RTG Rights Offer Circular

CIRCULAR TO SHAREHOLDERS
2012
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION
No person has been authorised to give any information, or make any representations in connection with the Transaction,
or the Company other than as contained in this Document and, if given or made, such information or representation
must not be relied upon as having been authorised by the Company, its Directors, or its advisors. The advisors are acting
as advisors to the Company only, in connection with the Transaction, and will not be responsible to any other person for
providing the protection offered to their clients.
If you are in any doubt as to the action you should take in relation to this document you should immediately consult with
your banker, attorney, stockbroker, accountant or other professional advisor.
If you have disposed of all your ordinary shares in Rainbow Tourism Group Limited (RTG), this Document should be sent
to the stockbroker, banker or agent through whom you disposed of such shares, for onward delivery to the purchaser
of your shares.
(Registration Number 4880/91)
CIRCULAR TO SHAREHOLDERS
Regarding
A RENOUNCEABLE RIGHTS OFFER
of approximately 225,000,000 (two hundred and twenty five million) ordinary shares of a nominal value of US$0.0001
each in the issued share capital of Rainbow Tourism Group Limited, at US$0.02 per ordinary share to existing shareholders
in the ratio of 13.6737 new ordinary shares for every 100 ordinary shares held in the issued share capital of Rainbow
Tourism Group Limited as at the Record Date.
Incorporating
A NOTICE CONVENING AN EXTRAORDINARY GENERAL MEETING
Financial Advisors
Reporting Accountants
Transfer Secretaries
Underwriter
Sponsoring Brokers
Legal Advisors
Legal Practitioners
10 Selous Avenue
Harare
Legal Practitioners
10 Selous Avenue
Harare
This Document does not purport to be a Circular or an offer to sell, or the solicitation of an offer to buy shares in any country other
than Zimbabwe. The distribution of this Document outside Zimbabwe may constitute the violation of the laws of other countries. This
Document contains an offer to the existing shareholders of Rainbow Tourism Group Limited to purchase additional shares in Rainbow
Tourism Group Limited that shall in all respects rank pari passu with, and be uniform to shares already in issue. The terms and conditions
of the Transaction are set out herein.
Document Issue Date: 30 November 2012
Rainbow Tourism Group | Circular to Shareholders
TABLE OF CONTENTS
CORPORATE DIRECTORY
5
IMPORTANT DATES
6
DEFINITIONS 7
PART ONE: SALIENT FEATURES
1.1
Details of the Offer
1.2 Summary of the Financial Information
1.3 Share Capital of RTG Before and After the Transaction
1.4
Rationale for the Transaction
9
9
9
9
9
PART TWO: THE CHAIRMANS LETTER

2.1 Background
2.2
2.3
The Proposed Rights Offer
2.4 Application of Proceeds from the Transaction
2.5
Costs of the Rights Offer
2.6
Conditions Precedent
2.7 Underwriting and Commitments
2.8 Working Capital Adequacy Statement
2.9
Regulatory Issues
2.10 Information on RTG
2.10.1 Background
2.10.2 Group Structure
2.10.3 Recent Disposals
2.10.4 Product offering
2.10.5 Shareholding
2.11 Effects of the Transaction on Share Capital
2.12 Financial Effect of the Transaction
2.13 Directors and Management
2.14 Consequences of not raising Additional Capital
2.15 Prospects
2.16 Dividends
2.17 Corporate Governance
2.18 Directors Responsibility Statement
2.19 Documents Available for Inspection
2.20 Directors Opinions and Recommendations
10
10
11
11
11
11
12
12
12
12
12
12
12
12
13
13
14
14
15
15
15
15
15
16
16
16
PART THREE: PERFORMANCE OVERVIEW

3.1 Performance Analysis
3.1.1 Working Capital
3.1.2 Operating Costs
3.2
Turnaround Strategies
3.2.1 Aggressive Marketing
3.2.2 Cost Management
17
17
17
17
18
18
18
3.2.3 Group Restructuring

3.2.4 Product Positioning and Service Management
3.2.5 Organisational Culture
18
19
19
PART FOUR: STATUTORY INFORMATION

4.1 Details of Directors
4.2 Senior Management
4.3 Directors Interest in Shares
4.4 Other Directors Interests
4.5 Directors Service Contracts
4.6 Corporate Governance
4.7 Directors Declarations
4.8 Legal Information
4.9 Listing of Rights Offer shares on ZSE
4.10 Experts Consent
20
20
21
22
22
23
23
24
24
25
25
PART FIVE: DIRECTORS RESPONSIBILITY STATEMENT
26
PART SIX: DETAILS, TERMS AND CONDITIONS OF THE OFFER

6.1
Terms of the Rights Offer
6.2
Date of Opening and Closing of Rights Offer
6.3 Courses of Action
6.4 Payment
6.5 Exchange Control
6.6 Listing, Dividends and Ranking of Rights Offer Shares
6.7
Rights Offer Share Certificates
27
27
27
27
27
27
28
28
PART SEVEN: ANNEXURES

7.1
Group Financial Information
7.2
Reporting Accountants Report
7.3 Share Price Performance
7.4 Underwriter Details
7.5
Table of Entitlements for RTG Shareholders
7.6 Notice of an Extraordinary General Meeting
7.7
Form of Proxy EGM
7.8 Letter of Allocation (LA) Sample
29
29
32
37
38
38
39
40
41
IMPORTANT INFORMATION
Whether or not you plan to attend the Extraordinary General Meeting, PLEASE COMPLETE AND SIGN THE FORM OF
PROXY and return it as soon as possible or in any event so as to be received by no later than 48 Hours before the meeting.
It is important that at the Extraordinary General Meeting, as many as possible votes are cast, so that there is a fair and
reasonable representation of the opinion of the holders of Rainbow Tourism Group Limited shares. You are therefore
strongly urged to sign and return your Form of Proxy as soon as possible. The completion and return of the Form of Proxy
will not preclude you from attending and voting in person at the Extraordinary General Meeting.
Helpline
If you have any questions relating to this Circular or the completion of the Form of Proxy, please contact the Company
Secretary, Stephen Nyabadza on +263 4 772 587-8 or nyabadzast@rtg.co.zw
CORPORATE DIRECTORY
Directors
Dr Joseph Kanyekanye Non Executive Chairman

Tendai MacGerald Madziwanyika Chief Executive
Paschal Changunda - Finance Director
Rosa Dube Non Executive Director
Shingirayi Norman Chibanguza - Non Executive Director
John Mafungei Chikura Non Executive Director
Douglas Hoto Non Executive Director
Ian Chamunorwa Haruperi Non Executive Director
Shadreck Chamunorwa Vera Non Executive Director
Douglas Mavhembu Non Executive Director
Company Secretary and registered office
Stephen Nyabadza
Rainbow Tourism Group Limited
1 Pennefather Avenue, Samora Machel Avenue West
P.O. Box 10029
Harare, Zimbabwe
Sponsoring Broker
Bethel Equities (Private) Limited

1 Ainsilie House
Corner 4th Street & Josiah Tongogara Avenue
P. O. Box 425
Harare, Zimbabwe
Legal Advisor
Kantor and Immerman Legal Practitioners

Mcdonald House
10 Selous Avenue
Harare, Zimbabwe
Auditors & Reporting Accountants
BDO Zimbabwe Chartered Accountants

No. 3 Baines Avenue
P.O. Box 334
Harare, Zimbabwe
First Transfer Secretaries (Private) Limited

1 Armagh Avenue
Eastlea
P. O. Box 11
Harare, Zimbabwe
Underwriter
National Social Security Authority

10th Floor NSSA House
Corner Sam Nujoma & Selous Avenue
Harare
Financial Advisors
Capital Bank Corporation Limited

13th Floor Social Security Centre
Julius Nyerere/Sam Nujoma
Harare, Zimbabwe
Receiving Bank
CBZ Bank Limited

Selous Avenue Branch
Harare
IMPORTANT DATES
Event
Date
Notice of EGM published
Friday, 30 November 2012
Publication of abridged Circular to Shareholders
Circular to Shareholders mailed
Last day of lodging Forms of Proxy for the EGM at 1000 hours at least 48 hours before the EGM
Friday , 21 December 2012
Register closes for voting at EGM at 1600 hours

EGM at 1000 hours
Friday , 21 December 2012

Monday, 24 December 2012
Record Date and register closes at 1600 hours
Share Register Re-opens
Thursday, 27 December 2012
Letters of allocation mailed to Shareholders
Rights Offer opens at 0900 hours
Dealing in Letters of Allocation opens
Last day for dealing in Letters of Allocation

Last day for splitting Letters of Allocation
Rights Offer closes at 1630 hours
Wednesday, 23 January 2013

Thursday, 24 January 2013
Friday, 25 January 2013
Last day of receipt of postal acceptances of the Rights Offer

Allocation of Rights Offer shares
Wednesday, 30 January 2013

Monday, 4 February 2013
Expected date of registering Rights Offer Shares
Wednesday, 6 February 2013
Results of the Rights Offer published
Rights Offer Share Certificates mailed
Thursday, 14 February 2013
DEFINITIONS
Articles of Association
The Articles of Association of Rainbow Tourism Group Limited;
ADR
Average Daily Rate;
Board, Board of Directors or Directors
The Board of Directors of Rainbow Tourism Group Limited;
Capital Bank
Capital Bank Corporation Limited, a registered accepting house in

Zimbabwe and financial advisor to RTG;
Circular or Document
This document which sets out the terms and conditions of the
proposed Rights Offer by Rainbow Tourism Group Limited;
Closing Date
The date on which the Rights Offer closes, being Friday, 25 January
2013
Companies Act
The Companies Act [Chapter 24:03] of Zimbabwe, as amended;
The conditions precedent to the Transaction set out in Section 2.6

of this Circular;
EGM or the Meeting
The Extraordinary General Meeting of the Company which shall be

held at 10:00 am on Monday, 24 December 2012, at 1 Pennefather
Avenue, Samora Machel Avenue West, Harare, to approve the
resolutions and give effect to the Transaction;
Form of Proxy, or Proxy Form
The form, included in this Circular, which enables Rainbow Tourism

Group Limited Shareholders to appoint a proxy to attend and vote
on their behalf and on the Resolutions;
Letter of Allocation, or LAs
The renounceable letter of allocation to be posted to RTG

shareholders from Monday, 31 December 2012, setting out the
entitlement of the persons to whom this Circular is addressed;
Legal Advisor
Legal Advisor on the proposed Transaction, namely Kantor and

Immerman Legal Practitioners;
LIBOR
The London Inter-Bank Offered Rate;
Listing Rules
The Listing Requirements of the Zimbabwe Stock Exchange, being

the rules regulating listing on the Zimbabwe Stock Exchange;
NAV
Net Asset Value;
NSSA
The National Social Security Authority, the underwriters of this

Rights Offer;
Opening Date
The date the Rights Offer opens, being Monday, 31 December 2012;
Record Date
The date on which the Rainbow Tourism Group Limited share

register will be closed for purposes of determining the eligibility
of Shareholders to participate in the Rights Offer which date is the
close of business on Monday, 24 December 2012;
REVPAR
Revenue per available room;
Rights Offer,
The offer to the shareholders of the Company of Rights Offer Shares

pro rata to their existing shareholdings on a ratio of 13.6737 Rights
Offer Shares for 100 ordinary shares already held, at a price of
US$0.02 each payable in full in United States Dollars on acceptance;
Rights Offer Shares
The offer, by way of a Rights Issue to all Shareholders, of

approximately 225,000,000 ordinary shares at a subscription price
of US$0.02 in the ratio of 13.6737 Rights Offer Shares for every 100
ordinary shares held;
Resolutions
The ordinary resolutions contained in the Notice giving effect to

the proposed Transaction upon approval by the Rainbow Tourism
Group Limited Shareholders at the Extraordinary General Meeting
to be held on Monday, 24 December 2012;
RTG , the Company or the Group
Rainbow Tourism Group Limited, comprising the Rainbow Hotels

Division and Rainbow Towers Hotel and International Conference
Centre.
SECZ
Securities Commission of Zimbabwe;
Shareholder or RTG Shareholder
A holder of Rainbow Tourism Group Limited Ordinary Shares

registered in the Rainbow Tourism Group Limited share register as
at the Record Date;
Shares, Ordinary Shares or RTG Shares
The ordinary shares of Rainbow Tourism Group Limited in the issued

and/or authorized share capital of Rainbow Tourism Group Limited;
DEFINITIONS
Sponsoring broker
Sponsoring broker on the proposed Transaction, namely Bethel

