - hotel revenue per available room (“RevPAR”); - hotel average daily rate (“ADR”); and - profitability. The Group does not rely on any one specific customer as none of its customers contributes a minimum of 10% of its revenue. All interest bearing liabilities have been allocated to segments as they relate to specific bank loans obtained by the segments. Earnings before interest, tax, depreciation and armotisation (“EBITDA”) has been calculated excluding exceptional charges relating

to fair value adjustments and impairments for 2015 and the comparatives.

Change in business model During the last quarter of the year the Group was finalising a change of its business model from the traditional hotel management

model to a hotel investment model which we believe is more optimal to the needs of the Group going forward. The Group has started recognising this new model and assess its business using this model from 1 January 2016. 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 Elephant Hills

Resort and Conference Centre, Troutbeck Resort, Hwange Safari Lodge, The Kingdom at Victoria Falls and Monomotapa Hotel. 2. Hotels Under Franchise (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 current 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 and Great Zimbabwe 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 Complementary Operations Sun Casinos and Sun Vacations (Timeshares) make up this strategic business unit.


60

6 SEGMENT INFORMATION (CONTINUED)

Revenue Sales between segments are eliminated on consolidation. The revenue from external parties reported to the executive committee is

measured in a manner consistent with that in the income statement. The segment information provided to the executive committee for the reportable segments is as follows:

Southern Africa West Africa

As at 31 December 2015Zimbabwe

US$

South Africaand

MauritusUS$

BotswanaUS$

GhanaUS$

Intersegmenttransactions

US$Consolidated

US$

Discontinuedoperations

US$

Continuingoperations

US$

Revenue:Sale of rooms 34 677 478 - - 3 125 217 - 37 802 695 (3 712 034) 34 090 661 Sale of food and beverages 25 906 863 - - 1 174 775 - 27 081 638 (1 509 039) 25 572 599 Management fees and commissions - 1 426 608 - - (1 426 608) - - - Gaming 1 242 424 - - - - 1 242 424 - 1 242 424 Conferencing 786 911 - - - - 786 911 (7 198) 779 713 Other income 1 488 183 - - 144 371 - 1 632 554 (162 978) 1 469 576

Total revenue 64 101 859 1 426 608 - 4 444 363 ( 1 426 608) 68 546 222 (5 391 249) 63 154 973

Material expensesCost of sales (18 609 903) - - (891 109) - (19 501 012) 1 218 570 (18 282 442)Employee benefit expenses (11 654 448) (299 671) - (443 325) - (12 397 444) 668 749 (11 728 695)Operating lease costs (6 988 386) (32 246) - (2 294 071) - (9 314 703) 2 386 527 (6 928 176)

(37 252 737) (331 917) - (3 628 505) - (41 213 159) 4 273 846 (36 939 313)

Other informationEBITDA 6 543 752 384 406 (827) (89 514) - 6 837 817 254 514 7 092 331 Depreciation (5 783 455) (4 327) - (140 222) - (5 928 004) 253 093 (5 674 911)Impairment charge (2 002 342) (23 396) - (311 511) - (2 337 249) 369 951 (1 967 298)Finance income - 4 554 - - - 4 554 - 4 554 Finance costs (2 504 008) - - (460 074) - (2 964 082) 460 074 (2 504 008)Other income 2 687 129 - - - - 2 687 129 - 2 687 129 Other expenses (4 150 789) (1 384 001) (252 536) (509 347) - (6 296 673) 509 347 (5 787 326)

- Profit / (loss) before income tax (5 209 713) (1 022 764) (253 363) (1 510 668) - (7 996 508) 1 846 979 (6 149 529)

Total assets 32 756 002 53 906 - 575 383 - 33 385 291 - 33 385 291

Total assets include:Additions to non-current assets (other thanfinancial instruments and deferred tax assets):-Property and equipment 23 975 152 3 792 - 107 387 - 24 086 331 107 387 23 978 944 -Other non-current receivables - - - - - - - -

23 975 152 3 792 - 107 387 - 24 086 331 107 387 23 978 944

Total Liabilities 27 405 289 1 473 975 - 3 486 552 - 32 365 817 - 32 365 817

Key performance indicatorsOccupancy (%) 48 - - 45 - 49 40 49 ADR (US$) 91 - - 107 - 93 84 93 RevPAR (US$) 44 - - 49 - 45 83 45


61

6 SEGMENT INFORMATION (CONTINUED)

Revenue (continued)

Southern Africa West Africa

As at 30 September 2014Zimbabwe

US$

South Africaand

MauritusUS$

BotswanaUS$

GhanaUS$

Intersegmenttransactions

US$Consolidated

US$

Discontinuedoperations

US$

Continuingoperations

US$

Revenue:Sale of rooms 28 601 439 - - 1 531 857 - 30 133 297 (2 124 668) 28 008 628 Sale of food and beverages 22 552 904 - - 584 782 - 23 137 686 (950 569) 22 187 117 Management fees and commissions - 1 533 551 - - (1 533 551) - - - Gaming 732 336 - - - - 732 336 - 732 336 Conferencing 978 466 - - - - 978 466 (21 896) 956 570 Rent and other income 1 689 373 - - 36 149 - 1 725 522 (50 204) 1 675 318

Total revenue 54 554 518 1 533 551 - 2 152 788 (1 533 551) 56 707 306 (3 156 175) 53 559 970

Material expensesCost of sales (15 403 075) - - (496 719) - (15 899 794) 840 211 (15 059 583)Employee benefit expenses (9 931 995) (265 003) - (390 930) - (10 587 928) 573 878 (10 014 050)Operating lease costs (6 635 298) (97 975) - (2 069 975) - (8 803 248) 2 167 105 ( 6 636 143)

31 970 368 362 978 - 2 957 624 - 35 290 970 3 581 194 31 709 776

Other informationEBITDA 9 257 271 465 490 1 920 (1 242 938) (1 533 551) 6 948 192 1 394 155 8 342 346 Depreciation (2 958 479) (2 953) - (116 662) - (3 078 094) 183 981 (2 894 113)Impairment charge (3 467 721) (157 026) - (103 287) - (3 728 034) 103 287 ( 3 624 747)Finance income - 3 952 - - - 3 952 - 3 952 Recycled from other comprehensive income 249 706 - - - - 249 706 - 249 706 Finance costs (3 090 412) - - (447 720) - (3 538 132) 447 720 (3 090 412)Other income 111 526 - - - - 111 526 - 111 526 Other expenses (348 017) - - - - (348 017) - (348 017)Share of income from equity accounted investments 274 315 - - - - 274 315 - 274 315

Profit / (loss) before income tax 28 189 309 463 1 920 (1 910 607) (1 533 551) (3 104 587) 2 129 143 (975 444)

Total assets 43 288 830 1 953 790 119 652 2 693 436 - 48 055 708 129 661 47 926 047

Total assets include:Additions to non-current assets (other thanfinancial instruments and deferred tax as-sets):-Property and equipment 3 010 965 - - 1 094 779 - 4 105 744 - 4 105 744 -Other non-current receivables 189 849 - - - - 189 849 - 189 849

3 200 814 - - 1 094 779 - 4 295 593 - 4 295 593

Total Liabilities 32 796 062 1 766 447 243 059 2 686 783 - 37 492 241 - 37 492 241

Key performance indicatorsOccupancy (%) 49 - - 26 - 48 28 48 ADR (US$) 97 - - 136 - 98 94 98 RevPAR (US$) 48 - - 36 - 47 27 47

The amounts provided to the executive committee with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset.

The Group did not record any share of income or losses from its joint venture (“West African Sun Hotels Limited”), as the joint venture

was still in a net liabilities position as at 31 December 2015 (2014: US$nil).


62

7 CHANGE IN ACCOUNTING ESTIMATE AND ACCOUNTING POLICY 7.1 Change in accounting estimate The Group changed its accounting estimate for service stocks. The old accounting treatment was to depreciate service stocks over 7

years. Under the new accounting estimate all service stocks except for linen will be charged to cost of sales in the month the service stocks are brought to use.

Linen will be depreciated over 24 months from the month the linen is available for use. This implies that only linen will be measured

and recognized within the scope of IAS 16, (Property, Plant and Equipment) as service stocks. Under the old method of depreciation, it was difficult to identify, determine the acquisition dates and determine the carrying amount of assets to be derecognized due to loss and damages. Given the nature of the service stocks and their quantities, it was difficult to tag and separately identify them.

The change in accounting estimate was applied prospectively. Below is the analysis of the impact of the change in the statement of

comprehensive income and statement of financial position.

As at31 December

2015US$

Statement of financial position AssetsDecrease in property and equipment (2,121,566)

LiabilitiesDecrease in deferred tax liability 546,303

Decrease in equity (1,575,263)

Statement of comprehensive incomeIncrease in cost of sales (188,558)Increase in depreciation and usage( note 8) (1,933,009)Deferred tax charge 546,303

Decrease in profit for the period (1,575,263)

7.2 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 property and equipment accounting policy 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.


63

8 PROPERTY AND EQUIPMENT

GROUPFreehold

propertiesUS$

Leaseholdproperties

US$Equipment

US$

Servicestocks

US$

Motorvehicles

US$

Capital workin progress

US$TotalUS$

Year ended 30 September 2014Opening net book amount 4 327 880 3 434 060 17 520 344 2 203 967 710 635 3 919 497 32 116 383 Additions - cost - 423 318 1 502 265 507 134 352 432 1 158 483 3 943 632 Adjustment - - - - - - Disposals - cost - - (599 612) - (108 872) (130 518) (839 002)Accumulated depreciation on disposals

- - 311 394 - 75 686 - 387 080

Transfer (out) / in - 1 753 930 1 863 623 89 713 (4 732) (3 702 534) -Transfer to non- current assets held for sale (4 257 640) - - - - - (4 257 640)Exchange differences - 2 965 27 168 (8 420) (27 547) (588 270) (594 104)Depreciation charge (70 240) (482 133) (1 910 462) (403 000) (212 259) - (3 078 094)

Closing net book amount - 5 132 140 18 714 720 2 389 394 785 343 656 658 27 678 255

As at 30 September 2014Cost or valuation - 9 166 670 25 979 076 2 792 394 1 445 797 656 658 40 040 595 Accumulated depreciation and impairment - (4 034 530) (7 264 356) (403 000) (660 454) - (12 362 340)

Net book amount - 5 132 140 18 714 720 2 389 394 785 343 656 658 27 678 255

Period ended 31 December 2015Opening net book amount - 5 132 140 18 714 720 2 389 394 785 343 656 658 27 678 255 Additions - 223 707 1 225 517 207 375 115 882 232 750 2 005 231 Transfer from non current assets held for sale 4 257 640 - - - - - 4 257 640 Transfers in/out - 145 106 271 063 - - (416 169) - Foreign exchange difference - (10 288) (213 258) (20 214) (4 016) (1 489) (249 265)Impairment (296 292) (162 168) (1 820 418) (14 832) (43 539) (2 337 249)Disposals - (140 725) (1 336 185) (77 649) (511 126) (39 313) (2 104 998)Accumulated depreciation on disposals/transfers -

25 729

274 292

31 177

326 136 -

657 334

Depreciation and usage - current period ( 87 799) (754 467) (2 528 540) (424 332) (199 857) - (3 994 995)Depreciation and usage- change in accounting estimate - - - (1 933 009) - - (1 933 009)

Closing net book amount 3 873 549 4 459 034 14 587 191 172 742 497 530 388 898 23 978 944

As at 31 December 2015Cost 4 257 640 9 384 470 25 926 213 172 742 1 046 537 388 898 41 176 500 Accumulated depreciation & impairment

(384 091) (4 925 436) (11 339 022) - (549 007) -

(17 197 556)

Net book amount 3 873 549 4 459 034 14 587 191 172 742 497 530 388 898 23 978 944


64

8 PROPERTY AND EQUIPMENT (CONTINUED)

Leaseholdproperties

US$Equipment

US$

Servicestocks

US$

Motorvehicles

US$

Capital workin progress

US$TotalUS$

Year ended 30 September 2014Opening net book amount - 60 050 - 232 229 1 766 610 2 058 890 Additions 125 111 112 267 - 252 969 2 700 493 047 Disposals - cost - - - (17 750) (130 518) (148 268)Accumulated depreciation on dispos-als - - -

10 510 -

10 510

Inter-segment transfers - - - - (1 606 092) (1 606 092)Depreciation charge (4 170) (15 573) - (94 525) - (114 268)

Closing net book amount 120 941 156 744 - 383 433 32 700 693 818

As at 30 September 2014Cost or valuation 125 111 184 392 - 609 612 32 700 951 816 Accumulated depreciation and impair-ment (4 170) (27 648) - (226 179) - (257 997)

Net book amount 120 941 156 744 - 383 433 32 700 693 818

Period ended 31 December 2015Opening net book amount 120 941 156 744 - 383 433 32 700 693 818 Additions 5 862 28 134 - - 19 483 53 479 Impairment (4 516) (17 278) - - - (21 794)Disposals (79 255) (26 895) - (327 359) (32 700) (466 209)Accumulated depreciation on dispos-als or transfers

11 138 5 536 - 204 081 - 220 755

Depreciation (14 715) (31 610) - (82 547) - (128 872)

Closing net book amount 39 455 114 631 - 177 608 19 483 351 177

As at 31 December 2015Cost 51 718 185 631 - 282 253 19 483 539 085 Accumulated depreciation & impair-ment (12 263) (71 000) - (104 645) - (187 908)

Net book amount 39 455 114 631 - 177 608 19 483 351 177

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 collateral to secure borrowings in the future.

