RTG 2014 Pages 1-22 - Rainbow Tourism Group

Transcription

2014
Annual Report
Refreshing Hotels, Amazing Experiences
Contents Page
2014
Annual Report
01
02
03
04
05
06
Vision, Mission and Values 08 Board of Directors
Group Structure
12 Senior Management
Product Portfolio
13 Corporate Information
The Rainbow Service Promise
Our History
RTG Profile
Stakeholder
Reports
14
17
21
24
25
27
28
29
Financial
Statements
Chairman’s Statement
Chief Executive Officer’s Report
Corporate Governance Report
Directors’ Responsibility Statement
Report of Directors
Auditors’ Report
30
31
32
42
Consolidated Statement of Financial Position
Consolidated Statement of Profit or Loss and
other Comprehensive Income
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Group Statement of Accounting Policies
Notes to the Consolidated Financial Statements
63
64
65
Top 20 Shareholders
Notice to Shareholders
Proxy Form
Other Information
& Proxies
2014
Annual Report
Vision • Mission • Values
02
Our Vision
To be the premier provider of diversified
hospitality services by 2017.
Our Mission
To create sustainable shareholder value
through the deployment of dynamic
hospitality services that consistently deliver
refreshing guest experiences.
Our Strategy
•
•
•
•
•
Consolidating the core
Revenue generation
Cost efficiency
Sustainability
Technological advancement
Our Values
FRESHNESS
In all that we do, we guarantee
freshness :
Fresh Food, Fresh Pillow, Fresh Smile
SYNERGIES
We activate synergies to
achieve amazing guest
success every time.
INTEGRITY
We have integrity:
We do what we say,
we keep our promises.
CONSISTENCY
VIBRANCY
We will provide consistent and
reliable service to all our
guests all the time.
We are vibrant:
We are full of life and
we enjoy what we do.
2014
Annual Report
Group Structure
03
The Group has operations in Zimbabwe and Mozambique
through a combination of owner managed and leased hotels.
ZIMBABWE
Owned
MOZAMBIQUE
Leased
Bulawayo Rainbow Hotel
Rainbow Towers Hotel
& Conference Centre
A’Zambezi River Lodge
Kadoma Hotel &
Conference Centre
Victoria Falls Rainbow
Hotel
Rainbow Beitbridge
Hotel
New Ambassador
Hotel
Leased
Rainbow Hotel
Mozambique
2014
Annual Report
Product Portfolio
04
Category
5 Star
Rainbow Towers Hotel & Conference Centre
No. of Units
Conference Capacity
No. of Rooms
1
7 000
305
6
1 310
710
1
600
182
8
8,910
1,197
3-4 Star
A’ Zambezi River Lodge
Victoria Falls Rainbow Hotel
Bulawayo Rainbow Hotel
Kadoma Hotel & Conference Centre
New Ambassador Hotel
Rainbow Beitbridge Hotel
3 Star
Rainbow Hotel Mozambique (Beira)
Grand-total
RTG South Africa
Marketing and Channel Management Office
The Rainbow Service Promise
2014
Annual Report
05
R ainbow Tourism Group offers fresh
experiences to its customers.
From the time you check in, your
experiences will be of freshness in all
respects.
Our service promise is encapsulated in
three pillars of freshness which are:
Fresh Food
Fresh Pillow
Fresh Smile
2014
Annual Report
Our History
06
1981 - 1991
1992-2000
1981
1992
Zimbabwe Tourist Board is formed as a corporate
body.
First CEO appointed and commercial business assets
transferred from ZTDC and Ministry of Environment
and Tourism to ZTIC. Operations start on 1 April.
1983
Government of Zimbabwe commissions construction
of a 5-star hotel and conference centre in Harare and
engages Sheraton Overseas Management Services
(a subsidiary of ITT Sheraton) to manage the 5-star
hotel upon completion.
1984
A parastatal, Zimbabwe Tourist Development
Corporation (ZTDC) is formed.
1985
The 5-star Hotel and Conference Centre construction
is completed and hotel starts operating under
a management contract with the name Harare
Sheraton Hotel. The Conference Centre is named
Harare International Conference Centre operated by
the Ministry of Environment and Tourism.
1986
ZTDC takes over Victoria Falls Rainbow Hotel, closed
during Zimbabwe’s liberation war. Victoria Falls
Rainbow Hotel closes again due to security
problems; Government asks for its re-opening. ZTDC
acquires two hotels, Ambassador Hotel and
A‘Zambezi River Lodge, to avert their closure.
1987
ZTDC establishes touring division as joint venture
under a different name, Zimbabwe Tours.
1989
The Zimbabwe Tourist Development Corporation Act
is amended to hive off commercial side of ZTDC
operations.
1991
Zimbabwe Tourism Investment Company (Pvt) Ltd
(ZTIC), a company wholly owned by Government, is
registered under the Companies Act, Chapter 190.
First Board appointed in November to turn around
ZTDC loss-making operations, namely Hotels Division
(A’Zambezi River Lodge, Victoria Falls Rainbow Hotel,
New Ambassador Hotel – formerly Ambassador
Hotel, and Christmas Pass Hotel), Tours Division
(comprising Zimbabwe Tours), Conference Division
(comprising Harare International Conference Centre)
and the Investment Division (represented by the
Harare Sheraton Hotel which was operated under a
management contract with Sheraton Overseas
Management Services).
1994
ZTIC changes name to Rainbow Tourism Group
Limited (RTG) with RTG still wholly owned by
Government. Zimbabwe Tours becomes a joint
venture on a shareholding structure of 60% for RTG
and 40% for a strategic partner, Ireland Blyth Ltd (IBL)
Mauritius, and is renamed Zimbabwe Mauritius
Tours and Travel (Pvt) Ltd trading as Tourism Services
Zimbabwe.
1995
RTG acquires Rhodes Nyanga Hotel and Kadoma
Ranch Motel.
1996
Chimanimani Hotel is acquired on a shareholding of
75% for RTG and 25% for a strategic partner Bervin
Investments.
Zambezi
Safari
Lodges
is
commissioned on a shareholding of 50% for RTG and
50% for a strategic partner Conservation Corporation
Zimbabwe.
1997
Christmas Pass Hotel, Mutare, is disposed. Bulawayo
Sun Hotel is purchased and renamed Bulawayo
Rainbow Hotel.
1998
Touch the Wild Lodges and Safaris acquired on a
shareholding structure of 60% for RTG and 40% for
IBL Mauritius. ITT Sheraton is bought by Starwood
Hotels and Resorts Worldwide Inc.
1999
Management contract over Harare Sheraton Hotel
renegotiated by RTG and Starwood Hotels and
Resorts Worldwide Inc. and renamed Sheraton
Harare Hotel and Towers. RTG is structured into four
business units (Rainbow Hotels and Conferences
division, Sheraton Harare Hotel and Towers division,
Touch the Wild (Pvt) Ltd and Tourism Services
Zimbabwe). A voluntary retrenchment scheme is
offered. Cabinet approval for RTG privatization is
given on 29 June. RTG’s strategic partnership with
Accor is approved on 19 October. RTG becomes the 72nd
quoted company on the Zimbabwe Stock Exchange
on 1 November.
2014
Annual Report
Our History
07
2001 - 2010
2011 -Present
2000
2010
RTG/Accor strategic partnership agreement is
concluded; Accor’s 35% shareholding becomes fully
subscribed on 1 March. Chimanimani Hotel and
Rhodes Nyanga Hotel disposed as they could not
achieve critical mass in capacity and yield.
Refurbishment
of
A’Zambezi
River
Lodge
commences. Matetsi Water Lodge is acquired as a
going concern on 1 March. RTG also entered into
a long-term lease over Hotel Mozambique in Beira
and commences operations in July. Rainbow Hotels
in Zimbabwe acquired ISO 9001:2008 certification
in March.
2001
Re-branding of A’Zambezi River Lodge to Hotel
Mercure A’Zambezi.
2002
Re-branding of Victoria Falls Rainbow Hotel to Hotel
Mercure Rainbow.
2004
By mutual agreement, management contract with
IBL Mauritius terminated. However, IBL Mauritius
maintains its shareholding.
2005
Management agreement with Starwood comes to an
end and is not renewed. Management of Sheraton
Harare Hotel and Towers localized. Business of
Sheraton Harare Hotel and Towers and Harare
International Conference Centre merged. RTG
successfully carries out a rights issue in September
and new shareholders emerged. Accor, Laaico, and
Ministry of Environment and Tourism gets diluted.
2006
The merged business successfully rebranded the
Rainbow Towers Hotel and Conference Centre on 19
March. Management contract with Accor terminated.
Hotel Mercure A’Zambezi and Hotel Mercure
Rainbow rebranded to A’Zambezi River Lodge and
Victoria Falls Rainbow Hotel respectively under the
Rainbow Hotels Division. Group reverses losses of
the past 3 years and wipes out foreign debt incurred
over management contracts.
2007
South African marketing office established and
Tourism Services Zambia registered. Regional
expansion strategy unveiled. Group finds partner
with piece of land for construction of a hotel in
Beitbridge.
2011
A’Zambezi River Lodge refurbished and rebranded to
a 4-star hotel. The hotel was opened mid-May. RTG
seeks to recapitalise and to dispose its subsidiaries,
namely TTW, Matetsi Water Lodge and TSZ in order to
focus on core hotel operations and retire short term
debt.
2012
RTG embarks on a recapitalisation exercise to
address short-term debt burden. RTG secures a US$10
million long-term loan and concludes a US$4.5
million rights issue. The Group disposes of some of
its subsidiaries which were TTW and TSZ to focus on
core hotel operations. Hotel Edinburgh in Kitwe,
Zambia is closed.
2013
The recapitalisation exercise was completed
through the following: A $10 million loan which was
used to restructure short term debt to medium term
debt and through a renounceable rights issue which
raised $4.5 million. RTG also placed
Hathanay
Investments (Pvt) Ltd into liquidation. Most
importantly, in 2013, the company made a profit of $1
million up from a $6 million loss during the previous
year. This was the company’s first significant profit
since the introduction of multi-currency in 2009.
2014
The Rainbow Beitbridge Hotel was opened for
trading on 15 January 2014. The hotel is being
operated under an operating lease from National
Social Security Authority (NSSA) and is located in the
border town of Beitbridge, with a rooms capacity of
136.
2008
RTG takes over management of first hotel in the
region in the name of Hotel Edinburgh in Kitwe,
Zambia. RTG also signs a management contract for
Savoy Hotel in Ndola, Zambia. Rainbow Hospitality
Business School (RHBS) is established.
2014
Annual Report
Board of Directors
08
Mr. John Mafungei Chikura
Mr. Tendai McGerald Madziwanyika
Mrs. Thandiwe Thando Mlobane
Non-Executive Chairman
Chief Executive Officer
Non-Executive Director (Deputy Chair)
Mr. Chikura is the Chief Executive
Officer of the Deposit Protection
Corporation and current Chairman
of the Africa Region, International
Association of Deposit Insurers
(IADI) based in Switzerland. He is
also the current Treasurer of IADI.
He holds a Master of Business
Administration in Finance and
Banking (Manchester University)
and is a Fellow of the Institute of
Chartered
Secretaries
and
Administrators (FCIS).
Mr. Madziwanyika is the Chief
Executive of the Company, having
assumed
that
position
in
November 2012. Tendai has held
senior positions in the FMCG and
hospitality industries including,
being the Managing Director of a
listed
hospitality
group
in
Zimbabwe.
Mrs. Mlobane is currently the
Municipal Consultant for Aline
Hope Business Solutions and
Training Services. She sits on the
boards of various organisations
including
Net-One
and
the
Zimbabwe Power Company. She is
a former Board member of Civil
Aviation Authority of Zimbabwe
(CAAZ). She has previously been a
director
at
Hwange
Colliery
Company Limited (2005-2011), Air
Zimbabwe
Corporation
(September 2007 to February 2012)
and
National
Railways
of
Zimbabwe (2005- August 2007).
His vast experience at senior
management levels includes the
post
of
Finance
and
Administration Manager for Cluff
Resources (now Ashanti Gold
Mining) and Lonrho Zimbabwe as
well as General Manager –
Finance and Company Secretary
for Southern Africa Reinsurance
Limited.
He is a past President of the
Zimbabwe Council for Tourism. He
holds a Bachelor of Accounting
Science (B Compt.) from the
University of South Africa and a
Master of Business Administration
(with
distinction)
from
Hull
University (United Kingdom).
He also sits on the board of
directors of First Mutual Holdings
Limited formally Africa First
ReNaissance Corporation Limited
and certain of its subsidiaries. Mr
Chikura is also a Non-Executive
Director of the Zimbabwe Asset
Management Company (ZAMCO).
Mrs. Mlobane has previously held
senior positions at the Reserve
Bank
of
Zimbabwe,
Genesis
Investment Bank and at the City of
Bulawayo. She holds a Bachelor of
Accountancy Degree from the
University of Zimbabwe, Masters
in Business Administration Degree
from the University of South Africa
and is currently studying for a
Doctorate
in
Business
Administration with the National
University
of
Science
and
Technology (NUST). As a result of
her wide experience in finance
and corporate governance, Mrs.
Mlobane brings onto the board
vast financial skills required in a
listed company.
Board of Directors
2014
Annual Report
09
Mr. Shingirayi Norman Chibanguza
Mr. Ian Chamunorwa Haruperi
Mr. Douglas Hoto
Non-Executive Director
Mr. Chibanguza is currently the
Managing Director for Farhigh
Trading
Transportation
and
Property Management, Cladmont
Investments,
Property
Plus
Realtors and Haddon and Sly
Properties. His other directorships
include Hwange Colliery Company
Limited and Zimchem Refineries
(Pvt) Ltd.
Mr. Haruperi is currently the
Managing Director of Investorlink
Minerals Ltd and has more than
seven years’ experience at the
helm of an organization dealing in
mining, properties, finance and
investment. Mr. Hoto is the Group Chief
Executive Officer of First Mutual
Holdings Limited formally Africa
First ReNaissance Corporation
Limited. He has previously worked
as Chief Executive Officer for Altfin
Holdings Limited.
He is currently a non-executive
director
at
Hwange
Colliery
Company Limited and Hamilton
Insurance. Mr. Haruperi holds a
Bachelor of Science in Economics. Mr. Hoto has over 22 years
experience as an Actuary and has
worked in various roles in the
Insurance industry in Zimbabwe
and the SADC region.
Mr. Chibanguza previously held
senior positions at Chibanguza
Group
of
Hotels
and
Guy
Chibanguza Enterprises (Pvt.) Ltd
(Retail supermarkets) between
2003 and 2007.
He is the past Chairman of the
Actuarial Society of Zimbabwe and
a Fellow of the Faculty of
Actuaries of Scotland. Mr Hoto
holds a Bachelor of Science
Honours Degree in Mathematics
(UZ).
He is currently studying towards a
Bachelor
of
Commerce
in
Entrepreneurship (SA) from the
University of South Africa.
2014
Annual Report
Board of Directors
10
Mr. Douglas Mavhembu
Mr. Napoleon Kudakwashe Mtukwa
Mr. Shadreck Chamunorwa Vera
Finance Director
Mr. Mavhembu is the Deputy
Director - International Tourism
Directorate in the Ministry of
Tourism and Hospitality Industry.
He has worked in various senior
capacities within the Ministry of
Tourism and Hospitality Industry
including being Acting Director for
two
years
and
Acting
Under-Secretary (Tourism). He is
also a Non-Executive Director of
the RETOSA Board (Executive
Committee).
Mr. Mtukwa is the current Finance
Director and Company Secretary.
He is a fellow member of the
Association of Certified Chartered
Accountants (ACCA).
Mr. Vera is the Investments
Director at National Social Security
Authority (NSSA). He holds a
Master of Business Administration
degree from the Nottingham Trent
University and a Postgraduate
Diploma in Management Studies
from the same University.
Mr
Mavhembu
was
the
Co-Chairperson
for
the
Zimbabwe/Zambia Joint Technical
Committee on the UNWTO General
Assembly which was held in
Victoria Falls in 2013.
He holds a Master of Science
degree in Tourism and Hospitality
Management from the University
of Zimbabwe, a Bachelor of
Business
Administration
in
Tourism
Management
from
Azaliah
University
and
a
Certificate in Education (ZFETC)
Zimbabwe.