Equities (Private) Limited;
Subscription Price
The amount of US$0.02 per Rights Offer Share payable in full in

United States Dollars on acceptance;
Transaction
Collectively, the offer to registered holders of ordinary shares in

Rainbow Tourism Group Limited of approximately 225,000,000
Rights Offer shares for an aggregate amount of approximately
US$4,500,000 pro-rata to their existing shareholding, in United
States Dollars at a price of US$0.02 per share on the basis of 13.6737
rights offer shares for every 100 ordinary shares already held, and to
issue and allot such shares pursuant to the Transaction;
First Transfer Secretaries (Private) Limited, being the transfer

secretaries of Rainbow Tourism Group Limited;
The turnaround strategies, which were approved by the RTG Board,

for the purposes of improving performance of the business of RTG
post the Transaction;
Underwriter
Underwriter on the proposed Transaction, namely NSSA;
US$, USD or $
The United States Dollar, the lawful currency of the United States
of America;
ZSE
Zimbabwe Stock Exchange;
ZTA
Zimbabwe Tourism Authority;
PART ONE: SALIENT FEATURES
1.1
Details of the Offer

Authorised Ordinary Shares
2,500,000,000
Authorised Ordinary Share Capital
250,000
Issued Ordinary shares of US$0.0001 nominal value each in issue as at 30 June 2012
1,645,495,543
New Ordinary shares to be issued under the Rights Offer (approximately)
225,000,000
Ratio of new shares offered for existing ordinary shares
13.6737 for 100
Ordinary shares in issue after this Rights Issue
1,870,495,543
Net Asset Value per Ordinary share as at 30 June 2012
US$0.0076
Profoma Net Asset Value per ordinary share after the Rights Offer
US$0.009
Gross Rights Offer Proceeds (approximately)
US$4,500,000
Transaction Costs
US$252,500
Net Rights Offer Proceeds
1.2
US$4,247,500
Summary of the Financial Information

Period
30 June 2012
(reviewed)
US$
Revenue
30 Dec. 2011
(audited)
US$
31 Dec. 2010
(audited)
US$
31 Dec. 2009
(audited)
US$
13,292,006
27,320,901
20,740,166
17,505,716
(13,381,646)
(21,120,130)
(18,456,197)
(14,086,244)
Net Finance Costs
(1,597,942)
(1,650,315)
(1,397,334)
(321,666)
Comprehensive Income
(4,542,208)
(391,475)
(1,027,104)
1,263,215
Total Assets
50,195,099
52,025,313
44,273,215
33,387,820
Shareholder Equity
12,472,240
17,014,447
17,403,922
18,595,036
Operating Expenses
1.3
Share Capital of RTG Before and After the Transaction
The shares to be issued pursuant to the transaction shall rank pari passu in all respects with the other shares of
the Company already in issue. The effects of the Transaction on the authorised and issued share capital of RTG are
shown in the table below.
Before
Rights Offer
After
2, 500, 000, 000
2,500,000,000
Authorised share capital

Authorised Ordinary shares
Nominal value per share (US$)
Nominal value
0.0001
0.0001
250,000
250,000
1,645,495,543
225,000,000
1,870,495,543
Issued share capital

Total number of Ordinary Shares
Nominal value per share
Nominal value
0.0001
0.0001
0.0001
164,550
22,500
187,050
854,454,087
629,454,087
Authorised but unissued shares

Ordinary shares
1.4
In the absence of recapitalisation post dollarisation of the economy, RTG management had to resort to expensive
short-term loans borrowed from local banks to finance critical capital requirements and working capital. The
short-term borrowings exerted pressure on the cash flows such that the Company could not repay the loans on
time leading to lenders charging them penalty rates. The proposed recapitalisation, through a Rights Offer of
approximately US$4.5 million, is designed to address the Groups working capital requirements by retiring part of
the US$12.6 million short-term expensive loans and the balance shall be restructured through a US$10 million loan
secured under favourable borrowing terms. The recapitalisation will therefore free up working capital, currently
being channelled towards interest payment, to finance generation of more revenue for the Company.
PART TWO: THE CHAIRMANS LETTER
30 November 2012
Dear Shareholder
RAINBOW TOURISM GROUP LIMITED RIGHTS OFFER FOR SUBSCRIPTION FOR APPROXIMATELY 225,000,000
ORDINARY SHARES OF US$0.0001 NOMINAL VALUE EACH AT A SUBSCRIPTION PRICE OF US$0.02 PER SHARE
2.1 Background

Rainbow Tourism Group Limited (RTG) reconstituted its Board of Directors on the 11th of July 2012 following the
resignation of the majority of Directors on the previous Board. Pursuant to an analysis of the financial position of
RTG and various related documents, it is the Boards view that the Group should urgently address the short term
borrowings which stood at $12.6 million as at 30 June 2012. At a meeting held on the 19th of September 2012, the
RTG Board of Directors resolved that, subject to the approval of Shareholders, the Company be authorized to
immediately proceed to raise funds amounting to US$14.5 million with an intention of reducing and restructuring
the short-term expensive debt. The funds raised shall be split into a US$10 million loan secured under favourable
terms and a Rights Offer of approximately US$4.5 million to existing shareholders.

Regarding the Rights Issue, the Board has resolved to raise approximately US$4.5 million through an offer to the
Shareholders of the Company, registered as such at the close of business on Monday, 24 December 2012 being the
Record Date, approximately 225,000,000 Rights Offer Shares for subscription at a ratio of 13.6737 new Shares for
every 100 ordinary shares already held, at a price of US$0.02 each.
Shareholders shall be requested to follow their Rights to enable the recapitalisation of the Company. If RTG does
not receive payment from a shareholder by the due date as set out in this Document, the offer to that shareholder
shall be deemed to have been declined and will automatically lapse. The Rights Offer is fully underwritten by
the National Social Security Authority, in terms of an Underwriting Agreement signed on 26 November 2012. Full
details of the Underwriter are set out in Section 7.4. The purpose of this Circular is to furnish RTG shareholders
with the requisite statutory and regulatory information relating to the Rights Offer and to detail the action that
can be taken by each shareholder.
2.2
In the absence of recapitalisation post dollarisation of the economy, RTG Management had to resort to expensive
short-term loans borrowed from local banks to finance critical capital expenditure and working capital. The
short-term borrowings exerted pressure on the cash flows such that the Company could not repay the loans on
time leading to lenders charging them penalty rates. The proposed recapitalisation, through a Rights Offer of
approximately US$4.5 million, is designed to address the Groups working capital requirements by retiring part
of the US$12.6 million short-term expensive loans and the balance shall be financed through a US$10 million loan
secured under favourable borrowing terms. The recapitalisation will therefore free up working capital, currently
being channelled towards interest payments, to finance generation of more revenue for the Company.

The short-term borrowings which the Group accessed from various local financial institutions were utilized as
follows:
Utilisation
Amount (US$)
Other Information
A Zambezi River Lodge Project
2,442,113.00
Amount borrowed to partly fund A Zambezi refurbishment

project. It includes loan and bond registration fees.
Restructuring of Matetsi Debt
1,615,000.00
Restructuring of a surety liability in connection with Matetsi.
Rainbow Towers Project
235,000.00
Amount borrowed to pay contractors during the time

ReNaissance Merchant Bank Limited was under curatorship.
Divisional Capital Expenditure
2,877,387.00
Critical capital expenditure since 2009 for some of the

operating divisions.
Touch The Wild (Private) Limited

(TTW) Refurbishment
300,000.00
Loan accessed from FBC Bank for Sikumi refurbishment and

working capital for TTW.
Working Capital
4,020,500.00
Working capital since 2009.
Total Principal Borrowings
11,490,000
10
The Rights Offer together with the US$10 million loan is expected to address the following;
- fully retire the short term expensive debt;
- reduce the impact of the finance cost in the Groups Statement of Comprehensive Income;
- eliminate the risk of default on loan repayment;
- improve the Groups working capital position; and
- enhancing the Groups cash flows by completing a number of capital projects that the Group is currently
undertaking.
2.3

The Proposed Rights Offer

The Board of Directors has resolved to undertake a renounceable Rights Offer to the Shareholders of the Company,
registered as such at the close of business on Monday, 24 December 2012, being the Record Date, approximately
225,000,000 Rights Offer Shares for subscription at a ratio of 13.6737 Rights Offer Shares for every 100 shares
already held, in United States Dollars, at a price of US$0.02 each for an aggregate amount of approximately
US$4,500,000 RTG to all the Existing Shareholders, and to issue and allot such shares pursuant to the Transaction.
Letters of Allocation in respect of the Rights Offer will be posted to RTG Shareholders as from Monday, 31 December
2012. The Rights Offer Shares are scheduled for listing and trading on the ZSE with effect from Wednesday, 6
February 2013. If a shareholder decides not to follow his/her rights, the Rights Offer may be renounced in favour
of a third party. If RTG does not receive payment from the shareholder or the third party by the due date as set
out in this document, the offer shall be deemed to have been declined and will automatically lapse and the shares
available to that shareholder shall be taken up by the Underwriter.
2.4

Application of Proceeds from the Transaction

The application of the proceeds of the Transaction is set out below.
ITEM DESCRIPTION
AMOUNT (US$)
PROPORTION (%)
4,247,500
94.4
Part Retirement of Short Term Borrowings and Increasing Working Capital

Rights Offer Expenses
TOTAL
252,500
5.6
4,500,000
100
Since the proceeds of the Rights Offer can only partly retire the expensive short term debt, the Company has
secured a loan amounting to US$10 million, which shall be used to restructure the remaining short-term debt.
2.5

Costs of the Rights Offer

The costs of the Rights Offer shall be borne by RTG out of the proceeds of the Rights Offer and include the specific
legal, underwriting and other services which are estimated to be US$252,500. Details are as follows:
Description
Amount (US$)
Professional Fees
152,500
Printing and Publication
50,000
Underwriting fees
50, 000
Total
252,500
2.6

The proposed Rights Offer is conditional and subject to the following:
- Approval by shareholders of RTG of the resolutions at the EGM to be held on Monday, 24 December 2012 in
terms of the EGM notice incorporated herein;
- Approval by the ZSEs Listings Committee of the listing of the new RTG ordinary shares to be issued to members
who meet the terms of the Rights Offer as outlined in this Circular; and
- The Underwriting Agreement entered between NSSA and RTG remaining in full force.
11
2.7

Underwriting and Commitments

The Rights Offer is fully underwritten by the National Social Security Authority (NSSA) in terms of an
Underwriting Agreement dated 26 November 2012. The underwriting of the Rights Offer by NSSA will result in
dilution of shareholders who decide not to follow their rights. Copies of the Underwriting Agreement are available
for inspection at the registered offices of RTG, 1 Pennefather Avenue, Samora Machel Avenue West, Harare.
2.8

Working Capital Adequacy Statement

For the half year ended 30 June 2012, the Company had a negative working capital of US$8,438,202, which is an
unfavourable position for the Group. The directors are of the opinion that the financial resources to be made
available to RTG post the proposed rights offer will significantly reduce the negative working capital position.
2.9

Regulatory Issues
The Listing Committee of the ZSE has granted a primary listing and permission to deal in all renounceable Letters
of Allocation, relating to the Rights Offer Shares to be listed on the ZSE.
Application has been made to the Listing Committee of the ZSE, which has granted approval, in principle, for the
Rights Offer Shares offered in terms of the Rights Offer to be listed on the ZSE.
2.10 Information on RTG
2.10.1 Background

Rainbow Tourism Group Limited (RTG) was formed in 1992 as part of Governments commercialization
programme. Having been incorporated in 1991 as Zimbabwe Tourism Investments Company (Private) Limited
(ZTIC), a parastatal then responsible for the promotion of tourism in the country, the Company rose within
six years from three hotel units and a tour operator company in 1992 to become Zimbabwes second largest
hospitality chain by 1998.
In 1994, ZTIC was renamed Rainbow Tourism Group (Private) Limited, and the entity was converted to a public
company and listed on the ZSE on 01 November 1999 after the Government offered 70% shareholding to institutional
investors, employees and members of the public. Today, RTG owns quality business units, establishing itself as
the fastest growing hotel group in Zimbabwes tourism industry. It has successfully positioned itself as a leader
in offering Zimbabwean cultural hospitality. In order to remain competitive, the Group has adopted a branding
strategy so as to ensure a close and sustainable relationship between the brand and its customers.
2.10.2 Group Structure