Capital work in progress relates to refurbishment equipment and hotel furniture, fittings and equipment for the Zimbabwe hotels

that was undertaken during the financial year. This is not depreciated until it is brought to use. All the depreciation is charged in operating expenses in the statement of comprehensive income. During the year, the group assessed property and equipment for impairment and this led to an impairment of US$2 337 249 (2014:

US$nil). The assessment was done by the Group’s valuer Dawn Property Consultancy (Private) Limited. The reason for impairment was due to some assets being carried at values that were deemed to be higher given their date of acquisition and estimated useful lives, compared to the current prevailing market prices of new assets of the same range or category. All assets that were impaired belonged to African Sun Zimbabwe Limited.

No assets were on a finance lease in the current year (2014: US$239 500).


65

8 PROPERTY AND EQUIPMENT (CONTINUED)

There were no contractual commitments for the acquisitions of property and equipment as at 31 December 2015 (2014: US$nil) There were no borrowing costs capitalised during the year (2014: US$nil) on qualifying assets. Recoverable amount of impaired property and equipment The recoverable amount of the property and equipment was determined as fair value less costs to sell. The fair values were determined

by an independent professional valuer, Dawn Property Consultancy (Private) Limited, using significant unobservable inputs (level 3). The fair value for each asset was determined as the estimated amount for which the asset should exchange on the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing and where the parties had acted knowledgeably, prudently and without compulsion. Selling costs were estimated as negligible, resulting in no adjustments being made to the determined fair values.

Fair value measurements using Quoted prices

in activemarkets for

identicalassetslevel 1

US$

Significant

other observable

inputs level 2

US$

Significant unobservable

inputs level 3

US$TotalUS$

Non-recurring fair value measurements

As at 31 December 2015Freehold properties - - 3 873 549 3 873 549 Lease hold properties - - 4 459 034 4 459 034 Equipment - - 14 587 191 14 587 191 Motor vehicles - - 497 530 497 530

- - 23 417 304 23 417 304

As at 30 September 2014Freehold properties - - - - Lease hold properties - - 5 132 140 5 132 140 Equipment - - 18 714 720 18 714 720 Motor vehicles - - 785 343 785 343

- - 24 632 203 24 632 203

Fair value inputs An independent valuation of the Group’s property and equipment was performed by Dawn Property Consultancy (Private) Limited

to determine the fair value of the equipment as at 31 December 2015. The valuation which conforms to International Valuation Standards was determined by reference to recent market transactions on arm’s length terms.

The different levels of determining the fair values have been defined as follows: -Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). -Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices)

or indirectly (that is, derived from prices) (level 2). -Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

There are no level 1 and level 2 assets and there were no transfers between level 1 and 2 during 2015 and 2014.

Valuation processes of the Group Property and equipment is now stated at cost based on valuation by the independent external valuers, less subsequent accumulated

depreciation and impairment losses.

The valuation was completed using the market approach, which is the estimated amount for which an asset should exchange hands on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion for all the categories.

Set out in the table below is information about fair value measurement using significant unobservable inputs (level 3):


66

Description

Fair value as as at

31 December 2015US$

Valuation technique

Unobservableinputs

Range of unobservable

inputs (weighted

average)

Relationship ofunobservableinputs to fair

value

Freehold 3 873 549 Recent sale Estimated US$18 000- The higher the properties transactions in sale price of US$54 000 price per house

the same area a house the higher the fair value

Leasehold 4 459 034 Recent or Costs of Inputs include The higher the properties cost of doing different items labour, paint, cost of the

the same required to carpets, designs inputs, the improvements furnish the and construction higher the fair

hotels materials value

Equipment 14 759 931 Willing buyer Prices of Wide price range The higher the willing seller second hand as the category the unit price

(recent market transactions on

or used itemsof equipment

comprises various

of the items of equipment,

similar items) items of the higher the equipment fair value

Motor 497 530 Willing buyer Prices of US$8 000- The higher the vehicles willing seller second hand US$120 000 the price per

(recent market or used vehicle transactions on vehicles the higher the

similar vehicles) fair value

9 BIOLOGICAL ASSETS

The Group owns biological assets in the form of a timber plantation. The timber is held mainly for sale as raw timber on maturity. The total area under the timber plantation as at 31 December 2015 is approximately 454.8 hectares (2014: 567hectares). The difference in hectrage from last year’s of 567 hectares is due to a fire that destroyed part of the timber.

As at31 December

2015US$

As at30 September

2014US$

Timber plantations Mature (trees which are 18 years and older) 127 146 163 900 Immature (trees which are below 18 years) 37 991 89 815

165 137 253 715

The following table presents the group’s biological assets that are measured at fair value, at 31 December 2015.

Level 1US$

Level 2US$

Level 3US$

TotalUS$

Timber plantations-mature - - 127 146 127 146 -immature - - 37 991 37 991

- - 165 137 165 137

The following table presents the group’s biological assets that are measured at fair value, at 30 September 2014.

Level 1US$

Level 2US$

Level 3US$

TotalUS$

Timber plantations-mature - - 163 900 163 900 -immature - - 89 815 89 815

- - 253 715 253 715


67

9 BIOLOGICAL ASSETS (CONTINUED)

There were no transfers between any levels during the year. The reconciliation in the fair value of the assets within level 3 of the hierarchy is follows:

Timber plantationFifteen

months ended 31 December 2015

US$

Timber plantationYear ended


As at 1 October 253 715 220 651 Damaged by fire ( 91 584) - Gain from changes in fair value less estimated point of sale costs 3 006 33 064 As at 31 December 165 137 253 715

Net gains / (losses) on biological assets for the period included in the statement of comprehensive income (88 578) 33 064

The following unobservable inputs were used to measure the fair value of the Group’s timber plantation:

Description

Fair value as as at

31 December 2015US$

Valuation technique

Unobservableinputs


inputs (weighted

average)


value

Timber plantation 165 137 Faustmannmodel

Age of the trees

Discount rate

7 years and older

15%

The older the trees, the higher

the value The higher the

discount rate, the lower the value

There were no harvests during the year (2014: US$nil) There are no biological assets with restricted title or pledged as collateral (2014: US$nil) There are no commitments for the development or acquisitions of biological assets (2014: US$nil) The Group is exposed to risks arising from fire, diseases, environmental changes and climatic changes. To manage these risks, the

Group has insured the plantation for the sum of US$253 715 (2014: US$253 715). During the period a fire destroyed some of the biological assets. The area was badly burnt and the trees will not recover since they

were less than 10 years old. The Group engaged valuers to value the total biological assets and based on the valuation report as at 31 December 2015, the value of the area burnt was US$91 584. The Group has filed an insurance claim and is yet recover the loss from the insurance company.

The following would be the fair value of the Group’s timber plantation if the discount rate was 10%:

Description

Fair value as as at

31 December 2015US$

Valuation technique

Unobservableinputs


inputs (weighted

average)


value

Timber plantation 180 062 Faustmannmodel

Age of the trees

Discount rate

7 years and older

15%

The older the trees, the higher

the value The higher the

discount rate, the lower the value


68

10 INVESTMENTSGROUP COMPANY

As at31 December

2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

10.1 Total investmentsInvestments accounted for using the equity method (note 10.2) - - - -Investment in subsidiaries (note 10.4) - - 24 701 731 24 701 731

- - 24 701 731 24 701 731

10.2 Investments accounted for using the equity method

10.2.1 Investment in associate - Dawn Properties LimitedAs at 1 October - 6 067 253 - 5 975 065 Share of profit for the year - 274 315 - - Fair value adjustment on reclassification tonon-current assets held for sale - ( 80 649) - ( 41 046)Classified to non-current assets held for sale (note 11) - (3 171 087) - (3 171 087)Dividend received - ( 39 603) - ( 39 603)Impairment - (3 050 229) - (2 723 329)

- - - -

10.2.2 Investment in joint venture - West African SunHotels LimitedAs at 1 October Share of profit - - - -

- - - -

Nature of investment in joint venture in 2015 when the group exited and 2014.

Name of entity Country ofincorporation

% of ownershipinterest

Nature of therelationship

Measurementmethod

West African Sun Hotels Limited Nigeria 50 Note 1 Equity

Note 1: During the period ended 31 December 2015, the Group exited the Nigerian foreign operation. There was no financial impact from the exit of Nigeria as the investee company was in a net liabilities position and the investment in the joint venture was nil in the

books of the Group. The exit from Nigeria was effective 30 September 2015. Summarised financial information for West African Sun Hotels Limited Set out below is the summarised unaudited financial information for West African Sun Hotels Limited as at 30 September 2015. Prior

to this date, the investment was accounted for using the equity method.


69

10 INVESTMENTS (CONTINUED)

10.2 Investments accounted for using the equity method (continued)

10.2.2 Investment in joint venture - West African Sun Hotels Limited (continued)

Summarised statement of financial positionAs at

31 December 2015US$

As at30 September

2014US$

Non-current assets 3 163 6 089

Current assetsCash and cash equivalents 5 904 4 418 Other current assets 1 283 621 874 256

Total current assets 1 289 525 878 674

Total assets 1 292 688 884 763

Current liabilitiesAmounts owed to related parties ( 898 603) (1 139 144)Statutory liabilities ( 318 010) ( 376 481)Other liabilities ( 534 603) ( 74 623)

Total current liabilities (1 751 216) (1 590 248)

Net liabilities (458 528) (705 485)

Summarised statement of comprehensive incomeManagement fees earned 9 159 434 833 Operating expenses (7 424) (633 439)

Profit / (loss) before income tax 1 735 (198 606)Income tax expense - -

Profit / (loss) for the period 1 735 (198 606)

The joint venture uses the same accounting policies as the Group.

Reconciliation of summarised financial informationReconciliation of the summarised financial information presented to the carryingamount of its interest in the joint venture.

Summarised financial informationOpening net liabilities as at 1 October (705 485) (506 879)Profit / (loss) for the period 1 735 (198 606)

Closing net liabilities (703 750) (705 485)

Interest in joint venture at 50% (351 875) (352 742)

Carrying amount in the books of the Group - -

10.3 Interest in joint operation The Group has a 50% interest in The Victoria Falls Hotel. The Victoria Falls Hotel is a leased hotel in the Victoria Falls area. The

following amounts represent the Group’s 50% share of the assets and liabilities, and sales and results of the joint operation. They are included in the statement of financial position and statement of comprehensive income.


70


10.3 Interest in joint operation (continued)

Summarised statement of financial position15 months

ended31 December

2015US$

As at30 September

2014US$

AssetsNon-current assetsProperty and equipment 2 776 447 2 929 430

Current assetsBank and cash 374 168 312 908 Debtors 412 018 514 164 Intercompany - 3 194 332 Inventory 274 483 240 408

Total assets 3 837 116 7 191 242

LiabilitiesCurrent liabilitiesIntercompany (377 867) - Creditors (1 525 566) (1 158 789)

Net assets 1 933 683 6 032 453

Summarised statement of comprehensive incomeRevenue 7 540 504 6 585 788 Cost of sales (1 912 343) (1 572 916)Gross profit 5 628 161 5 012 872

Overheads (2 035 744) (1 622 876)Capital expense (1 807 735) (1 478 269)

Profit before income tax 1 784 682 1 911 727

10.4 Investment in subsidiariesCOMPANY

As at31 December

2015US$

As at30 September

2014US$

African Sun Limited PCC (Mauritius) 100%At acquisition 2 618 780 2 618 780 Shareholders' loan 4 195 077 4 195 077

Total investment in African Sun Limited PCC (Mauritius) 6 813 857 6 813 857

African Sun Zimbabwe (Private) Limited 100%At acquisition 8 890 147 8 890 147 Shareholders' loan 8 934 727 8 934 727

Total investment in African Sun Zimbabwe (Private) Limited 17 824 874 17 824 874

Total investment in subsidiaries 24 638 731 24 638 731

Loan to African Sun Zimbabwe (Private) Limited carries interest at 7.5% per annum, while that to African Sun Limited PCC (Mauritius) bears no interest. All loans to subsidiaries are unsecured and do not have fixed repayment dates.

