African Sun : 2022 HY Results & Audit Review

(Incorporated in Zimbabwe on 2 July 1971 under Company Registration Number 643/71)

Short-Form Financial Announcement

For the half year ended 30 June 2022

Financial highlights

	Ination adjusted	Ination adjusted
	for the half year ended 30 June 2022	for the half year ended 30 June 2021
Revenue	ZWL 8.45 billion	ZWL 3.35 billion
Occupancy	41%	24%
Prot for the period	ZWL 5.86 billion	ZWL 18.58 billion
Finance costs	ZWL 68.16 million	ZWL 30.16 million
Average Daily Room Rate	ZWL 36,277	ZWL 23,232
EBITDA	ZWL 7.30 billion	ZWL 19.39 billion
Rooms Revenue Per Available Room	ZWL 15,563	ZWL 5,632
Total Revenue Per Available Room	ZWL 29,002	ZWL 11,685
Basic Earning/(loss) for the Period	413.72 ZWL cents	1,304.26 ZWL cents

The Directors of African Sun Limited (the Company) are responsible for the short-form nancial announcement which is issued in terms of Practice Note 13 of the Zimbabwe Stock Exchange.

The short-form nancial announcement is only a summary of the information contained in the condensed consolidated nancial statements for the half year ended 30 June 2022. Any investment decisions by investors and and/or shareholders should be based on the complete condensed nancial statements for the half year ended 30 June 2022 published on the ZSE website: www.zse.co.zw and Company's website: www.africansunhotels.com/investorrelations. The condensed nancial statements for the half year ended 30 June 2022 are also available on request, at no charge, from the registered oce of the Company during working hours or via email on venon.musimbe@ africansunhotels.com.

Financial performance

Revenue

The ination adjusted revenue at ZWL8.45 billion, was 153% up compared with the same period last year ("SPLY"). The improved performance was driven by higher business volumes and rmer average daily rates ("ADR") at the back of increased demand. Hotel occupancy, at 41%, increased by 17 percentage points compared to the SPLY. This was, however, 4 percentage points lower than the occupancy levels achieved over the same period in 2019.

The Group's business continue to be predominantly domestic driven. However, we have also started to witness signs of recovery on the regional and international market front. Foreign business contributed 15% towards hospitality revenue, representing a 7 percentage point increase from the SPLY. The hospitality segment, which is the key driver of the Group's revenues and protability, contributed 95% of the total revenue whilst the real estate segment contributed 5%. Key contributors to the real estate segment revenues were residential stand sales at Marlborough Sunset Views as well as property consultancy revenue.

Operating Expenses

The increase in the Group's ination adjusted operating expenses (excluding depreciation), at 127% compared to the SPLY trailed the 153% increase in revenue. Operating expenses increased mainly due to increase in business volumes; and inationary pressures which the Group has also been experiencing even in United States of American Dollars ("USD") denominated costs. The Group will continue to monitor costs and implement various cost cutting initiatives.

Protability and liquidity

The Group recorded ination-adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") of ZWL7.30 billion and prot after tax of ZWL6.07 billion as a result of improved business performances and rmer cost management initiatives.

Turning to liquidity, the Group is currently ungeared and had cash and cash equivalents of ZWL4.67 billion as at 30 June 2022. The Group is currently in discussions with local nancial institutions, earmarked at establishing standby nancing facilities for material hotel refurbishment projects that are in the pipeline.

	INFLATION ADJUSTED	HISTORICAL COST
	30 June 2022	30 June 2021	30 June 2022	30 June 2021
All gures in ZW$	Reviewed	Reviewed	Reviewed	Reviewed

Revenue Operating prot Prot for the period

Basic and diluted earnings per share

8,454,080,442	3,348,060,323	6,065,984,998	1,092,706,727
6,492,079,498	18,651,661,551	10,122,065,328	5,089,673,220
6,070,941,252	18,583,588,941	9,830,289,720	5,084,826,468
413.72	1,304.26	666.03	356.27

	INFLATION ADJUSTED	HISTORICAL COST
	As at 30 June 2022	As at 31 December 2021	As at 30 June 2022 As at 31 December 2021
All gures in ZW$	Reviewed	Audited	Reviewed	Audited
Total assets	74,970,165,077	48,460,087,902	71,108,445,732	21,060,963,465
Total equity	61,087,777,586	40,807,884,924	54,841,109,283	17,214,997,484
Total liabilities	13,882,387,491	7,652,202,978	16,267,336,449	3,845,965,981

Interim dividend declaration

The Board resolved to declare an interim dividend of ZWL0.102118 per share plus USD0.000545 per share, with respect to the half year ended 30 June 2022. A separate dividend notice will be issued with respect to the interim dividend declaration.