The Groups structure is as shown below;
RAINBOW TOURISM GROUP LIMITED
Rainbow Hotel Division
Rainbow Hospitality
Business School
Rainbow Towers Hotel &

Conference Centre
RTG operates three divisions as represented on the organogram. The Groups Hotel Division comprises Bulawayo
Rainbow Hotel, A Zambezi River Lodge, Victoria Falls Rainbow Hotel, New Ambassador Hotel, Kadoma Hotel &
Conference Centre, Hotel Edingurgh Kitwe (Zambia), Rainbow Hotel (Beira-Mocambique) and Savoy Hotel Ndola
(Zambia Management Contract).
2.10.3 Recent Disposals

The Company has thus far raised US$945,000 from the disposal of non-core assets namely; Touch The Wild (Private)
Limited and Zimbabwe Mauritius Tours and Travel (Private) Limited t/a Tourism Services Zimbabwe. This amount
was utilised to settle part of the short term debt and settling disposal costs. The sale of Matetsi Water Lodge will
raise US$1.6 million which shall be channelled towards costs associated with the business and its disposal. The
balance of the proceeds will be channelled towards the Beitbridge Hotel project which is expected to open in the
first half of 2013. The Groups target closing date for the disposal is the 30 November 2012.
12
2.10.4 Product offering

The Rainbow Towers Hotel and International Conference Centre (Rainbow Towers)

Rainbow Towers is a leading five star hotel and conference centre located in Zimbabwes capital city, Harare. It is
located 17km from the Harare International Airport and a walking distance from the city centre. Rainbow Towers
is situated in a spectacular garden setting, with fully secured and spacious parking. The hotel houses a therapeutic
health massage parlour, jewellery shop, hair and beauty salon and a gift shop. Outdoor facilities include a gym and
sauna health club, swimming pool and a floodlit tennis court.
Rainbow Hotels Division

This division comprises three to four star business and leisure hotels. These include:
- New Ambassador Hotel (Central Harare);
- Rainbow Kadoma Hotel & Conference Centre;
- Rainbow Bulawayo Hotel;
- Rainbow Victoria Falls Hotel;
- A Zambezi River Lodge;
- Rainbow Hotel Mozambique;
- Edinburgh Hotel (Kitwe); and
- The Savoy Hotel (Management Contract).
Rainbow Hospitality Business School (RHBS or the School)
RHBS is a hotel and tourism training institution. It was established in October 2007 and offers graduates the City
& Guilds as well as Higher Education Examination Council Diplomas and Certificate programs.
The School taps into the development of hospitality talent for both the local and regional markets. The School is
a ready source for trained and qualified labour force. The School is playing a significant role in providing trained
personnel for the local and regional hospitality industry.
2.10.5 Shareholding

The top twenty Shareholders of the Company on the record date are as follows:
Shareholder
Number Of Shares
National Social Security Authority
452,521,114
27.50
Hamilton & Hamilton Trustees Ltd
300,200,782
18.24
Zimcor Limited
217,889,317
13.24
First Mutual Life - Policy Holders
134,958,449
8.20
Ministry Of Environment & Tourism
83,402,508
5.07
Tristar Insurance Company Limited
73,428,208
4.46
LAAICO - FCA Non-Res
60,000,000
3.65
First Mutual Life - Shareholders
48,028,088
2.92
Pearl Properties (2006) Limited
42,915,563
2.61
FMRE Property & Casualty - Shareholders
26,643,635
1.62
First Mutual Life - Managed Fund
21,806,875
1.32
Hamilton, Nicholas Rhodes - NNR
16,695,788
1.01
Pinnacle Investments (Private) Limited
15,521,167
0.94
Hamilton, Maximilian Rhett
13,996,703
0.85
Meikles Pension Fund
10,084,672
0.61
FMRE Property & Casualty-Policyholders
10,267,278
0.62
Hamilton, Orrie Lincoln
10,000,000
0.61
Hamilton, Richmond Louis
10,000,000
0.61
Hamilton, Alexander Sethi
10,000,000
0.61
Eugenie Britannia, Hamilton
9,990,000
0.61
1,568,350,147
96.01
TOTAL NUMBER OF SHARES IN ISSUE
1,645,495,543
13
Assuming all Shareholders follow their Rights in the Rights Offer as set out in this document, the proportion
of shareholding will not change across the board. If a Shareholder elects not to follow his/her rights, his/her
percentage shareholding in RTG shall be diluted. If the Company has not received payment from any Shareholder
by the due date, the offer to that Shareholder shall automatically lapse, and the Shares shall be taken up by
underwriters. The issue will be done on the basis of 13.6737 new shares for every 100 Ordinary Shares already held
resulting in a 12.02 % dilution if any shareholder decides not to follow his/her rights in the Rights Offer.
Part Seven Subsection 7.5 of this Document contains an illustrative table of entitlements for RTG Shareholders
with respect to the Rights Offer on the basis of full subscription.
2.11
Effects of the Transaction on Share Capital

Before
Rights Offer
After
2, 500, 000, 000
2, 500, 000, 000
Authorised share capital

Authorised Ordinary shares
Nominal value per share (US$)
Nominal value
0.0001
0.0001
250,000
250,000
1,645,495,543
225,000,000
1,870,495,543
0.0001
0.0001
0.0001
164,550
22,500
187,050
Issued share capital

Total number of Ordinary Shares
Nominal value per share
Nominal value
Authorised but unissued shares
Ordinary shares
854,454,087
629,454,087
2.12 Financial Effect of the Transaction

Set out below are the Abridged Statements of Financial Positions of RTG as at 30 June 2012 assuming the Rights
Offer had been effective on 30 June 2012. There are no direct financial effects on the Statement of Comprehensive
Income arising from the Rights Offer.

Actual (USD)
30 June 2012
Pro-forma (USD)
30 June 2012
ASSETS
Total non-current assets
34,405,985
34,405,985
Total current assets
14,141,213
14,141,213
Assets in disposal group held for sale
1,647,901
1,647,901
50,195,099
50,195,099
164,550
187,050
TOTAL ASSETS
EQUITY AND LIABILITIES
SHAREHOLDERS EQUITY
Share Capital
Share Premium
Non distributable reserves
Revaluation reserve
Foreign currency translation reserve
Retained (loss) / earnings
4,477,500
16,884,995
16,884,995
1, 108, 995
1,108,995
16,285
16,285
(5,702,586)
(5,955,086)
Total equity
12,472,240
16,719,739
Total Liabilities
37,722,860
33,475,360
TOTAL EQUITY AND LIABILITIES
50,195,099
50,195,099
14
2.13

Directors and Management

The Transaction will have no material impact on the composition of the Board of Directors and the management
team. The Directors believe that the proposed Transaction is in the best interests of RTG and its Shareholders.
2.14

Consequences of not raising Additional Capital

In the event that the proposed Rights Offer is not implemented;
- the Company will be unable to retire the expensive short term debt and will continue to be burdened by high
finance charges;
- the short-term facilities are overdue and are attracting penalty interest rates thus exacerbating the burden of
finance costs;
- the Companys earnings will be subdued as a result of working capital constraints; and
- relations with creditors will further deteriorate which may result in possible litigation.
2.15 Prospects

The Group is pursuing a number of projects that will have a significant impact on its future prospects which include
among others;

Refurbishment of RTGs hotels in Zimbabwe

RTG is refurbishing and upgrading its properties in Zimbabwe, with a view to:
- Restore the hotels quality and ambience;

- Move in line with the international trends, particularly given the internationalization of the hospitality and
tourism business; and
- Protect and/or create direct and indirect employment for the local community.
Rainbow Towers Hotel

The refurbishment of Rainbow Towers Hotel resumed in April 2012, following the lifting of curatorship of
ReNaissance Merchant Bank Limited, now Capital Bank. The Board is optimistic that the Group will be more
competitive after the completion of the refurbishment project. The completion of the project is the first half
of 2013. The upward growth is also expected to be supported by improvements in the local and international
economies and consumer average spending power. The average daily room rate is expected to increase by 30%
from the current US$96 after completion of the refurbishment.
Rainbow Beitbridge Hotel Development

This is a new hotel development by NSSA. The Group will be responsible for the interior work whilst NSSA is
responsible for the super structure and will own the hotel. In terms of the Memorandum of Agreement in place,
RTG will lease the hotel from NSSA. The construction of the hotel is on course and it is expected that the hotel will
be complete by the fisrt half of 2013.
Rainbow Hotel Mozambique

RTG has started work on the refurbishment of Rainbow Hotel Mozambique. The estimated completion time is end
of March 2013.
Other Properties
The Group plans to undertake projects to upgrade and refashion the following properties; Bulawayo Rainbow
Hotel, Kadoma Hotel and Conference Centre and Victoria Falls Rainbow Hotel. The projects will be funded through
internally generated resources.
2.16 Dividends
No interim dividend was declared for the half year ended 30 June 2012.
2.17

Corporate Governance
The Board of Directors of the Company currently comprises 10 (ten) directors of which two are executive directors.
The Board of Directors is ultimately responsible for the management of the Company. The Information pertaining
to the Directors of RTG is set out in Section 4.1.
15
2.18 Directors Responsibility Statement

Part Five of this Circular gives details of Directors responsibilities.
2.19

2.20

Documents Available for Inspection

The following documents or copies thereof will be available for inspection at the registered office of RTG during
normal business hours:
- Memorandum and Articles of Association of the RTG;
- the Reviewed Financial Statements of RTG for the six month to 30 June 2012;
- the Audited Financial Statements of RTG for the year ended 31 December 2011;
- The Experts Consents referred to in Section 4.10 of this Circular;
- The Underwriting Agreement;
- The original copy of the signed Circular to Shareholders;
- The EGM Notice and Form of Proxy; and
- The Reporting Accountants Report.
Directors Opinions and Recommendations
The Directors have considered the terms and conditions of the proposed Rights Offer and are of the opinion that it
is in the best interest of the shareholders. Accordingly, the Directors recommend that Shareholders vote in favour
of the Transaction and follow their rights in the Rights Offer.
Shareholders holding approximately 51 percent of RTG issued share capital have indicated their intention to follow
their rights.

Yours faithfully,
For and behalf of the Board of Directors of Rainbow Tourism Group Limited
Dr. Joseph Kanyekanye

Chairman
16
PART THREE: PERFORMANCE OVERVIEW
3.1

Performance Analysis
The information tabulated below show the abridged historical performance of the Group (refer to section 7.1 for
full financial statements) since the economy adopted the multi-currency system.
Period
31 Dec. 2011
(audited)
US$
31 Dec. 2010
(audited)
US$
31 Dec. 2009
(audited)
US$
Revenue
13,292,006
27,320,901
20,740,166
17,505,716
Cost of Sales
(1,516,216)
(3,389,479)
(2,803,661)
(2,752,341)
Gross Profit
11,775,790
23,931,422
17,936,505
14,753,375
Other Income
Operating Expenses
203,852
178,971
288,277
753,583
(13,381,646)
(21,120,130)
(18,456,197)
(14,086,244)
Operating (Loss)/Profit
(2,159,003)
1,796,593
(1,323,847)
500,600
Net Finance Costs
(1,597,942)
(1,650,315)
(1,397,334)
(321,666)
(Loss)/Profit Before Tax
(3,756,945)
146,278
(2,721,181)
178,934
27,062
417,235
1,677,954
(19,972)
(3,729,883)
563,513
(1,043,227)
158,962
(820,444)
(936,946)
(109,660)
(4,542,208)
(391,475)
(1,027,104)
1,263,215
Taxation
(Loss)/Profit After Tax
Discontinued Operations
Total Comprehensive Income
30 June 2012
(reviewed)
US$
The Groups revenue has been steadily growing since 2009 when the economy adopted the multi-currency system.
However, there is a notable decline in the profitability of the Group from 2009 to the period ending 30 June 2012.
The major causes of under-performance are as outlined below;
3.1.1 Working Capital

Working capital requirements were largely funded through short term expensive debt accounting for a
corresponding increase in finance costs since 2009 which rose from a low of US$321,666 (2009) to a high of
US$1,650,315 (2011). The Groups operations continue to be pressured by finance costs as indicated by the Interim
Financial Statements as at 30 June 2012. The finance costs for the half year ended 30 June 2012 were US$1,597,942
increasing pressure on operating income. The continued dependence on short term expensive debt has had a
negative impact on the operations of the Company and hence there is need to address this through the proposed
capital raise.