The investments in subsidiaries were not impaired during the year (2014: US$nil).


71


10.4 Investment in subsidiaries (continued)

Principal subsidiaries The Group had the following subsidiaries at 31 December 2015:

Name

Country of incorporation and place of business

Ultimate parent

Immediate parent

Nature of business

2015Proportion of

ordinary shares directly held by

the Group (%)

2014Proportion of

ordinary shares held by the Group (%)

African Sun Zimbabwe (Private)Limited

Zimbabwe African SunLimited

African SunLimited

Hotel andCatering 100 100

African Sun Hotels Limited Mauritius African SunLimited

African Sun Investment P.C.C Limited

Holding Company 100 100

African Sun Hotels InvestmentsHoldings Limited

Mauritius African SunLimited

African Sun Hotels Limited


African Sun Investment P.C.C Limited


African SunLimited


African Sun Hotels Limited Mauritius Branch


African Sun Hotels Limited


African Sun South Africa (Proprietary) Limited

Republic of South Africa

African SunLimited

African Sun Hotels Investments

Holdings Limited

Holding Company

(Dormant) 100 100

The Grace Hotel (Proprietary) Limited


African SunLimited

African Sun South South AfricaPTY Limited

(Dormant)

100 100

The Lakes Hotel (Proprietary) Limited


African SunLimited

African Sun South South AfricaPTY Limited

(Dormant)

100 100

Leisure and Hotels Botswana(Private) Limited

Botswana African SunLimited

African SunLimited

(Dormant)100 100

All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings held

directly by the parent company do not differ from the proportion of ordinary shares held.

11 NON-CURRENT ASSETS HELD FOR SALEGROUP COMPANY

As at31 December

2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

16.54% investment in Dawn Properties Limited - 3 171 087 - 3 171 087 Freehold properties - transferred from property andequipment - 4 046 430 - - Assets of a disposal group classified as held for sale - 129 661 - -

- 7 347 178 - 3 171 087 The details of the non-current assets held for sale are disclosed in (a) to (b) below. (a) Non-current assets held for sale During the year the Group completed the disposal of the 406 466 976 shares (16.54%) in Dawn Properties Limited. The disposal raised

US$5.8 million which was used to pay borrowings. 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 was achieved through the completion of the disposal of the 16.54% in Dawn. It was the Board’s view that, keeping ownership of the staff houses will be more beneficial in the long run as opposed to paying rent in perpetuity. Instead, the houses will be used as security on long-term borrowings which will be used to refinance the short-term loans.

The non-current asset held for sale belonged to African Sun Limited in Zimbabwe.


72

11 NON-CURRENT ASSETS HELD FOR SALE (CONTINUED)

(b) Assets and liabilities of a disposal group classified as held for sale Fothergill operating assets with a carrying amount US$129,661 previously classified as a disposal group held for sale in 2014 were

impaired during the period 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 however there has been a delay in finalising the lease because the Wild Parks Commission was dissolved and there is no one to contact. The Group still intends to dispose once the lease has been renewed.

The hotel has been non-operational since 2011, and there are no associated incomes and expenses, cash flows and liabilities. Below is an analysis of the assets classified as held for sale;

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

Assets of a disposal group classified as held for saleProperty and equipment - 120 334 - - Inventory - 9 327 - -

Total assets of a disposal group classified as heldfor sale - 129 661 - -

(c) Fair value of non-current assets held for sale In 2014, freehold properties classified as held for sale were valued at fair value. The fair value was determined using significant

unobservable inputs (level 3), less costs to sale. The fair value less costs to sale in 2014 was US$4 046 430. The fair value of the 16.54% investment in Dawn Properties Limited was determined using quoted prices in the active markets for

identical assets, which is the Zimbabwe stock exchange (Level 1). For the portion that was classified as non-current assets held for sale as at 30 September 2014, the fair value was determined using significant unobservable inputs, which was the agreed selling price (level 3)

The assets of a disposal group classified as held for sale were valued at fair value and no associated disposal costs were expected.

This non-recurring fair value was measured using unobservable inputs, being the depreciated replacement cost of similar assets, and were therefore within level 3 of fair value hierarchy.

Fair Value measurements using

As at 31 December 2015

Quoted prices in activemarkets

for identical assets level 1

US$

Significant other

observable inputs level 2

US$

Significant observable

inputs level 3 US$

Total US$

Non-recurring fair value measurementsFreehold properties - transferred from property and equipment - - - - 16.54% investment in Dawn Properties Limited - - - - Assets of a disposal group classified as held for sale - - - -

- - - -

As at 30 September 2014Freehold properties - transferred from property and equipment - - 4 046 430 4 046 430 16.54% investment in Dawn Properties Limited 3 171 087 - - 3 171 087 Assets of a disposal group classified as held for sale - - 129 661 129 661

3 171 087 - 4 176 091 7 347 178


73

11 NON-CURRENT ASSETS HELD FOR SALE (CONTINUED)

(c) Fair value of non-current assets held for sale (continued) Below is the Group’s reconciliation of the fair values of non-current assets held for sale

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

As at 1 October 7 347 178 4 354 381 3 171 087 4 224 720 Assets classified as held for sale from investmentsin associate - 3 171 087 - 3 171 087 Assets classified held for sale from propertyand equipment - 4 257 640 - - Fair value adjustment on freehold properties - ( 211 210) - - Impaired ( 129 661) - - - Sold during the period (3 171 087) (4 224 720) (3 171 087) (4 224 720)Reclassified back to property and equipment (4 046 430) - - -

- 7 347 178 - 3 171 087 12 FINANCIAL INSTRUMENTS

Financial instruments by categoryAssets as per statement of financial positionTrade and other receivables (excludingpre-payments and statutory receivables) (note 14) 4 205 031 6 661 145 2 193 735 2 336 697 Loans advanced - - 13 129 804 13 129 804 Cash and cash equivalents 3 079 533 2 734 576 613 337 161 186

Total 7 284 564 9 395 721 15 936 876 15 627 687

Liabilities as per statement of financial positionBorrowings 7 736 967 17 348 745 1 425 257 3 998 351 Trade and other payables (excluding statutoryliabilities) 9 930 167 9 116 207 1 037 716 1 014 119

Total 17 667 134 26 464 952 2 462 973 5 012 470

13 INVENTORIESFood and beverage 686 040 908 076 - - Shop merchandise 51 403 67 737 - - Consumable stocks 533 794 354 467 3 359 6 110 Maintenance stocks 367 842 314 212 - -

1 639 079 1 644 492 3 359 6 110

14 TRADE AND OTHER RECEIVABLESTrade receivables 3 015 684 4 638 998 - - Less: allowance for impairment (732 159) (307 766) - -

Trade receivables - net 2 283 525 4 331 232 - - Prepayments 263 777 285 380 24 602 18 000 Amount receivable from a joint operations partner 242 221 168 739 - - PAYE and VAT refundable - South Africa entities 53 790 199 797 - - Amount receivable from TGL Properties 568 490 - - - Other receivables 385 455 463 579 83 603 36 953 Receivables from related parties (note 30) 174 309 1 040 960 1 832 484 1 718 424 Staff receivables 546 031 656 635 277 648 581 320

4 522 598 7 146 322 2 218 337 2 354 697

Less non-current portion:Receivables from related parties (note 30) - 255 582 - 255 582 Staff receivables 389 971 356 464 389 971 356 464

Total non-current 389 971 612 046 389 971 612 046

Current portion 4 132 627 6 534 276 1 828 366 1 742 651


74

14 TRADE AND OTHER RECEIVABLES (CONTINUED)GROUP COMPANY

As at31 December

2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

All non-current receivables are due within five years. Related parties is based on cash flows discounted using the Group’s Average cost of borrowing of 11.29%. The loans relate to car loans and housing loans which are payable over 5 years

The effective interest rates on non-current receivables were as follows:Receivables from related parties 11.29% 11.54% 11.29% 13.20%Staff receivables 11.29% 13.20% 11.29% 13.20%

As at 31 December 2015, trade receivables of US$2 554 016 (2014: US$2 584 584) were fully per-forming.

As at 31 December 2015 trade receivables ofUS$ 3 168 628 (2014: US$1 746 648) were past due but not impaired. These relate to a number ofindependent customers from whom there is no recent history of default. The ageing analysis of these trade receivables is as follows:Up to 30 days 1 467 525 858 653 - - 30 to 60 days 283 306 343 560 - - Over 60 days 833 612 544 435 - -

2 584 443 1 746 648 - -

As at 31 December 2015, trade receivables ofUS$732 159 (2014 US$307 766) were impaired andfully provided for. The individually impaired receivables mainly relate to customers in difficult economic situations. The ageing analysis of these trade receivables is as follows:Over 60 days 732 159 307 766 - -

The carrying amounts of the Group’s trade and oth-er receivables are denominated in the followingcurrencies:United States of America dollars 3 707 403 6 543 875 - 799 723 South African Rand 169 245 248 842 - - Botswana Pula 77 116 112 321 - - Ghanaian Cedi' 568 834 241 284 - -

4 522 598 7 146 322 - 799 723

Movements on the group provision for impairment of trade receivables are as follows:As at 1 October 307 766 269 810 - - Allowance for receivables impairment 424 393 116 936 - - Receivables written off during the period as uncollectible - (78 980) - -

As at 31 December 732 159 307 766 - -

The creation and release of allowance for impaired receivables have been included in “other expenses” in the statement of comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation of recovering additional cash.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The

Group does not hold any collateral as security. Debtors amounting to US$324 720 (2014:US$952 281) were pledged as security to a medium-term loan of US$1 390 308 (2014: US$1

532 227).


75

15 CASH AND CASH EQUIVALENTSGROUP COMPANY

As at31 December

2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

Cash at bank and on hand 3 079 533 2 734 576 613 337 161 186

The net exposure to foreign currency balances was:Bank balancesUnited States dollars 2 651 473 1 733 472 611 303 144 950 South African Rand 402 971 930 227 2 034 16 236 Botswana Pula 4 104 6 396 Euro 12 425 58 849 - - Australian Dollars 57 1 080 - - British Pound 1 954 - Ghanaian Cedi' 6 549 4 552 - -

3 079 533 2 734 576 613 337 161 186

The carrying amount of the cash and bank balancesapproximate its fair value.

Cash and cash equivalents includes a restrictedbalance of US$104 602 (2014: US$369 453) held in an offshore account by Africa Export-Import Bank as part of the security to the loan. This is 8% of the outstanding loan balance. The cash is available to the extent that the balance is equal to or more than 8% of the loan outstanding.

Cash and cash equivalents comprise the following for the purposes of the statement of cash flows:

Cash and bank balances 3 079 533 2 734 576 613 337 161 186 Bank overdrafts (note 21) (512 177) (1 261 632) - - Less: restricted cash (104 602) (369 453) - -

Cash and cash equivalents 2 462 754 1 103 491 613 337 161 186

Restricted cash relates to cash that is held by African Export-Import Bank Zimbabwe as security for a loan granted to African Sun Limited. This restricted cash reduces as the repayments are made.

16 SHARE CAPITAL AND PREMIUM 16.1 Authorised and issued share capital

Numberof shares

Ordinaryshare capital

US$

Share premium

US$

Treasury shares

US$ Total US$

As at 30 September 2013 823 940 874 8 314 729 24 734 304 (205 713) 32 843 320 Sale of treasury shares 7 532 033 - - 205 713 205 713 As at 30 September 2014 831 472 907 8 314 729 24 734 304 - 33 049 033Share options exercised 30 298 870 302 987 389 381 - 692 368

As at 31 December 2015 861 771 777 8 617 716 25 123 685 - 33 741 401

The total authorised number of ordinary shares is 1,5 billion (2014: 1,5 billion) with a par value of US$0.01 per share. All issued shares are fully paid.