Mr. Mtukwa has previously held
accounting positions at Unilever
Zimbabwe and Mobil Oil. He also
holds a Master of Business
Administration Degree and an
Honours
Degree
in
Applied
Accounting with the University of
Zimbabwe.
He has vast experience at Senior
Management
level
including
years of serving in the position of
Group Finance Manager and Group
Management
Accountant
for
Rainbow Tourism Group.
He also holds an Advanced
Diploma in Treasury Management
and Trade Finance from the
Institute of Bankers South Africa
and a Certificate in Management
Information Systems (London).
Mr. Vera is currently studying
towards a Doctorate degree in
Business
Administration
with
Nottingham Trent University. He is
also a Certified Associate member
of the Institute of Bankers in South
Africa.
2014
Annual Report
Senior Management
12
Tendai M. Madziwanyika
Napoleon K. Mtukwa
Shupai Marware
Caroline Mapfumo
George Manyumwa
Finance Director &
Company Secretary
Commercial
Director
Human Resources
Director
Operations
Director
Samson Chitsato
Renica Mapfunde
Clement Mboma
Liz Makwezwa
Head: Internal
Audit & Risk
Group Projects &
Facilities Manager
Head: Business
Information
Systems
Quality
Assurance
Manager
2014
Annual Report
Corporate Information
13
NATURE OF BUSINESS
RTG is a hospitality management company which provides hotel and conferencing facilities in Zimbabwe and Mozambique.
DIRECTORS
John M. Chikura
Napoleon K. Mtukwa
Shingirayi N. Chibanguza
Ian C. Haruperi
Joseph Kanyekanye (Dr)
David Govere
Douglas Hoto
Douglas Mavhembu
Thandiwe T. Mlobane
Shadreck C. Vera
(Chairman)
(Chief Executive Officer)
(Finance Director) (Appointed 28/02/14)
(Non-Executive)
(Non-Executive)
(Non-Executive) (Resigned 08/05/14)
(Non-Executive) (Resigned 13/05/14)
(Non-Executive)
(Non-Executive)
(Non-Executive)
(Non-Executive)
COMPANY SECRETARY
Napoleon K. Mtukwa
REGISTERED OFFICE
PRINCIPAL BANKERS
Rainbow Towers Hotel & Conference Centre
No.1 Pennefather Avenue
Samora Machel Avenue West
HARARE
CBZ Bank Limited
60 Kwame Nkrumah Avenue
HARARE
FBC Bank Limited
45 Nelson Mandela Avenue
HARARE
AUDITORS
TRANSFER SECRETARIES
Grant Thornton
Chartered Accountants (Zimbabwe)
135 Enterprise Road
Highlands
HARARE
First Transfer Secretaries (Private) Limited
1 Armagh Road
Eastlea
HARARE
LEGAL PRACTITIONERS
Kantor & Immerman Legal Practioners
McDonalds House
10 Selous Avenue
HARARE
CORPORATE OFFICE
Napoleon K. Mtukwa
Caroline Mapfumo
Shupai Marware
George Manyumwa
Samson Chitsato
Renica Mapfunde
Clement Mboma
Liz Makwezva
(Chief Executive Officer)
(Finance Director)
(Human Resources Director)
(Commercial Director)
(Operations Director)
(Head: Internal Audit & Risk)
(Group Projects and Facilities Manager)
(Head: Business Information Systems)
(Quality Assurance Manager)
2014
Annual Report
14
Highlights
•
•
•
•
•
•
Revenue 5% from $29.3 million in 2013 to
$30.7 million in 2014.
Occupancy increased to 48% from 47%.
RevPAR 8% from $39 to $36.
EBITDA from $4.3 million recorded during
same period last year to $0.9 million due to
the impairment of debts worth $2.8 million.
Resultant loss for the year of $1.4 million in
2014
from a profit for the year of $1.1 million
in 2013.
Gearing
56% from 59% in December 2013.
Mr. John M. Chikura • Chairman
1.
INTRODUCTION
The increase in international tourist arrivals in 2014 has
ensured that tourism remains a strong and resilient
economic activity worldwide. According to the UNWTO
World Tourism Barometer, international tourist arrivals
grew by 4.7% in 2014 from the previous year. These arrivals
are expected to grow by between 3% and 4% in 2015. Africa
recorded 2% growth in 2014 and is projecting growth of
between 3% and 5% in 2015. The growth recorded in 2014 is
mainly attributed to the increased demand in tourism from
traditional source markets.
In Zimbabwe, the year 2014 continued to be challenging
for the broader economy. Slow economic activity has led
to continued tightening of credit conditions resulting in a
shrinking market. Notwithstanding this broader picture,
signs of recovery can be gleaned in the tourism sector.
In the second half of the year, the Ebola Virus Disease
outbreak
affected
the
tourism
sector
due
to
misperceptions about the transmission of the virus and
the geography of Africa. While the outbreak was limited to
West Africa, RTG resort hotels registered cancellations
worth over $0.5 million.
2.
PERFORMANCE REVIEW
The Group revenues increased by 5% to $30.7 million from
$29.3 million achieved in the same period last year. The
growth in revenues was mainly driven by foreign business.
The continued focus on foreign revenue streams has paid
dividends to the Group. This revenue line grew by $1.2
million (equivalent to 16%) compared to the same period
last year, bringing the contribution of foreign revenues to
28% from 26%.
Zimbabwe operations revenues excluding the newly
opened Rainbow Beitbridge Hotel (RBBH) increased by $0.1
million from $27.7 million to $27.8 million. The Zimbabwe
operations revenues were given a boost by innovative
programs such as Stay Now Pay Later (SNPL) and RTG
Mobile.
These programs contributed $0.4 million to
revenue growth. The city hotels recorded a $0.7 million
decline in revenues during the year 2014. However, it is
pleasing to note that this reduction came against the
backdrop of once-off large events hosted in 2013 such as
the referendum and national elections which generated
business worth $2.5 million. This is evidence of a
strengthening revenue base.
The Mozambique business experienced reduction in
revenues of $0.2 million due to the impact of the
refurbishment works which were ongoing during the
period under review.
The Group redesigned its pricing model with the objective
of promoting domestic tourism thereby enhancing activity
in its hotels. This strategy resulted in dilution of the
Average Daily Rate (ADR) from $81 to $75 compared to prior
year, led by RBBH, which was introduced to the market at
the rate of $49.
Consequently, the Group's RevPAR
decreased by 8% to $36 from $39 recorded in 2013.
During the year, the Group also launched a series of
promotions including weekender rates and festive season
specials.
Cost of sales per room sold dropped by 5.3% compared to
prior year thereby reflecting greater efficiencies in the
procurement and operating processes.
2014
Annual Report
(continued)
15
The EBITDA margin declined to $0.9 million in 2014
compared to $4.3 million in the corresponding period last
year as a result of the following:
I.
The once-off impairment charge of $2.8 million. This
charge was made up of:
•
•
II.
III.
The $1.9 million held up at Capital Bank, which was
meant for the refurbishment of Rainbow Towers
Hotel and Conference Centre (RTHCC). The bank is
now non-operational after the cancellation of its
banking licence by the Reserve Bank of Zimbabwe
(RBZ) in June 2014. The Group has provided for this
amount in full. However, we are optimistic of the
outcome of the impeding liquidation process.
Overdue management fees of $0.9 million owed
by Savoy Hotel in Zambia.
Retrenchment of staff at central office and RTHCC. This
amounted to $0.9 million and has an eleven-month
payback period.
The RBBH recorded a loss of $0.6 million for the year
against initial projections of a $1.0 million loss. This
loss was mainly due to start-up costs, which is
expected of a hotel in its first year of operation.
5%
REVENUE GROWTH
FROM $29.3 MILLION
to $30.7 MILLION
The Group’s borrowing position as at 31 December 2014
reduced to $22.2 million (Dec 2013: $23.9 million)
representing a reduction of 7%. The effective cost of debt
remained at 11% since beginning of the year.
Included in the borrowings is a $10 million loan from
National Social Security Authority (NSSA) which will be
payable by 31 December 2015. The loan was meant to
provide the Group with some relief from pressure exerted
by short term borrowings at exorbitant interest rates
during the 3-year turnaround period starting from 1
January 2013 to 31 December 2015. The loan will be
reviewed during the third quarter of 2015 and restructured
accordingly.
3.
PRODUCT UPGRADES
During the year under review, the Group outlayed $2.1
million towards capital expenditure. The funding was
mainly towards renovation of hotels through internally
generated cash flows. The Group continues to pursue the
completion of the Rainbow Towers Hotel and Conference
Centre refurbishment project. The project is now 50%
complete with the remaining works projected to be
complete by the end of year 2015. The project was stalled
by the $1.9 million project funds held up at the now
non-operational Capital Bank.
A significant achievement during the year was the
completion of the refurbishment of Rainbow Hotel
Mozambique. The refurbishment included rooms, public
areas, elevators and painting the exterior of the hotel. The
hotel is expected to generate notable revenue growth in
2015.
Bulawayo Rainbow Hotel was also given a face-lift during
the first half of 2014. We are now engaged in the final
phase of the refurbishment, which will position it as the
preferred business hotel in Bulawayo.
2014
Annual Report
(continued)
16
4.
CORPORATE SOCIAL INVESTMENT
During the course of the year, the Group invested in
environmental awareness campaigns in partnership with
Environment Africa. In this regard, the Group successfully
hosted the 18th Environmental Reporter awards. RTG will
therefore continue to advocate for the sustainable use of
the environment.
In support of the Zimbabwe National Army (ZNA), RTG
donated blankets and linen towards Tsanga Lodge, which
is the rehabilitation centre for the army.
Going forward, RTG will continue to invest in corporate
social value programs that enhance the livelihoods of
local communities.
5.
DIVIDENDS
In view of our strategic focus on growing the business and
consolidating the financial position of the Group, the
board resolved to not declare a dividend for the year 2014.
7.
ACKNOWLEDGEMENTS
On behalf of the Board, I would like to thank all RTG
stakeholders, business partners and shareholders for
their continued support and commitment during this
period of recovery.
The Directors express their appreciation for the
contribution made by the employees to the improvement
of the operations of the business and our loyal customers.
…………………………………………
J. M. CHIKURA
CHAIRMAN
25 March 2015
6.
DIRECTORATE
There were no changes to the directorate since the last
reported position as at 30 June 2014.
2014
Annual Report
17
“...the Group achieved much of its
growth in the past 2 years by
reliance on rudimentary tools such
as revenue generation and cost
reduction measures. The Group has
now re-defined the next phase of
its journey to incorporate
knowledge-driven instruments of
growing Group performance...”
Mr. Tendai M. Madziwanyika • CEO
1.
INTRODUCTION
Notwithstanding a challenging operating environment,
the Group recorded growth in revenue during the year
ended 31 December 2014. This growth in revenue was
largely due to the increasing contribution of foreign
business to the company’s revenue base. This is testimony
to the success of the company’s intense overseas
marketing drive. According to the Zimbabwe Tourism
Authority (ZTA) 2014 tourism overview report, foreign
tourist arrivals to Zimbabwe and to the Sub-Saharan Africa
region grew by 2.6% and 3.3% respectively. Foreign arrivals
to RTG properties on the other hand grew by 33%. According
to the same report, arrivals from Europe to Zimbabwe grew
by 7% from 128,901 to 137,465 whilst arrivals to RTG
properties grew by 51% from 10,186 to 15,427. These
statistics show that there is great potential for further
growth in foreign markets and the company will continue
to pursue these markets with vigor.
growth in foreign business, particularly through the South
Africa sales office. Foreign business grew by $818,000
constituting a 32% growth from prior year. Foreign markets
contributed $8.8 million to revenue, which is 28% of the
Group’s total revenue, up from 26% in 2013. This segment
continues to provide stable business particularly given
that the Zimbabwe market continues to experience
liquidity constraints.
The national average hotel occupancy levels for 2014
remained at 48% while RTG’s Zimbabwe operations
recorded occupancy levels of 54%. The industry
experienced a drop in average daily rate (ADR) as one of
the attempts by hotels aimed at stimulating demand. This
has led to the market ADR dropping from above $100 to
below $70. RTG on the other hand recorded an average ADR
of $75 down from $81 recorded in prior year.
31,000,000
2.
FINANCIAL PERFORMANCE
Group revenue for the year grew by 5% from $29.3 million in
2013 to $30.7 million in 2014. Zimbabwe operations
revenue grew by $100,000 to $27.8 million while the
Mozambique operation recorded a drop in revenue of 14%.
This overall steady increase in revenue is a result of the
In the local market, the Group continued to pursue revenue
growth
particularly
through
innovative
revenue
generating programs introduced around mid-2013 such as
Stay-Now-Pay-Later, RTG Virtual and RTG Mobile which
raised a combined $426,000 in the year under review.
Group Revenue Trend 2012-1214
31,000,000
30,500,000
29,500,000
29,000,000
28,500,000
28,000,000
27,500,000
27,000,000
26,500,000
26,000,000
25,500,000
2012
2013
2014
2014
Annual Report
(continued)
18
Revenue mix for the past 2 years is analysed as follows:
Group Revenue Mix
2014
817,563
Other Operated
3%
Departments
2013
949,570
3%
Other Operated
Departments
6,811,175
7,075,279
23%
23%
Conference
Conference
14,382,947
& Banqueting
47%
Rooms
14,088,680
& Banqueting
Rooms
Food &
Food &
Beverages
Beverages
8,440,057
7,473,362
27%
26%
48%
The cost reduction strategies that were introduced in 2013
continued to impact on the Group’s cost structures. Over the
two year turnaround period commencing January 2013,
operating costs dropped by 16% which is a $4.6 million
reduction.
3.
STATEMENT OF FINANCIAL POSITION
The Group’s gearing ratio reduced from 69% in 2012 to
56% in 2014. Shareholders equity improved from $16.8
million to $17.2 million. The increase in equity was as a
result of the revaluation gain from land and buildings
which were revalued end of year 2014.
Impact of Reduction in Operating Costs
Group Debt & Shareholders Equity Trend 2012 to 2014
DESCRIPTION
2014
2013
30,000,000
29,823,183
Rainbow Beitbridge
Hotel Impact
(1,667,009)
-
-
25,000,000
Capital Bank Provision
(1,937,178)
-
-
20,000,000
Savoy Hotel Debt Provision
(858,589)
-
-
Retrenchment
(502,909)
-
-
Like-for-Like Operating
Costs
Reduction - Amount
- Percentage
24,857,498
375,339
1%
25,232,837
2012
Annual Operating Costs
29,427,193
25,232,837 29,427,193
4,194,356
-
14%
-
15,500,000
10,000,000
5,000,000
-
2012 (G:69%)
Earnings Before Interest, Taxes, Depreciation and Amortization
(EBITDA) dropped due to provisions amounting to $3.3 million
that were made during the year. Were it to exclude once-off
provisions, the Group would have maintained an EBITDA of $4.3
million, which is a 15% margin. The net profit position would
consequently have been at 3% ($940 000).
Total Debt
2013 (G:59%
2014 (G:56%)
Shareholders Equity
The $10 million loan facility from National Social
Security Authority (NSSA) was re-classified in the
Group’s statement of financial position as a current
liability as it becomes due and payable on 31 December
2015. The loan will be restructured accordingly during
2015.
2014
Annual Report
(continued)
19
4.
SERVICE DELIVERY
The focus for 2014 was on realigning processes and
systems in order to better serve the customer. The Group
Guest Satisfaction Index (G.S.I) was up by 0.9% in 2014 to
88.5% from 87.7%. This index has effectively increased by
4.1% since 2012. The aggregate score for resort hotels
improved by 2.3% to 90.3% compared to full year 2013. This
shows the Group’s commitment towards continuous
improvement on quality and service delivery.
5.
HUMAN RESOURCES
The Group undertook a retrenchment exercise during the
second half of 2014 wherein 70 employees were
retrenched at central office and Rainbow Towers Hotel
combined. The staff rationalization exercise was designed
to realign the business considering changes that had
taken place during the turnaround period. Staff
head-count reduced from 945 in 2013 to 766 by year end
2014. This was a further reduction from 1143 as at 31
December 2012. In 2015, there will be specific focus on
capacity development of employees to drive excellence in
service provision in line with the Group’s strategic intent.
