2011 Annual Report and Accounts - Investing In Africa

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Notes to the Financial Statements (continued) 4 Financial risk management (continued) Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new capital or sell assets to reduce debt. During 2011 the Group’s strategy, which was unchanged from 2010, was to maintain a gearing ratio between 25% and 40%. The gearing ratios at 31 December 2011 and 2010 were below the preferred gearing ratios as follows: 2011 2010 Shs’000 Shs’000 Total borrowings 2,126,066 1,625,281 Less: cash and cash equivalents (403,114) (1,049,247) Net debt 1,722,952 576,034 Total equity 8,046,824 7,496,385 Total capital 9,769,776 8,072,419 Gearing ratio 18% 7% 5 Segment information Management has determined the operating segments based on the reports reviewed by the Managing Director that are used to make strategic decisions. The Managing Director considers the business from both a geographic and product perspective. Geographically, management considers the performance in Kenya and Tanzania. Kenya is further segregated into hotels and lodges. The reportable operating segments derive their revenue primarily from accommodation, food and beverage sales. The Managing Director assesses the performance of the operating segments based on profits before depreciation and amortisation, interest and tax, which is a measure of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA). The measure also excludes the effects of unrealised gains/losses on financial instruments. Interest income and expenditure are not allocated to segments, as this type of activity is driven by the central treasury function, which manages the cash position of the Group. 60 TPS EASTERN AFRICA LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2011
Notes to the Financial Statements (continued) 5 Segment information (continued) The segment information provided to the Managing Director for the reportable segments for the year ended 31 December 2011 is as follows: Kenya Kenya Tanzania All other Total Hotels Lodges Lodges segments Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Revenue 2,046,291 1,156,052 2,190,197 250,535 5,643,075 Less inter segmental sales - - - (157,100) (157,100) Net revenue from third parties 2,046,291 1,156,052 2,190,197 73,435 5,465,975 EBITDA 509,719 213,499 543,071 2,436 1,268,725 Depreciation and amortisation (94,120) (69,349) (166,134) (1,231) (330,834) Income tax expense (113,141) (6,084) (96,649) (21,368) (237,242) Share of profit from associate - 4,255 - 15,077 19,332 Investment in associate - 34,974 - 652,034 687,008 Additions to non-current assets 346,217 311,164 122,652 423,111 1,203,144 Total assets 3,736,900 1,657,347 4,625,859 3,111,734 13,131,840 Goodwill 230,152 90,000 733,218 4,491 1,057,861 The segment information for the year ended 31 December 2010 is as follows: Kenya Kenya Tanzania All other Total Hotels Lodges Lodges segments Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Shs ‘000 Revenue 1,838,929 823,030 1,753,678 214,684 4,630,321 Less inter segmental sales - - - (150,193) (150,193) Net revenue from third parties 1,838,929 823,030 1,753,678 64,491 4,480,128 EBITDA 481,501 207,166 417,045 2,306 1,108,018 Depreciation and amortisation (83,236) (48,228) (114,712) (11,441) (257,617) Income tax expense (56,076) (36,199) (76,498) (7,776) (176,549) Share of profit from associate - 1,088 - - 1,088 Investment in associate - 30,718 - - 30,718 Additions to non-current assets 243,057 - 1,448,019 312,879 2,003,955 Total assets 3,443,807 1,112,568 4,010,628 3,356,134 11,923,137 Goodwill 230,152 90,000 733,218 4,491 1,057,861 See note 20 for details of the impairment of goodwill of Shs 20,008,000 in the Kenyan operating segment in 2010. The write off relates to the portion of goodwill on Samburu Serena Safari Lodge which was damaged by floods in March 2010 and has since not been operational. The revenue from external parties reported to the Managing Director is measured in a manner consistent with that in the income statement. TPS EASTERN AFRICA LIMITED ANNUAL REPORT AND FINANCIAL STATEMENTS 2011 61
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2011 Annual Report and Accounts
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Directors and Administration BOARD
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Operating Subsidiaries and Properti
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Notice of Annual General Meeting No
Page 10 and 11: Chairman’s Statement Mr. Francis
Page 12 and 13: Chairman’s Statement (continued)
Page 14 and 15: Taarifa ya Mwenyekiti (kuendelea) u
Page 16 and 17: The Managing Director’s Report Mr
Page 18 and 19: The Managing Director’s Report (c
Page 20 and 21: Taarifa kutoka kwa Meneja Mkurugenz
Page 22 and 23: Board of Directors 1 MR. FRANCIS OK
Page 24 and 25: Corporate Governance Statement The
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Page 36 and 37: Consolidated Statement of Comprehen
Page 38 and 39: Company Statement of Financial Posi
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Page 42 and 43: Company Statement of Changes in Equ
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2011 Annual Report and Accounts - Investing In Africa

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