76

16 SHARE CAPITAL AND PREMIUM (CONTINUED)

16.1 Authorised and issued share capital (continued) The unissued shares are under the control of the Directors, subject to the limitations imposed by the Articles and Memorandum of

Association of the Company, the Zimbabwe Companies Act (Chapter 24:03) and the Zimbabwe Stock Exchange Listing Requirements.

16.2 Directors’ shareholdings As at 31 December 2015, no directors held shares directly in the Company (2014:nil). All directors who acquired shares through the

employee share based payment scheme sold their shares during the year. 17 SHARE-BASED PAYMENTS

Share options were granted to directors and to selected employees. The exercise price of the granted options was equal to the market price on approval date which is also the grant date. Options were conditional on the employee completing three years’ service (the vesting period). The options were exercisable starting three years from the grant date, without additional performance and market conditions. The Group had no legal or constructive obligation to repurchase or settle the options in cash.

There were no share options granted during the year. Below are the movements and related weighted average exercise price of the

outstanding share options that were granted in 2013:

As at 31 December 2015 As at 30 September 2014Exercise

price in UScents per

share option Share

options

Exerciseprice in US

cents pershare option

Share options

As at 1 October 1.50 32 926 655 1.50 32 926 655 Granted during the period - - - - Exercised during the period 1.50 (30 298 870) - - Forfeited during the period - (2 627 785) - -

As at 31 December - - 1.50 32 926 655

There was a change in ownership structure during the year and this led to the shortening of the vesting period and all option were exercised during the period. The forfeited balance related to those shares that belonged to employees who retired or were retrenched.

18 RESERVES 18.1 Reserves Other reserves include a non-distributable reserve which arose as the net effect of the restatement of assets and liabilities previously

denominated in Zimbabwe dollars on 1 February 2009, treasury shares and equity settled share based payments reserve. The transfer from non-distributable reserve to accumulated losses was done following approval by the Board. The non-distributable

reserve arose following the dollarisation in 2009. The remaining amount of US$1 273 921 relates to The Victoria Falls Hotel, which is jointly managed. The other partner requires the same approval to reclassify.

18.2 Equity settled share based payments reserve The Group had a share option scheme, where employees were given the option to buy the Company’s shares at the end of the defined

vesting period. The accrued value of employee services was credited to this equity settled share based payments reserve until such time the options were exercised. Of the share option granted in 2013, 30,298,870 were exercised during the period. All options not exercised were forfeited.

18.3 Foreign currency translation reserve On consolidation, exchange differences arising from the translation of transactions and balances of foreign operations whose

functional currencies are different to the Group’s presentation currency are taken to the foreign currency translation reserve. 18.4 Revaluation reserve The revaluation reserve relates to share of revaluation reserves from the associates and joint ventures.


77

19 TRADE AND OTHER PAYABLESGROUP COMPANY

As at31 December

2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

Trade payables 4 470 652 2 919 584 450 160 465 809 Amounts due to related parties 832 943 283 381 - - Statutory liabilities 6 173 782 5 617 239 2 427 203 4 383 052 Accruals 1 726 983 2 731 790 294 726 265 026 Guests deposits 872 910 1 735 428 - - Rent liability for The Lakes Hotel 461 788 634 351 - - Other payables 1 564 891 811 673 292 830 283 284

16 103 949 14 733 446 3 464 919 5 397 171 Less non-current:Statutory liabilities on a payment plan 1 165 237 2 203 358 1 165 237 2 203 358

Current 14 938 712 12 530 088 2 299 682 3 193 813

Statutory liabilities relate to pay as you earn (“PAYE”), pension obligations, value added tax (“VAT”) and tourism levy. The non-current potion of statutory liabilities are payable monthly on a fixed instalment for the next 46 months (2014: 58 months). Included in other payables are sundry creditors who provide other goods and services which do not form part of the direct costs and

services of the business 20 PROVISIONS FOR OTHER LIABILITIES

Provisions are recorded when the Group has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic benefits will occur, and where a reliable estimate can be made of the amounts of the obligations. A reliable estimate is the amount the Group would rationally pay to settle the obligation at the reporting date.

The provisions balance is made up of the following:

GROUP 31 December 2015 Balance as at

1 October 2014 US$

Current

provision US$

Utilised/reversed

provision US$

Balance as at 31 December

2015 US$

Leave pay 509 168 328 729 - 837 897 Contractual claims 364 467 - - 364 467 The Victoria Falls Hotel dismissed employees - 835 787 - 835 787 Audit costs for foreign operations - 909 300 - 909 300 Audit fees - 192 626 - 192 626 Restructuring costs - 291 000 - 291 000 Legal cost - 60 000 - 60 000

873 635 2 617 442 - 3 491 077

30 September 2014 Balance as at

1 October 2013 US$

Current

provision US$

Utilised/reversed

provision US$

Balance as at 30 September

2014 US$

Leave pay 749 463 - (240 295) 509 168 Contractual claims 364 467 - - 364 467

1 113 930 - (240 295) 873 635


78

20 PROVISIONS FOR OTHER LIABILITIES (CONTINUED)

COMPANY 31 December 2015 Balance as at

1 October 2014 US$

Current

provision US$

Utilised/reversed

provision US$

Balance as at 31 December

2015 US$

Leave pay 100 433 92 367 - 192 800 Audit fees - 180 025 - 180 025 Legal costs - 60 000 - 60 000 Restructuring costs - 95 000 - 95 000

100 433 427 392 - 527 825

30 September 2014 Balance as at

1 October 2013 US$

Current

provision US$

Utilised/reversed

provision US$

Balance as at 30 September

2014 US$

Leave pay 215 444 - (115 011) 100 433

(a) Leave pay This amount is the Group’s liability to pay employees for their annual leave days. Current provision is included in the statement of comprehensive income under ‘operating expenses’. (b) Contractual claims The amount represents a provision payable to a counterparty arising from a service contract. The counterparty has made an

additional claim against the Group. After obtaining legal advice, the outcome of the legal claim will not give rise to any loss beyond the provision provided for.

(c) The Victoria Falls Hotel dismissed employees The Victoria Falls Hotel Partnership, in which the Group has 50% joint control, is a defendant in a legal case involving 69 dismissed

employees. The employees were dismissed following their involvement in an illegal industrial action. They have since challenged the dismissal through the courts.

(d) Audit costs for foreign operations This amount is the provision for the audit costs of dormant companies in South Africa and the exit of the Fothergill operations. (e) Audit fees This is the provision for audit fees that are payable to the independent auditors of the Group. (f) Restructuring costs This is a provision for retrenchment for all closed entities, including foreign operations. (g) Legal cost This is a provision for any legal matters on the closure of foreign entities.


79

21 BORROWINGSGROUP COMPANY

As at31 December

2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

Non-currentForeign bank loans 979 167 3 524 875 - - Finance lease liability - 35 139 - 35 139 Local bank loans 1 338 367 3 182 781 890 308 -

Total non-current 2 317 534 6 742 795 890 308 35 139

CurrentBank overdrafts- local banks 252 396 1 261 632 - 312 218 Bank overdrafts- foreign banks 259 781 - - - Foreign bank loans 1 837 990 3 087 500 - - Finance lease liability 34 949 138 494 34 949 138 494 Local bank loans 3 034 317 6 118 324 500 000 3 512 500

Total current 5 419 433 10 605 950 534 949 3 963 212

Total borrowings 7 736 967 17 348 745 1 425 257 3 998 351

Current bank borrowings of US$5 419 433 comprise: -US$500,000 local loans which were renewed during the year and will be due for renewal in 2016. -US$39,949 current portion of the finance lease liability. -US$252,396 overdrafts from local banks which are part of the current facilities and are renewable during 2016 when the global

facilities are up for renewal. -US$259,781 overdraft from a Ghanaian bank. The overdraft is part of the term facility from Ghana and will not be renewed at the end

of the facility in 2018. -US$1,250,000 current portion of the long-term refurbishment loan. Local bank loans including overdrafts bear an average interest cost of 16.57% (2014: 16.57%) annually. Current foreign bank loans are part of long-term loans structures and have the same terms as defined in the long-term portions of

the same loans. Current bank borrowings include US$575 308 secured loans (2014: US$1 532 277). The loans are secured by; -cession of debtors amounting to US$751 000 (2014; US$ 952 281), -deed of pledge of funds in foreign currency accounts, and -unlimited guarantee by African Sun Zimbabwe (Private) Limited. Non-current bank borrowings of US$2 317 534 comprise: -US$979 167 Ghanaian medium term loan which bears interest at 12.5% (2014: 12.5%), and is payable over 4 years. US$847 281 of

the loan is classified under current. The loan is secured by a bank guarantee from a Zimbabwean bank. -US$1 837 990 (2014: US$4 311 303) a foreign loan bearing interest at LIBOR plus 7% (2014: 7%) and was payable over 5 years. This

loan is now classified under current. The loan is secured by a bank guarantee from a local bank amounting to US$4 700 000, a cash deposit of US$104 000 and an African Sun Limited guarantee. During the year, the Group repaid US$3 118 155 (2014: US$2 494 524) in principal towards the loan.

-US$1 243 243 local bank loan bearing interest at 15% per annum. The loan is unsecured and is payable over 3 years from 1 September 2014 with a final maturity date of 31 August 2017. The first instalment which was due on this loan was paid on 30 September 2014 and the last instalment is due on 31 August 2018.


80

21 BORROWINGS (CONTINUED)

The maturity profile of the Group’s borrowings are as follows:

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

Up to one month 1 275 472 481 970 - 336 259 Later than one month, but not later than three months 2 180 041 2 294 106 125 000 1 023 082 Later than three months, but not later than six months 1 057 668 2 118 659 125 000 1 034 623 Later than six months, but not later than nine months 437 265 1 268 659 125 000 34 623 Later than nine months, but not later than one year 468 986 4 442 554 159 949 1 534 623 Later than one year, but not later than five years 2 317 535 6 742 797 890 308 35 141

7 736 967 17 348 745 1 425 257 3 998 351

The exposure of the Group’s borrowings to interest rate changes and the contractual repricing dates at the end of the reporting period are as follows:6 months or less 4 513 181 4 894 735 250 000 2 393 964 6-12 months 906 251 5 711 213 284 949 1 569 246 1-5 years 2 317 535 6 742 797 890 308 35 141

7 736 967 17 348 745 1 425 257 3 998 351

The carrying amounts of the Group’s borrowings approximate their fair values as the impact of discounting is insignificant.

22 INCOME TAXES

22.1 Income tax expense15 months

ended31 December

2015US$

As at30 September

2014US$

Current income tax:Income tax on current year profitsWithholding tax - -

- -

- - Deferred tax:Originating and reversal of temporary differences (464 839) (550 031)

Income tax credit (464 839) (550 031)

The tax on the Group’s profit before income tax differs from the theoretical amount thatwould arise using the weighted average tax rate applicable to profits of the consolidatedentities as follows:Loss before income tax continuing operations (6 149 528) (3 104 585)

Tax calculated at domestic tax rates applicable to profits in the respective countries (1 622 853) (374 925)

Tax effects of:-Equity accounted earnings reported net of tax - (70 636)-Income not subject to tax (760 267) (99 354)-Expenses not deductible for tax purposes 1 918 281 536 406 -Utilisation of previously unrecognised tax losses - (541 522)

Income tax credit (464 839) (550 031)

Income not subject to tax relates to income that arose from a gain on disposal of Dawn Properties Limited shares which was taxed at a lower rate and dividend income.