The Group is currently undertaking capital projects which entail the refurbishment of Rainbow Towers which
resumed in April 2012 and is expected to be completed in January 2013, the construction of Beitbridge Hotel which
is expected to be complete by the first half of 2013 and the refurbishment of Rainbow Hotel Mocambique. Upon
completion of these projects, the Group is expected to realise more revenue and operating income.
Short term borrowings closed the period ending 30 June 2012 at US$12.6 million whilst long term borrowings were
at US$10.7 million. The resultant interest rate burden and cash flow is affecting the overall performance of the
Group.
3.1.2 Operating Costs

The Groups operating costs have been on the rise since 2009 in particular employment costs and utilities. Increase
in revenues was not appropriately matched with increases in operating costs. The Group shall be embarking on
a downsizing exercise to deal with employment costs. The exercise is expected to cost the Group US$420,000
which shall be paid from internally generated resources.
17
3.2

The Group has identified key areas which need to be addressed as part of the turnaround strategy. These include;
- aggressive marketing;
- cost management;
- restructuring of the Group;
- organizational culture; and
- product positioning and service management.
3.2.1 Aggressive Marketing

The Group shall apply Enterprise Wide Marketing Management (EWMM) where marketing is no longer just a
department but what everyone does in the Group. Marketing should be responsible for positioning the business in
view of its competitors, develop innovative products and services. In addition the internal processes and systems
should be fluid so that there are no bottlenecks in service delivery.

- Branding
The Group requires a fresh look that will make it more competitive and attractive in the market. The current
status of the brand is dull and unappealing. This is further compounded by product issues and inconsistent service
delivery. A new brand image will be developed and this will be complemented by continued product and service
standard improvement.
- Centralisation of the sales function

The Group will reorganise the sales department into a centralised sales function that will be able to drive efficiency
and choice for the customers.
3.2.2 Cost Management

- Central Procurement

The strategy will aim at resourcing the Group central procurement unit. This will eliminate middleman in the supply
chain in order to bring down cost of sales and other direct costs.

- Finance Costs
The debt restructuring will free working capital leading to the improvement of the Groups current ratio.
Operations will have enough cash to deal with daily operational expenditure as well as planning for future capital
expenditure, especially the refurbishments.

- Other Costs
Poor internal controls particularly in procurement have resulted in leakages in the system hence increasing costs
generally. The Group has already put in place robust procurement procedures which are monitored from time
to time. TIPP off anonymous will be revamped in order to access information which management might not
observe.
3.2.3 Group Restructuring

Touch the Wild (Private) Limited, Matetsi Water Lodge and Zimbabwe Mauritius Tours and Travel (Private) Limited
t/a Tourism Services Zimbabwe were identified as non-core assets, and the Company resolved to dispose these
businesses. Losses from the discontinued operations are projected to close at $1.9 million for the year. The
finalization of these disposals will improve the Groups performance since the profitability was being reduced by
18
the losses from these entities. The Company is considering disinvesting from Zambia operations in view of the
poor performance of these businesses and non-remittance of fees to RTG.
3.2.4 Product Positioning and Service Management

The Group will embark on refurbishment of all hotels. Rainbow Towers refurbishment is currently in progress and
is expected to be complete in the first half of 2013. It is anticipated that on completion, the occupancy will rise
from current 55% to 60%; the average daily rate shall increase by 30% from the current $96 and annual revenues will
grow to $15 million from $12 million. Bulawayo Rainbow, Kadoma Hotel, Victoria Falls Rainbow and Ambassador
Hotel will be refurbished using internal resources for a period ranging from 1 year to 2 years.
3.2.5 Organisational Culture

There is need to have a culture that is anchored by the Company values which are, Respect, Integrity, Commitment,
Teamwork, and Passion. The leadership of the organization shall model these values so that there is consistency
in the delivery of brand values throughout the whole Group. The Group has put in place an effective performance
management system which is linked to consequence management. This shall instill a performance oriented
organizational culture at all times.
19
PART FOUR: STATUTORY INFORMATION
4.1

Details of Directors
The details of the RTG Directors are shown below.
Name
Position
Non-Executive Chairman
Tendai MacGerald Madziwanyika
Chief Executive
Paschal Changunda
Finance Director
Rosa Dube
Non-Executive Director
Shingirayi Norman Chibanguza
John Mafungei Chikura
Ian Chamunorwa Haruperi
Douglas Hoto
Douglas Mavhembu
Shadreck Chamunorwa Vera
The profiles of the Directors of RTG are detailed below.

Dr. Joseph Kanyekanye (45) - Non-Executive Chairman
Dr. Kanyekanye is presently the Group Chief Executive for Allied Timbers Zimbabwe. He is the past President of
the Confederation of Zimbabwe Industries (CZI). Dr. Kanyekanye holds a Diploma in Forestry from the Zimbabwe
College of Forestry, a Bachelor of Science (Honours) in Wood Science from the University of Wales (UK), a Master
of Business Administration from the University of Zimbabwe and Doctorate in Business Administration from
Calvary University (UK). He also sits on various boards including Capital Bank, NSSA and Starafrica Corporation
Limited

Mr. Tendai MacGerald Madziwanyika (44) Chief Executive

Tendai Madziwanyika was appointed Chief Executive of the Company with effect from 5th 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. He is the immediate 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).

Mr. Paschal Changunda (38) Finance Director
Mr. Changunda holds a Bachelor of Accountancy Honours degree from the University of Zimbabwe and is a
Chartered Accountant. Mr. Changunda is currently studying towards a Master of Business Leadership degree
with the University of South Africa. He joined RTG in 2002 as Group Finance Manager and was appointed to the
RTG board as Group Finance Director and Company Secretary in July 2004. He served his articles with Deloitte &
Touch. Prior to joining the Group he was Divisional Finance Manager for Cairns Foods Limited.

Mrs. Rosa Dube (49) Non-Executive Director
Mrs. Dube is currently the Operations Director for Design Technology Business Solutions, specializing in Business
Advisory Services and Public Sector Financial Compliance and Corporate Governance. Mrs. Dube holds a Bachelor
of Accountancy (Honours) degree from the University of Zimbabwe and Master of Science in Finance and Financial
Information Systems from the University of Greenwich UK. She is also a Certified SAP Financials Consultant.
Her other directorships include Eloah Vires Minerals, National Social Security Authority and Design Technology
Business Solutions.

Mr. Shingirayi Norman Chibanguza (28) 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, Hamilton Insurance, Central Estates Farm and Nyaya Industries. 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 currently studying towards a Bachelor of Commerce in
Entrepreneurship (SA) from the University of South Africa.
20
John Mafungei Chikura (56) Non-Executive Director

Mr. John Chikura is the Chief Executive Officer of the Deposit Protection Board and current Chairman of the Africa
Region, International Association of Deposit Insurers (IADI) based in Switzerland. 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). 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 also sits
on the board of directors of Africa First ReNaissance Corporation Limited and certain of its subsidiaries.

Mr. Ian Chamunorwa Haruperi (33) Non-Executive Director
Mr. Haruperi is currently the Managing Director of Chardore Holdings and has more than seven years experience
at the helm of an organization dealing in mining, properties, finance and investment. He is a former Director of
Mining Procurement for Memotek Ltd (2001 to 2003). He is currently a non executive director at Hwange Colliery
Company Limited. Mr. Haruperi holds a Bachelor of Science in Economics from Middlesex University, (UK).

Mr. Douglas Hoto (47) Non-Executive Director

Mr. Hoto is the Group Chief Executive Officer of Africa First ReNaissance Corporation Limited. He has previously
worked as Chief Executive Officer for Altfin Holdings Limited. 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. He is the Chairman
of the Zimbabwe National Statistics Agency (ZIMSTAT), a board member of the Insurance Pension Commission
(IPEC), the Chairman of the Actuarial Society of Zimbabwe and a Trustee of the S V Muzenda Foundation. Mr. Hoto
is a Fellow of the Faculty of Actuaries of Scotland and holds a Bachelor of Science Honours Degree in Mathematics
(UZ). Mr. Hoto is also a non-executive director of Capital Bank.

Mr. Shadreck Chamunorwa Vera (42) Non-Executive Director
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. He also holds an Advanced Diploma in Treasury Management and Finance from
Institute of Bankers South Africa and a Certificate in Management Information Systems (London). Mr. Vera is
currently studying towards a Doctorate in Business Administration with Nottingham Trent University.

Mr. Douglas Mavhembu (39) Non-Executive Director
Mr. Mavhembu is the Acting Director - International Tourism Directorate in the Ministry of Tourism. He has worked
in various senior capacities within the Ministry of Tourism and Hospitality including being the Deputy Director
(tourism) and Acting Under Secretary (Tourism). Mr. Mavhembu is the Co-Chairperson for the Zimbabwe/Zambia
Joint Technical Committee on the 2013 UNWTO General Assembly to be held in Victoria Falls, 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 degree from Azaliah University and various certificates in Tourism and
Hospitality Management.
4.2

Senior Management
Tendai MacGerald Madziwanyika (44) Chief Executive Officer
See profile under Details of Directors above
Paschal Changunda (38) Finance Director

See profile under Details of Directors above

Cyndrella Masimbe (44) Human Resources Director
Mrs. Masimbe joined RTG in 1999 as Training Manager for the Rainbow Hotels Division. She then became Human
Resources Manager for the same division in 2000, before her appointment as Group Human Resources Director
in 2002. Prior to joining RTG, Mrs. Masimbe worked in various operations management positions at Africa Sun
Limited (formerly Zimbabwe Sun Limited) for five years. She briefly lectured on undergraduate and postgraduate
hotel management programs at the University of Zimbabwe. Mrs. Masimbe holds a BSc (Honours) degree in
Economics (UZ), and an MSc Tourism & Hospitality Management (UZ).
21

Godfrey Pasipanodya (45) Commercial Director
Mr. Pasipanodya has experience in Sales, Marketing and Business Operations for the Hospitality Sector, having
been a Regional Director, Marketing for Continental Europe under the Zimbabwe Tourism Authority. His
directorships include Air Zimbabwe Limited. Mr. Pasipanodya holds a Bachelor of Business Studies degree (UZ)
and a Master of Business Administration in International Marketing (ESLCA Paris School of Business).

Richard Nkomo (54) General Manager Rainbow Towers
Mr. Nkomo has over 25 years experience in general management positions within the hospitality industry in
Zimbabwe and the United States of America. He has inter alia worked as Director of Sales and Marketing for
Rainbow Towers Hotel and Conference Centre (then called the Sheraton Hotel) and later as Deputy General
Manager for the same hotel. In the United States he held various positions for hotels such as Suburban Hotel
Complex and Courtyard by Mariot and Homewood Hotel Suites Schaumburg. Mr. Nkomo holds a Master of
Business Administration degree from Tennessee State University, a Bachelors in Public Administration degree from
Middle Tennessee State University, and various certificates from Cornell University in Hotel Strategic Marketing.

Dumisani Mhlanga (41) Operations Manager Rainbow Hotels
Mr. Mhlanga has over 10 years of experience in operations management having worked in various capacities in
operations management for Innscor Africa, African Sun and National Foods. Prior to this appointment, he was the
Operations Director for National Foods Limited. Dumisani holds a Master of Business Administration degree from
Eastern & Southern African Institute of Management (ESAMI) and a Bachelor of Marketing Management degree
from Institute of Marketing Management (South Africa)

Stephen Nyabadza (32) Company Secretary & Legal Advisor
Mr. Nyabadza has over eight years experience in company secretarial and corporate law work. His experience
include being a Group Legal Officer for TA Holdings Limited and Corporate Lawyer with Clarity Mineral Services
Zimbabwe. He has also previously worked as the Corporate & Legal Services Executive for Messrs BDO Spencer
Steward Botswana. Mr. Nyabadza holds a Bachelor of Laws (Honours) degree (UZ), a Master of Laws (Specialising
in Corporate Law) degree (UNISA) and a Master of Business Administration degree (ESAMI Business School). Mr.
Nyabadza is a Legal Practitioner Notary Public and Conveyancer and is registered to practise law in Zimbabwe and
Botswana.