The Group has created a knowledge-driven growth
strategy that will focus on retention, training and
development of our employees in pursuit of service
excellence.
Going forward the Group will be focusing on the following
pillars:
1.
Balance Sheet enhancement to the benefit
of shareholders
2.
Product Enhancement and Development
3.
Training, Development, Alignment and Retention
4.
Driving Brand Loyalty
5.
Innovation and Performing at the cutting edge
of Technology
We remain confident of the long term future of the Group.
We seek to constantly improve our capabilities while
nurturing the innovative, friendly and refreshing service
culture which will drive the Group’s future. We have sought
to achieve this by simplifying our systems and business
processes, removing overlaps across our operations and
geographic spread whilst developing mutually beneficial
customer relationships at all levels.
………………..............…………………………
T. M. MADZIWANYIKA
CHIEF EXECUTIVE OFFICER
6.
CONCLUSION
As indicated above, the Group achieved much of its growth
in the past 2 years by reliance on rudimentary tools such
as revenue generation and cost reduction measures. The
Group has now re-defined the next phase of our journey to
incorporate knowledge-driven instruments of growing
Group performance.
2014
Annual Report
21
1.
INTRODUCTION
RTG views good corporate governance as a vital ingredient
in operating a successful business. Good corporate
governance provides assurance to all stakeholders that
the business is being properly managed and controlled.
The corporate governance framework under which the
company operates is derived from the Code of Corporate
Practices and Conduct as set out in the King Report 2009
(King III). The launch of a National Code on Corporate
Governance for Zimbabwe on Thursday 9 April 2015
provided a home grown code, tailor-made to deal with the
challenges confronted by a Zimbabwean company. RTG
will ensure that its corporate governance framework is
aligned to the new National Code of Corporate Governance.
2.
BOARD OF DIRECTORS
The RTG Board currently has nine members, two of whom
are executive and seven of whom are non-executive. The
non-executive directors provide the necessary objectivity
for the board’s effective functioning and carry sufficient
weight in the Board’s deliberations and resolutions. The
Board’s composition reflects varying skills, knowledge
and experience. The Board members are fully aware of
their duties to ensure that the Group maintains a high
standard of corporate governance.
The Board Chairman is an independent non-executive
director in terms of the King III classification. In line with
the Articles of Association, the roles of the Chairman and
Chief Executive Officer are separate and distinct, and the
board composition comprises a balance between the
seven non-executive directors and the two executive
directors, namely the Chief Executive Officer and the
Finance Director. This allows for separation of
responsibilities and enhancement of the board’s
oversight function over the management function.
The Board meets at least once every quarter to review and
monitor the performance of the Group and executive
management. Certain matters are considered at all board
meetings including the Chief Executive’s Report, the
Finance Report, and Board Committee Reports. Special
board meetings or Special Committee meetings can be
held to deliberate on ad-hoc matters that arise in between
scheduled board meetings. During the course of 2014, one
special board meeting and two Special Committee
meetings were held.
ATTENDANCE AT SCHEDULED MEETINGS OF THE BOARD AND BOARD COMMITTEES IN THE 2014 FINANCIAL YEAR.
Board
Meeting
Audit & Risk
Committee
Human
Resources,
Remuneration
& Corporate
Governance
Committee
Markering,
Communications
& Strategy
Committee
Finance
Committee
J. M. Chikura
5/5
N/A
4/5
N/A
N/A
T. M. Madziwanyika
5/5
4/4
5/5
4/4
5/5
N. K. Mtukwa
5/5
4/4
5/5
4/4
5/5
T. T. Mlobane
3/5
N/A
N/A
2/2
5/5
J. Kanyekanye
1/1
N/A
0/1
N/A
N/A
D. Govere
1/1
1/1
1/1
N/A
N/A
S. N. Chibanguza
4/5
N/A
4/5
N/A
3/3
I. C. Haruperi
3/5
3/4
N/A
4/4
N/A
D. Hoto
5/5
4/4
3/4
N/A
N/A
D. Mavhembu
5/5
1/2
N/A
3/4
2/2
S. C. Vera
4/5
N/A
3/4
1/2
4/5
Name
2014
Annual Report
(continued)
22
3.
BOARD COMMITTEES
The Company’s Articles empower the Board to delegate its
powers to committees consisting of selected members.
The board has four committees, namely the Audit and Risk
Committee, the Human Resources, Remuneration and
Corporate Governance Committee, the Marketing and
Strategy Committee and the Finance Committee.
3.4 Finance Committee
The Finance Committee is composed of three
non-executive directors. The Committee assists
the Board in its consideration and approval of
various matters including;
3.4.1
ongoing oversight pertaining to capital
structure and funding;
3.4.2
capital management and planning
initiatives;
3.1 Audit and Risk Committee
The Committee comprises of three non-executive
directors. The Committee deals inter alia with
compliance,
internal
control
and
risk
management. The external auditors attend all
scheduled meetings as ex officio members. The
Committee meets at least three times a year.
3.2 Human Resources, Remuneration and Corporate
Governance Committee
The Committee comprises of four non-executive
directors. The primary function of the committee
is to assist the Board by reviewing policies
relating to senior executives’ remuneration and
the current industry practice with regards to
executive remuneration. The Committee also
makes recommendation to the Board on the
composition of the Board and the balance
between executives and non-executives. Skills
and diversity is also taken into account in this
process.
3.3 Marketing,
Committee
Communications
and
Strategy
The Marketing, Communications and Strategy
Committee is made up of three non-executive
directors. The purpose of the committee includes
to review and advice on the Group’s marketing
sales and overall strategy initiatives.
3.4.3
due diligence on acquisitions, divestments
including proposals which may have a
material impact on the Group’s capital
position.
4.
BOARD CHARTER
The Board has an approved Charter which details inter alia
the manner in which the Board conducts its business.
5.
DEALING IN SECURITIES
The Board has implemented a formal trading policy
prohibiting directors, officers and employees of the
company from dealing in the company’s shares during its
closed periods as prescribed by the ZSE Listing Rules.
6.
DEMATERIALIZATION OF SECURITIES
The Securities Act [Chapter 24:25] (the Securities Act)
authorizes the Zimbabwe Stock Exchange to convert
paper-based share certificates into an electronic format.
Pursuant to the Securities Act, the Securities Exchange
Commission awarded Chengetedzai Depository Company
the rights to establish, operate and develop a central
securities depository system in which securities will be
traded in dematerialized/electronic form.
In terms of section 72 of the Securities Act, a shareholder
who so wishes to participate in an established central
2014
Annual Report
(continued)
23
securities depository system may do so by electing to
convert his or her securities into dematerialized form.
Section 72 supersedes all other provisions to the contrary
in the Company’s Act [Chapter 24:03] and by implication
the company’s articles and memorandum of association.
Section 72 of the Securities Act requires that the
conversion of securities of a listed company into
dematerialized form must be authorized by the directors
of that company. On 5 March 2015, the RTG board passed a
resolution authorizing and empowering the company to
convert its securities into dematerialized form and deal in
such dematerialized securities. This resolution is subject
to the requirements of the Securities Act [Chapter 24:25],
and in particular the individual consent of the holder of
securities in the company.
7.
ETHICS
The Group subscribes to sound principles of ethics and
good business practices. A code of ethical business
conduct is in place and is consistently enforced with
disciplinary measures.
.........................................................
N. K. Mtukwa
Company Secretary
25 March 2015
RTG’s
shareholders
may
accordingly,
through
Chengetedzai Depository Company at any time apply for
the conversion of their share certificates into electronic
instruments and deal with their respective securities in
that form.
2014
Annual Report
Rainbow Tourism Group Limited
Directors’ Responsibility Statement
24
Directors’ responsibility and approval of the consolidated financial statements for the year ended 31 December 2014
To the members of Rainbow Tourism Group Limited and its subsidiaries
It is the Directors’ responsibility to ensure that the consolidated financial statements fairly present the state of affairs
of the Group. The external auditors are responsible for independently reviewing and reporting on the financial
statements.
The consolidated financial statements set out in this report have been prepared by management in accordance with
International Financial Reporting Standards (IFRSs). The statements are based on appropriate accounting policies
which are supported by reasonable and prudent judgements and estimates.
The Group’s accounting and internal control systems are designed to provide reasonable assurance as to the integrity
and reliability of the financial statements and to adequately safeguard, verify and maintain accountability of its
assets. Such controls are based on established written policies and procedures and all employees are required to
maintain the highest ethical standards in ensuring that the Group’s business practices are conducted in a manner
which in all reasonable circumstances is above reproach. Issues that come to the attention of the Directors have been
addressed and the Directors confirm that the systems of accounting and internal control are operating in a satisfactory
manner.
In light of the current financial position, the Directors are satisfied that Rainbow Tourism Group Limited and its
subsidiaries is a going concern and have continued to adopt the going concern basis in preparing the consolidated
financial statements.
The Group’s financial statements which are set out on pages 28 to 62 were, in accordance with their responsibilities,
approved by the Board of Directors on 25 March 2015 and are signed on its behalf by:
……………………..……….
J. M. Chikura
Chairman
……...................................
T. M. Madziwanyika
Report of The Directors
2014
Annual Report
25
Your Directors have pleasure in presenting their report and
audited financial statements for the year ended 31
December 2014.
SHARE CAPITAL
The authorised share capital of the company remained
unchanged from the previous year at US$250 000 divided
into 2 500 000 000 ordinary shares of $0.0001 each, of
which $187 049.55 divided into 1 870 495 543 ordinary
shares of $0.0001 cents has been issued.
RESERVES
The movement of the reserves of the Group is shown in the
statement of changes in equity.
DIVIDENDS
In view of our strategic focus on growing the business and
consolidating the financial position of the Group, the
board resolved not to declare a dividend for the year
ended 31 December 2014.
BORROWING POWERS
In terms of the Articles of Association, the company is
authorised to borrow funds amounting to, but not
exceeding twice the aggregate of:i.
ii.
The amount of issued and paid up share capital of
the company and
The total amount of capital and revenue reserves
of the company including share premium.
The directors confirm that during the year under review
the company’s borrowings were within the above limits.
RESPONSIBILITY FOR FINANCIAL STATEMENTS
The directors are responsible for the maintenance of
adequate accounting records and the preparation of the
financial information included in this Annual Report. The
Financial Statements have been consistently prepared in
accordance with International Financial Reporting
Standards, and where required, reflect our best estimates
and judgements.
DIRECTORS
Dr. Joseph Kanyekanye and Mr. David Govere resigned as
directors of the Company effective 8 May 2014 and 13 May
2014 respectively. The two resignations were noted at the
previous AGM.
To fulfill this responsibility the Group maintained systems
of internal control which are designed to provide
reasonable assurance that the records accurately reflect
the transactions of the Group and safeguard its interests.
Shareholders will be requested to elect Mr. Shingirai
Norman Chibanguza and Mr. Douglas Hoto who retire by
rotation and, being eligible, offer themselves for
re-election.
The Group financial statements have been prepared on the
going concern basis since the directors have every reason
to believe that the Group has adequate resources to
continue into the foreseable future.
DIRECTORS’ FEES
Shareholders will be asked to approve payment of
directors’ fees of $83,933 for the year ended 31 December
2014.
For and on behalf of the Board
AUDITORS
A resolution seeking the re-appointment of Messrs. Grant
Thornton and approval of their remuneration for the past
year’s audit will be submitted at the Annual General
Meeting.
..................................................
N. K. Mtukwa
Company Secretary
25 March 2015
Auditors’ Report
Grant Thornton
Camelsa Business Park
135 Enterprise Rd, Highlands
PO Box CY 2619
Causeway, Harare
Zimbabwe
T +263 4 442511-4
F +263 4 442517/ 496985
E info@zw.gt.com
www.grantthornton.co.zw
To the members of Rainbow Tourism Group Limited and its subsidiaries
We have audited the accompanying consolidated annual financial statements of RAINBOW TOURISM GROUP LIMITED and its subsidiaries
as set out on pages 28 to 62 which comprise the consolidated statement of financial position as at 31 December 2014, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, and the notes to the consolidated financial statements, which include a summary of the significant accounting
policies and other explanatory notes.
Directors’ responsibility for the consolidated financial statements
The Group’s directors are responsible for the preparation and fair presentation of the consolidated financial statements in accordance
with International Financial Reporting Standards and in the manner required by Companies Act (24:03). This responsibility includes
designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the consolidated
financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our audit in
accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated annual
financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material
misstatement of the consolidated annual financial statements, whether due to fraud or error. In making those risk assessments, we
consider internal control relevant to the entity’s preparation and fair presentation of the consolidated annual 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 consolidated
annual financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements, in all material respects, give a true and fair view of the financial position of
Rainbow Tourism Group Limited and its subsidiaries as at 31 December 2014, and of its financial performance and its cash flows for the
year then ended in accordance with International Financial Reporting Standards.
Emphasis of matter
Without qualifying our opinion, we draw attention to note 30 to the financial statements which indicates that the Group’s current
liabilities as at 31 December 2014 exceeded its current assets by USD 16 503 895. This condition may cast significant doubt on the Group’s
ability to meet its short term obligations.
Report on other legal and regulatory requirements
In our opinion, the consolidated financial statements have been properly prepared in compliance with the requirements of the
Companies Act (Chapter 24:03) and the relevant Statutory Instruments SI 33/99 and SI 62/96.
....................................................................................
Grant Thornton
Chartered Accountants (Zimbabwe)
Registered Public Auditors
HARARE
26 March 2015
27
2014
Annual Report
Consolidated Statement of Financial Position
As at 31 December 2014
28
Group
Notes
Company
2014
USD
2013
USD
2014
USD
2013
USD
Non current assets
Property and equipment
Intangible assets
Investment in subsidiaries
4
5
6
40 889 538
154 829
41 044 367
38 233 817
180 635
38 414 452
39 797 805
154 829
109 000
40 061 634
37 522 221
180 635
110 000
37 812 856
Current assets
Inventories
Accounts receivable
Other financial assets
Cash and cash equivalents
8
9
7
10
2 693 061
6 123 938
14 367
498 447
9 329 813
2 379 733
6 111 029
5 847
4 015 719
12 512 328
2 655 161
5 981 105
14 367
405 310
9 055 943
2 326 999
5 376 099
5 847
3 782 079
11 491 024
50 374 180
50 926 780
11.1
11.2
11.3
11.4
11.5
187 055
4 477 500
16 711 500
(71 753)
2 985 217
(7 162 755)
17 126 764
187 055
4 477 500
16 711 500
(38 773)
1 257 114
(5 806 833)
16 787 563
187 055
4 477 500
16 711 500
2 985 217
(8 221 218)
16 140 054
187 055
4 477 500
16 711 500
1 257 114
(7 199 365)
15 433 804
12.1
13
6 403 341
1 010 367
7 413 708
19 878 518
2 100 317
21 978 835
6 403 341
992 925
7 396 266
19 878 518
2 076 765
21 955 283
12.2
14
15 046 333
10 019 406
767 969
25 833 708
3 000 000
8 043 861
122 524
993 997
12 160 382
15 046 333
9 766 955
767 969
25 581 257
3 000 000
7 920 796
993 997
11 914 793
Total liabilities
33 247 416
34 139 217
32 977 523
33 870 076
Total equity and liabilities
50 374 180
50 926 780
49 117 577
49 303 880
Total assets
49 117 577 49 303 880
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Share premium
Non distributable reserve
Foreign currency translation reserve
Revaluation reserve
Accumulated losses
Total equity
Non current liabilities
Borrowings
Deferred tax
Current liabilities
Borrowings
Accounts payable
Tax payable
Bank overdraft
10
……………………..……….
J. M. Chikura
Chairman
……...................................