81

22 INCOME TAXES (CONTINUED)

22.1 Income tax expense (continued) Expenses not deductible for tax purposes relate to expenses such as expenses from foreign dormant entities, donations, legal

claims, increase in allowance for doubtful debts on related parties, Zimra penalties, impairment of non current assets held for sale, loss on disposal of property and equipment and fair value adjustment of biological assets

The weighted average applicable tax rate was 26.88% (2014: 24.52%). The applicable tax rates in the different counties for the year were; Zimbabwe 25.75% (2014: 25.75%) South Africa 28% (2014: 28%) Ghana 20% (2014: 20%) Nigeria 30% (2014: 30%)

22.2 Deferred taxes The analysis of deferred tax assets and deferred tax liabilities is as follows:

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

Deferred tax assets:-Deferred tax assets to be recovered aftermore than 12 months 466 997 1 031 788 466 997 - -Deferred tax assets to be recovered within 12 months 711 264 834 096 257 500 225 933

1 178 261 1 865 884 724 497 225 933

Deferred tax liabilities:-Deferred tax liabilities to be recovered aftermore than 12 months 3 852 490 4 262 022 - 78 969 -Deferred tax liabilities to be recovered within 12 months 914 908 889 106 49 921 27 387

4 767 398 5 151 128 49 921 106 356

Net deferred tax liabilities / (assets) 3 589 137 3 285 244 (674 576) (119 577)

The gross movement on the deferred taxaccount is as follows:As at 1 October 3 285 244 4 104 127 (119 577) (246 298)Statement of comprehensive income (credit) / charge (464 839) (550 031) (554 999) 126 721 Income statement charge - discontinued operations 768 732 - - -

As at 31 December 3 589 137 3 554 096 (674 576) (119 577)

The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same tax jurisdiction, is as follows:

GROUPAccelerated

taxdepreciation

US$

Fair valuegains

US$Other

US$

Total US$

Deferred tax liabilities

Year ended 30 September 2014As at 1 October 2013 5 302 019 - 147 204 5 449 223 (Credited) / charged to statement of comprehensive income (449 436) - 151 341 (298 095)

As at 30 September 2014 4 852 583 - 298 545 5 151 128

Period ended 31 December 2015As at 1 October 2014 4 852 583 - 298 545 5 151 128 (Credited) / charged to statement of comprehensive income (194 033) - (189 696) (383 729)

As at 31 December 2015 4 658 550 - 108 849 4 767 399


82

22 INCOME TAXES

22.2 Deferred taxes (continued) COMPANY

Acceleratedtax

depreciationUS$

Fair valuegains

US$Other

US$

Total US$

Deferred tax liabilitiesYear ended 30 September 2014

As at 1 October 2013 188 853 - - 188 853 Credited to statement of comprehensive income (82 497) - - (82 497)

As at 30 September 2014 106 356 - - 106 356

Period ended 31 December 2015As at 1 October 2014 106 356 - - 106 356 Credited to statement of comprehensive income (56 435) - - (56 435)

As at 31 December 2015 49 921 - - 49 921

GROUP Accelerated

taxdepreciation

US$

Fair valuegains

US$Other

US$

Total US$

Year ended 30 September 2014As at 1 October 2013 (55 477) (1 289 619) - (1 345 096)Charged / (credited) to statement of comprehensive income 25 655 (546 443) - ( 520 788)

As at 30 September 2014 (29 822) (1 836 062) - (1 865 884)

Period ended 31 December 2015As at 1 October 2014 (29 822) (1 836 062) - (1 865 884)Charged / (credited) to statement of comprehensive income (265 439) 953 061 - 687 622

As at 31 December 2015 (295 261) (883 001) - (1 178 262)

COMPANY Provisions

US$Tax losses

US$Other

US$Total US$

Deferred tax assets

Year ended 30 September 2014As at 1 October 2013 - (435 151) - (435 151)Credited to statement of comprehensive income (25 861) 235 079 - 209 218

As at 30 September 2014 (25 861) (200 072) - (225 933)Period ended 31 December 2015As at 1 October 2014 (25 861) (200 072) - (225 933)(Charged) / credited to statement of comprehensive income (23 785) (474 779) - (498 564)

As at 31 December 2015 (49 646) (674 851) - (724 497) Deferred tax assets are recognised for tax loss carry-forwards to the extent that the realisation of the related tax benefit through

future taxable profits is probable. Based on forecasts, Directors are of the opinion that, the taxable profits will offset the current deferred tax asset.

The Group has not recognised tax losses amounting to US$504 748 (2014: US$818 883). The asset will only be recognised if there is

possibility of reversal of the losses 23 DISCONTINUED OPERATIONS 23.1 West Africa 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. The exit from Nigeria was effective 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.


83

23 DISCONTINUED OPERATIONS (CONTINUED)

23.2 Zimbabwe The Group mutually terminated the lease agreement of Beitbridge Express Hotel with Dawn Properties Limited effective 31 January

2016.This was following approval by the Board on 19 November 2015 to exit from the lease. The rational for discontinuing was as a result of prolonged losses by the Hotel which was eroding the group’s equity. The hotel reported a loss of US$336 311 for the period ended 31 December 2015 (2014: US$218 535)

23.3 Analysis of profit for the period from discontinued operations The combined results of the discontinued operations included in the profit for the period are set out as below. The comparative profit

and cash flows from discontinued operations have been re-presented to include those operations classified as discontinued in the current period.

15 months ended

31 December 2015US$

Yearended


Statement of comprehensive incomeRevenue 5 391 249 3 156 175 -Amber Accra Hotel 4 444 363 2 161 627 -Beitbridge Express Hotel 946 886 994 548

Cost of sales (1 218 570) (840 211)-Amber Accra Hotel (891 109) (496 719)-Beitbridge Express Hotel (327 461) (343 492)

Gross profit 4 172 679 2 315 964 -Amber Accra Hotel 3 553 254 1 664 908 -Beitbridge Express Hotel 619 425 651 056

Operating expenses (4 728 009) (3 997 387)-Amber Accra Hotel (3 830 713) (3 127 795)-Beitbridge Express Hotel ( 897 296) (869 592)

Other expenses (188 070) - -Amber Accra Hotel (188 070) --Beitbridge Express Hotel - -

Impairment (369 951) - -Amber Accra Hotel (311 511) --Beitbridge Express Hotel (58 440) -

Finance costs (460 075) (447 720)-Amber Accra Hotel (460 075) (447 720)-Beitbridge Express Hotel - -

Loss before income tax (1 573 425) (2 129 143)-Amber Accra Hotel (1 237 114) (1 910 607)-Beitbridge Express Hotel (336 311) (218 535)

Income tax (charge) / credit (709 649) 268 852 -Amber Accra Hotel (709 649) 268 852 -Beitbridge Express Hotel - -

Loss after income tax (2 283 074) (1 860 291)-Amber Accra Hotel (1 946 763) (1 641 755)-Beitbridge Express Hotel (336 311) (218 536)

Loss from sale of assets after tax (342 677) - -Amber Accra Hotel (342 677) - -Beitbridge Express Hotel - -

Loss from discontinued operations (2 625 751) (1 860 291)-Amber Accra Hotel (2 289 440) (1 641 755)-Beitbridge Express Hotel (336 311) (218 536)


84

23 DISCONTINUED OPERATIONS (CONTINUED) 23.3 Analysis of profit for the period from discontinued operations (continued)

15 months ended

31 December 2015US$

Yearended


Other comprehensive income from discontinued operationsExchange differences on translation of discontinued operations (356 891) (1 621 472)-Amber Accra Hotel (356 891) (1 621 472)-Beitbridge Express Hotel - -

Other comprehensive income from discontinued operations (356 891) (1 621 472)-Amber Accra Hotel (356 891) (1 621 472)-Beitbridge Express Hotel - -

23.5 Analysis of cash flows from discontinued operations

Net cash generated use in discontinued operationsNet cash outflow from operating activities (740 446) (68 425)-Amber Accra Hotel (787 913) (126 621)-Beitbridge Express Hotel 47 467 58 196

Net cash outflow from investing activities (155 112) (1 006 623)-Amber Accra Hotel (107 387) (932 667)-Beitbridge Express Hotel (47 725) (73 956)

Net cash (outflow) / inflow from financing activities (815 680) 567 946 -Amber Accra Hotel (815 680) 567 946 -Beitbridge Express Hotel - -

Net cash generated from / (used in) discontinued operations (1 711 238) (507 101)-Amber Accra Hotel (1 710 980) (491 342)-Beitbridge Express Hotel ( 258) (15 759)

Analysis of the disposal of operating assetsConsideration receivable 754 928 - -Amber Accra Hotel 754 928 - -Beitbridge Express Hotel - -

Carrying amount of operating assets soldProperty and equipment (1 060 560) - -Amber Accra Hotel (1 060 560) --Beitbridge Express Hotel - -Inventory ( 37 045) - -Amber Accra Hotel ( 37 045) --Beitbridge Express Hotel - -

Loss from sale of operating assets ( 342 677) - -Amber Accra Hotel ( 342 677) - -Beitbridge Express Hotel - -


85

24 EMPLOYEE PENSION COSTS The Group and all employees contribute to one or more of the following independently administered defined contribution

funds: (a) African Sun Limited Pension Fund - Zimbabwe This fund is a defined contribution scheme. All employees, except those who are members of the Catering Industry and Pension Fund

are members of this fund. The Group temporarily suspended pension contributions with effect from 1 October 2014 with the view of not accumulating a further liability towards the fund. The suspension was approved by the pension fund trustees, and the pensions and insurance regulator. Contributions to the fund resumed in the current period after approval by the Board.

(b) Catering Industry Pension Fund - Zimbabwe This is a defined contribution scheme which covers employees in specified occupations of the catering industry. The majority of

employees of African Sun Limited are members of this fund.

(c) National Social Security Authority Scheme (NSSA) - Zimbabwe The Group and all its employees based in Zimbabwe contribute to the National Social Security Authority Scheme, promulgated under

the National Social Security Act 1989. The Group’s obligations under this scheme are limited to specific contributions legislated from time to time.

(d) Provident Fund- South Africa The subsidiary company has a defined contribution provident fund, of which full time employees of the branch are members.

15 months ended

31 December 2015US$

Yearended


Group contributions to the plans during the year charged to the incomestatement amounted to;African Sun Limited Pension Fund 156 770 658 058 Catering Industry Pension Fund 112 841 472 192 National Social Security Authority Scheme 493 122 544 519 Provident Fund - South Africa 22 581 14 577 Unemployment Insurance Fund - South Africa 2 673 2 791 Provident Fund Ghana 13 246 10 275 Social Security and National Insurance Trust ("SSNIT") 38 382 26 762

839 615 1 729 174


86

25 OTHER INCOME AND EXPENSES15 months

ended31 December

2015US$

Yearended


Other incomeFair value adjustment on biological assets (note 9) - 33 064 Gain on disposal of investment in Dawn Properties Limited 2 654 161 - Dividend income 32 968 7 200 Unwinding of interest of staff debtors 265 362 - Income from insurance claims - 30 883 Income from disposal of scrap - 40 379

2 952 491 111 526

Other expensesEmployee share options 121 881 80 685 Provision for litigation costs and other provisions 835 787 - Retrenchment costs 1 567 085 - Separation costs 675 000 - Fair value adjustment biological assets 88 578 - Loss on sale of property and equipment 202 919 267 332 Closure consultancy costs 831 300 - Secretarial fees dormant entities 35 990 - VAT and withholding tax penalty 340 282 - Impairment of receivable from related party 510 945 239 800 Impairment of Zimra overpayment 481 190 - Impairment of other receivables 26 919 - Stocks write offs 27 736 42 859 Three partners resort receivable 77 116 -

5 822 728 630 676

Impairment of non-current assets Reversal of impairment of NCAHFS (note 8) (211 210) - Impairment of fixed assets (note 8) 2 278 813 - Fothergill assets write off (note 11) 129 661 -

2 197 264 -


87

26 EXPENSES BY NATURE 15 months

ended31 December

2015US$

Yearended


Inventory recognised in cost of sales 6 417 839 5 248 321 Outside laundry in cost of sales 648 831 471 817 Employee benefit expenses - payroll cost in cost of sales 7 945 203 6 689 020 - payroll cost in operating expenses 11 728 695 9 919 234 - directors' fees 226 724 109 392 Impairment charges on trade receivables (note 14) 1 146 944 294 522 Depreciation, usage and amortisation (note 8) 5 681 631 2 894 113 Sales and marketing 1 905 839 2 429 432 Operating lease costs 6 928 176 6 636 143 Audit fees; - -current year 207 750 185 064 -prior year 408 024 293 116 Repairs and maintenance 3 578 700 2 338 820 Electricity and water 3 561 503 2 802 375 Franchise fees 1 301 578 758 833 Insurance 617 691 489 115 Licenses 665 141 445 176 Vehicle running expenses 1 573 793 1 009 467 Security 1 280 184 1 129 587 Guest supplies 907 948 609 289 Banqueting and guest entertainment 630 649 423 204 Bad debts 617 677 414 499 Telephone costs 556 254 373 280 Printing and stationery 395 999 265 740 Sundry staff costs 444 008 297 957 Bank charges 278 515 186 901 Management fees 216 724 145 435 Consultancy costs 154 165 103 454 Foreign exchange losses 118 165 79 296 Outside laundry 94 654 63 518 Other 1 498 543 1 005 617