Samson Chitsato (42) Risk and Internal Audit
Mr. Chitsato has over 13 years of experience in internal audit and risk management. He has worked for Star Africa
Corporation, OK Zimbabwe Limited and Meikles Retail Group at various management levels in internal audit. Mr.
Chitsato is a Certified Internal Auditor and also holds a Master of Audit Management and Consultancy degree
from Birmingham City University and is a member of the Chartered Institute of Secretaries and Administrators
Zimbabwe.
4.3
Directors Interest in Shares
None
4.4 Other Directors Interests
Apart from the information disclosed in this Document, neither the Directors of RTG nor any member of their
immediate families nor any person acting in concert with the Company, controls or is interested, beneficially or
otherwise, in any RTG Shares.
4.5

Directors Service Contracts

Service contracts of Directors will not be affected by the Transaction proposed.
4.6

Corporate Governance
Board Committees
The Board is responsible for providing effective leadership based on an ethical foundation. The roles of the
Chairman and the Chief Executive Officer are separate and distinct.
22
It is the policy of the Board that the Board should comprise of a balance of executives and non-executive
directors, with the non-executive directors in the majority. The Board ordinarily comprise of two executive
directors and eight non-executive directors. The non-executive directors provide the necessary objectivity for the
boards effective functioning and carry sufficient weight in the boards deliberations and resolutions. The Board
composition reflects varying skills, knowledge and experience, all who are fully aware of their duties to ensure
that the group maintains a high standard of corporate governance. Through its Remuneration and Nominations
committee, the board undertakes the role of selection and appointment of the new directors subject to the
companys constitutive documents.
In terms of the Companys Articles of Association, directors appointed by the Board during the course of the year,
are subject to confirmation at the next Annual General Meeting. Dr. Joseph Kanyekanye, Mrs Rosa Dube, Messrs.
Shingirayi Norman Chibanguza, Ian Chamunorwa Haruperi, Douglas Hoto and Douglas Mavhembu who were coopted to the Board during the course of the year will retire and being eligible for re-election at the forthcoming
Annual General Meeting. In terms of the articles of Association, at least one third of the directors are required to
retire each year. The directors may make themselves available for re-election.

The Board meets at least once every quarter to review and monitor performance of the group and executive
management. The Board considers and approves Group strategy, corporate governance policies and the risk and
compliance structures, risk management and internal control policies and structures, business continuity plans
and board composition.
Audit and Risk Committee

The Committee currently comprises three Non-Executive Directors, and is chaired by a Non-Executive Director.
The committee deals inter alia, with compliance, internal control and risk management. The external auditors
attend meetings by invitation. The committee meets at least four times a year to consider compliance with
financial reporting requirements, monitor the appropriateness of the accounting policies and the effectiveness of
the systems of internal control and consider the findings of the internal and external auditors.
Finance Committee
The committee comprises of three Non-Executive Directors. The Board has defined the Committees purpose as
assisting the Board in its consideration for approval and on-going oversight of matters pertaining to:
- Capital structure and funding;
- Capital management planning and initiatives; and
- Due diligence on acquisitions and divestments including proposals which may have a material impact on the
Groups capital position.
Human Resources and Corporate Governance Committee

The committee currently comprises of three Non-Executive Directors and is chaired by a Non-Executive Director.
The primary functions of the committee are to assist the Board by reviewing policies, relating to senior executives
remuneration and monitoring the current industry practice with regards to executive remuneration. The
committee also makes recommendations 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. The Committee reviews
and makes recommendations to the Board of Directors on the structure and membership of Board Committees
annually.
Marketing and Strategy Committee

The committee currently comprises of three Non-Executive Directors and is chaired by a Non-Executive Director.
The functions of this committee includes; reviewing and advising on the Groups marketing strategy and identifying
and exploring new business opportunities for the Group.
23
4.7
Directors Declarations

Statement of indebtedness
In terms of the Companys Articles of Association, the Directors of the Company are authorised, at their discretion,
without the previous sanction of an ordinary resolution of the Company in general meeting, to incur borrowings
provided the aggregate principal amount of these borrowings shall not exceed twice the aggregate of:

- the nominal amount of the issued and paid share capital for the time being of the Company; and
- the aggregate of amounts standing to credit of all capital and revenue reserve accounts, any share premium
account and profit and loss account as set out in the latest audited balance sheet of the Company, its holding
company and its subsidiaries which has been drawn up to be laid before the shareholders of the Company in
general meeting at the relevant time.
As at 30 June 2012 the Company had the following borrowings:

PTA Bank Loan

The loan of US$3.2 million carries interest of 3 months Libor rate plus 6% per annum during the grace period and 3
months Libor rate plus 5.55% thereafter. The loan has a tenor of five years with principal repayment grace period
of one year and is secured by a bond in favour of the bank over Victoria Falls Rainbow Hotel and A Zambezi River
Lodge Properties with a net book value of US$11,044,220. The loan is due for repayment in the second quarter of
2017.
Afreximbank Loan
The loan of US$7.5 million carries interest of Libor rate plus market premium determined by the bank calculated
as the variance between the banks cost of funding and relevant Libor rate plus 5.5% per annum. The loan has a
tenor of six years with one year capital repayment grace period of one year and is secured by a bank guarantee of
US$7.5 million from Capital Bank and a mortgage bond over the notarial lease in respect of Rainbow Towers Hotel
and Conference Centre. The loan is due for repayment in the 4th quarter of 2016.
Short Term Loans

These are Bankers Acceptances with various financial institutions amounting to US$12.6 million. The loans were
unsecured except for the US$5 million facility with CBZ Bank Limited and repayable within 30 to 120 days subject
to being rolled over. Interest on Bankers Acceptances ranged between 14% and 42% per annum.
4.8
Legal Information
Litigation

The Directors are not aware of any legal proceedings (including any such proceedings which are pending
or threatened), which would have a material adverse impact on the business, operations, assets, liabilities or
materially affect the ability of the group to operate or conduct its business in the manner in which it is currently
operated or conducted. While this is the case, at the time of drafting this document, the Company had the
following litigation matters:

- Messina Investments Limited (the Applicant) v Rainbow Tourism Group Limited and Nine Others HC 6391/06.
In this case, the Applicant seeks the review of an arbitral award wherein the Applicant unsuccessfully sought an
order directing that additional shares be issued to it, pursuant to the 2005 Rights Offer by the Company and or
its Directors.
- Africa Corporate Advisors Limited (the Plaintiff) v Rainbow Tourism Group Limited HC/2739/12. The Plaintiff
claims an amount if US$310,000 from RTG in respect of advisory services it claims to have rendered to RTG at
RTGs specific instance and request for and in connection with raising funds for the construction of a hotel.
- Employees of Matetsi Water Lodge (the Applicant) v Matetsi Game Lodge. The Applicants are claiming
US$216,000 from Matetsi in respect of unpaid wages and salaries which they claim are owed to them by Matetsi
for the period December 2011 to June 2012.
24

Material Contracts
At the time of drafting this document, the Company had the following material contracts:

Afreximbank Loan
Facility Agreement in respect to US$7.5 million entered into between RTG as the Borrower, African Export
Import Bank (the Lender) & Capital Bank (as the Local Agent).
PTA Loan
Facility Agreement of about US$3.8 million entered into between RTG (as Borrower) and PTA (as the Lender).
US$10 million Loan

The Group has finalised a US$10 million loan with a local lender at favourable terms to restructure part of the short
term borrowings.
Underwriting Agreement
This agreement was signed between the Company and NSSA on 26 November 2012 and is available for inspection
at the Company Corporate Offices.
Other Material Contracts

There are no material contracts or proposed contracts, written or oral, relating to the remuneration of the
executive directors or management, secretarial and technical fees or restraint payments payable by the Company
or any of its subsidiaries. Conditions of employment are governed by contracts of employment. Other than
contracts mentioned in this Rights Offer Circular, there are no material contracts entered into by the Company,
either verbally or in writing that are or may be material and which have been entered into within the last two
(2) years, otherwise than in the ordinary course of business. No contract entered into at any time contains an
obligation or settlement that is material to RTG or its subsidiaries.
Material Changes
Other than those mentioned in this Rights Offer Document, there have been no material changes in the financial
or trading position of RTG and its subsidiaries that has occurred since the end of the financial year and the date of
this Document.
4.9 Listing of Rights Offer shares on ZSE

Application has been made to the Listing Committee of the ZSE, which has granted approval, in principle, for the
Rights Offer Shares offered in terms of this Rights Offer to be listed on the ZSE from Wednesday, 6 February 2013.
4.10

Experts Consent
Capital Bank, BDO Zimbabwe Chartered Accountants, Bethel Equities, Kantor and Immerman Legal Practitioners
and First Transfer Secretaries have given and not withdrawn their consent to the issue of this Rights Offer
Document with the inclusion of their names and reports in the form and context in which they appear.
25
PART FIVE: DIRECTORS RESPONSIBILITY STATEMENT
The Directors whose names are given below, collectively and individually accept full responsibility for the accuracy
of the information given, and certify that to the best of their knowledge and belief there are no other facts the
omission of which would make any statement false or misleading, and that they made all reasonable inquiries to
ascertain such facts.
The Directors also confirm that this Circular includes all such information within their knowledge (or which it
would be reasonable for them to obtain by making enquiries) that investors and their professional advisors would
require and reasonably expect to find for the purposes of making an informed assessment of the assets and
liabilities, financial position, profits and losses and prospects of RTG and of the rights attaching to the securities to
which the Circular relates.
Name of Director
Signature
Signed on original
Tendai MacGerald Madziwanyika
Signed on original
Paschal Changunda
Signed on original
Rosa Dube
Signed on original
Shingirayi Norman Chibanguza
Signed on original
John Mafungei Chikura
Signed on original
Ian Chamunorwa Haruperi
Signed on original
Douglas Hoto
Signed on original
Douglas Mavhembu
Signed on original
Shadreck Chamunorwa Vera
Signed on original
26
PART SIX: DETAILS, TERMS AND CONDITIONS OF THE OFFER
6.1

Terms of the Rights Offer

The Board of Directors has resolved to offer to the Shareholders of the Company, registered as such at the close of
business on Monday, 24 December 2012, being the Record Date, approximately 225,000,000 Rights Offer Shares
for subscription at a ratio of 13.6737 Rights Offer Shares for every 100 ordinary shares already held, in United
States Dollars, at a subscription price of US$0.02 each for an aggregate amount of approximately US$4,500,000
and in return the issue and allotment of approximately 225,000,000 ordinary shares in RTG to those shareholders
and to issue and allot such shares pursuant to the Transaction.
6.2

Date of Opening and Closing of Rights Offer

The Rights Offer will open at 0900hrs on Monday, 31 December 2012 and close at 1630 hours on Friday, 25 January
2013.
6.3
Courses of Action
Set out below are the options available to RTG Shareholders with respect to their rights in terms of the Rights
Offer:

Acceptance Subscribe for all the Rights Offer Shares

The Shareholder who wishes to take up their rights in terms of the Rights Offer, is required to complete Part A
of the renounceable Letter of Allocation (LA) form and subscribe for the rights offer shares as set out in this
Circular in accordance with the instructions contained and forward it to First Transfer Secretaries (FTS) by no
later than Thursday, 24 January 2013 with proof of payment. Kindly note that under no circumstances should cash
be send to FTS.
Splitting
A shareholder who wants to take up some but not all of their rights should complete Part B of the LA, and return
to FTS, 1 Armagh Avenue, Eastlea, Harare to be received by 3.00 p.m. on or before Friday, 25 January 2013.