T. M. Madziwanyika
2014
Annual Report
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
For the year ended 31 December 2014
29
Group
Company
2014
USD
2013
USD
2014
USD
2013
USD
30 715 846
(10 234 917)
29 322 787
(9 399 542)
29 347 709
(9 912 425)
27 656 310
(9 101 521)
Gross profit
20 480 929
19 923 245
19 435 284
18 554 789
Other operating income
Administrative expenses
Distribution expenses
Other operating expenses
51 575
(12 678 789)
(2 168 843)
(6 523 298)
112 915
(9 293 129)
(1 259 863)
(6 697 344)
51 575
(12 106 123)
(2 150 428)
(6 130 365)
25 244
(8 627 131)
(1 234 992)
(6 180 127)
(838 426)
2 785 824
(900 057)
2 537 783
Notes
Revenue
Cost of sales
15
(Loss)/profit from operations
Net finance cost
17
(2 109 308)
(1 776 166)
(2 109 308)
(1 776 166)
(Loss)/profit before tax
18
(2 947 734)
1 009 658
(3 009 365)
761 617
Income tax
19
1 591 812
216 331
1 640 738
333 508
(1 355 922)
1 225 989
(1 368 627)
1 095 125
(Loss)/profit after tax from continuing operations
Loss from discontinued operations, net of tax
20
(Loss)/profit for the year
(1 355 922)
(167 145)
1 058 844
(1 368 627)
1 095 125
Other comprehensive income:
Items that will not be reclassified subsequently to
profit or loss
Gain on property revaluation, net of tax
1 728 103
-
1 728 103
-
Items that will be reclassified subsequently to profit or loss
Exchange loss arising from translation of foreign operations
Other comprehensive income/(loss), net of tax
Total comprehensive income for the year
(32 980)
(40 271)
-
-
1 695 123
(40 271)
1 728 103
339 201
1 018 573
359 476
1 095 125
-
Continuing operations
Basic (loss)/earnings per ordinary share
21
(0.072)
0.065
(0.073)
0.059
Headline (loss)/earnings per ordinary share
21
(0.073)
0.065
(0.074)
0.059
2014
Annual Report
Consolidated Statement of Cash Flows
30
Group
Company
Notes
2014
USD
2013
USD
2014
USD
2013
USD
22
2 277 386
2 895 473
1 953 605
2 693 882
58 796
51 575
(2 168 104)
(48 929)
32 980
203 704
108 154
124 768
(1 884 320)
(117 177)
40 271
1 167 169
58 796
108 154
51 575
52 833
(2 168 104) (1 884 320)
(104 128)
970 549
(2 109 707)
38 426
5 177
(2 066 104)
(4 208 122)
233 190
19 441
(3 955 491)
(1 661 372) (3 909 793)
38 426
5 177
(1 617 769) (3 909 793)
(Decrease)/increase in borrowings
Proceeds from rights issue of ordinary shares
Net cash (outflow)/inflow from financing activities
(1 428 844)
(1 428 844)
2 509 391
4 500 000
7 009 391
(1 428 844)
2 509 391
4 500 000
(1 428 844) 7 009 391
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
(3 291 244)
4 221 069
(3 150 741)
4 070 147
3 021 722
(1 199 347)
2 788 082
(1 282 065)
(269 522)
3 021 722
(362 659)
2 788 082
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations
Interest received
Investment income
Interest paid
Income tax paid
Exchange losses on translation of foreign operations
Net cash inflow/(outflow) from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments on purchase of property and equipment
Proceeds from sale of property and equipment
Proceeds from disposal of stock market investments
Net cash outflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS AT END OF YEAR
10
2014
Annual Report
Consolidated Statement of Changes In Equity
31
Foreign
Group
Non
currency
Equity
Non
Share
Share
distributable
translation
Revaluation
Accumulated
attributable
controlling
Total
capital
premium
reserve
reserve
reserve
losses
to the owners
interests
equity
USD
USD
USD
USD
USD
USD
USD
USD
USD
164 555
-
16 711 500
1 498
1 257 114
(6 865 677)
11 268 990
-
11 268 990
(40 271)
-
1 058 844
1 018 573
-
1 018 573
-
-
4 500 000
-
4 500 000
1 257 114
(5 806 833)
16 787 563
-
16 787 563
Balance at
1 January 2013
Total comprehensive
-
-
-
Rights issue of shares
(loss)/income for the year
22 500
4 477 500
-
Balance at 31 December 2013
187 055
4 477 500
16 711 500
(38 773)
-
Total comprehensive
-
-
-
(32 980)
1 728 103
(1 355 922)
339 201
-
339 201
187 055
4 477 500
16 711 500
(71 753)
2 985 217
(7 162 755)
17 126 764
-
17 126 764
164 555
-
16 671 182
-
1 257 114
(6 070 355)
12 022 496
-
-
-
-
-
-
1 095 125
1 095 125
-
1 095 125
22 500
4 477 500
-
-
-
-
4 500 000
-
4 500 000
Company
Balance at 1 January 2013
12 022 496
Total comprehensive
income for the year
Transfer within reserves
-
-
40 318
-
-
(2 224 135)
(2 183 817)
-
(2 183 817)
187 055
4 477 500
16 711 500
-
1 257 114
(7 199 365)
15 433 804
-
15 433 804
-
-
-
-
1 728 103
(1 368 627)
359 476
-
359 476
Transfer within reserves
-
-
-
-
-
346 774
346 774
-
346 774
187 055
4 477 500
16 711 500
-
2 985 217
(8 221 218)
16 140 054
-
16 140 054
Total comprehensive
2014
Annual Report
Group Statement of Accounting Policies
32
1.
GENERAL INFORMATION
2.3 Changes in accounting policies
1.1 Nature of business and incorporation
Rainbow Tourism Group Limited is a company incorporated
and domiciled in Zimbabwe. The Group is in the tourism
services industry as hoteliers, tour operators and
providers of conference facilities. Its registration number
is 4880/91. The Group has a primary listing on the
Zimbabwe Stock Exchange.
1.2 Currency
The Group’s financial statements are expressed in United
States dollars which is both the functional and the
presentation currency of the primary economic
environment in which the Group operates.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of compliance
These consolidated financial statements have been
prepared in conformity with International Financial
Reporting Standards, promulgated by the International
Accounting Standards Board (IASB), which includes
standards and interpretations approved by IASB.
2.2 Basis of preparation
The principal accounting policies adopted in the
preparation of the financial statements are set out below.
The policies have been consistently applied to all the
years presented, unless otherwise stated.
These financial statements have been prepared in
accordance with International Financial Reporting
Standards, International Accounting Standards and
Interpretations (collectively IFRSs) issued by the
International Accounting Standards Board (IASB), the
Zimbabwe Companies Act (Chapter 24:03) and related
statutory instruments SI 53/99 and SI 62/96.
The preparation of financial statements in compliance
with IFRSs requires the use of certain critical accounting
estimates. It also requires Group’s management to
exercise judgement in applying the Group's accounting
policies. The areas where significant judgements and
estimates have been made in preparing the financial
statements and their effect are disclosed in note 3 to
these financial statements.
2.3.1 Voluntary change in accounting policy
During the period, the Group changed its accounting policy
with respect to the recognition of direct operating
expenses and direct labour as cost of sales in addition to
direct raw materials. In accordance with IAS 8 ‘Accounting
Policies, Changes in Accounting Estimates and Errors’, the
financial report has therefore been prepared on the basis
of a retrospective application of a voluntary change in
accounting policy. The previous accounting policy was to
charge direct raw materials used in production as cost of
sales.
The new accounting policy was adopted on 30 June 2014
and has been applied retrospectively including full year
2013 audited financial statements and its comparatives.
The Group believes that the new policy closely aligns the
cost of sales to clearly show the business direct costs
related to the revenue generated.
The reclassification of a portion of operating expenses to
cost of sales in accordance with the new accounting
policy will not result in change of the profit or loss before
tax position in the current period or any periods/years
included within these consolidated financial statements.
2.3.2 New and revised standards that are effective for
annual periods beginning on or after 1 January 2014
A number of new and revised standards are effective for
annual periods beginning on or after 1 January 2014 that
are relevant to the Group. Information on these new
standards is presented below.
IFRS 10 ‘Consolidated Financial Statements’ (IFRS 10)
IFRS 10, ‘Consolidated Financial Statements’, effective 1
January 2013. This standard builds on existing principles by
identifying the concept of control as the determining
factor in whether an entity should be included within the
consolidated financial statements. The standard provides
additional guidance to assist in determining control
where this is difficult to assess. This new standard might
impact the entities that a group consolidates as its
subsidiaries.
IFRS 10 supersedes IAS 27 (2008) Consolidated and
Separate Financial Statements and SIC - 12 Consolidation
Special Purpose Entities, and introduces a single ‘control
model’ for all entities including special purpose entities
(SPEs), whereby control exists when all of the following
conditions are present:
Group Statement of Accounting Policies (continued)
2014
Annual Report
33
•
•
•
Power over investee
Exposure, or rights, to variable returns from
investee
Ability to use power over investee to affect the
entity’s returns from investee.
Other changes introduced by IFRS 10 include:
•
The introduction of the concept of ‘de facto’
control for entities with less than a 50%
ownership interest in an entity, but which have a
large
shareholding
compared
to
other
shareholders .
•
Potential voting rights are only considered when
determining if there is control when they are
substantive (holder has practical ability to
exercise) and the rights are exercisable when
decisions about the investees activities that
affect the investors return will or can be made.
•
Specific guidance for the concept of ‘silos’, where
groups of assets (and liabilities) within one entity
are ring-fenced, and each group is considered
separately for consolidation.
Parties to a joint operation account for their share of
assets, liabilities, revenues and expenses in accordance
with their contractual rights and obligations. The adoption
of IFRS 11 had no effect on the Group’s financial position or
performance, as after considering the requirements of
IFRS 11, the Group concluded that it has no interests in joint
arrangements.
IFRS 12 ‘Disclosure of Interests in Other Entities’ (IFRS 12)
IFRS 12 sets out the disclosure, requirements relating to an
entity’s interests in subsidiaries, joint arrangements,
associates and structured entities. The standard requires
a reporting entity to disclose information that helps users
to assess the nature and financial effects of the reporting
entity’s relationship with other entities.
As the new standard affects only disclosure, there is no
effect on the Group’s financial position or performance.
IFRS 12 disclosures, where applicable have been provided,
in the notes to the financial statements.
IFRS 13 ‘Fair Value Measurement’ (IFRS 13)
Management has reviewed its control assessments in
accordance with IFRS 10 and has concluded that there is no
effect on the classification (as subsidiaries or otherwise)
of any of the Group’s investees held during the
period/comparative periods covered by the financial
statements.
IFRS 11 ‘Joint Arrangements’ (IFRS 11)
IFRS 11 supersedes IAS 31 (Interests in Joint Ventures) and
SIC - 13 (Jointly-controlled Entities - Non-monetary
Contributions
by
Venturers)
and
requires
joint
arrangements to be classified as either:
•
•
Joint operations - where parties with joint control
have rights to assets and obligations for
liabilities, or
Joint ventures - where parties with joint control
have rights to the net assets of the investee.
Joint arrangements that are structured through a separate
vehicle will generally be treated as joint ventures, unless
the terms of the contractual arrangement, or other facts
and circumstances indicate that the parties have rights to
assets and obligations for liabilities of the arrangement,
rather than rights to net assets.
Joint ventures are accounted for using the equity method
(proportionate consolidation is not permitted by IFRS 11).
IFRS 13 clarifies the definition of fair value and provides
related guidance and enhanced disclosures about fair
value measurements. The scope of IFRS 13 is broad and it
applies for both financial and non-financial items for
which other IFRSs require or permit fair value
measurements
or
disclosures
about
fair
value
measurements except in certain circumstances.
IFRS 13 applies prospectively for annual periods beginning
on or after 1 January 2013. Its disclosure requirements
need not be applied to comparative information in the first
year of application.
Amendments to IAS 19 ‘Employee Benefits’ (IAS 19)
The 2011 amendments to IAS 19 made a number of changes
to the accounting for employee benefits, the most
significant relating to defined benefit plans. The
amendments:
•
eliminated the ‘corridor method’ and requires the
recognition
of
remeasurements
(including
actuarial gains and losses) arising in the
reporting period in other comprehensive income;
•
changed the measurement and presentation of
certain components of the defined benefit cost.
2014
Annual Report
34
The net amount in profit or loss is affected by the
removal of the expected return on plan assets and
interest cost components and their replacement
by a net interest expense or income based on the
net defined benefit asset or liability, and
•
enhanced
disclosures,
including
more
information about the characteristics of defined
benefit plans and related risks.
The amendments clarify that, if the amount of the
contributions is independent of the number of years of
service, an entity is permitted to recognise such
contributions as a reduction in the service cost in the
period in which the service is rendered, instead of
allocating the contributions to the periods of service.
Examples of such contributions include those that are a
fixed percentage of the employee’s salary, a fixed amount
of contributions throughout the service period, or
contributions that depend on the employee’s age.
The amendment adopted with effect from 1 July 2014 is not
expected to affect the Group as it does not have defined
benefit plans. Therefore the application of IAS 19 did not
have an impact to the period/comparative periods
covered by the financial statements.
IAS 32 Financial Instruments: Presentation (Amendment) –
Offsetting Financial Assets and Financial Liabilities
The Amendments to IAS 32 add application guidance to
addressing consistencies in applying IAS 32’s criteria for
offsetting financial assets and financial liabilities in the
following two areas:
•
•
the meaning of ‘currently has a legally
enforceable right of set-off’; and
that some gross settlement systems may be
considered equivalent to net settlement.
The Amendments are effective for annual periods
beginning on or after 1 January 2014 and are required to be
applied retrospectively. Management does not anticipate
a material impact on the Group’s financial statements
from these amendments.
Impairment of assets (IAS 36)
The amendments address the disclosure of information
about the recoverable amount of impaired assets if the
amount is based on fair value less cost of disposal. The
amendment affects annual periods commencing on or
after 1 January 2014. The amendment has no effects to the
Group’s financial results.
2.3.3 Standards, amendments and interpretations to
existing standards that are not yet effective and have not
been adopted early by the Group.
At the date of authorisation of these financial statements,
certain new standards, amendments and interpretations
to existing standards have been published by the IASB but
are not yet effective, and have not been adopted early by
the Group. Management anticipates that all of the relevant
pronouncements will be adopted in the Group’s
accounting policies for the first period beginning after the
effective date of the pronouncement. Information on new
standards, amendments and interpretations that are
expected to be relevant to the Group’s consolidated
financial statements is provided below. Certain other new
standards and interpretations have been issued but are
not expected to have a material impact on the Group’s
consolidated financial statements.
IFRS 9 ‘Financial Instruments’ (IFRS 9)
The IASB aims to replace IAS 39 ‘Financial Instruments:
Recognition and Measurement’ (IAS 39) in its entirety with
IFRS 9. To date, the chapters dealing with recognition,
classification, measurement and derecognition of
financial assets and liabilities have been issued. These
chapters are effective for annual periods beginning on or
after 1 January 2015. Chapters dealing with impairment
methodology and hedge accounting are still being
developed. Further, in November 2011, the IASB tentatively
decided to consider making limited modifications to IFRS
9’s financial asset classification model to address
application issues. The Group’s management have yet to
assess the impact of this new standard on the Group’s
financial statements. Management does not expect to
implement IFRS 9 until it has been completed and its
overall impact can be assessed.
IFRS 14 ‘Regulatory Deferral Accounts’ (IFRS 14)
IFRS 14 permits an entity which is a first-time adopter of
International Financial Reporting Standards to continue to
account, with some limited changes, for ‘regulatory
deferral account balances’ in accordance with its previous
GAAP, both on initial adoption of IFRS and in subsequent
financial statements. Regulatory deferral account
balances, and movements in them, are presented
separately in the statement of financial position and
statement of profit or loss and other comprehensive
income and specific disclosures are required.
IFRS 14 was originally issued in January 2014 and applies to
an entity’s first annual IFRS financial statements for a
period beginning on or after 1 January 2016. The new
2014
Annual Report
35
standard will not have an impact on the Group financial
statements as the Group has always adopted
International Financial Reporting Standards.
IFRS 15 ‘Revenue from Contracts with Customers’ (IFRS 15)
The IASB and FASB have issued their joint revenue
recognition standard, IFRS 15 Revenue from Contracts with
Customers, which replaces all existing IFRS and US GAAP
revenue requirements. The core principle of IFRS 15 is that
revenue is recognised to depict the transfer of promised
goods or services to customers in an amount that reflects
the consideration to which the entity expects to be
entitled in exchange for those goods or services.