Total cost of sales and operating expenses 61 737 547 48 111 737

27 FINANCE COSTS AND INCOME

27.1 Finance incomeInterest income on bank deposits 4 554 3 952

4 554 3 952

27.2 Finance costsInterest costs on bank borrowings (2 051 553) (3 017 222)Interest cost on statutory liabilities (452 455) (73 190)

(2 504 008) (3 090 412)

Net financing costs for the period (2 499 454) (3 086 460)


88

27 FINANCE COSTS AND INCOME (CONTINUED)

15 months ended

31 December 2015US$

Yearended


27.3 Net Interest paidFor the purposes of statement of cash flows, net interest paid comprise the following;Finance costs from continuing operations per statement of comprehensive income (2 504 008) (3 090 412)Finance costs from discontinued operations (460 075) (447 720)Accrued finance costs from prior year - (124 325)Deferred finance costs current period - (213 856)

Total interest paid (2 964 083) (3 876 313)

Interest receivedInterest income on bank deposits 4 554 3 952

Net interest paid (2 959 529) (3 872 361)

There were no borrowing costs capitalised during the period (2014: nil)

28 EARNINGS PER SHARE

28.1 Basic earnings per share: centsFrom continuing operations (0.67) (0.05)From discontinued operations (0.31) (0.23)

Total basic earnings attributable to owners of parent (0.98) (0.28)

28.2 Diluted loss per share: centsFrom continuing operations (0.67) (0.05)From discontinued operations (0.31) (0.22)

Total dilute earnings attributable to owners of parent (0.98) (0.27)

28.3 Headline earnings per share: centsHeadline (loss) / earnings (0.96) 0.09 Diluted headline (loss) / earnings (0.96) 0.09

28.4 Reconciliations of earnings used in calculating earnings per shareLoss attributable to owners of the parent arising fromFrom continuing operations (5 684 689) (425 411)From discontinued operations (2 625 751) (1 860 292)

Loss attributable to owners of parent (8 310 441) (2 285 703)

Adjusted for;Profit from disposal from equity accounted investment (2 654 456) - Fair value adjustment and impairment of assets classified to non-current assets held forsale (211 210) 291 857 Loss from disposal of non-current assets including discontinued operations 545 596 - Impairment of non-current assets held for sale- fothergill 129 661 - Impairment of property and equipment 2 325 248 - Impairment of investment in associate - 3 050 229 Fair value adjustment on biological assets 88 578 (33 064)Recycled from other comprehensive income - (249 706)

Headline (loss) / earnings attributable to parent (8 087 023) 773 613


89

28 EARNINGS PER SHARE (CONTINUED)

28.5 Weighted average number of shares used as the denominator15 months

ended31 December

2015

Yearended

30 September 2014

Number NumberWeighted average number of shares used as the denominatorNumber of shares in issue 861 771 777 831 472 907 Weighted average number of shares in issue for basic earnings / (loss) per share 842 743 867 830 217 607 Weighted average number of shares in issue for diluted earnings / (loss) per share 842 743 867 854 520 614

For the purpose of basic earnings per share, the weighted average number of ordinary shares outstanding during the period is the number of ordinary shares outstanding at the beginning of the year, adjusted by the number of ordinary shares bought back or issued during the year multiplied by a time weight factor. The time weighting factor is the number of days that the shares are outstanding as a proportion of the total number of days in a year.

Weighted average number of shares for diluted earnings are calculated by adjusting the weighted number of ordinary shares with the potentially dilutive ordinary shares. As at 31 December 2015 there were no potential dilutive share options (2014: 32 926 655). For the share options, a calculation is done to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares determined using the described method is compared with the number of shares that would have been issued assuming the exercise of the share options. Of the potentially dilutive share options of 32 926 655 as at 30 September 2014, 30 298 870 share options were exercised on 17 July 2015 and the balance were forfeited.


90

29 STATEMENT OF CASHFLOW SUMMARY WORKINGS

29.1 Cash generated from operations 15 months

ended31 December

2015US$

Yearended


Cash generated from operations

Loss before income tax from;Continuing operations (6 149 529) (975 442)Discontinued operations (1 916 102) (2 129 143)

Loss before income tax including discontinued operations (8 065 631) (3 104 585)Adjusted for:Non-cash items including discontinued operationsDepreciation and hotel equipment usage (note 8) 5 928 003 3 078 094 Loss from disposal of property and equipment 545 596 267 332 Impairment of property and equipment (note 8) 2 337 248 - Amounts recycled from other comprehensive income - (249 706)Impairment of investment in associate (note 10.2) - 3 050 229 Impairment of inventory 52 225 42 859 Impairment of other long-term receivables (note 14) - 82 775 Fair value gains on biological assets 88 578 (33 064)Fair value gains on assets classified to property and equipment from non-current assetsheld for sale ( 211 210) - Fair value loss on assets classified to non-current assets held for sale from property andequipment - 291 858 Value of employee service under employee share ownership scheme 121 881 80 685 Impairment of assets of a disposal group (note 10) 129 661 - Gain on sale of non-current assets held for sale (2 654 161) - Finance costs net 2 959 528 3 534 180 Share of income from equity accounted investments - (274 315)

Cash generated from operations before changes in working capital 1 231 719 6 766 342

Changes in working capitalInventories (46 813) (43 688)-Increase in inventories 5 412 (829)-Inventory written off during the year (52 225) (42 859)Current trade and other receivables and trade and other payables 8 147 191 (241 628)-Decrease in current trade and other receivables 2 401 650 1 642 073 -Increase / (decrease) in current trade and other payables 5 026 066 (1 494 363)-Accrued interest prior year - 338 181 -Receivables from sale of non-current assets 717 411 -Foreign translation differences 2 064 (727 519)Decrease / (increase) in non-current trade and other receivables 222 075 (189 849)-Decrease / (increase) in non current trade and other receivables 222 075 (85 672)-Adjusted to current - (21 402)-Allowance for impairment of housing loans and motor vehicle loans - (82 775)-Decrease / (increase) in non-current trade and other payables (1 038 121) 445 256

Changes in working capital 7 284 332 ( 29 909)

Cash generated from operations 8 516 051 6 736 433


91

29 STATEMENT OF CASHFLOW SUMMARY WORKINGS (CONTINUED)

29.1 Additions and disposals of properties and equipment15 months

ended31 December

2015US$

Yearended


Additions to property and equipment 2 005 231 3 943 632

Disposals of property and equipment Cost of property and equipment disposed 2 104 998 839 002 Accumulated depreciation of property and equipment disposed (657 334) (387 081)

Net book amount 1 447 664 451 921 Loss on disposal of property and equipment including discontinued operation (545 596) (267 332)Proceeds accounted for under receivables (717 410) -

Cash proceeds from disposal of property and equipment 184 658 184 589

30 RELATED PARTY TRANSACTIONS The following transactions were carried out with related parties:

(a) Lease rentalsRent paid to Dawn Properties Limited 2 961 547 2 094 259

Rent payable to Dawn Properties Limited 414 757 283 381

African Sun Limited disposed its entire the shareholding in Dawn Properties Limited. However the two now have a common shareholding with Brainworks controlling more than 60% in Dawn Properties Limited

Lease rentals relate to the leases of 8 hotels rented from Dawn Properties Limited. Allleases with Dawn Properties Limited are at normal commercial terms and conditions.

(b) Key management compensationKey management includes directors (executive and non-executive), members of the Executive Committee, the Company Secretary and Head of Internal Audit. The compensation paid or payable to key management for employee services is as shown below:

Salaries and other short term employee benefits 1 168 101 1 327 168 Non-executive directors' fees 226 724 109 392 Termination pay 899 519 - Share based payments (note 16) 79 223 52 755

2 373 567 1 489 315

The Company granted 30 298 870 share options to key management in lieu of services. US$79 223 was charged to the statement of comprehensive income during the year relating to the share options granted (2014: US$52 755).


92

30 RELATED PARTY TRANSACTIONS (CONTINUED)

(c) Year end balances arising from transactions with related parties

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

Payables to Dawn Properties Limited 414 757 283 381 - -

Receivables from related partiesReceivables from executives - housing loans 179 309 255 582 179 309 255 582 Receivables from subsidiary in lieu of statutoryobligations - African Sun Zimbabwe (Private) Limited - - 1 107 912 1 236 302 Other receivables from subsidiaries - - 545 263 207 025 Receivables from joint venture entity - West AfricanSun Hotels Limited - 785 378 - 19 515

Total receivables from related parties 179 309 1 040 960 1 832 484 1 718 424

The payables to Dawn Properties Limited arose from lease rentals and are due one month after billing. The payables bear no interest.

(d) Receivables from executives The receivables from executives arose from housing loans advanced. Housing loans are payable over a 5 year period in 60 equal

instalments and no interest is charged.

The balance on loans to executives is analysed below:

GROUP COMPANYAs at

31 December 2015US$

As at30 September

2014US$

As at31 December

2015US$

As at30 September

2014US$

As at 1 October 255 582 338 741 255 582 338 741 Housing loans advanced during the year 126 103 105 342 126 103 105 342 Housing loans repaid during the year (419 358) - (419 358) - Unwinding of interest 216 982 (188 501) 216 982 (188 501)

As at 31 December 179 309 255 582 179 309 255 582

Receivables from related parties are discounted using the Group’s average cost of borrowing of 11.29%.


93

31 COMMITMENTS 31.1 Operating lease commitments The Group leases all its hotels in Zimbabwe under non-cancellable operating lease agreements. The lease terms are between 5 and

15 years, and all the lease agreements are renewable at the end of the lease period at market rates. The estimated undiscounted future minimum lease payments under the operating leases are as follows:

As at31 December

2015US$

As at30 September

2014US$

Not later than 1 year- Fixed 1 748 880 4 056 000

Later than 1 year and not later than 5 years- Fixed 6 995 520 16 224 000

Later than 5 years- Fixed 5 246 640 27 456 000

Total lease commitments 13 991 040 47 736 000

Variable lease commitments are based on estimates described in note 4(e). Thesignificant drop in the lease commitments is as a result of closure of Ghana andBeitbridge operations.

32.2 Capital expenditureAuthorised by Directors and contracted for - - Authorised by Directors but not contracted for 11 992 386 4 490 080

11 992 386 4 490 080

Capital expenditure relates to acquisition of property and equipment. The greater part of capital expenditure will be financed from free cash flows following completion of the greater aspects of our refurbishment. 32 EVENTS AFTER REPORTING DATE The Group closed Beitbridge Express Hotel on 31 January 2016. This closure was following an approval by the Board on 19 November

2015. Details on the Hotel are disclosed under note 23.2, discontinued operations.

94

Group Supplementary Information

5 YEAR REVIEW

CAGR(%)

31

December 2015

30 September

2014

30 September

2013 Restated

30 September

2012 Restated

30 September

2011 SHARE PERFORMANCE: CENTSPer shareBasic earningsBasic (loss) / earnings per share from continuing operations (11) (0.67) (0.05) (1.07) 0.12 (0.44)Basic loss per share from discontinued operations 21 (0.31) (0.23) - 0.00 (0.81)Basic (loss) / earnings per share for the year 6 (0.98) (0.28) (1.07) 0.12 (1.25)

Diluted earningsDividend (interim)Diluted (loss) / earnings per share from continuing operations

(11) (0.67) (0.05) (1.04) 0.12 (0.44)

Diluted loss per share from discontinued operations 21 (0.31) (0.22) - - (0.81)Diluted (loss) / earnings per share for the year 6 (0.98) (0.27) (1.04) 0.12 (1.25)

Headline earningsHeadline earnings / (loss) per share 202 (0.96) 0.09 (0.16) 0.12 0.23 Diluted headline earnings / (loss) per share 202 (0.96) 0.09 (0.16) 0.12 0.23

Net asset value (16) 1.28 1.27 1.73 2.78 2.61 Closing market price 15 1.70 2.10 1.10 0.90 1.20

Share informationIn issue - 861 771 777 831 472 907 831 472 907 831 472 907 831 472 907 Market capitalisation 16 14 650 120 17 460 931 17 302 758 7 415 468 9 977 675 ZSE industrial index 6 115 195 200 146 156

RATIOS AND RETURNSRevenue generationRevenue: US$ 7 63 154 973 53 568 809 56 275 679 54 426 751 48 796 506 Room occupancy % (2) 49 48 48 50 51 RevPAR: US$ 4 45 47 48 45 40 ADR: US$ 5 93 98 100 91 80

Profitability and returnsEBITDA: US$ 27 7 092 331 8 342 346 4 095 675 6 288 728 2 733 646 EBITDA margin (%) 22 11 13 12 12 5Pre-tax return on equity (%) - (9) (250) 7 7 (22)Income after taxation to total capital employed (%) - (1) (17) (15) 2 (7)Pre-tax return on total assets (%) - (2) (18) 2 3 (9)

SolvencyGearing (%) 13 65 58 56 40 36 *Interest cover (times) 23 0.84 2.53 1.17 2.49 1.49 Shareholders' equity to total assets (%) (14) 7 22 25 39 40 Total liabilities to total shareholders' funds (%) 24 1255 355 306 159 150

LiquidityCurrent assets to interest free liabilities and short term borrowings 2 0.37 0.76 0.63 0.56 0.69

ProductivityTurnover per employee: US$ 8 31 993 34 561 32 669 32 669 27 980

OtherNumber of employees - 1 245 1 490 1 666 1 666 1 744 Number of shareholders - 7 177 9 041 9 013 9 013 9 107

*Ratio has been calculated excluding non-cash items like impairment of investment in associate.