The Rights Offer shares that the shareholder does not wish to follow will be taken up by the underwriters.
Renunciation ELECT not to follow rights

The right to subscribe for the Rights Offer Shares in RTG, as detailed in this Document, may be renounced (nil paid)
in favour of a third party.
In the event that the Company does not receive a duly completed Letter of Allocation from a Shareholder by
Friday, 25 January 2013 it will be presumed that the particular Shareholder has waived his rights and the Rights
Offer Shares offered to that Shareholder will automatically lapse and they shall be taken up by the underwriter.
6.4 Payment

The amount due on acceptance is payable in the currency of the United States of America. The cash, transfer,
cheque or bank draft shall be payable into the following account before the due date:
Account Name
:
Rainbow Tourism Group Rights Issue
Bank : CBZ BANK
Branch : Selous Avenue
Account Number
:
02123111380056
ALL DEPOSIT SLIPS MUST BEAR THE LETTER OF ALLOCATION REFERENCE NUMBER FOUND ON THE TOP RIGHT
CORNER OF THE FORM. Proof of deposit into the account and the completed Letters of Allocation should be
lodged with the transfer secretaries, FTS at their registered office.
6.5
Exchange Control
United States Dollars are legal tender in Zimbabwe. The Transaction does not require exchange control approval.
Non-resident shareholders of RTG are advised to consult their professional advisors or bankers regarding their
individual exchange control position, in relation to their participation in the Rights Offer described in this Circular
to shareholders.
27
6.6

Listing, Dividends and Ranking of Rights Offer Shares

The Listing Committee of the ZSE has granted primary listing for, and permission to deal in, all Renouncable Letters
of Allocation (nil paid) relating to the Rights offer shares, between Monday, 31 December 2012 and Wednesday,
23 January 2013. Renouncable Letters of Allocation may be negotiated and sold, subject to Exchange Control
Regulations, the details of which are disclosed in this Circular. Application was made to the ZSE Listing Committee
to approve the listing of the Rights Offer shares on the ZSE from Wednesday, 6 February 2013. Persons becoming
shareholders as a result of the Rights Offer will be placed in the share register of RTG. The Transfer Secretaries
in respect of the Rights Offer Shares are First Transfer Secretaries, whose details are set out in the corporate
information section at the beginning of this circular.
The Rights Offer Shares issued in accordance with the Rights Offer will be issued as fully paid and will rank pari
passu from the date of issue with the other shares of the company.
6.7

Rights Offer Share Certificates

The share certificates in respect of the Rights Offer will be distributed and allotted to Shareholders from Thursday,
14 February 2013.
28
PART SEVEN: ANNEXURES
7.1
Group Financial Information
7.1.1
RTG Consolidated Statement of Financial Position

Reviewed
30.06.2012
US$
Audited
31.12.2011
US$
Audited
31.12.2010
US$
Audited
31.12.2009
US$
34,170,053
33,385,813
30,692,185
26,536,417
-
ASSETS
Non-current assets
Property and equipment
Investment property
Intangible asset
Held to maturity investment
450,000
235,932
235,932
900,000
900,000
34,405,985
34,071,745
31,592,185
27,436,417
Current assets
Inventories
1,833,201
1,718,539
1,413,219
1,082,730
Accounts receivable
7,858,125
6,676,245
5,334,423
4,528,238
Held to maturity investment
900,000
Held for trading investments
18,335
18,335
24,994
37,373
Cash and bank balances
Assets in disposal group classified as held for sale

Total assets
4,431,552
6,113,206
5,908,394
303,062
14,141,213
15,426,325
12,681,030
5,951,403
1,647,901
2,527,243
50,195,099
52,025,313
44,273,215
33,387,820
EQUITY AND LIABILITIES

Capital and reserves
Share capital
Non distributable reserve
Foreign currency translation reserve
164,550
164,550
164,550
16,884,995
17,174,043
17,174,043
17,338,593
16,285
8,166
26,208
(2,072)
1,108,995
1,108,995
1,108,995
1,011,492
(5,702,585)
(1,441,307)
(1,069,874)
393,669
12,472,240
17,014,447
17,403,922
18,741,682
(146,646)
12,472,240
17,014,447
17,403,922
18,595,036
10,740,838
10,872,838
9,669,657
427,350
3,549,274
3,576,342
4,377,746
6,489,432
14,290,112
14,449,180
14,047,403
6,916,782
Short term loans
7,708,806
10,750,631
6,370,212
1,081,759
Accounts payable
9,791,840
7,510,057
3,894,234
5,475,293
Revaluation reserve
Accumulated loss
Non -controlling interest
Non-current liabilities
Long term loans
Deferred tax
Current liabilities
Tax payable
183,050
378,228
124,866
57,303
4,895,719
1,573,439
2,432,578
1,261,647
22,579,415
20,212,355
12,821,890
7,876,002
853,332
349,331
Total liabilities
37,722,859
35,010,866
26,869,293
14,792,784
Total equity and liabilities
50,195,099
52,025,313
44,273,215
33,387,820
Bank overdraft
Liabilities directly associated with assets in disposal group
classified as held for sale
29
7.1.2
RTG Consolidated Statement of Comprehensive Income

REVIEWED
30.06.2012
US$
AUDITED
31.12.2011
US$
AUDITED
31.12.2010
US$
AUDITED
31.12.2009
US$
Revenue
13,292,006
27,320,901
20,740,166
17,505,716
Cost of sales
(1,516,216)
(3,389,479)
(2,803,661)
(2,752,341)
Gross profit
11,775,790
23,931,422
17,936,505
14,753,375
Other operating income

Operating expenses
Investment income
Earnings before interest, tax, depreciation and amortisation
46,162
74,498
75,222
683,616
(13,381,646)
(21,120,130)
(18,456,197)
(14,086,244)
157,690
104,473
213,055
69,967
(1,402,004)
2,990,263
(231,415)
1,420,714
(756,998)
(1,193,670)
(1,092,432)
(920,114)
(2,159,003)
1,796,593
(1,323,847)
500,600
Finance expense
(1,597,942)
(1,650,315)
(1,397,334)
(321,666)
(Loss) / profit before tax
(3,756,945)
146,278
(2,721,181)
178,934
Depreciation
(Loss) / profit from operations
Income tax
27,062
417,235
1,677,954
(19,972)
(3,729,883)
563,513
(1,043,227)
158,962
(820,444)
(936,946)
(109,660)
(4,550,327)
(373,433)
(1,152,887)
158,962
97,503
1,106,325
Exchange (loss) / gain arising on translation
8,119
(18,042)
28,280
(2,072)
Total other comprehensive income
8,119
(18,042)
125,783
1,104,253
(4,542,208)
(391,475)
(1,027,104)
1,263,215
(Loss) / profit after tax from continuing operations

Loss from discontinuing operations, net of tax
(Loss)/profit for the period
Other comprehensive income net of tax
Gain on property revaluation net of tax
Total comprehensive income for the period
30
7.1.3
RTG Consolidated Statement of Cash Flows

REVIEWED
30.06.2012
US$
AUDITED
31.12.2011
US$
AUDITED
31.12.2010
US$
AUDITED
31.12.2009
US$
(1,531,298)
3,981,205
(3,675,641)
1,955,097
45,676
383,599
226,715
16,782
CASHFLOWS FROM OPERATING ACTIVITIES

Cash generated from operations
Interest received
Investment income
Interest paid
Income tax paid
203,348
104,473
213,055
(1,681,809)
(2,136,097)
(1,626,382)
(338,448)
(195,178)
(124,866)
(59,867)
Exchange losses on translation of foreign operations
(26,758)
(18,042)
(23,066)
Net cash (outflow) / inflow from operating activities
(3,186,019)
2,190,272
(4,945,186)
1,633,431
(985,541)
(6,777,490)
(5,299,013)
(2,574,720)
CASHFLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment
Proceeds on sale of property and equipment
211,453
746,842
135,463
117,700
650,000
Purchase of intangible asset
(235,932)
Decrease/(Increase) in held for trading investments
6,659
12,378
(37,373)
Decrease/(Increase) in held to maturity investment
900,000
(900,000)
Disposal /(Purchase) of investment property
580,000
(450,000)
Net cash inflow /(outflow) from investing activities
1,355,912
(6,709,921)
(5,151,172)
(3,394,393)
(3,173,827)
5,583,600
14,530,759
499,342
Proceeds from sale of subsidiaries
CASHFLOWS FROM FINANCING ACTIVITIES

Decrease /(Increase) in borrowings
Net cash (outflow) / inflow from financing activities
(3,173,827)
5,583,600
14,530,759
499,342
(5,003,934)
1,063,951
4,434,401
(1,261,620)
CASH AND CASH EQUIVALENTS AT BEGINNING OF

PERIOD
4,539,767
3,475,816
(958,585)
303,035
CASH AND CASH EQUIVALENTS AT END OF PERIOD
(464,167)
4,539,767
3,475,816
(958,585)
Net (Decrease)/Increase in cash and cash equivalents
31
Tel: +263 4 703 876 /7/8

Fax: +263 4 703 876/7/8
www.bdo.co.zw
BDO Zimbabwe Chartered Accountants
7.2
Reporting Accountants Report
17 October 2012
Kudenga House
3 Baines Avenue
P.O Box 334
Harare
Zimbabwe

The Directors


1 Pennefather Road
HARARE
Dear Messrs,
INDEPENDENT REPORTING ACCOUNTANTS REPORT ON THE CONSOLIDATED FINANCIAL INFORMATION OF
RAINBOW TOURISM GROUP LIMITED AND ITS SUBSIDIARIES (RTG)
1.
REVIEW REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2012
1.1 Introduction
At your request for the purpose of the terms and objectives of the engagement set out in our engagement letter
dated October 1, 2012, issued in connection with the proposed transaction involving a renunceable rights offer
of shares in Rainbow Tourism Group Limited, we present our report on the reviewed financial information of the
group in respect of the half year ended 30 June 2012, being the date to which the latest audited and reviewed
financial statements have been prepared in compliance with the Zimbabwe Stock Exchange ZSE listing
requirements.
1.2

Directors responsibility for the financial statements

We have reviewed the accompanying consolidated statement of financial position of Rainbow Tourism Group
Limited (RTG or the Group) as of June 30, 2012 and the related consolidated statement of comprehensive
income, consolidated statement of changes in equity and consolidated cash flows for the six-month period
then ended. The Groups directors are responsible for the preparation and fair presentation of these financial
statements in accordance with International Financial Reporting Standards(IFRS) and in the manner required
by the Companies Act (Chapter 24:03). Our responsibility is to issue a report on the financial statements based on
our review.
1.3
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410, (Review of
Interim Financial Information Performed by the Independent Auditor of the Entity). A review of interim financial
information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be identified in an audit. Accordingly we do not
express an opinion.
1.4
Review report for the period ended 30 June 2012
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim
financial statements do not present fairly, in all material respects, the financial position of the Group as at 30 June
2012 in accordance with International Financial Reporting Standards and in the manner required by the Companies
Act (Chapter 24:03).
1.5

Emphasis of matter
Without qualifying our review opinion, we draw attention to Note 6 to the financial statements which indicates
that the Group incurred a loss before tax of $3,463,697 for the six months ended 30 June 2012 (31 December 2011:
profit of $146,697) and as of that date the Groups current liabilities exceeded its current assets by $8,136,135 (31
December 2011: $4,786,030). These conditions along indicate the existence of a material uncertainty that may cast
significant doubt on the Groups ability to continue as a going concern.
32
2.
PRIOR YEARS AUDITED CONSOLIDATED FINANCIAL STATEMENTS AUDIT OPINIONS
We have been auditors of Rainbow Tourism Group and its subsidiaries throughout the period covered in this
report.
2.1
Financial year ended 31 December 2011
2.1.1 Unqualified opinion on the consolidated statement of financial position at 31 December 2011

The consolidated statement of financial position, in all material respects, gave a true and fair view of the financial
position of the Group as at 31 December 2011 in accordance with International Financial Reporting Standards and
in the manner required by the Companies Act (Chapter 24:03).
2.2
2.2.1 Transition to full compliance with International Financial Reporting Standards (IFRSs)

The Group resumed presentation of IFRS financial statements after the Group issued financial statements in the
prior reporting period ended 31 December 2009 which did not include an explicit and unreserved statement of
compliance with IFRS due to the effects of severe hyperinflation. The Group early adopted the amendment to IFRS
1 and therefore applied that standard in returning to compliance with IFRS. The Groups functional currency for
the period before 1 January 2009, the Zimbabwe dollar (ZWD), was subjected to severe hyperinflation because
it had both of the following characteristics:

(a) a reliable general price index was not available to all entities with transactions and balances in the ZW$; and

(b) e
xchangeability between the ZW$ and a relatively stable foreign currency did not exist.