IFRS 15 establishes a five-step model that will apply to
revenue earned from a contract with a customer (with
limited exceptions), regardless of the type of revenue
transaction or the industry. The standard’s requirements
will also apply to the recognition and measurement of
gains and losses on the sale of some non-financial assets
that are not an output of the entity’s ordinary activities
(e.g., sales of property, plant and equipment or
intangibles). Extensive disclosures will be required,
including disaggregation of total revenue; information
about performance obligations; changes in contract asset
and liability account balances between periods and key
judgements and estimates.
The standard is effective for annual periods beginning on
or after 1 January 2017, but early adoption is permitted
under IFRS. The Group is still assessing the impact of the
standard on its contracts with customers.
IAS 16 and IAS 38 “Clarification of Acceptable Methods of
Depreciation and Amortisation’
The IASB issued amendments to IAS 16 Property, Plant and
Equipment and IAS 38 Intangible Assets prohibiting the use
of revenue-based depreciation methods for fixed assets
and limiting the use of revenue-based amortisation
methods for intangible assets. The amendments are
effective prospectively. The amendment becomes
effective for annual periods beginning on or after1 January
2016 and will not have any impact on the Group as
depreciation and amortisation are not based on revenue
methods.
The management anticipate that the adoption of these
Standards and Interpretations will have no material
impact on the financial statements of the Group in the
period of initial application.
2.4 Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company (including structured
entities) controlled by the Company and its subsidiaries.
Control is achieved when the Company:
•
•
•
has power over the investee;
is exposed, or has rights, to variable returns from
its involvement with the investee and
has the ability to use its power to affect its
returns.
The Company reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control
listed above.
When the Company has less than a majority of voting
rights of an investee, it has power over the investee when
the voting rights are sufficient to give it the practical
ability to direct the relevant activities of the investee
unilaterally.
The Company considers all relevant facts and
circumstances in assessing whether or not the company’s
voting rights in an investee are sufficient to give it power
including:
• the size of the company’s holding of voting rights
relative to the size and dispersion of holdings of
the other vote holders;
• potential voting rights held by the company, other
vote holders or other parties;
• rights
arising
from
other
contractual
arrangements; and
• any additional facts and circumstances that
indicate that the company has, or does not have
the current ability to direct the relevant activities
at the time that the decisions need to be made,
including
voting
patterns
at
previous
shareholder’s meeting.
Consolidation of a subsidiary begins when the Company
obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically,
income and expenses of a subsidiary acquired or disposed
of during the year are included in the consolidated
statement of profit or loss and other comprehensive
income from the date the Company gains control until the
date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive
income are attributable to the owners of the company and
2014
Annual Report
36
to the non-controlling interests even if this results in the
non-controlling interests having a deficient balance.
When necessary adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies.
Effectively where the company has the power, either
directly or indirectly, to govern the financial and operating
policies of another entity or business so as to obtain
benefits from its activities, it is classified as a subsidiary.
The consolidated financial statements present the results
of the company and its subsidiaries ("the Group") as if they
formed a single entity. Intercompany transactions and
balances between Group companies are therefore
eliminated in full.
2.8 Inventories
Inventories are initially recognised at cost, and
subsequently at the lower of cost and net realisable value.
Cost comprises all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to
their present location and condition.
Weighted average cost is used to determine the cost of
ordinarily interchangeable items.
2.9 Property and equipment
Items of property and equipment are initially recognised
at cost. As well as the purchase price, cost includes
directly attributable costs and the estimated present
value of any future unavoidable costs of dismantling and
removing items. The corresponding liability is recognised
within provisions.
2.5 Business combination
The consolidated financial statements incorporate the
results of business combinations using the purchase
method. In the statement of financial position, the
acquiree's identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the
acquisition date. The results of acquired operations are
included in the consolidated statement of comprehensive
income from the date on which control is obtained. They
are not consolidated from the date control ceases.
Subsequent costs are included in the assets' carrying
amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits
associated with the item will flow to the entity and the
cost can be measured reliably. All other repairs and
maintenance costs are charged to the statement of
comprehensive income during the period in which they are
incurred. The assets' useful lives and residual values are
reviewed, and adjusted if appropriate, at each statement
of financial position date.
2.6 Revenue
Rendering of services
Revenue arises from the rendering of services by the
Group. Revenue is recognised to the extent that it is
probable that the economic benefits will flow to the Group
and the revenue can be reliably measured. It is measured
at the fair value of the consideration received or
receivable net of taxes.
2.7 Interest income
Interest income is accrued on a time basis, by reference to
the principal amount outstanding and effective interest
rate applicable.
2.7 Operating expenses
Operating expenses are recognised in profit or loss upon
utilisation of the service or at the date of their origin.
Land and capital work-in-progress are not depreciated.
Depreciation on assets under construction does not
commence until they are complete and available for use.
Depreciation is provided on all other items of property and
equipment so as to write off their carrying value over their
expected useful economic lives. It is provided on a straight
line basis over the remaining useful lives at the following
rates:
· Buildings
2-4%
·
Leasehold improvements
5-20%
·
Furniture and equipment
10-15%
·
Motor vehicles
25-33%
Land and buildings are revalued after every three years by
an independent appraiser based on market evidence of
the most recent prices achieved in arms length
transactions of similar properties. The surplus arising from
the revaluation is recognised directly into equity.
2014
Annual Report
37
Impairment of property and equipment
The carrying amount of property and equipment is
reviewed at each statement of financial position date to
determine whether there is any indication of impairment.
If any such indication exists, the asset’s recoverable
amount is estimated. Impairment loss is recognised
directly through the statement of comprehensive income
when the carrying amounts of the assets exceed the fair
values of the respective assets.
Derecognition of property and equipment
An item of property and equipment is derecognized upon
disposal or when no future economic benefits are
expected from use or disposal.
2.10 Investment property
Investment properties consist of properties acquired to
earn rental income for the long term and for capital
appreciation. Properties are stated initially at cost on
acquisition, which comprises the purchase price and
directly attributable expenditure.
Subsequent to initial recognition, investment properties
are measured at their fair value. Fair value is determined
annually based on the open market value basis, using
either the discounted cash flow method or the
capitalisation of net income method. Gains or losses
arising from changes in fair value are included in profit or
loss for the period in which they arise.
2.11 Externally acquired intangible assets
Externally acquired intangible assets are initially
recognised at cost and subsequently amortised on a
straight-line basis over their useful economic lives.
Intangible
assets
are
recognised
on
business
combinations if they are separable from the acquired
entity or give rise to other contractual/legal rights. The
amounts ascribed to such intangibles are arrived at by
using appropriate valuation techniques.
The useful economic life of the Group’s intangible assets is
as follows:
Microsoft user rights
8 years
2.12 Post-employment benefits-Defined contribution
schemes
Contributions to defined contribution pension schemes
are charged to the consolidated statement of
comprehensive income in the year to which they relate.
2.13 Leases
Where substantially all of the risks and rewards incidental
to ownership of a leased asset have been transferred to
the Group (a "finance lease"), the asset is treated as if it
had been purchased outright. The amount initially
recognised as an asset is the lower of the fair value of the
leased property and the present value of the minimum
lease payments payable over the term of the lease. The
corresponding lease commitment is shown as a liability.
Lease payments are analysed between capital and
interest. The interest element is charged to the
consolidated statement of comprehensive income over
the period of the lease and is calculated so that it
represents a constant proportion of the lease liability. The
capital element reduces the balance owed to the lessor.
Where substantially all of the risks and rewards incidental
to ownership are not transferred to the Group (an
"operating lease"),
the total rentals payable under the lease are charged to
the consolidated statement of comprehensive income on
a straight-line basis over the lease term. Associated cost
such as maintenance and insurance, are expensed as
incurred.
The aggregate benefit of lease incentives is recognised as
a reduction of the rental expense over the lease term on a
straight-line basis.
2.14 Non-current assets held for sale and disposal groups
Non-current assets and disposal groups are classified as
held for sale when:
• they are available for immediate sale;
• management is committed to a plan to sell;
• it is unlikely that significant changes to the plan
will be made or that the plan will be withdrawn;
• an active programme to locate a buyer has been
initiated;
• the asset or disposal group is being marketed at a
reasonable price in relation to its fair value; and
• a sale is expected to complete within 12 months
from the date of classification.
Non-current assets and disposal groups classified as held
for sale are measured at the lower of:
2014
Annual Report
38
•
•
their carrying amount immediately prior to being
classified as held for sale in accordance with the
Group's accounting policy; and
fair value less costs to sell.
Following their classification as held for sale, non-current
assets (including those in a disposal group) are not
depreciated.
The results of operations disposed during the year are
included in the consolidated statement of comprehensive
income up to the date of disposal.
A discontinued operation is a component of the Group's
business that represents a separate major line of
business or geographical area of operations or is a
subsidiary acquired exclusively with a view to resale, that
has been disposed of, has been abandoned or that meets
the criteria to be classified as held for sale.
Discontinued
operations
are
presented
in
the
consolidated statement of comprehensive income as a
single line which comprises the post-tax profit or loss of
the discontinued operation along with the post-tax gain or
loss recognised on the re-measurement to fair value less
costs to sell or on disposal of the assets or disposal
groups constituting discontinued operations.
2.15 Provisions
Provisions are recognised when the Group has a present
legal or constructive obligation as a result of past events
and reliable estimate of the obligation can be made. The
amount recognised as a provision is the best estimate of
the consideration required to settle the present obligation
at the statement of financial position date, taking into
account the risks and uncertainties surrounding the
obligation. Where a provision is measured using the cash
flows estimated to settle the present obligation, its
carrying amount is the present value of those cash flows.
2.16 Borrowing costs
Interest incurred on borrowings used to fund the
refurbishment of hotels is capitalised as part of the cost of
the hotels, net of interest received on cash drawn down
yet to be expended. The Group does not incur any other
interest costs that qualify for capitalisation.
2.17 Foreign currency transactions
Transactions in foreign currencies are initially recorded in
the functional currency at the exchange rate ruling at the
date of transaction. At each statement of financial
position
date,
monetary
assets
and
liabilities
denominated in foreign currencies are translated at the
functional currency exchange rate ruling at the statement
of financial position date. Non-monetary assets and
liabilities are carried at fair value denominated in foreign
currencies and are translated at rates prevailing at the
date when the fair value was determined. All gains and
losses arising on exchange rate are included in the
statement of comprehensive income for the period,
except for exchange differences arising on non-monetary
assets and liabilities where the changes in the fair value
are recognized directly in reserves.
2.18 Share capital
Financial instruments issued by the Group are classified
as equity only to the extent that they do not meet the
definition of a financial liability or financial asset.
The Group’s ordinary shares are classified as equity
instruments.
2.19 Earnings per share
Earnings per share is calculated by dividing profit/ (loss)
after tax by the weighted average number of shares in
issue throughout the year.
2.20 Financial instruments
2.20.1 Financial assets
The Group classifies its financial assets into one of the
categories discussed below, depending on the purpose for
which the asset was acquired.
Other than financial assets in a qualifying hedging
relationship, the Group's accounting policy for each
category is as follows:
a. Fair value through profit or loss
This category comprises only in-the-money derivatives
(see Financial liabilities section for out of- money
derivatives). They are carried in the statement of financial
position at fair value with changes in fair value recognised
in the consolidated statement of comprehensive income
in the finance income or expense line. Other than
derivative financial instruments which are not designated
2014
Annual Report
39
as hedging instruments, the Group does not have any
assets held for trading nor does it voluntarily classify any
financial assets as being at fair value through profit or
loss.
b. Loans and receivables
These assets are non-derivative financial assets with
fixed or determinable payments that are not quoted in an
active market. They arise principally through the provision
of services to customers (e.g. trade receivables), but also
incorporate other types of contractual monetary assets.
They are initially recognised at fair value plus transaction
costs that are directly attributable to their acquisition or
issue, and are subsequently carried at amortised cost
using the effective interest rate method, less provision for
impairment. Impairment provisions are recognised when
there is objective evidence (such as significant financial
difficulties on the part of the counterparty or default or
significant delay in payment) that the Group will be unable
to collect all of the amounts due under the terms
receivable, the amount of such a provision being the
difference between the net carrying amount and the
present value of the future expected cash flows
associated with the impaired receivable.
For trade receivables, which are reported net; such
provisions are recorded in a separate allowance account
with the loss being recognised within administrative
expenses
in
the
consolidated
statement
of
comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value
of the asset is written off against the associated
provision.
From time to time, the Group elects to renegotiate the
terms of trade receivables due from customers with which
it has previously had a good trading history. Such
renegotiations will lead to changes in the timing of
payments rather than changes to the amounts owed and,
in consequence, the new expected cash flows are
discounted at the original effective interest rate and any
resulting difference to the carrying value is recognised in
the consolidated statement of comprehensive income
(operating profit).
The Group's loans and receivables comprise trade and
other receivables and cash and cash equivalents in the
consolidated statement of financial position. 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, and – for
the purpose of the statement of cash flows - bank
overdrafts. Bank overdrafts are shown within loans and
borrowings in current liabilities on the consolidated
statement of financial position.
c. Available-for-sale
Non-derivative financial assets not included in the above
categories are classified as available for- sale and
comprise principally the Group's strategic investments in
entities not qualifying as subsidiaries, associates or
jointly controlled entities. They are carried at fair value
with changes in fair value, other than those arising due to
exchange rate fluctuations and interest calculated using
the effective interest rate, recognised in other
comprehensive income and accumulated in the
available-for-sale reserve. Exchange differences on
investments denominated in a foreign currency and
interest calculated using the effective interest rate
method is recognised in profit or loss.
Where there is a significant or prolonged decline in the fair
value of an available for sale financial asset (which
constitutes objective evidence of impairment), the full
amount of the impairment, including any amount
previously recognised in other comprehensive income, is
recognised in profit or loss. Purchases and sales of
available for sale financial assets are recognised on
settlement date with any change in fair value between
trade date and settlement date being recognised in the
available-for-sale reserve. On sale, the cumulative gain or
loss recognised in other comprehensive income is
reclassified from the available-for-sale reserve to profit
or loss.
2.20.2 Financial liabilities
The Group classifies its financial liabilities into one of two
categories, depending on the purpose for which the
liability was acquired. Other than financial liabilities in a
qualifying hedging relationship (see below), the Group's
accounting policy for each category is as follows:
a. Fair value through profit or loss
This
category
comprises
only
out-of-the-money
derivatives (see Financial assets for in the money
derivatives). They are carried in the consolidated
statement of financial position at fair value with changes
in fair value recognised in the consolidated statement of
comprehensive income. The Group does not hold or issue
derivative instruments for speculative purposes, but for
hedging purposes. Other than these derivative financial
instruments, the Group does not have any liabilities held
for trading nor has it designated any financial liabilities as
being at fair value through profit or loss.
2014
Annual Report
40
b. Other financial liabilities
Other financial liabilities include the following items:
Bank borrowings are initially recognised at fair value net
of any transaction costs directly attributable to the issue
of the instrument. Such interest bearing liabilities are
subsequently measured at amortised cost using the
effective interest rate method, which ensures that any
interest expense over the period to repayment is at a
constant rate on the balance of the liability carried in the
consolidated statement of financial position. Interest
expense in this context includes initial transaction costs
and other payable on maturity, as well as any interest or
coupon payable while the liability is outstanding.
Where it is not possible to estimate the recoverable
amount of an individual asset, the impairment test is
carried out on the smallest Group of assets to which it
belongs for which there are separately identifiable cash
flows; its cash generating units (CGUs’). Goodwill is
allocated on initial recognition to each of the Group's CGUs
that are expected to benefit from the synergies of the
combination giving rise to the goodwill.
Liability components of convertible loan notes are
measured as described further below. Trade payables and
other short-term monetary liabilities, which are initially
recognised at fair value and subsequently carried at
amortised cost using the effective interest method.
2.20.5 Cash and cash equivalents
For the purpose of cash flow statement, cash and cash
equivalents comprise of bank balances and amounts due
from other banks and dealing securities.
2.20.3 Fair value measurement hierarchy
IFRS 7 requires certain disclosures which require the
classification of financial assets and financial liabilities
measured at fair value using a fair value hierarchy that
reflects the significance of the inputs used in making the
fair value measurement. The fair value hierarchy has the
following levels:
(a) quoted prices (unadjusted) in active markets for
identical assets or liabilities (Level 1);
(b) inputs other than quoted prices included within
Level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices) (Level 2); and
(c) inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
(Level 3).