Outlook

The rst half of the year delivered performance that exceeded our initial expectation. Zimbabwe, like many destinations across the globe, continues to witness encouraging signs of a much accelerated recovery to the pre-pandemic tourism arrival levels. Inspite of the current global economic and geopolitical challenges, the UNTWO revised its outlook for 2022, projecting that with international arrivals are now expected to reach 55% to 70% of 2019 levels. We expect recovery of our international business to continue into the second half of the year.

External Auditor's review conclusion

These ination adjusted condensed consolidated nancial statements for the six months ended 30 June 2022 have been reviewed by Grant Thornton Chartered Accountants (Zimbabwe) in accordance with International Standards on Review Engagements (ISRE) 2410. The auditors have issued a qualied conclusion on the interim condensed consolidated nancial statements with respect to non-compliance with International Accounting Standard (IAS) 21 - The Eect of Changes in Foreign Exchange Rates, and International Financial Reporting Standard (IFRS) 3 -BusinessCombinations with respect to measurement of gain on bargain purchase on acquisition transaction in the prior nancial year.

The engagement partner on the audit resulting in the review conclusion auditor's report is Edmore Chimhowa (PAAB Number 0470).

Directors:E. A. Fundira (Chairman), P. Saungweme (Chief Executive Officer)*, N. Mutizwa (Chief Finance Officer)*, G. Chikomo, C. Chikosi, B. Childs, V.W. Lapham,

L.M. Mhishi, T. M. Ngwenya, A.E. Siyavora. * Executive

Registered Office: Monomotapa Hotel, Number 54 Park Lane, Harare, Zimbabwe. Email: [e-mail], Web: www.africansunhotels.com

Independent Auditor: Grant Thornton Chartered Accountants (Zimbabwe), Camelsa Business Park, 135 Enterprise Road, Harare, Zimbabwe

Reviewed Condensed Consolidated Financial

Statements for the half year ended

30 June 2022

Contents

Directorate and corporate information	1
Chairman's statement	2
External auditor's review conclusion	5
Condensed consolidated statement of financial position	6
Condensed consolidated statement of comprehensive income	7
Condensed consolidated statement of changes in equity	8
Condensed consolidated statement of cash flows	12
Notes to the condensed consolidated financial statements	13

These reviewed condensed consolidated financial statements are presented in Zimbabwe Dollars ("ZWL").

Statement of Vision

To be the leading Hospitality and Leisure Company in the markets we operate.

MISSION

We exist to create value for all our stakeholders.

• To our Guests
  Exceeding their expectations through provision of a delightful service, as they are our reason for existence.
• To our Employees
  Creating opportunities for personal growth and balanced lifestyles for all our staff to enable them to positively influence lives around them and delight our guests.
• To our Community and Environment
  To be a model corporate citizen in the society in which we operate from where we derive our identity and being.
• To our Business Partners
  Establishing ethical and honest relationships with our business partners and suppliers who enable us to meet and exceed our guest expectations.
• To our Shareholders
  Deliver real value growth to our shareholders in excess of 20% return on equity per annum.

OUR CORE VALUES AND BELIEFS

Our seven-point "PRILFSC" value system forms the basis our belief system within the organization

We will do so through:

• Professionalism - We exude expert competence in the way we do business.
• Respect - In all our relationships, we seek to build and honor.
• Integrity - We do what we say. We are true to self and true to others.
• Leisure - We enjoy everything we do.
• Fairness - We are a non-discriminate organization and we treat everyone equally.
• Service Excellence - We meet and exceed customer expectations.
• Care - We show concern and seek the well-being of everyone.

AFRICAN SUN LIMITED - Reviewed condensed consolidated financial statements for the half year ended 30 June 2022

Directorate and corporate information

DIRECTORS
E.A. Fundira	Chairman
P. Saungweme*	Chief Executive Officer
N.Y. Mutizwa*	Chief Finance Officer
B.I. Childs
G. Chikomo
T.M. Ngwenya
L.M. Mhishi
C.F. Chikosi
A.E. Siyavora
V.W. Lapham
*Executive
Company Secretary
V.T. Musimbe

African Sun Limited

Incorporated and domiciled in the Republic of Zimbabwe Registration number: 643/1971

Registered Office

African Sun Limited, c/o Monomotapa Harare

54 Parklane, Harare, P.O. Box CY 1211, Causeway, Harare, Zimbabwe

Tel: [phone]

Email: [e-mail]

Web: www.africansunhotels.com

Independent Auditor

Grant Thornton Chartered Accountants (Zimbabwe)