The Groups functional currency ceased to be subject to severe hyperinflation from 1 January 2009 because the
Group changed its functional and presentation currency from ZW$ to the United States dollar (US$) with effect
from 1 January 2009.
2.2.2 Audit opinion for the year ended 31 December 2010

2.2.2.1 Unqualified audit opinion

position of the group as at 31 December 2010 in accordance with International Financial Reporting Standards.
2.2.2.2 Emphasis of matter

Without qualifying our opinion, we drew the attention of the users of the financial statements to the following
matters:

Going concern of a significant subsidiary

A significant subsidiary, Touch The Wild (Private) Limited, which had been consolidated, was facing going concern
problems. There was no certainty whether Sikumi Tree Lodge which contributed 24% of the subsidiarys revenue
would remain under the control of the subsidiary due to an ownership dispute. The ability of the subsidiary to
continue operating as a going concern was therefore dependent on a return to profitable operations, satisfactory
resolution of the ownership dispute of Sikumi Tree Lodge and continued support from the bankers, creditors and
the holding company.
2.3


A multi-currency framework was introduced in January 2009 and the financial statements for the year ended 31
December 2009 were stated in United States Dollars. The financial statements for years prior to 31 December
2009 were stated in Zimbabwe Dollars. The financial statements for comparative purposes beyond 31 December
2009 have not been included in the Circular by the Directors as they believe they will be misleading. Due to the
prevailing economic environment in the previous years it is not possible to convert these financial statements into
United States Dollars in a manner consistent with IAS 21 (The Effects of Changes in Foreign Exchange Rates) and
IAS 29 (Financial Reporting in Hyperinflationary Economies).
33
The audit report for the consolidated financial statements for the year ended 31 December 2009 covered the
following:-
2.3.1 Non-compliance with International Accounting Standard (IAS) 29 (Financial Reporting in Hyperinflationary
Economies) and International Accounting Standard (IAS) 21 (The Effects of Changes in Foreign Exchange
Rates)

The Group operated under a hyperinflationary economy in the year ended 31 December 2008. The Group
changed its functional currency to United States Dollars with effect from January 2009. All monetary comparative
information, the statement of comprehensive income, and the statement of cash flows were not prepared in
conformity with International Financial Reporting Standards in that the requirements of IAS 29 and IAS 21 were
not complied with in converting the financial information during the period of hyperinflation into an applicable
measurement base at the date of reporting for the following reasons:
- the inability to reliably measure inflation because of the interaction of multiple economic factors which were
pervasive to the Zimbabwean economic environment; and

- the inability to adjust items that were recorded in Zimbabwe dollars into United States Dollars at the date of
change of functional currency.
2.3.2 Non-compliance with IAS 1: Presentation of financial statements

The Directors did not present any comparative information as required by IAS 1 because they believed the
information would be misleading.
In line with (i) and (ii) above, the split audit opinion was thus:2.3.2.1 Adverse opinion on non-compliance with International Financial Reporting Standards on all comparative
information, the statement of comprehensive income and the statement of cash flows.

Because of the significance of non-compliance with IFRSs, the comparative information, the statement of
comprehensive income and the statement of cash flows did not give a true and fair view of the results of the
Groups operations and cash flows for the year ended 31 December 2009 in accordance with International Financial
Reporting Standards.
2.3.2.2 Unqualified audit opinion on the statement of financial position as at ended 31 December 2009

position of the group as at 31 December 2009 in accordance with International Financial Reporting Standards.
2.3.2.3 Emphasis of matter

Without further qualifying our opinion, we drew the attention of the users of the financial statements to the
following matters:a)

Going concern of a significant subsidiary

A significant subsidiary, TOUCH THE WILD (PRIVATE) LIMITED which had been consolidated, was facing going
concern problems. There was also no certainty whether Sikumi Tree Lodge which contributed 24% of the
subsidiarys revenue would remain under the control of the subsidiary due to an ownership dispute. The ability
of the subsidiary to continue operating as a going concern was dependent on a return to profitable operations,
satisfactory resolution of the ownership dispute of Sikumi Tree Lodge and continued support from the bankers,
creditors and the holding company.
b)

Fair value determination for transactions, assets and liabilities

The determination of fair values of land and buildings presented in the financial statements was affected by
the prevailing economic environment and therefore could have been distorted. This could result in significant
variations in fair values, depending on factors and assumptions used in the determination of the fair values.
34
3.
REVIEW REPORT ON UNAUDITED PROFORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30

JUNE 2012
3.1 Introduction

Section 2.12 of this Circular contains the pro-forma consolidated statement of financial position of Rainbow
Tourism Group Limited (the Group) as at 30 June 2012 in accordance with the policies and assumptions which
form part of the financial information. The purpose of the pro-forma consolidated statement of financial position
is to incorporate the effect of the raising of approximately US$4,500,000.00 equity by way of a rights offer (the
Transaction), that is the subject of this Circular to Shareholders of Rainbow Tourism Group Limited subsequent
to 30 June 2012 as if it had occurred on that date.
3.2

Scope of the review

We have performed a review of the pro-forma consolidated statement of financial position of the group as at 30
June 2012 as set out in Section 2.12 in order to state whether on the basis of the procedures described, anything
has come to our attention that would indicate that the pro-forma consolidated statement of financial position
is not presented fairly in accordance with the measurement requirements of applicable International Financial
Reporting Standards to the extent to which they are relevant to the information presented.
Our review has been conducted in accordance with International Auditing Standards applicable to review
engagements and has been limited to inquiries with the Groups personnel, analytical procedures applied to the
financial data, a reading of contracts and other relevant documents, a reading of minutes of Directors meetings,
ensuring consistency in application of accounting standards and policies and certain limited verifications
supporting the amounts and other disclosures in the financial information. We have also determined whether
the pro-forma transactions form a reasonable basis for the preparation of the pro-forma statement of financial
position.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance
provided is less than that given in an audit. We have not performed an audit and, accordingly, we do not express
an audit opinion.
3.3

Our Review Opinion

Based on our review of the pro-forma consolidated statement of financial position nothing has come to our
attention to indicate that it has not been compiled in accordance with the policies and assumptions so as to
present fairly the relevant pro-forma financial position of Rainbow Tourism Group Limited as at 30 June 2012 in
accordance with the measurement requirements of applicable International Financial Reporting Standards as if
the proposed transactions had occurred on that date.
4.
SUBSEQUENT EVENTS
Other than the matters dealt with in this report, to the best of our knowledge and belief, we are not aware of any
material items, transactions or events subsequent to 30 June 2012 which require comment or adjustment to the
information contained in this report or which would cause such information to be misleading.
5. DISCLOSURE
BDO Zimbabwe Chartered Accountants does not have any pecuniary interests that could reasonably be regarded
as being capable of affecting its ability to give an unbiased opinion in this matter. BDO Zimbabwe Chartered
Accountants does not provide any other service which includes taxation, due diligence and other advisory services
to Rainbow Tourism Group Limited. BDO Zimbabwe Chartered Accountants is the appointed auditor of Rainbow
Tourism Group Limited and will receive a professional fee for the preparation of this report.

The directors have agreed to indemnify and hold harmless BDO Zimbabwe Chartered Accountants and its
employees from any claims arising out of misstatement or omission in any material or information supplied by
the directors.
35
6.

APPENDED FINANCIAL INFORMATION

As the purpose of the appended financial information differs from the purpose of financial statements prepared
for the members, the appended financial information is not intended to comply fully with the full presentation
and disclosure requirements of the Companies Act (Chapter 24:03) and International Financial Reporting
Standards.
7. CONSENT
We consent to the inclusion of this report, which will form part of this Circular to the Shareholders, to be issued on
or about 30 November 2012, in the form and context in which it will appear.

Yours faithfully,
BDO Zimbabwe Harare

Chartered Accountants 17 October, 2012
36
7.3

Share Price Performance

The following table shows the share price history and the volumes of RTG Shares traded on the ZSE for the last
dealing day of each month from January 2012 to September 2012 and closing price on each day in the month
leading to Wednesday,31 October 2012 [being the last practicable date prior to the finalisation of this Circular].
Date
Bid Price
US$
Offer Price
US$
Sale Price
US$
Volume of Shares
Traded
0.020
0.020
0.020
4,781.000
Data for each month ended:

31 January 2012
29 February 2012
0.015
0.015
0.015
566.000
30 March 2012
0.020
0.020
0.020
10,754.000
30 April 2012
0.022
0.022
0.022
4,228.000
31 May 2012
0.020
0.020
0.020
3,835.000
29 June 2012
0.025
31 July 2012
0.015
31 August 2012
0.021
0.030
28 September 2012
0.025
0.028
0.026
76,000.000
01 October 2012
0.028
02 October 2012
0.023
0.026
03 October 2012
0.023
0.028
0.023
59,271.000
04 October 2012
0.028
05 October 2012
0.028
08 October 2012
0.028
09 October 2012
0.025
10 October 2012
0.023
11 October 2012
0.018
0.025
12 October 2012
0.018
0.023
Data for each day ended
15 October 2012
0.015
0.020
0.023
34,096.000
16 October 2012
0.002
0.020
0.020
1,000.000
17 October 2012
0.018
0.022
0.020
33,110.000
18 October 2012
0.018
0.020
5,593.000
19 October 2012
0.018
22 October 2012
0.018
0.022
23 October 2012
0.018
0.018
29,134.000
24 October 2012
0.018
0.020
0.018
1,845.000
25 October 2012
0.018
26 October 2012
0.018
29 October 2012
0.018
0.022
0.020
57,869.000
30 October 2012
0.019
0.022
0.020
101,661.000
31 October 2012
0.019
0.020
200,000.000
The Groups share price has been oscillating between a high of US$0.033 and a low of US$0.012 from January 2010
to October 2012.
37
The weighted share prices (cut off date 31 October 2012) are as follows:
US$
7.4

90 day weighted average price
0.0211
0.0213
0.0213
Underwriter Details
The National Social Security Authority (NSSA) was constituted and established in terms of the NSSA Act of 1989
(Chapter 17:04) as a statutory corporate body tasked by the Government of Zimbabwe to provide social security.
The provision of social security can be defined as instituting public policy measures intended to protect an
individual in life situations or conditions in which his/her livelihood and well being may be threatened, such as those
engendered by sickness, workplace injuries, unemployment, invalidity, old age, retirement and death. It is based
on the principle of social solidarity and pooling of resources and risks, involving drawing of savings from periods
of employment, earnings and good health to provide for periods of unemployment, old age, invalidity and death.
At the moment NSSA is administering two schemes: Pension and Other Benefits Scheme and Accident Prevention
and Workers Compensation Scheme, although, in an endeavour to provide a more comprehensive social security
package for the Zimbabwean society, groundwork for the introduction of more schemes is underway.

31 December 2011
30 December 2010
TOTAL ASSETS
592,222,107
456,690,679
Total Reserves
587,349,743
451,739,924
Total Liabilities
TOTAL EQUITY AND LIABILITIES
4,872,364
4,950,756
592,222,107
456,690,679
More information on the Underwriter can be found on www.nssa.org.

7.5

Table of Entitlements for RTG Shareholders

Set out below is the table of entitlement of RTG Shareholders to Rights Offer Shares, based on a ratio of 13.6737
new Rights Offer shares for every 100 ordinary shares already held on the Record Date. Fractional entitlements to
be rounded off.
Shares currently held by
Shareholder
Rights Offer Entitlement
Subscription Price
Ordinary Shares
Rights Offer Shares
At US$0,02 per Share
1,000
140
2.80
5,000
700
14.00
10,000
1,400
28.00
100,000
14,000
280.00
500,000
70,000
1,400.00
1,000,000
140,000
2,800.00
2,500,000
350,000
7,000.00
5,000,000
700,000
14,000.00
10,000,000
1,400,000
28,000.00
50,000,000
7,000,000
140,000.00
100,000,000
14,000,000
280,000.00
38
Notice of an Extraordinary General Meeting
7.6
Notice of an Extraordinary General Meeting
NOTICE IS HEREBY GIVEN THAT an Extraordinary General Meeting (EGM) of the Shareholders of Rainbow
Tourism Group Limited (the Company) will be held in the Jacaranda Rooms 2 and 3 at the Rainbow Towers and
Conference Centre, 1 Pennefather Avenue, Harare on Monday, 24 December 2012, at 1000 hours (or immediately
after the conclusion or adjournment of the Annual General Meeting of the Company (AGM), which has been
convened to be held at the same place and on the same day) for the purpose of transacting the following business:
1.
CONSTITUTION OF MEETING
1.1 To table valid forms of proxy.

1.2 To declare the meeting constituted.
2.
RENOUNCEABLE RIGHTS OFFER
To resolve-
THAT the Directors of the Company be and are hereby authorised to offer approximately 225,000,000 (two
hundred and twenty five million) ordinary shares in the authorised share capital of the company, by way of rights
issue, to its shareholders who appear in the members register at close of business on Monday, 24 December
2012, in the ratio of 13.6737 (thirteen point six seven three seven) Rights Offer Shares for every 100 (one hundred)
ordinary shares already held in the company, fractional entitlements to be rounded off, at an issue price of US$0.02
(Zero comma zero two United States dollars) per share, payable in full on acceptance, and to issue and allot the
rights shares as may be subscribed pursuant to the rights offer.
3.
DIRECTORS AUTHORITY TO GIVE EFFECT TO THE ABOVE RESOLUTION
To resolve
That, the Directors be and are hereby authorized to take any and all steps necessary to give effect to the
renounceable rights offer resolution above.