The level in the fair value hierarchy within which the
financial asset or financial liability is categorised is
determined on the basis of the lowest level input that is
significant to the fair value measurement.
2.20.4 Impairment of non-financial assets
Impairment tests on goodwill and other intangible assets
with indefinite useful economic lives are undertaken
annually at the financial year end. Other non-financial
assets are subject to impairment tests whenever events
or changes in circumstances indicate that their carrying
amount may not be recoverable. Where the carrying value
of an asset exceeds its recoverable amount (i.e. the higher
of value in use and fair value less costs to sell), the asset
is written down accordingly.
Impairment charges are included in profit or loss, except
to the extent they reverse gains previously recognised in
other comprehensive income. An impairment loss
recognised for goodwill is not reversed.
2.21 Cost of sales
Cost of sales includes the cost of materials, cost of direct
Labour in the production of and production of food costs.
2.22 Service stocks
Service stocks relates to linen, cutlery and cookery. These
are recognized as stocks in the statement of financial
position.
2.23 Income tax
Current tax
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be
recovered from or paid to the tax authorities. The tax rates
and tax laws used to compute the amount are those that
are enacted or substantively enacted by the reporting
date.
Deferred tax
Deferred income tax is provided using the liability method
on temporary differences at the statement of financial
position date between the tax bases of assets and
liabilities and their carrying amounts for financial
reporting purposes.
Deferred tax liabilities are recognised for all taxable
temporary differences except: Where the deferred tax
liability arises from the initial recognition of goodwill or of
an asset or liability in a transaction that is not a business
combination and at the time of the transaction affects
neither the accounting profit nor taxable profit or loss; and
in respect of taxable temporary differences associated
with investments in subsidiaries, associates and interests
2014
Annual Report
41
in joint ventures where the timing of the reversal of the
temporary differences can be controlled and it is probable
that reversal of the temporary differences can be
controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all
deductible temporary differences, carry-forward of
unused tax credits and unused tax losses to the extent
that it is probable that taxable profit will be available
against which the deductible temporary differences and
the carry forward of unused tax credits and unused tax
losses can be utilized except: “where the deferred income
tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in
a transaction that is not a business combination and at the
time of the transaction affects neither the accounting
profit nor taxable profit or loss; and in respect of
deductible temporary differences associated with
investments in subsidiaries, associates and interests in
joint ventures. Deferred tax assets are recognised only to
the extent that it is probable that the temporary difference
will reverse in the foreseeable future and taxable profit
will be available against which the temporary differences
can be utilised.
3.
SIGNIFICANT JUDGEMENTS IN APPLYING THE GROUP’S
ACCOUNTING POLICIES
In preparing the financial statements, management is
required to make estimates and assumptions that affect
the amounts presented in the financial statements and
related disclosures. Use of available information and the
application of judgment is inherent in the formation of
estimates. Actual results in the future could differ from
these estimates which may be material to the financial
statements. Significant judgements include:
3.1 Trade receivables
The Group assesses its trade receivables for impairment at
each statement of financial position date. In determining
whether an impairment loss should be recorded in the
statement of comprehensive income, the Group makes
judgement as to whether there is observable data
indicating a measurable decrease in the estimated future
cash flows from a financial asset.
3.2 Impairment testing
The Group reviews and tests the carrying value of assets
when events or changes in circumstances suggest that
the carrying amount may not be recoverable.
The carrying amount of deferred income tax assets at each
statement of financial position date are reduced to the
extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed
at each statement of financial position date and
recognised to the extent that it has become probable that
future taxable profit will allow the deferred tax asset to be
recovered.
Deferred income tax assets and liabilities are measured at
the tax rates that are expected to apply to the year when
the asset is realised or the liability is settled based on tax
rates (and tax laws) that have been enacted or
substantively enacted at the statement of financial
position date. Income tax relating to items recognised
directly in equity is recognised in equity and not in the
statement of comprehensive income. Deferred tax assets
and deferred tax liabilities are offset if a legally
enforceable right exists to set off current tax assets
against current tax liabilities and the deferred tax relate
to the same taxable entity and the same taxation
authority. Deferred capital gains tax arises on the
revalued property. The capital gains tax liability is
computed on the revaluation adjustment based on rates
ruling on the statement of financial position date.
2014
Annual Report
Notes to the Consolidated Financial Statements
42
4. PROPERTY AND EQUIPMENT
Group
Land and
Leasehold
Capital work
Furniture and
Motor
buildings
improvements
in progress
equipment
vehicles
Total
USD
USD
USD
USD
USD
USD
Carrying amount 01/01/2013
23 008 061
847 579
6 458 488
5 146 873
353 056
35 814 057
Cost /valuation
24 623 697
904 484
6 458 488
6 641 958
854 214
39 482 841
(1 615 636)
(56 905)
Additions
-
23 290
3 098 973
830 885
Accumulated depreciation
-
(1 495 085)
(501 158) (3 668 784)
254 974
4 208 122
Carrying amount of disposed assets
-
58 129
-
139 098
64 088
261 315
Cost /valuation
-
65 901
-
206 121
167 509
439 531
-
(7 772)
-
(67 023)
(103 421)
(178 216)
(602 290)
(103 226)
-
(782 807)
(38 724)
(1 527 047)
Depreciation charge
22 405 771
709 514
9 557 461
5 055 853
505 218
38 233 817
24 623 697
861 873
9 557 461
7 266 722
941 679
43 251 432
(2 217 926)
(152 359)
-
(2 210 869)
(436 461)
(5 017 615)
Revaluation surplus
-
-
-
-
-
-
Additions
-
-
-
2 089 259
20 448
2 109 707
-
4 873 444
(7 218 018)
2 344 574
-
2 282 656
-
-
-
-
disposed assets
-
-
-
30 804
554
31 358
Cost /valuation
-
-
-
78 229
36 969
115 198
-
-
-
(47 425)
(36 415)
(83 840)
(603 078)
(42 766)
-
(1 004 395)
(55 045) (1 705 284)
24 085 349
5 540 192
2 339 443
8 454 487
470 067 40 889 538
Cost /valuation
26 906 353
5 735 317
2 339 443
11 622 326
(2 821 004)
(195 125)
-
(3 167 839)
Cost /valuation
Transfers in/(out) of
Capital work in Progress
Revaluation of land and buildings
2 282 656
Carrying amount of
Depreciation charge for the year
925 158
47 528 597
(455 091) (6 639 059)
The land and buildings have been pledged as security for long term borrowings as more fully disclosed in note 12.3. There is
a notarial general covering bond over the Group's movable assets. Land and buldings were revalued by Bard Real Estate as
at 31 December 2014.
Notes to the Consolidated Financial Statements (cont)
2014
Annual Report
43
4. PROPERTY AND EQUIPMENT (continued)
Land and
Leasehold
Capital work
Furniture and
Motor
buildings
improvements
in progress
equipment
vehicles
Total
USD
USD
USD
USD
USD
USD
24 115 714
615 005
5 965 574
4 203 654
80 083 34 980 030
Cost /valuation
25 731 641
661 197
5 965 574
5 430 870
508 212
38 297 494
(1 615 927)
(46 192)
(1 227 216)
(428 129)
(3 317 464)
815 410
15 663
3 909 793
Company
Additions
-
23 290
3 055 430
-
-
-
Cost /valuation
-
-
-
8 284
862
9 146
-
-
-
(8 284)
(862)
(9 146)
(629 903)
(32 183)
(1 367 602)
Depreciation charge
-
-
-
(602 290)
(103 226)
-
23 513 424
535 069
9 021 004
4 389 161
63 563
37 522 221
Cost /valuation
25 731 641
684 487
9 021 004
6 237 996
523 013
42 198 141
(2 218 217)
(149 418)
(1 848 835) (459 450)
(4 675 920)
Additions
-
Transfers
-
Revaluation of land and buildings
2 282 656
4 703 108
-
(7 464 734)
-
1 640 924
2 761 626
-
20 448
-
1 661 372
-
-
2 282 656
-
-
-
31 143
554
31 697
Cost /valuation
-
-
-
78 229
36 969
115 198
-
-
-
(47 086)
(36 415)
(83 501)
-
(944 199)
(48 123)
(1636 747)
Depreciation charge for the year
(603 078)
(41 347)
25 193 002
5 196 830
1 556 270
7 816 369
35 334
39 797 805
Cost /valuation
28 014 297
5 387 595
1 556 270
10 562 317
506 492
46 026 971
(2821 295)
(190 765)
(2 745 948)
(471 158)
(6 229 166)
-
The land and buildings have been pledged as security for long term borrowings as more fully disclosed in note 12.3.There is
a notarial general covering bond over the Group's movable assets. Land and buldings were revalued by Bard Real Estate as
at 31 December 2014.
2014
Annual Report
44
Group
5. INTANGIBLE ASSETS
Company
2014
USD
2013
USD
2014
USD
2013
USD
Carrying amount 1 January
Cost/valuation
Accumulated amortisation
180 635
235 932
(55 297)
206 441
235 932
(29 491)
180 635
235 932
(55 297)
206 441
235 932
(29 491)
Amortisation
(25 806)
(25 806)
(25 806)
(25 806)
Carrying amount 31 December
Cost/valuation
Accumulated amortisation
154 829
235 932
(81 103)
180 635
235 932
(55 297)
154 829
235 932
(81 103)
180 635
235 932
(55 297)
In 2011, the Group acquired rights to use certain Microsoft products indefinitely. However, considering the changes in
technology, it is unlikely that the Group will continue to benefit for a period of more than 8 years. The intangible assets
are therefore being amortised over 8 years.
6. INVESTMENT IN SUBSIDIARIES
Aggregate investment in subsidiaries
Balance at 1 January
Additions
Disposals
-
-
110 000
1 759 586
(1 000) (1 649 586)
Balance at 31 December
-
-
109 000
110 000
Analysed as follows:
Rainbow Tourism Group (Zambia) Limited
Rainbow Hotel Mozambique Lda
-
-
109 000
1 000
109 000
-
-
109 000
110 000
All the above investments in subsidiaries are unlisted and are measured at cost. Rainbow Tourism Group Limited has
100% voting power and control of all the subsidiaries. The disposals of investments in subsidiaries relate to
discontinued operations that were derecognised during the year.
2014
Annual Report
45
Group
7. OTHER FINANCIAL ASSETS
Company
2014
USD
2013
USD
2014
USD
2013
USD
5 847
(5 177)
670
25 288
(19 441)
5 847
5 847
(5 177)
670
25 288
(19 441)
5 847
Treasury bills
Recovery of foreign currency accounts balance
13 697
13 697
-
13 697
13 697
-
Total
14 367
5 847
14 367
5 847
Held for sale investments
Quoted shares
Disposals
Held to maturity investments
The Treasury Bills (TBs) were issued in 2014 by the Government of Zimbabwe (GoZ) in settlement of indebtedness with
regards to Foreign Currency Accounts (FCAs) balances transferred to the Reserve Bank of Zimbabwe (RBZ) under
Exchange Control Directive RI : 303 of 2007. These balances accumulated prior to 2009 before adoption of the
multi-currency regime. The TBs were issued with effect from 10 April 2014 with maturity tenors of 3, 4 and 5 years and
the GoZ will redeem the TBs in equal installments beginning in year 3 with the final installment to be redeemed in year
5. With effect from date of issue, the TBs will attract the interest rate of 2% per annum and a half yearly coupon will be
paid.
8. INVENTORIES
Group
Food and beverages
Service stocks
Other stocks
2014
USD
368 850
1 906 445
417 766
2 693 061
2013
USD
642 721
758 149
978 863
2 379 733
Company
2014
USD
363 174
1 881 634
410 353
2 655 161
2013
USD
584 173
709 973
1 032 853
2 326 999
2014
Annual Report
46
9. ACCOUNTS RECEIVABLE
Group
Trade
Less: Allowance for credit losses
Other receivables
Company
2014
USD
2013
USD
2014
USD
2013
USD
7 489 245
(2 932 818)
4 556 427
1 567 511
6 123 938
8 059 375
(2 806 285)
5 253 090
857 939
6 111 029
7 145 304
(2 916 437)
4 228 867
1 752 238
5 981 105
4 949 587
(1 276 209)
3 673 378
1 702 721
5 376 099
4 228 867
1 752 238
5 981 105
3 673 378
1 702 721
5 376 099
The fair value of trade and other receivables classified as loans and receivables is as follows:
Trade
Other
4 556 427
1 567 511
6 123 938
5 253 090
857 939
6 111 029
As at 31 December 2014 the Group's trade receivables of USD 4 556 427 (2013 : USD 5 253 090) were past due but not
impaired. They relate to the clients with no default history. The aging analysis of these receivables is as follows:
Up to 3 months
3 to 6 months
9 months and over
1 609 361
1 019 528
1 927 538
4 556 427
2 149 261
627 422
2 476 407
5 253 090
1 520 533
965 673
1 742 661
4 228 867
2 307 443
304 327
1 061 608
3 673 378
As at 31 December 2014 the Group's trade receivables of USD 2 932 818 (2013: USD 2 806 285) were past due and impaired.
The analysis of these provisions is as follows:
Up to 3 months
3 to 6 months
9 months and over
2 932 818
2 932 818
2 806 285
2 806 285
2 916 437
2 916 437
1 276 209
1 276 209
1 276 209
2 127 490
(487 262)
2 916 437
1 276 209
1 276 209
Movement on the Group provision for impairment of trade receivables is as follows:
Provisions for the year
Receivables written off during the year as uncollectable
2 806 285
613 795
(487 262)
2 932 818
2 806 285
2 806 285
The movement on the provision for impaired receivables has been included in other operating expenses on the
consolidated statement of comprehensive income.
Other classes of financial assets included within trade and other receivables do not contain impaired assets.
2014
Annual Report
47
10. CASH AND CASH EQUIVALENTS
Group
For the purposes of the statement of cash flows,
cash and equivalents comprise the following:
Bank and cash balances
Bank overdraft
Company
2014
USD
2013
USD
2014
USD
2013
USD
498 447
(767 969)
(269 522)
4 015 719
(993 997)
3 021 722
405 310
(767 969)
(362 659)
3 782 079
(993 997)
2 788 082
The bank overdrafts are unsecured. The interest rates range between 15% and 16% per annum.
11. SHARE CAPITAL AND RESERVES
11.1 Share capital
Group
Authorised
2 500 000 000 ordinary shares of USD 0.0001 each
Issued and fully paid
1 870 495 543 ordinary shares of USD 0.0001 each
Company
250 000
250 000
250 000
250 000
187 055
187 055
187 055
187 055
The unissued shares are under the control of the Directors for an indefinite period subject to the limitations imposed by
the Companies Act (Chapter 24:03), the Zimbabwe Stock Exchange and approval by members in a general meeting.
A rights issue of 225 000 000 shares at USD 0.02 was approved by shareholders on the 27th of December 2012 to raise
USD 4 500 000. The Group concluded the rights issue in February 2013. The movement in the number of the issued
shares as a result of the rights issue is as follows:
Number of shares:
000s
000s
000s
000s
Shares issued in terms of the rights issue
1 870 496
-
1 645 496
225 000
1 870 496
-
1 645 496
225 000
1 870 496
1 870 496
1 870 496
1 870 496
Movement during the year
4 477 500
-
4 477 500
4 477 500
-
4 477 500
4 477 500
4 477 500
4 477 500
4 477 500
11.2 Share premium
The movement in the share premium was a result of a rights issue of 225 000 000 shares at a premium of 1.99 cents per
share.
2014
Annual Report
48
11. SHARE CAPITAL AND RESERVES (continued)
Group
Company
2014
USD
2013
USD
2014
USD
2013
USD
16 711 500
16 711 500
16 711 500
16 711 500
16 711 500
16 711 500
16 671 182
40 318
16 711 500
11.3 Non distributable reserve
Opening balance
Transfers within reserves
Closing balance
The non-distributable reserve is attributable to the net effect of the restatement of assets and liabilities previously
denominated in Zimbabwe dollars on 21 January 2009. The assets and liabilities were restated to United States Dollars
using the guidance issued by Public Accountants and Auditors Board and Zimbabwe Stock Exchange in 2009.