Camelsa Business Park, 135 Enterprise Road,Harare, Zimbabwe

Main Bankers

FBC Bank Limited

5th Floor, FBC Centre, Nelson Mandela Avenue, Harare, Zimbabwe

Nedbank Zimbabwe Limited

16th Floor, Old Mutual Centre, Third Street, Harare, Zimbabwe

Legal Advisors

Dube, Manikai and Hwacha Commercial Law Chambers

6th Floor, Gold Bridge, Eastgate Complex, Robert Mugabe Road, Harare, Zimbabwe

Transfer Secretaries

Corpserve (Private) Limited

2nd Floor, ZB Bank Centre, Cnr Kwame Nkrumah Avenue/First Street, P.O. Box 2208, Harare, Zimbabwe Tel: [phone]

Email: [e-mail]

Investor Relations

Web: www.africansunhotels.com

1

Chairman's statement

Financial highlights

	Inflation adjusted	Inflation adjusted
	for the half year ended	for the half year ended
	30 June 2022	30 June 2021
Revenue	ZWL 8.45 billion	ZWL 3.35 billion
Occupancy	41%	24%
Profit for the period	ZWL 5.86 billion	ZWL 18.58 billion
Finance costs	ZWL 68.16 million	ZWL 30.16 million
Average Daily Room Rate	ZWL 36,277	ZWL 23,232
EBITDA	ZWL 7.30 billion	ZWL 19.39 billion
Rooms Revenue Per Available Room	ZWL 15,563	ZWL 5,632
Total Revenue Per Available Room	ZWL 29,002	ZWL 11,685
Basic Earnings Per Share for the Period	413.72 ZWL cents	1,304.26 ZWL cents

in Ukraine that continues to fuel inflation. The higher- than-expected global inflation and rising interest rates potentially drive higher travel costs and negatively weigh on consumer spending, inevitably eroding disposable income that feeds into our leisure business.

Financial performance

During the first half of 2022, the Group delivered performance that was ahead of the SPLY in spite of the challenging economic environment that prevailed during the period under review.

Revenue

The inflation adjusted revenue at ZWL8.45 billion, was 153% up compared with the SPLY. The improved performance was driven by higher business volumes and firmer average daily rates ("ADR") at the back of increased demand. Hotel occupancy, at 41%, increased by 17 percentage points compared to the SPLY. This was, however, 4 percentage points lower than the occupancy levels achieved over the same period in 2019.

The Group's business continue to be predominantly

Profitability and liquidity

The Group recorded inflation-adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") of ZWL7.30 billion and profit after tax of ZWL6.07 billion as a result of improved business performances and firmer cost management initiatives.

Turning to liquidity, the Group is currently ungeared and had cash and cash equivalents balance of ZWL4.67 billion as at 30 June 2022. The Group is currently in discussions with local financial institutions, earmarked at establishing standby financing facilities for material hotel refurbishment projects that are in the pipeline.

Update on acquisition of Dawn Properties Limited ("DPL")

I am pleased to report that during the period under review, the Group successfully concluded the acquisition of the remaining DPL issued shares. Consequently, the Company now wholly owns DPL. The integration of DPL which commenced in 2021 is progressing well and is on track to be completed by 31 December 2022.

Introduction

On behalf of the Board of Directors of African Sun Limited ("the Company") and its subsidiaries (together referred to as "the Group"), it gives me pleasure to present to you the reviewed condensed consolidated financial statements for the half-year ended 30 June 2022.

Operating environment

The Covid-19 pandemic's hold on everyday life has significantly waned compared to the same period last year ("SPLY"). Six months into 2022, a sense of optimism has returned, as the demand for travel is beginning to show significant improvement. According to the latest United Nations World Tourism Organization ("UNWTO") World Tourism Barometer, international tourism witnessed a strong rebound in the first five months of 2022, with almost 250 million international arrivals recorded, comparing favorably to the 77 million tourist arrivals between January to May 2021. The current year tourist arrival levels reflect recovery of 46% compared to pre-pandemic 2019 levels (the last normal trading year

before the outbreak of Covid-19). Based on data from STR - a global hospitality industry benchmarking and marketplace insights provider, global occupancy rates increased to 66% in June 2022, in comparison to 43% in January 2022. During the same period, the Group also recorded a generally gradual and consistent increase in occupancy, closing June 2022 with 54% compared with 28% recorded in January 2022. The uptick in international arrivals is gathering pace and points towards a strong second half of the year leading into our peak summer season.