95

Shareholder’s ProfileAs at 31 December 2015

Shareholders analysis by volume

Range of holdings Number of

shareholders % Issued shares %

1-5000 6,033 84.06 4,839,564 0.565001-10000 389 5.42 2,662,683 0.3110001-25000 401 5.59 6,148,783 0.7125001-50000 132 1.84 4,579,199 0.5350001-100001 90 1.25 6,129,274 0.71100001-200000 55 0.77 7,663,650 0.89200001-500000 31 0.43 9,320,173 1.08500001-1000000 19 0.26 15,398,226 1.79Above 1 000 000 27 0.38 805,030,225 93.42

TOTAL 7,177 100 861,771,777 100

Shareholder analysis by type



LOCAL COMPANIES 611 8.51 579,861,133 67.30INSURANCE COMPANIES 13 0.18 204,124,495 23.70LOCAL INDIVIDUAL RESIDENT 5,920 82.49 36,148,078 4.19PENSION FUNDS 46 0.64 12,267,201 1.42FUND MANAGERS 18 0.25 7,448,019 0.86CHARITABLE AND TRUSTS 134 1.87 7,106,926 0.82NEW NON RESIDENT 193 2.69 5,380,476 0.62LOCAL NOMINEE 80 1.11 4,913,521 0.57OTHER INVESTMENTS & TRUST 58 0.81 2,369,397 0.27FOREIGN NOMINEE 20 0.28 1,527,925 0.18DECEASED ESTATES 75 1.05 432,438 0.05FOREIGN COMPANIES 6 0.08 167,503 0.02BANKS 2 0.03 22,319 0.00FOREIGN INDIVIDUAL RESIDENT 1 0.01 2,346 0.00

Total 7,177 100 861,771,777 100

Top 10 shareholders

Range of holdings Shareholding

2015 % Shareholding

2014 %

BRAINWORKS CAPITAL MANAGEMENT (PVT) LTD 494,940,596 57.43 358,666,923 43.14OLD MUTUAL LIFE ASSURANCE COMPANY ZIMBABWE LIMITED 203,919,598 23.66 202,276,380 24.33OLD MUTUAL ZIMBABWE LIMITED 66,212,575 7.68 66,212,575 7.96ZIMBABWE SUN EMPLOYEE SHARE 6,698,969 0.78 6,698,969 0.81GURAMATUNHU FAMILY TRUST 5,159,598 0.60 6,822,535 0.82ADLAB (PRIVATE) LIMITED 3,550,000 0.41 - - PICKOVER INVESTMENTS P/L 3,108,442 0.36 - - DELTA BEVERAGES PENSION FUND 2,619,267 0.30 - - LOCAL AUTHORITIES PENSION FUND 2,125,338 0.25 - - LA FRANCE HOLDINGS LIMITED (NNR) 1,765,961 0.20 - - TURNER ROY - - 14,323,474 1.72ALTFIN LIFE ASSURANCE COMPANY LTD - - 12,536,883 1.51STANBIC NOMINEES (PVT) LTD - - 11,124,006 1.34WORKERS COMPENSATION INSURANCE FUND (WCIF) - - 10,586,064 1.27NATIONAL SOCIAL SECURITY AUTHORITY (NSSA) - - 8,897,753 1.07Other 71,671,433 8.33 133,327,345 16.03

Total 861,771,777 100 831,472,907 100

96

Shareholders analysis by type (summarised)



Public 7,055 98.30 357,252,950 41.46Directors 2 0.03 494,940,596 57.43Non-Public 120 1.67 9,578,231 1.11

Total 7,177 100 861,771,777 100 • Non-Public includes Employee Share Participation Trust and managerial employees who hold shares in the Company in their individual capacities. • Public refers to Local Companies, Insurance Companies, Nominees, Banks, Investments, Trusts, Pension Funds and other organisations. • Directors means Company directors who hold shares in the Company directly and indirectly.

Major shareholders 2015 % 2014 %

Brainworks Capital Management (Private) Limited 494,940,596 57.43 358,666,923 43.14

Old Mutual Life Assurance Company Zimbabwe Limited 203,919,598 23.66 202,276,380 24.33Old Mutual Zimbabwe Limited 66,212,575 7.68 66,212,575 7.96

Total 765,072,769 88.77 627,155,878 75.43

Resident and non-resident shareholders 2015 % 2014 %

Resident 846,451,333 98.22 818,529,663 98.44Non resident 15,320,444 1.78 12,943,244 1.56

Total 861,771,777 100 831,472,907 100

The residency of a shareholder is based on place of domicile as recorded in the share register as defined for Exchange Control and does not denote status in terms of indigenisation regulations.

Share price information

Mid-Market price at:

Friday 31 December 2014 1,80 cents Tuesday 31 March 2015 1,50 cents Tuesday 30 June 2015 2,00 cents Wednesday 30 September 2015 1,98 centsThursday 31 December 2015 1,70 cents

Price range

Highest 01 October 2014 to 31 December 2015 2,90 cents Lowest 01 October 2014 to 31 December 2015 1,50 centsAverage Price 01 October 2014 to 31 December 2015 2,04 cents


97


98

Group structureAs at 31 December 2015

* Operated for 11 months of the period under review.

** The Group discontinued its interest effective 30 September 2015.

99

Board of Directors

1

4

5

8 9

7

2

6

10

3

100

1. MR. HERBERT NKALANon- executive DirectorMr. Nkala was appointed Chairman of the African Sun Limited Board on the 31st of March 2015 having joined the Board on the 24th of November 2014. Mr. H. Nkala is a marketing practitioner with qualifications from the Boston College in the United States of America, Jutland Institute of Technology in Denmark as well as the University of Zimbabwe to mention just a few. Mr. Nkala is the Managing Director of Arena Investments (Private) Limited. He is a previous recipient of the Tourism Personality of the year and the award for outstanding contribution to Tourism. Mr. Nkala is also a Board member of the following Companies; FBC Holdings Limited, IDC Zimbabwe, Tanganda Tea Company and OK Zimbabwe Limited.

2. MR. EDWIN TIMOTHY SHANGWA Managing Director Mr. Shangwa (Ed) was appointed to the position of Managing Director on 17 September 2015, having acted in the same position for six months. He has experience in the Tourism and Hospitality industry spanning over 30 years. He has a wealth of experience in accounting, corporate governance and company secretarial after having begun his career with African Sun Limited as a Trainee Accountant. Prior to taking up his current position he was a Finance Director of one of the subsidiaries as well as the Company Secretary.

Ed holds a Master in Business Administration degree, Postgraduate Diploma in Management Studies, Certificate in Management from Nottingham Business School, United Kingdom. He holds a Diploma in Accountancy, a Fellow Member of the Institute of Administration and Commerce of Southern Africa (FIAC) (Z), SA and is an Associate Member of the Hotel and Catering International Management Association (AHCIMA).

3. MR. BELIEVEMORE HATINZWANI DIRORIMWE Finance Director Mr. Dirorimwe (Believe) is a member of the Institute of Chartered Accountants of Zimbabwe (ICAZ), South Africa Institute of Chartered Accountants (SAICA), Association of Chartered Certified Accountants (ACCA).

He has been with the Group for (7) seven years and has a wealth of experience in Financial Management, Corporate Finance and Financial Reporting. Believe has been instrumental in the Group’s capital raising initiatives, new projects appraisals and openings, and SBU performance management.

Prior to taking up the position of Finance Director he was the Corporate Finance Manager and before that the Group Accountant. Believe served his articles of clerkship with Astra Industries Limited.

4. MR. EMMANUEL ANESU FUNDIRA Non-executive DirectorMr. Fundira was appointed to the Board of African Sun Limited on the 17th of October 2012. He is a holder of a BSc (Hons) Economics and Finance degree, MBA degree in Finance and Strategic Management and a Diploma in Marketing as well as other qualifications attained from various Universities. He is the Founder of a diversified tourism based leisure group with interest in photographic and non-photographic safaris operating on the shores of Lake Kariba and in the Victoria Falls.

Mr. Fundira is a past recipient of the Private Sector Tourism Personality of the Year Award (2009), the ZTA Tourism Image Builder of the Year Award (2010) and the ZTA Tourism Personality of the Year Award (2010).

He sits on the Safari Club International (SCI) Board and the African Wildlife Consultative Board (AWCF) and also serves as a Trustee of several charitable organisations.

5. MR. WALTER TINEYI KAMBWANJINon-executive DirectorMr. Kambwanji is a Chartered Accountant (Zimbabwe) and holds a Bachelor of Accounting Science degree from the University of South Africa and a Postgraduate Diploma in Applied Accounting from the University of Zimbabwe. Mr. Kambwanji co-founded Brainworks Zimbabwe and has significant experience in finance and operations in Zimbabwe and internationally. Prior to co-founding Brainworks Zimbabwe in 2009, he was a professional in the finance department of HSBC in London. He has previously been Finance Director of various companies in Zimbabwe including BancABC Zimbabwe Limited, Renaissance Merchant Bank Limited and Murray & Roberts Zimbabwe Limited. Mr. Kambwanji sits on several boards of directors which include Dawn Properties Limited and other Brainworks Zimbabwe affliates.

Board of Directors

101

6. MR.ALEX MAKAMURENon-executive Director Mr. Makamure was appointed to the African Sun Limited Board on the 17th of October 2012. A Chartered Accountant by training, Mr. Makamure is the Company Secretary and Group Treasurer for Delta Corporation Limited and has experience in Accounting, Treasury Management, Taxation, Procurement and Logistics Management, Corporate Administration among other professional spheres. He sits on the boards of Schweppes Zimbabwe Limited and other Delta affliates.

7. MS. NYARADZO G MAPHOSA Non-executive Director Ms Maphosa was appointed to the African Sun Limited Board on the 17th of October 2012. A registered Legal Practitioner, Conveyancer, Notary Public and a Partner with Sawyer and Mkushi, Miss Maphosa has been in practice for the past 12 years were she is attorney of record for several reputable financial institutions in Zimbabwe. She is also affiliated with the Institute of Bankers Zimbabwe and specializes in International Corporate Law and Finance. Miss Maphosa sits on several Boards and Trusts including Hillbrass P/L (Kintyre Estates), Tumaini and S.A.I.D Trust (Int).

8. MR. GEORGE MANYERENon-executive DirectorMr. Manyere was appointed to the African Sun Limited Board on the 24th of November 2014. An Accountant by training, he is the Founder and Chief Executive Officer of Brainworks Capital Management Limited. He has been involved in all phases of Brainworks Zimbabwe development since its founding in 2011. Brainworks is a leading and growing investment , consultancy and corporate advisory company, primarily active in Zimbabwe.

Prior to founding Brainworks Zimbabwe, Mr. Manyere was an investment professional with International Finance Corporation (“IFC”), headquartered in Washington DC. While at IFC, he was responsible for investing in excess of US$600 million in sub- Saharan Africa, and managing a portfolio of investments in excess of US$400 million and represented IFC on several investee companies’ boards.