Adjustments were made to the reserve to reflect the effect of disposals of subsidiaries and assets.
11.4 Foreign currency translation reserve
Opening balance
Closing balance
(38 773)
(32 980)
1 498
(40 271)
-
-
(71 753)
(38 773)
-
-
Foreign currency translation reserve arises from translation of the Group's foreign operation in Mozambique.
11.5 Revaluation reserve
Opening balance
Transfers within reserves
Closing balance
1 257 114
1 728 103
2 985 217
1 257 114
1 257 114
1 257 114
1 728 103
2 985 217
1 257 114
1 257 114
Land and buildings were valued by BARD Real Estate agent, whilst the other non-current assets were valued by
management in December 2014.
2014
Annual Report
49
12. BORROWINGS
Group
12.1 Long term loans
African Export-Import Bank (Afreximbank)
PTA Bank
National Social Security Authority (NSSA) long term loan
FBC Bank Limited
Less:Current portion of long term loans
Total long term loans
12.2 Short term loans
NSSA short term loan
FBC Bank Limited
CBZ Bank Limited
Add:Current portion of long term loans
Total short term loans
Company
2014
USD
2013
USD
2014
USD
2013
USD
3 305 000
1 289 941
3 616 638
2 571 428
10 783 007
4 379 666
6 403 341
4 875 000
2 048 581
12 954 937
19 878 518
19 878 518
3 305 000
1 289 941
3 616 638
2 571 428
10 783 007
4 379 666
6 403 341
4 875 000
2 048 581
12 954 937
19 878 518
19 878 518
10 000 000
666 667
10 666 667
3 000 000
3 000 000
10 000 000
666 667
10 666 667
3 000 000
3 000 000
4 379 666
15 046 333
3 000 000
4 379 666
15 046 333
3 000 000
12.3 Borrowings terms
African Export-Import Bank (Afreximbank) loan
The loan, which is denominated in United States dollars, carries interest at LIBOR rate plus market premium determined
by the bank calculated as the variance between the bank's cost of funding and relevant LIBOR rate plus 5.5% per annum.
The loan has a tenor of six years with a capital repayment grace period of one year and is secured by a bank guarantee
of USD 7 500 000 from Capital Bank Corporation Limited. The Rainbow Towers hotel lease was used as security for the
loan.
The loan agreement has a cash trapping clause which does not permit payment of dividends if debt service coverage
ratio defined as gross revenue minus operating expenses divided by interest and principal payments falls below 150%.
PTA bank loan
The loan, which is denominated in United States dollars, carries interest of 3 months LIBOR rate plus 6% per annum
during grace period and 3 months LIBOR rate plus 5.5% per annum thereafter. The loan has a tenor of seven years with a
principal repayment grace period of one year and is secured by a bond in favour of the bank over Victoria Falls Rainbow
and A 'Zambezi River Lodge with a carrying amount of USD 14 900 000.
NSSA loan
NSSA has extended to the Group a loan of USD 10 million towards restructuring of the group's debt and USD 4.4 million
facility towards Rainbow Beitbridge Hotel. The USD 10 million facility is secured by a bond over Bulawayo Rainbow
Hotel. The facilities were extended at an interest rate of 10% per annum. The USD 10 million NSSA loan is due and
payable in December 2015. The loan has been reclassified to short term liabilities.
FBC Bank Limited Loan
The FBC loan is secured by a notarial general covering bond over the Group's movable assets.
Short term loans
These are bankers' acceptances and short term borrowings with various financial institutions. Interest per annum on
bankers' acceptances ranges between 14% - 18% in 2014 and 14% - 42%in 2013.
2014
Annual Report
50
13.
DEFERRED TAX
Group
Company
2014
USD
2013
USD
2014
USD
2013
USD
(3 089 989)
(2 576 924)
4 100 356
1 010 367
4 677 241
2 100 317
Balance at the beginning of year
Temporary differences on property and equipment
Deferred tax adjustment on revalued assets
Originating differences on assessed losses
2 100 317
(1 131 438)
554 553
(513 065)
2 295 798
2 381 443
(2 576 924)
Deferred tax liabilities
1 010 367
2 100 317
992 925
2 076 765
8 170 260
1 849 146
10 019 406
5 958 573
2 085 288
8 043 861
8 032 935
1 734 020
9 766 955
4 668 936
3 251 860
7 920 796
14 379 450
15 515 336
821 060
30 715 846
14 088 680
14 284 537
949 570
29 322 787
13 600 179
15 020 201
727 329
29 347 709
13 015 844
13 774 139
866 327
27 656 310
13.1 Deferred tax assets
Assessed losses
(3 089 989) (2 576 924)
13.2 Deferred tax liabilities
Accelerated wear and tear
4 082 914
992 925
4 653 689
2 076 765
Reconciliation
14.
ACCOUNTS PAYABLE
Trade
Other
15.
2 076 765
2 410 273
(1 125 328)
2 243 416
554 553
(513 065) (2 576 924)
REVENUE
Rooms revenue
Food, beverages and conferencing
Other operating activities
Revenue represents amounts invoiced for sales, less value added tax as appropriate.
2014
Annual Report
51
16. COST OF SALES
During the year, the Group changed its accounting policy with respect to the recognition of direct operating expenses and
direct labour as cost of sales in addition to direct raw materials. In accordance with International Accounting Standard 8,
"Accounting Policies, Changes in Accounting Estimates and Errors", the financial statements have therefore been prepared
on the basis of a retrospective application of a voluntary change in accounting policy. The previous accounting policy was
to charge direct raw materials used in production as cost of sales. The new accounting policy was adopted on 30 June 2014
and has been applied retrospectively. The Group believes that the new policy closely aligns the cost of sales to clearly show
the business direct costs related to the revenue generated.
GROUP
As Reported
Adjustments
2013
2012
2013
Restated
2012
2013
2012
Revenue
29 322 787
27 570 966
-
-
29 322 787
27 570 966
Cost of sales
(3 131 887)
(3 008 238)
(6 267 655)
(6 766 451)
(9 399 542)
(9 774 689)
26 190 900
24 562 728
(6 267 655)
(6 766 451)
19 923 245
17 796 277
112 915
212 787
-
-
112 915
212 787
(9 293 129)
(9 661 235)
-
-
(9 293 129)
(9 661 235)
Gross Profit
Profit/(loss) from operations
COMPANY
(1 259 862)
(855 182)
-
-
(1 259 862)
(855 182)
(12 965 000)
(15 181 601)
6 267 655
6 766 451
(6 697 345)
(8 415 150)
2 785 824
(922 503)
-
-
2 785 824
(922 503)
As Reported
Adjustments
2012
Revenue
27 656 310
25 092 852
-
Cost of sales
(2 993 217)
(2 854 170)
(6 108 304)
(6 465 740)
24 663 093
22 238 682
(6 108 304)
(6 465 740)
25 244
104 787
-
-
25 244
104 787
(8 627 131)
(9 035 808)
-
-
(8 627 131)
(9 035 808)
Gross Profit
Profit/(loss) from operations
2013
Restated
2013
2012
-
2013
2012
27 656 310
25 092 852
(9 101 521)
(9 319 910)
18 554 789
15 772 942
(1 234 992)
(811 853)
-
-
(1 234 992)
(811 853)
(12 288 431)
(13 797 852)
6 108 304
6 465 740
(6 180 127)
(7 332 112)
2 537 783
(1 302 044)
-
-
2 537 783
(1 302 044)
The reclassification of a portion of operating expenses to cost of sales in accordance with the new accounting policy will
not result in change of the profit or loss before tax position in the current year or any years included within these
consolidated financial statements.
17.
NET FINANCE COST
Group
Finance income
Finance cost
The finance cost can be analysed as follows:
Finance expense from continuing operations
Finance expense from discontinued operations
Company
2014
2013
USD
USD
( 58 796)
( 108 154)
2 168 104
1 884 320
2014
USD
( 58 796)
2 168 104
2013
USD
( 108 154)
1 884 320
2 109 308
1 776 166
(2 168 104)
-
(1 884 320)
-
(2 168 104) (1 884 320)
-
(2 168 104)
(1 884 320)
(2 168 104) (1 884 320)
2 109 308
1 776 166
2014
Annual Report
52
18. (LOSS)/PROFIT BEFORE TAX
Group
Company
2014
USD
2013
USD
2014
USD
2013
USD
-
-
-
-
11 554 635
106 075
1 705 284
10 482 092
93 833
1 527 047
11 279 789
92 833
1 636 747
10 422 925
92 152
1 367 602
83 933
1 063 056
1 738 302
7 068
69 042
602 401
1 738 302
-
83 933
1 063 056
1 738 302
7 068
69 042
602 401
1 738 302
-
(48 926)
1 640 738
1 591 812
(117 177)
333 508
216 331
1 640 738
1 640 738
333 508
333 508
(2 947 734)
1 009 658
(3 009 365)
761 617
(759 042)
2 350 854
1 591 812
259 987
(43 656)
216 331
(774 911)
2 415 649
1 640 738
196 116
137 392
333 508
-
(167 145)
(167 145)
-
-
(Loss)/profit before tax is arrived at after taking
into account the following:
Income
Preference share dividends
Expenses
Staff costs
Audit fees
Depreciation of property and equipment
Directors' emoluments:
For services as directors
For managerial services
Operating lease expenses
Profit on disposal of equipment
19. INCOME TAX
Current
Deferred
Tax rate reconciliation
Accounting (loss)/profit
Tax at 25.75%
(Non-taxable)/non-deductible differences
20. DISCONTINUED OPERATIONS
Results of discontinued operations
Revenue
Expenses other than finance costs
Finance costs
Income tax credit
Loss for the year
2014
Annual Report
53
21. EARNINGS PER SHARE
Group
Company
2014
USD
2013
USD
2014
USD
2013
USD
(1 355 922)
1 225 989
(1 368 627)
1 095 125
'000s
'000s
'000s
'000s
1 870 496
1 870 496
1 870 496
1 870 496
(0.072)
0.065
(0.073)
0.059
(1 355 922)
1 225 989
(1 368 627)
1 095 125
'000s
'000s
'000s
'000s
1 870 496
1 870 496
1 870 496
1 870 496
(0.073)
0.065
(0.074)
0.059
(Loss)/profit for the year
(1 355 922)
Adjusted for:
Depreciation of property and equipment and amortisation 1 731 090
Dividends from foreign sudsidiary
Recovery of bad debts
(50 439)
Preference share dividend and investment income
(51 575)
Unrealised exchange (loss)/gain
(32 980)
Loss on disposal of subsidiary
(7 068)
1 058 844
(1 368 627)
1 095 125
1 527 047
(124 768)
(40 272)
-
1 662 553
377 714
(39 952)
( 51 575)
(7 068)
1 367 602
(52 833)
-
Finance costs
Income tax credit
Finance income
2 168 104
(1 591 812)
(58 796)
1 884 320
( 216 331)
(108 154)
2 168 104
(1 640 738)
(58 796)
1 884 320
(333 508)
(108 154)
Operating profit before working capital changes
Increase in inventories
(Increase)/decrease in accounts receivables
Increase/(decrease) in accounts payables
750 602
(313 328)
(12 909)
1 853 021
2 277 386
3 980 687
(412 309)
(422 232)
(250 673)
2 895 473
1 041 615
(328 162)
(606 007)
1 846 159
1 953 605
3 852 552
(902 182)
110 311
(366 799)
2 693 882
21.1 Basic earnings per share (continuing operations)
Numerator
(Loss)/profit for the year and earnings used in basic EPS
Denominator
Weighted average number of shares used in basic EPS
Basic (loss)/earnings per share (US cents)
21.2 Headline earnings per share (continuing operations)
Numerator
(Loss)/profit for the year and earnings used in basic EPS
Denominator
Weighted average number of shares used in basic EPS
Headline (loss)/earnings per share (US cents)
22. CASH FLOW INFORMATION
Cash generated from operating activities
2014
Annual Report
54
23. RELATED PARTY INFORMATION
Group
23.1 Compensation to key management
Short term benefits
23.2 Non - executive directors
Fees
The non - executive directors do not receive pension
entitlements from the Group.
23.3 Related party receivables
Rainbow Tourism Group (Zambia) Limited
23.4 Loans to key management
Loans
Company
2014
USD
2013
USD
2014
USD
2013
USD
1 063 056
602 401
1 063 056
602 401
83 933
69 042
83 933
69 042
-
-
-
1 143 361
365 274
260 000
365 274
260 000
The loans include motor vehicle and housing loans. The loans attract interest which ranges between 6% and 9% per
annum.
Key management personnel are those persons having the authority and responsibility for planning, directing, and
controlling activities of the Group. They include the Chief Executive, Finance Director and other senior management
of the Group.
23.5 Group structure
The Group comprises the following companies:
Name
Business
Rainbow Tourism Group (Zambia) Limited (non operational) Hotelier
Rainbow Tourism Group (Zimbabwe) Limited
Hotelier
Rainbow Hotel Mozambique Lda
Hotelier
Rainbow Tourism Group (South Africa) Limited (proprietary) Hotelier
Location
Zambia
Zimbabwe
Mozambique
South Africa
Shareholding
2014
2013
100%
100%
100%
100%
100%
100%
100%
100%
24. COMMITMENTS
24.1 Lease commitments
(a) Operating lease terms
The Group maintains a portfolio of two leased properties in and outside Zimbabwe under fixed operating lease
agreements and two leased properties under variable operating lease agreements. The terms are between 3 to 10
years for properties under fixed terms and 3 to 25 years for properties under variable terms. All the lease
agreements are renewable at the end of the lease period for a further period agreed by both parties at market
rates. The lease agreements do not impose any restrictions. Future minimum lease payments for variable
agreements are based on the current contingent rent as at the reporting date.
(b) The total future value of minimum lease payments is due as follows:
Period
Not later than one year
Later than one year and not later than five years
Later than five years
Type
-fixed
-variable
-fixed
-variable
-fixed
-variable
Total operating lease commitments
2014
USD
481 775
1 256 527
1 239 923
3 769 583
252 580
31 629 565
38 629 953
2013
USD
481 775
1 256 527
1 445 328
3 769 583
252 580
31 629 565
38 835 358
2014
Annual Report
55
25. CAPITAL EXPENDITURE COMMITMENTS
2014
USD
2 300 000
2 009 398
4 309 398
Contracted
Authorized but not contracted
2013
USD
7 500 000
8 053 143
15 553 143
The contracted USD 2 300 000 capital expenditure relates to Rainbow Towers Hotel and Conference Centre
refurbishment to be funded through internally generated resources . All projects will be carried out subject to
availability of funds.
26. RETIREMENT BENEFITS
26.1 Catering Industry Pension Fund (NEC) - Zimbabwe
This is a defined contribution scheme which covers employees in specified occupations of the catering industry.
The majority of employees in the Rainbow Tourism Group are members of this Fund.
Contributions for the year
240 081
280 580
26.2 National Social Security Authority Scheme (NSSA) - Zimbabwe
This is a defined contribution scheme legislated under the National Social Security Act (1989). The company's
obligations are limited to specific contributions as legislated from time to time, and are currently 3% of
pensionable earnings limited to USD 200 per month per employee.
158 751
143 048
26.3 Instituto Nacional Seguransa Social (INSS) - Mozambique
This is a defined contribution scheme which was promulgated under the Mozambican Labour Act. Contributions
by both the company and employees amount to 4% and 3% of basic salary respectively for all employees.
7 540
1 232
26.4 MINERVA PENSION-Non-NEC-Zimbabwe
This is a defined contribution scheme which covers supervisory and managerial employees. Contributions by both
the company and employees amount to 10% and 5% of basic salary respectively for all employees.
497 526
504 460
2014
Annual Report
56
27.
FINANCIAL RISK MANAGEMENT
The main risks facing the Group are treasury risk, credit risk, liquidity, exchange rate and cash flow risk.
In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments.
This note describes the Group's objectives, policies and processes for managing those risks and methods used to
measure them. Further quantitative information in respect of these risks is presented throughout these financial
statements.