PROXIES AND VOTES
Each member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to act in the
alternative and speak in his stead. A proxy need not be a member of the Company.

Proxy forms must be lodged at the registered office of the company not less than 48 hours before the time of
holding the meeting.
By Order of the Board

STEPHEN NYABADZA

COMPANY SECRETARY

1 Pennefather Avenue/ Samora Machel Avenue
Harare, Zimbabwe
39
7.7
Form of Proxy EGM

The Company Secretary

P.O. Box 10029
HARARE
I/We.of
being a member of Rainbow Tourism Group Limited hereby appoint..
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 Extraordinary General Meeting of the Company to be held in the Jacaranda Rooms 2 & 3, Rainbow Towers
Hotel and Conference Centre, Harare on Monday, 24 December 2012 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.
ORDINARY RESOLUTIONS
FOR
AGAINST
ABSTAIN
1. T
o authorise the Directors of the Company to offer
approximately 225,000,000 (two hundred and twenty
five million) ordinary shares in the authorised share capital
of the Company, by way of rights issue, to shareholders
who appear in the members register at close on business
on Monday, 24 December 2012, in the ratio of 13.6737
(thirteen point six seven three seven) Rights Offer Shares
for every 100 (one hundred) ordinary shares already held
in the Company, fractional entitlements to be rounded
off, at an issue price of US$ 0.02 (Zero comma zero
two United States dollars) per share, payable in full on
acceptance, and to issue and allot the rights shares as
may be subscribed pursuant to the rights offer.
2. To give Directors the authority to do any and all such
things as may be generally required or necessary to give
effect to the rights offer.
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.......2012
Signature of member...........
Number of shares held by member
NOTES

1. This proxy form should reach the registered office of the Company not later than 48 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.
40
7.8

Letter of Allocation (LA) Sample

RTG CORPORATION LIMITED
(RTG or Company)
Number of RTG ordinary shares
registered in your name at close
of business at 16:00 hrs Monday,
24 December 2012
Number of RTG ordinary shares

whichmay be subscribed for
US$0.02 per share
AMOUNT PAYABLE
by 16:30 hrs on Friday, 25 January
2013
ACCEPTANCE
IF YOU WISH TO SUBSCRIBE FOR THESE NEW SHARES WHICH HAVE BEEN OFFERED TO YOU, YOU MAY DEPOSIT OR TRANSFER
YOUR MONEY TO THE FOLLOWING BANK ACCOUNT.
BANK:
ACCOUNT NAME:
ACCOUNT NUMBER:
BRANCH:
CBZ BANK LIMITED

RAINBOW TOURISM GROUP RIGHTS ISSUE
02123111380056
SELOUS AVENUE
OR SIMPLY RETURN THIS FORM TOGETHER WITH YOUR PROOF OF PAYMENT, CHEQUE OR BANK DRAFT CROSSED NOT
NEGOTIABLE AND DRAWN IN FAVOUR OF RTG RIGHTS OFFER TO FIRST TRANSFER SECRETARIES (PRIVATE) LIMITED, 1
ARMAGH AVENUE CORNER McCHLERY & ARMAGH AVENUE, EASTLEA P.O. BOX 11, HARARE BY NO LATER THAN 16:30 HRS
Friday, 25 January 2013. BY SIGNING THIS FORM YOU UNDERSTAND AND ACCEPT THAT SHOULD SUCH A CHEQUE BE
DISHONOURED, YOU WILL FORFEIT THE RIGHT TO TAKE UP THE RIGHTS OFFER SHARES AND YOU WILL HAVE NO FURTHER
CLAIM WHATSOEVER AND INDEMNIFY RTG AND FTS IN THIS REGARD.
B.

FORM OF RENUNCIATION/SPLITTING (see paragraph 3 (three) Courses of action of the renounceable letter)
(To be completed by the Shareholder named above if the payment being made is to be part of the amount stated
above).
TO: The Directors
RTG LIMITED
I/We, the shareholder(s) named above, would like to take up $_________ worth
of the shares to be allocated to the Rights Issue being offered. I/We hereby
surrender the balance of my/our right to subscribe to the said Rights Shares in
favor of the underwriter(s).
Details of Split Required

Split No.
Amount remitted
1
2
3
4
Signature(s) ____________________________Date_____________________
Shareholder N0.____________
C.
REGISTRATION APPLICATION FORM

(To be completed by the person(s) / entity taking up the right, or his/her/their agent). (Please print).

First Name(s) _________________________________________________________________________________
Surname or name of corporate body______________________________________________________________

TO: The Directors

RTG LIMITED
I/We the person(s) named above, confirm I/we have full legal capacity to contract and request you to allot the
Rights Offer Shares covered by this Letter in my/our name(s). I/We authorize you to place my/our name(s) on
the register as members of the Company in respect of the shares so allocated, subject to the conditions set out
overleaf and the Memorandum and Articles of Association of the Company and enclose herewith my/our proof of
payment.
PLEASE SEND THE NEW CERTIFICATE TO ME/US/THE AGENT LODGING THIS APPLICATION.
Signature(s) ______________________________________ Date__________________
41
IMPORTANT

RTG LIMITED (RTG)

RENOUNCEABLE LETTER OF ALLOCATION (LA)

225,000,000 ordinary shares in the issued share capital of RTG are hereby offered to RTG shareholders, registered
as at the close of business on Monday, 24 December 2012, being the Record Date, for subscription in cash at a price
of US$0.02 (zero point zero two United States Dollarseach), payable in full on acceptance, in the ratio of two (2)
new ordinary shares for every single (1) ordinary share held.
Fractions of Rights Offer Shares arising will be rounded to the nearest whole ordinary share.
This offer should be read in conjunction with the Circular to RTG Shareholders detailing the terms and conditions
of the Rights Offer dated Friday, 30 November 2012 (Circular).
IF YOU HAVE RECENTLY SOLD ALL OR PART OF YOUR RTG SHARES, PLEASE SIGN SECTION B OF THIS LA OVERLEAF
AND DELIVER THIS DOCUMENT TO THE BROKER OR AGENT THROUGH WHOM YOU SOLD YOUR RTG SHARES.
1. General

The LA overleaf is a valuable document in that you can sell it via your stockbroker through the Zimbabwe Stock
Exchange, even though you have not paid any money for the Rights Offer Shares being offered to you.
2. Allocation

In terms of the Circular, RTG has offered you the right to subscribe at US$0.02 (zero point zero two United States
Dollars each) per Rights Offer Share for that number of Rights Offer Shares in RTG shown overleaf. The Rights
Offer Shares you have been allocated are based on the number of ordinary shares registered in your name at
the close of business on Monday, 24 December 2012 in the ratio of 14 new ordinary shares for every 100 ordinary
shares held.
3.
Courses of Action
3.1
Subscribe for all the shares offered (ACCEPTANCE)
In this case you should return this document without endorsement to FIRST TRANSFER SECRETARIES (PRIVATE)
LIMITED, Harare, together with your proof of payment, cheque, bank draft, or RTGS copy for the amount shown
in the relevant section.

Payment Details:
BANK
CBZ BANK LIMITED
ACCOUNT NAME
RAINBOW TOURISM GROUP RIGHTS ISSUE
ACCOUNT NUMBER
02123111380056
BRANCH SELOUS AVENUE
3.2

Sell your rights (RENUNCIATION)

In this case, you renounce your right to accept the Rights Offer Shares offered to you and sell your rights, via
a stockbroker. This you can do by signing at the bottom of Section B of the form overleaf and by sending it to
your stockbroker with your instructions to sell the rights. Neither the Company nor its agents shall be obliged
to investigate whether the LA has been properly signed. If the rights are subsequently sold, and the person
purchasing the rights wishes to subscribe for the Rights Offer Shares shown overleaf, he, she or his or her agent
must complete Section C of the form overleaf and the provisions of paragraph 3.1 shall apply in the same way as it
applies to the other sections.
3.3

Splitting your rights

In this case, you accept a portion of the Rights Offer Shares and transfer your right to subscribe for the balance in
favour of a named or unnamed person, or simply take up a portion and not sell the other portion in which case the
Shares will be taken up by the underwriter.
42
4. Timetable

Offer opens 0900 hours
Last day for dealings in LAs 1200hrs Wednesday, 23 January 2013
Latest time for splitting LAs 1200hrs
Thursday, 24 January 2013

Rights Offer closes 1630hrs
Friday, 25 January 2013

Allocation of Rights Offer Shares
Monday, 4 February 2013

Expected Date of Registering Rights Offer Shares

Results of the Rights Offer Published
5. Signatures
All alterations on/to Sections B and C must be authenticated by a full signature of the Shareholder and joint
renunciations must be signed by all the Shareholders concerned.
6.

New share certificates

New share certificates will be posted from Thursday, 14 February 2013 to the appropriate address recorded
overleaf, unless specific instructions to the contrary are given in writing by the person(s) concerned.
7. Discrepancy

If the payment you make is less than it should be, you will still be allocated that number of Rights Offer shares for
which the payment is sufficient. If your payment is more than the amount then you will not be given any additional
shares, and the excess payment will be refunded. Kindly note that refunds below $1 will not be made.

8.
Offshore/ Foreign Shareholders
Payments must be made through telegraphic transfer, cheque or bank draft, in favour of RTG RIGHTS OFFER
drawn in the currency of the United States Dollars. Cheques or bank drafts should be crossed not negotiable and
must be accompanied with a Letter of Allocation. Letters of Allocation should be forwarded to FIRST TRANSFER
SECRETARIES (PRIVATE) LIMITED accompanied by proof of payment.
43
44
REGISTERED OFFICE
Rainbow Towers Hotel and Conference Centre
No.1 Pennefather Avenue
HARARE
E-mail: reservations@rtg.co.zw
www.rtgafrica.com
: RTG Central reservations
: rtgreservations

RTG Rights Offer Circular

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CIRCULAR TO SHAREHOLDERS

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

(Registration Number 4880/91)

Rainbow Tourism Group | Circular to Shareholders

PART TWO: THE CHAIRMANS LETTER

PART THREE: PERFORMANCE OVERVIEW

Rainbow Tourism Group | Circular to Shareholders

3.2.3 Group Restructuring

PART FOUR: STATUTORY INFORMATION

PART FIVE: DIRECTORS RESPONSIBILITY STATEMENT

PART SIX: DETAILS, TERMS AND CONDITIONS OF THE OFFER

PART SEVEN: ANNEXURES

Rainbow Tourism Group | Circular to Shareholders

Rainbow Tourism Group | Circular to Shareholders

Dr Joseph Kanyekanye Non Executive Chairman

Company Secretary and registered office

Bethel Equities (Private) Limited

Kantor and Immerman Legal Practitioners

Auditors & Reporting Accountants

BDO Zimbabwe Chartered Accountants

First Transfer Secretaries (Private) Limited

National Social Security Authority

Capital Bank Corporation Limited

CBZ Bank Limited

Rainbow Tourism Group | Circular to Shareholders

Notice of EGM published

Friday, 30 November 2012

Publication of abridged Circular to Shareholders

Friday, 30 November 2012

Circular to Shareholders mailed

Friday, 30 November 2012

Friday , 21 December 2012

Register closes for voting at EGM at 1600 hours

Friday , 21 December 2012

Record Date and register closes at 1600 hours

Monday, 24 December 2012

Share Register Re-opens

Thursday, 27 December 2012

Letters of allocation mailed to Shareholders

Monday, 31 December 2012

Rights Offer opens at 0900 hours

Monday, 31 December 2012

Dealing in Letters of Allocation opens

Monday, 31 December 2012

Last day for dealing in Letters of Allocation

Wednesday, 23 January 2013

Last day of receipt of postal acceptances of the Rights Offer

Wednesday, 30 January 2013

Expected date of registering Rights Offer Shares

Wednesday, 6 February 2013

Results of the Rights Offer published

Wednesday, 6 February 2013

Rights Offer Share Certificates mailed

Thursday, 14 February 2013

Rainbow Tourism Group | Circular to Shareholders

The Articles of Association of Rainbow Tourism Group Limited;

Average Daily Rate;

Board, Board of Directors or Directors

The Board of Directors of Rainbow Tourism Group Limited;

Capital Bank Corporation Limited, a registered accepting house in

The Companies Act [Chapter 24:03] of Zimbabwe, as amended;

The conditions precedent to the Transaction set out in Section 2.6

EGM or the Meeting