The Minister of Finance and Economic Development during the 2022 Mid-Term Budget presentation revised the 2022 economic growth projection downwards to 4.6% from the initial 5.5%. Globally, the International Monetary Fund ("IMF"), in its July 2022 update forecasted global economic slowdown from 6.1% in 2021 to 3.2% in 2022, and a further reduction to 2.9% in 2023. The downgrade of both the local and global economic growth forecasts is mainly attributable to the adverse impact of the war

domestic driven. However, we have also started to witness signs of recovery on the regional and international market front. Foreign business contributed 15% towards hospitality revenue, representing a 7 percentage point increase from the SPLY. The hospitality segment, which is the key driver of the Group's revenues and profitability, contributed 95% of the total revenue whilst the real estate segment contributed 5%. Key contributors to the real estate segment revenues were residential stand sales at Marlborough Sunset Views as well as property consultancy revenue.

Operating expenses

The increase in the Group's inflation adjusted operating expenses (excluding depreciation), at 127% compared to the SPLY trailed the 153% increase in revenue. Operating expenses increased mainly due to increase in business volumes; and inflationary pressures which the Group has also been experiencing even in United States of American Dollars ("USD") denominated costs. The Group will continue to monitor costs and implement various cost cutting initiatives.

The Group's strategy to rationalize its asset base by disposing non-core real estate assets to unlock much needed liquidity for targeted capital expenditure on core operations, is progressing well. As of the date of this report, the Group had raised USD1,7 million from the disposal of non-core assets, including proceeds from the former Brondesbury Park Hotel in Nyanga. The former Beitbridge Express Hotel property and 100% equity stake in Dawn Property Consultancy (Private) Limited, which are the principal non-core investments yet to disposed off, are being actively marketed.

Update on refurbishments

Our cash utilization strategy remains unchanged, focusing mainly on targeted capital expenditure on hotel assets in order to enhance guest experience and to preserve value. Earlier this month, we celebrated the highly anticipated completion of 47 rooms and kitchen refurbishment at the majestic five-star Victoria Falls Hotel, "the Grand Old Lady". The Group, together with our partner - Meikles Limited, invested over USD4.5million towards the refurbishment of this property.

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AFRICAN SUN LIMITED - Reviewed condensed consolidated financial statements for the half year ended 30 June 2022

3

Chairman's statement (continued)

The Group completed the refurbishment of 32 rooms at Troutbeck Resort in July 2022, while the remaining 37 rooms are targeted for completion beginning of October 2022. Work on Hwange Safari Lodge rooms refurbishment commenced in August 2022; whilst the refurbishment of the remaining rooms at Great Zimbabwe Hotel, including the conference centre is at an advanced stage.

Update on The Kingdom at Victoria Falls hotel exit

As reported at the Company's last Annual General Meeting in June 2022, the Company will be exiting The Kingdom at Victoria Falls Hotel. Currently, management is seized with the implementation of a structured and smooth exit plan.

Interim dividend declaration

The Board resolved to declare an interim dividend of ZWL0.102118 per share plus USD0.000545 per share, with respect to the half year ended 30 June 2022. A separate dividend notice will be issued with respect to the interim dividend declaration.

Outlook

The first half of the year delivered performance that exceeded our initial expectation. Zimbabwe, like many destinations across the globe, continues to witness

encouraging signs of a much accelerated recovery to the pre-pandemic tourism arrival levels. Inspite of the current global economic and geopolitical challenges, the UNTWO revised its outlook for 2022, projecting that international arrivals are now expected to reach 55% to 70% of 2019 levels. We expect recovery of our international business to continue into the second half of the year.

Directorate changes

There were no changes to the directorate during the period under review.

Appreciation

My sincere gratitude goes to staff for their continued hard work. To my fellow Directors, I am very grateful for your continued support as we transition from Covid-19 survival to steady recovery. To our stakeholders, thank you for the continued patronage.

E A Fundira

Chairman

22 September 2022

External Auditor's review conclusion

These inflation adjusted condensed consolidated financial statements for the six months ended 30 June 2022 have been reviewed by Grant Thornton Chartered Accountants (Zimbabwe) in accordance with International Standards on Review Engagements (ISRE) 2410. The auditors have issued a qualified conclusion on the interim condensed consolidated financial statements with respect to non-compliance with International Accounting Standard (IAS) 21 - The Effect of Changes in Foreign Exchange Rates, and International Financial Reporting Standard (IFRS) 3 -BusinessCombinations with respect to measurement of gain on bargain purchase on acquisition transaction in the prior financial year.

The engagement partner on the audit resulting in the review conclusion auditor's report is Edmore Chimhowa (PAAB Number 0470).

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AFRICAN SUN LIMITED - Reviewed condensed consolidated financial statements for the half year ended 30 June 2022

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