There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from the previous periods
unless otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
a) Accounts receivable
b) Cash at bank
c) Borrowings
d) Accounts payable
General objectives, policies and processes
The Board has overall responsibility for the determination of the Group's risk management objectives and policies
and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating
processes that ensure the effective implementation of the objectives and policies to the Group's finance function.
27.1 Treasury risk
The Audit and Finance Committee, made up of executive and non-executive directors, meets regularly to consider
and analyse, among other issues, currency and interest rate exposures and to re-evaluate treasury risk
management strategies against prevailing economic forecasts. Compliance with Group policies and exposure
limits is reviewed at regular board meetings.
27.2 Liquidity risk
The Group has a borrowing capacity of USD 34 253 528 of which 35% was unutilised as at 31 December 2014. Cash
generated from operations is adequate to enable the Group to meet its day-to day expenses and service interest
charges as they fall due. Currently the Group has negative working capital due to a $10 million which is due and
payable in December 2015.
27.3 Credit risk
Financial assets which potentially subject the Group to concentrations of credit risk consist mainly of trade
receivables, bank balances and cash. The Group's receivables are presented net of provision for doubtful debts
where this is considered necessary. Credit risk in respect of trade debtors is limited because of the nature of the
major receivables, i.e., local private companies and Government departments which although they take time,
eventually make payments.
2014
Annual Report
57
27. FINANCIAL RISK MANAGEMENT (continued)
27.4 Interest rate risk
The Group's exposure to interest rate fluctuations is limited to the bank overdraft amount. Interest rates on the
existing loans are contractual.
27.5 Exchange risk
The Group is exposed to foreign currency fluctuations as it accrues foreign currency-denominated liabilities in its
business activities. It is exposed to such foreign currency fluctuations to the extent that such liabilities are not
matched by foreign currency receipts from operations.
A summary of the financial instruments held by category is provided below:
Financial assets
Group
Trade and other receivables
Company
Fair value
Loans and
Held to
through
profit or loss
receivables
maturity
2014
USD
2014
USD
2014
USD
(269 522)
6 123 938
670
5 855 086
(269 522)
6 123 938
5 854 416
13 697
13 697
Fair value
through
profit or loss
Loans and
receivables
Held to
maturity
2014
USD
(362 659)
5 981 105
670
5 619 116
2014
USD
(362 659)
5 981 105
5 618 446
2014
USD
13 697
13 697
2014
Annual Report
58
Fair value
Fair value
through profit
through profit
or loss
or loss
Amortised cost
Amortised cost
2014
2013
2014
2013
USD
USD
USD
USD
Trade and other payables
-
-
9 766 955
7 920 796
Borrowings
-
-
6 403 341
19 878 518
Bank overdrafts
-
-
767 969
993 997
-
-
16 938 265
28 793 311
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or a counterparty to a financial instrument fails to
meet its contractual obligations. Financial assets which potentially subject the Group to concentrations of credit risk
consist primarily of cash and trade receivables. The Group's cash and cash equivalents are placed with high quality
financial institutions. The credit risk with respect to trade receivables is limited as a result of the spread of balances
owing to various customers who are in different sectors of the economy.
Financial assets
Carrying value
Group
Carrying value
Maximum
Maximum
Exposure
Exposure
2013
2014
2013
2014
USD
USD
USD
USD
(269 522)
3 021 722
(269 522)
3 021 722
6 123 938
6 111 029
6 123 938
6 111 029
14 367
5 847
14 367
5 847
5 868 783
9 138 598
5 868 783
9 138 598
(362 659)
2 788 082
(362 659)
2 788 082
5 981 105
5 376 099
5 981 105
5 376 099
14 367
5 847
14 367
5 847
5 632 813
8 170 028
5 632 813
8 170 028
Company
Financial instruments measured at fair value
Level 2
Level 1
Group
Equity investments
Level 3
2014
2013
2014
2013
2014
2013
USD
USD
USD
USD
USD
USD
670
5 847
-
-
-
-
670
5 847
-
-
-
-
Company
Equity investments
Liquidity risk
This is the risk of insufficient liquid funds being available to cover commitments. In order to mitigate any liquidity risk
that the Group faces, the Group's policy has been throughout the year ended 31 December 2014, to maintain
substantial unutilised facilities.
2014
Annual Report
59
Group
Borrowings
Bank overdrafts
Between 3 and
Between 12 and
Up to 3 month
12 months
24 months
Over 2 years
Total
2014
2014
2014
2014
2014
USD
USD
USD
USD
USD
3 458 845
2 760 958
2 156 152
1 643 451
10 019 406
15 046 333
1 030 233
1 373 644
3 999 464
21 449 674
767 969
-
-
-
767 969
19 273 147
3 791 191
3 529 796
5 642 915
32 237 049
Company
Borrowings
Bank overdrafts
Group
Borrowings
Bank overdrafts
3 324 449
2 734 137
2 153 771
1 554 598
9 766 955
15 046 333
1 030 233
1 373 644
3 999 464
21 449 674
767 969
-
-
-
767 969
19 138 751
3 764 370
3 527 415
5 554 062
31 984 598
2013
2013
2013
2013
2013
USD
USD
USD
USD
USD
8 043 861
-
-
-
8 043 861
3 000 000
1 373 644
1 373 644
17 131 230
22 878 518
993 997
-
-
-
993 997
12 037 858
1 373 644
1 373 644
17 131 230
31 916 376
Company
Borrowings
Bank overdrafts
28.
7 920 796
-
-
-
7 920 796
3 000 000
1 373 644
1 373 644
17 131 230
22 878 518
993 997
-
-
-
993 997
11 914 793
1 373 644
1 373 644
17 131 230
31 793 311
MANAGEMENT OF CAPITAL
The primary objective of the Group's capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions.
No changes were made in the objectives, policies or processes during the year ended 31 December 2014.
The Group monitors its capital ratio using an adjusted gearing ratio which is net debt divided by total capital plus net
debt. The Group includes within its net debts, interest bearing loans and borrowings, trade and other payables, less
cash and cash equivalents, excluding discontinued operations; capital includes equity attributable to the equity
holders of the parent.
2014
Annual Report
60
28. MANAGEMENT OF CAPITAL (continued)
Group
2014
USD
Group
2013
USD
Borrowings
Tax payables
Less: Bank and cash balances
10 019 406
21 449 674
( 498 447)
8 043 861
22 878 518
122 524
(4 015 719)
Net debt
30 970 633
27 029 184
17 126 764
16 787 563
48 097 397
43 816 747
64%
62%
Total equity
Capital and net debt
Adjusted gearing ratio
29 SEGMENTAL PERFORMANCE
Basis of segmentation
The Group has interests in and outside Zimbabwe. The Group generates revenue from the tourism services industry
as hoteliers and providers of conference facilities. The types of services from which each operating segment
derives its revenues are described below.
Rainbow Tourism Group has two main business segments:
Zimbabwe
This division is involved in hotels and conferencing. The segment accounts for 96% (2013: 95%) of the revenue from
parties outside the Group.
Outside Zimbabwe
This division is made up of Mozambique. It is involved in a hotel which accounts for 4% (2013: 5%) of the Group’s
revenue. The Group has a Market and Channel Managemement Officein South Africa.
Measurement of operating segment profit or loss, assets and liabilities
Management has determined the operating segments based on the reports reviewed by the Chief Executive, who is
responsible for allocating resources to the reportable segments and assesses their performance. The chief
operating decision-maker assesses the performance of the operating segments based on a measure of profit or
loss.
The accounting policies of the operating segments are the same as those described in the summary of significant
accounting policies. The Group's evaluation performance excludes the effect of non recurring expenditure from the
operating segments such as restructuring costs and legal fees. The measure also excludes the effects of equity
settled share-based payments and unrealised gains or losses on financial instruments.
Inter-segment sales are priced along the same lines as sales to external customers, with an appropriate discount
being applied to encourage use of Group resources at a rate acceptable to local tax authorities. This policy was
applied consistently throughout the current and prior periods.
2014
Annual Report
61
29. SEGMENTAL PERFORMANCE (continued)
Zimbabwe
2014
USD
Outside
Zimbabwe
2014
USD
Total
2014
USD
29 347 709
29 347 709
1 368 137
1 368 137
30 715 846
30 715 846
29 347 709
1 368 137
30 715 846
Depreciation on property and equipment
1 662 554
68 536
1 731 090
Segment (loss)/profit from operations
(900 057)
61 631
(838 426)
Group
Revenue
Inter-segmental revenue
Total revenue from external customers
Group's revenue per consolidated statement of profit/loss and
other omprehensive income
Finance income
Finance expense
58 796
(2 168 104)
Group loss before tax and discontinued operations
(2 947 734)
Additions to non current assets
1 661 031
448 676
2 109 707
Reportable segment assets
49 013 102
1 361 078
50 374 180
Reportable segment liabilities
32 977 523
269 893
33 247 416
Zimbabwe
2013
USD
Outside
Zimbabwe
2013
USD
Total
2013
USD
Revenue
Inter-segmental revenue
27 731 289
-
1 591 498
-
29 322 787
-
Total revenue from external customers
27 731 289
1 591 498
29 322 787
Discontinued operations
Group's revenue per consolidated statement of profit/loss and
other comprehensive income
-
-
-
27 731 289
1 591 498
29 322 787
Depreciation on property and equipment
1 432 898
94 149
1 527 047
Segment profit from operations
2 552 527
233 297
2 785 824
Finance income
Finance expense
108 154
(1 884 320)
1 009 658
Group profit before tax and discontinued operations
Additions to non current assets
4 058 057
150 065
4 208 122
Reportable segment assets
48 159 435
2 767 345
50 926 780
Reportable segment liabilities
33 894 144
245 073
34 139 217
2014
Annual Report
62
30. NEGATIVE WORKING CAPITAL
As at 31 December 2014, the Group had a negative working capital of USD 16 503 895. This is attributable to the NSSA
loan of USD 10 000 000 which is due for repayment in December 2015. The board assessed the negative working
capital and is clear that the position does not have a significant impact on the Group's ability to meet its short term
obligations as negotiations are currently underway to restructure the Group's major borrowings. The loan facility
is expected to be restructured in the current year.
31.
EVENTS AFTER THE REPORTING DATE
There were no events after the reporting date that require additional or separate disclosure.
2014
Annual Report
Top Twenty Shareholders
63
SHAREHOLDER
SHARES
%
1
NATIONAL SOCIAL SECURITY AUTHORITY
677,386,342
36.21
2
HAMILTON & HAMILTON TRUSTEES LTD
526,026,820
28.12
3
STANBIC NOMINEES (PRIVATE) LIMITED
373,102,697
19.95
4
MINISTRY OF MINES ENVIRONMENT AND TOURISM
83,402,508
4.46
5
LAAICO – FCA NON-RES
60,000,000
3.21
6
PINNACLE INVESTMENTS (PRIVATE) LIMITED
15,521,167
0.83
7
ALLIED TIMBER
5,088,548
0.27
8
WORKERS COMPENSATION INVESTMENT FUND
3,171,496
0.17
9
OLD MUTUAL LIFE ASSURANCE COMPANY OF ZIMBABWE LTD
2,535,750
0.14`
10
MANO, EVELYN
1,942,625
0.10
11
WILLOUGHBY'S CONSOLIDATED PLC NNR,
1,483,579
0.08
12
ANNES SUPERMARKET
1,466,251
0.08
13
GURAMATUNHU SOLOMON
1,400,000
0.07
14
KAMBA, THOMPSON TOGARAPI
1,101,319
0.06
15
M K FAMILY TRUST
1,002,947
0.05
16
BLAGOJEVIC, GORAN
903,510
0.05
17
KOPI, COLZA M
852,553
0.05
18
SAMURIWO, TICHAONA
706,052
0.04
19
RENAISSANCE SECURITIES NOMINEES (TWO) (PRIVATE) LIMITED
665,318
0.04
20
ZIMBABWE ELECTRICITY IND PENSION FUND
600,486
0.03
1,758,359,968
94.00
OTHER SHAREHOLDERS
112,135,575
6.00
TOTAL SHARES IN ISSUE
1,870,495,543
100
TOP 20 VOTING BLOCK
2014
Annual Report
Notice to Shareholders
64
(Incorporated in Zimbabwe on 7 October 1991 under company registration number 4880/91)
NOTICE IS HEREBY GIVEN THAT the 16th Annual General Meeting ("AGM") of the shareholders of Rainbow Tourism Group
Limited ("the Company") will be held in the Jacaranda Rooms 2 and 3 at the Rainbow Towers Hotel and Conference
Centre, 1 Pennefather Avenue, Samora Machel Avenue West, Harare on Thursday 11 June 2015 at 12:00 noon to transact
the following business;
1.
FINANCIAL STATEMENTS
To receive and adopt the financial statements and the reports of Directors and Auditors for the year ended
31 December 2014.
2.
DIRECTORS’ FEES
To approve the fees paid to the Directors for the year ended 31 December 2014.
3.
DIRECTORATE
To re-elect Messrs. Shingirai Norman Chibanguza and Douglas Hoto as Directors of the Company. In
accordance with Article 99 of the Company’s Articles of Association, Messrs. Shingirai Norman Chibanguza
and Douglas Hoto retire by rotation at the Company’s Annual General Meeting and, being eligible, offer
themselves for re-election.
4.
AUDITORS
To fix the remuneration for the auditors for the past audit and to re-appoint Messrs. Grant Thornton
Chartered Accountants (Zimbabwe) as auditors until the next Annual General Meeting.
5.
PROXIES AND VOTES
Each member entitled to attend and vote at the meeting is entitled to appoint one or more persons, whether
members or not, to act in the alternative as his/her proxy to attend or vote instead of him/her, having the
same rights as the member to speak at the meeting.
Proxy forms must be lodged at the registered office of the Company no later than 12:00 noon on 09 June 2015.
By order of the board
.....................................................................
NAPOLEON K. MTUKWA
COMPANY SECRETARY
25 March 2015
1 Pennefather Avenue / Samora Macheal Avenue
Harare, Zimbabwe
2014
Annual Report
Proxy Form
65
The Secretary
Rainbow Tourism Group Limited
1 Pennefather Avenue, Samora Machel Avenue West
HARARE
I/We …………………………………………….......................................................................… of ………………………………………….........................................………
being a member of Rainbow Tourism Group Limited (the Company) hereby appoints……………………………......................................…..
or failing him/her the Chairman of the meeting as my/our proxy to attend and speak for me/us on my/our behalf at the
Annual General Meeting of the Company to be held in the Jacaranda Rooms 2 &3, Rainbow Towers Hotel and Conference
Centre, Harare on the 11th June 2015 and at any adjournment thereof and to vote or abstain from voting as indicated
below on the resolutions to be considered at the said meeting.
FOR
1.
AGAINST
ABSTAIN
To receive and adopt the financial statements, the reports of the
directors and auditors for the year ended 31 December 2014.
2. To approve the fees paid to the directors for the year ended 31 December 2014.
3. To elect Mr. Shingirai Norman Chibanguza who retires by rotation and, being
eligible offers himself for re-election.
4. To elect Mr. Douglas Hoto who retires by rotation and, being eligible offers
himself for re-election.
5. To fix the remuneration for the auditors for the year ended 31 December 2014.
6. To re-appoint Messrs. Grant Thornton Chartered Accountants (Zimbabwe) as
auditors for the ensuing financial year.
Please indicate with an “X” in the spaces provided how you wish your votes to be cast. If no indication is given, the proxy
will vote or abstain at his/her discretion.
Signed at …………………………….. this …………………………….day of ……………………………………… 2015.
Signature of member ………………………………………………………………………………………………………….....
Number of Shares ………………………………………………………………………………………………………………..…
NOTES
1.
This proxy form should reach the registered office of the company not later than forty –eight hours
before the time of the meeting.
2.
A member entitled to attend and vote is entitled to appoint a proxy to attend and vote and speak in his stead.
A proxy need not be a member of the company.
2014
Annual Report
Notes
66
Registered Office
Rainbow Towers Hotel and Conference Centre
No. 1 Pennefather Avenue
Samora Machel Avenue West
HARARE
Email:
reservations@rtg.co.zw
res@rtgrsa.co.za
Website:www.rtgafrica.com
Skype: rtgreservations
Facebook: RTG Central reservations

RTG 2014 Pages 1-22 - Rainbow Tourism Group

Transcription

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