Mr. Manyere holds a Bachelor of Accounting Science degree and Honours in Accounting Science degree from the University of South Africa. He also holds a Certificate in Theory of Accounting from the University of South Africa and has completed various international courses in finances, strategy and investment banking.

Mr. Manyere sits on several boards of directors and these include Brainworks Zimbabwe, Dawn Properties Limited, GetBucks Limited, Zimbabwe Newspaper (1980) Limited and Ecobank Asset Management (Private) Limited and GetSure Life Assurance Company of Zimbabwe Limited. 9. MS. TARIRO NDEBELENon-executive DirectorMs. Ndebele was appointed to the African Sun Limited Board on the 24th of November 2014. Ms. Ndebele is a sales and marketing practitioner who holds a Master in Business Administration degree, with her other qualifications being in Economics, International Air Transport and Marketing. She has over 20 years’ experience in travel and tourism. She has previously worked for the following companies, Sheraton Harare Hotel and Towers, KLM Royal Dutch Airlines, The Zimbabwe Tourist Development Corperation, Emirates as well as the Ministry of Finance Economic Planning and Development were she has gained valuable experience in her chosen area of expertise. She serves as a Trustee of a number of local and international charitable organizations and is the past Chairman of the Board of Airlines Representatives in Zimbabwe.

10. MR. TIMOTHY NUYNon-executive DirectorMr. Nuy is a Partner at Brainworks Capital Management and a Director at both African Development Corporation and My Bucks. Timothy is a specialist in finance and investments. He has a wealth of experience in financial analysis, investments, financial and commercial due diligence, restructuring and corporate strategy throughout Europe and Africa.

Board of Directors

102

DIRECTORATE

ChairmanH. Nkala

Non-executive DirectorsE.A. FundiraW.T.KambwanjiA. MakamureG. ManyereN.G. MaphosaT. NdebeleT. Nuy

Executive DirectorsE.T. Shangwa – Managing DirectorB.H. Dirorimwe – Finance Director BOARD COMMITTEES

Finance and Audit CommitteeA. Makamure (Non-executive Chairman)G. Manyere (Non-executive Director) T. Nuy (Non-executive Director)E.A. Fundira (Non-executive Director)

Nominations CommitteeH Nkala (Non-executive Chairman) W.T.Kambwanji (Non-executive Director)A. Makamure (Non-executive Director)

Human Resources and Remuneration CommitteeW.T. Kambwanji (Non-executive Chairman)N.G. Maphosa (Non-executive Director) T. Ndebele (Non-executive Director)

Marketing CommitteeT. Ndebele (Non-executive Chairman) E.A. Fundira (Non-executive Director)G. Manyere (Non-executive Director)

* The Executive Directors attend any Committee by invitation.

Company SecretaryV.T Musimbe

AUDITORSPricewaterhouseCoopers Chartered Accountants (Zimbabwe)Building Number 4, Arundel Office ParkNorfolk RoadMount PleasantP.O. Box 453HarareZimbabwe

BANKERSMBCA Bank Limited16th Floor, Old Mutual CentreThird StreetHarareZimbabwe

FBC Bank Limited5th floor, FBC CentreNelson Mandela AvenueHarare

LEGAL ADVISORSDube, Manikai & Hwacha Legal Practitioners6th Floor, Gold BridgeEastgate ComplexRobert Mugabe RoadHarareZimbabwe

REGISTERED OFFICEC/O Monomotapa Hotel54 ParklaneHarareZimbabwe

PHYSICAL ADDRESSBally House,Mount Pleasant Business Park,Off Norfolk Road/870 Endeavour Crescent,HarareP.O.Box CY 1211,Causeway Harare

Corporate Information

103

EXECUTIVE COMMITTEEE.T. Shangwa Managing DirectorB.H. Dirorimwe Finance DirectorE. Nyakurerwa Human Resources DirectorV.T. Musimbe Company Secretary

DIVISIONAL HEADSM. Havercroft Hotels Under Management - Legacy Hospitality Management Limited T. Hwingwiri Hotels Under Franchise InterContinental Hotels Group (IHG)E.T. Shangwa Owner Managed Hotels/Other Strategic Business Units

HOTEL AND RESORT GENERAL MANAGEMENT

Property General Managers

Area General ManagersJ. Trotsky Monomotapa Harare / Troutbeck ResortA. Landry Elephant Hills Resort/ The Kingdom at Victoria Falls/ Hwange Safari Lodge

Hotels Under Management - Legacy Hospitality Management Limited

A.Landry Elephant Hills Resort D. Kung The Kingdom at Victoria FallsN.Dzambo Hwange Safari LodgeI. Katsidzira Monomotapa Harare C.Chimbira Troutbeck Resort

Hotels Under Franchise - InterContinental Hotels Group (IHG)T.Hwingwiri Holiday Inn HarareC. Mulinde Holiday Inn BulawayoC.Chinwada *African Sun Amber Hotel Mutare*Soon to be rebranded back to Holiday Inn Mutare

Owner Managed HotelsA. Chikwanda Caribbea Bay Resort M. Zulu Great Zimbabwe Hotel

The Victoria Falls Hotel PartnershipG. Togni The Victoria Falls Hotel Sun CasinosD. Kanyandu Harare Sun Casino

Sun VacationsM.Matebwe Blue Swallow Units and Kingfisher Cabanas

Management

104

NOTICE IS HEREBY GIVEN THAT, the Forty Fourth Annual General Meeting of Shareholders of African Sun Limited will be held in the Inyangani Room, Ground Floor at Holiday Inn Harare, Corner 5th Street and Samora Machel Avenue, Harare on Thursday, 30 June 2016 at 1200 hours for the following purposes:

ORDINARY BUSINESS

1. Statutory Financial Statements To receive and adopt the financial statements for the period ended 31 December 2015, together with the report of the Directors and

Auditors therein.

2. To Appoint Directors Pursuant to the recent amendments to the Companies Memorandum and Articles of Association, all the Non-Executive Directors

will be subject to re-election at the Annual General Meeting. All the Non-Executive Directors being eligible will offer themselves for re-election at the Annual General Meeting.

3. Auditor’s Remuneration To determine the Auditor’s remuneration for the past audit. PricewaterhouseCoopers have indicated their willingness to continue in

office.

4. Director’s Fees To approve the payment of Directors’ fees for the chairman and non-executive directors for the period ended 31 December 2015.

Note:(a) In terms of section 129 of the Companies Act (Chapter 24:03), members are entitled to appoint one or more proxies to act in the

alternative, to attend, vote and speak in their place at the meeting. A proxy need to be a member of the Company. (b) In terms of Article 80 of the Company’s Articles of Association, instruments of the proxy must be lodged at the registered office of the

Company at least forty-eight hours before the time appointed for holding the meeting.

By Order of the Board

V T Musimbe Company Secretary

Registered OfficeAfrican Sun LimitedMonomotapa Hotel54 ParklaneHarare Zimbabwe

28 April 2016

Notice to Members

105

Shareholder’s Diary

SHAREHOLDERS’ DIARY

Full Year Results 2015 March 2016Annual Report 2015 Published June 2016Forty-fourth Annual General Meeting 30 June 2016

INTERIM REPORTS ANTICIPATED DATEHalf Year Results 2016 August 2016Full year Results 2016 March 2017

Forty-fifth Annual General Meeting June 2017

106

African Sun Limited Incorporated in the Republic of Zimbabwe Registration number: 643/1971

Registered office Transfer Secretaries C/O Monomotapa Hotel Corpserve (Private) Limited54 Parklane 2nd Floor, ZB Bank CentreHarare Cnr Kwame Nkrumah Avenue/First StreetP.O. Box CY 1211 P.O. Box 2208Causeway HarareHarare ZimbabweZimbabwe Tel: +263 4 751559/61Tel: +263 4 250501-6, 791459, 703970, 791416, 253401, Email: [email protected], 338239, 0782705382, 0782705379, 0782705384 Email: [email protected]: HYPERLINK “http://www.africansunhotels.com” www.africansunhotels.com

Physical AddressBally House,Mount Pleasant Business Park,Off Norfolk Road/870 Endeavour Crescent,HarareP.O.Box CY 1211,Causeway HarareZimbabweTel: + Tel: +263 4 250501-6, 791459, 703970, 791416, 253401, 338236, 338239, 0782705382, 0782705379, 0782705384 Email: [email protected]: HYPERLINK “http://www.africansunhotels.com” www.africansunhotels.com

Investor relationsWeb: www.africansunhotels.com

Telephone directory

For reservations:Pan African Central Reservations Office, Johannesburg (PACRO) +27 100030079,100030081-5Email: [email protected]

Harare Central Reservations Office Harare (HACRO) +263 4 700521 or +263 782 706 785-7Email: [email protected]

Legacy Hotels and Resorts, Baobab House, 5 Autumn Street, Rivonia, Johannesburg, South Africa +27 (0) 11 234 1823Email: [email protected]

Corporate and Hotel Directory

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Hotels Under managementMonomotapa Hotel +263 4 704501-30Elephant Hills Resort +263 13 44793-9Hwange Safari Lodge +263 18 331-6The Kingdom at Victoria Falls +263 13 44275 or 13 42358Troutbeck Resort +263 298 881 or 298 883-6

Hotels Under FranchiseAmber Hotel Mutare (Soon to be rebranded Holiday Inn Mutare) +263 20 64431Holiday Inn Bulawayo +263 9 252464, 257211 or 252460-9Holiday Inn Harare +263 4 251200-14 or 795610-38

Owner Managed HotelsCaribbea Bay Resort +263 61 2452-4Great Zimbabwe Hotel +263 39 262274, 265427 or 264187

The Victoria Falls Hotel PartnershipThe Victoria Falls Hotel +263 13 44751-60 or 44203-5

Other Strategic Business UnitsHarare Sun Casino +263 4 704501-30

Timeshares Kariba +263 61 2452-4Nyanga +263 298 881 or 298 883-6

Corporate and Hotel Directory

For use at the Forty-Fourth Annual General Meeting of the Shareholders of African Sun Limited to be held in the Inyangani Room, Ground Floor at Holiday Inn Harare, Corner 5th Street and Samora Machel Avenue, Harare on Thursday, 30 June 2016 at 1200 hours.

I/We, the undersigned

of

Being registered holder(s) of ordinary shares

Hereby appoint

or failing him,

Or failing them, the Chairman of the meeting as my/our proxy to act for me/us and vote for me/us on my/our behalf as indicated below at the Annual General Meeting of the company to be held on Thursday, 30 June 2016 at 1200 hours and at any adjournment thereof.

PROXY(a) In terms of section 129 of the of the Companies Act (Chapter 24:03), members are entitled to appoint one or more proxies to act in the alternative, to attend and vote and speak in their place at the meeting. A proxy need not be a member of the Company.(b) In terms of article 80 of the Company’s Articles of Association, instruments of the proxy must be lodged at the registered office of the Company at least forty-eight hours before the time appointed for holding the meeting.

Signed at this day of 2016

Signature of Shareholder

PLEASE NOTEIf the address on the envelope of this letter is incorrect, please fill in the correct details below and return to the Company Secretary.

Name

Address

PROXY FORM FOR THE ANNUAL GENERAL MEETING

Stamp

THE COMPANY SECRETARY

Registered Office:AFRICAN SUN LIMITED

C/O Monomotapa Hotel,54 Parklane,

Harare, Zimbabwe.PO Box CY 1211, Causeway, Harare, Zimbabwe.

Physical Address:AFRICAN SUN LIMITED

Bally House, Mount Pleasant Business Park,

Off Norfolk Road/ 870 Endeavour Crescent,Mount Pleasant,

Harare, Zimbabwe.PO Box CY 1211, Causeway, Harare, Zimbabwe.

THE COMPANY SECRETARYAfrican Sun Limited

Bally House, Mount Pleasant Business Park,Off Norfolk Road/870 Endeavour Crescent, Harare

P O Box CY 1211, CausewayHarare, Zimbabwe

Email: [email protected]

CORPORATE HEAD OFFICEAfrican Sun Limited

Bally House, Mount Pleasant Business Park,Off Norfolk Road/870 Endeavour Crescent, Harare

P O Box CY 1211, CausewayHarare, Zimbabwe

P O Box CY 1211, Causeway, Harare, ZimbabweEmail: [email protected]

Web: www.africansunhotels.comwww.africansuninvestor.com

POISED FOR THE FUTURE · • 2015 - The Company exited from all foreign operation and refocused on...

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