Swazispa Holdings Limited Annual Reportese.co.sz.dedi337.nur4.host-h.net/wp/wp-content/uploads/...2016/12/31 · Headline earning per share of 55.4 cents (2015: 60 cents) was achieved.

Annual Report 31 December 2016

Swazispa Holdings Limited

Profile IFC

FinancialHighlights 1

Chairman’sReview 2

CorporateGovernanceReport 4

GroupValueAddedStatement 7

Directorate,AdministrationandManagement 8

FiveYearFinancialReview

-Statistics 9

-GroupConsolidatedStatementsofComprehensiveIncome 10

-GroupConsolidatedStatementsofFinancialPosition 11

Definitions 12

StatementofResponsibilitybytheDirectors 13

ReportonAuditCommitteeFunctions 14

IndependentAuditor’sReport 15

ReportoftheDirectors 20

AccountingPolicies 22

StatementsofComprehensiveIncome 31

StatementsofFinancialPosition 32

StatementsofCashFlow 33

StatementsofChangesinEquity 34

NotestotheFinancialStatements 35

NoticeofAnnualGeneralMeeting 58

OwnershipandCorporateStructure 60

FormofProxy Insert

SwazispaHoldingsLimitedwasincorporatedinDecember1962and

listed on the Swaziland Stock Exchange on 22 February 1991. The

GroupownsandoperatesSunInternationalhotelsandcasinoresorts

inSwaziland.ThesecomprisetheRoyalSwaziSpa,CountryCluband

Casino, theLugogoSunHotelandtheEzulwiniSunHotel (currently

moth-balled) set inSwaziland’sbeautifulEzulwiniValley. TheGroup

recognises the importanceofwell-trained,efficientandmotivated

stafftoensurestandardsofexcellenceanditsoperatingphilosophy

istoofferfirstclassfacilitiesandserviceaswellasvalueformoney.

Contents

Profile

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fortheperiodended

6 Months 12Months31 December 30June

2016 2016 %E000’s E000’s Change

TRADING

Revenue 105 278 193335 -45,5%Operatingprofit/(loss) 6 196 6564 -5,6%Profit/(loss)beforetaxation 5 491 5189 5,8%Headlineearnings/(loss) 3 955 3698 6,9%

ORDINARYSHAREPERFORMANCE

Headlineearnings/(loss)pershare (cents) 55 53 3,8%Netassetvaluepershare (cents) 444 387 14,6%

FINANCIALRATIOS

Returntoequityshareholders % 12,7 13,7

MARKETSHAREPRICEAT31DECEMBER (cents) 600 600

Financial Highlights

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TRADING ENVIRONMENTSwaziland has been hit by a severe drought during 2016 together with a sharp decline in Southern African Customs Union (SACU) revenue. The decline in SACU revenue has put pressure on external as well as fiscal accounts. The negative impact of these economic shocks continues to bear its challenges and the situation is compounded by disposable income that remains constrained.

RESULTS For the six months ended 31 December 2016, the hospitality side of the business once again achieved satisfactory results whilst the gaming side of the business was down on the same period for the prior year. Although the southern African casino industry in general experienced a slowdown in business, the decline in gaming business in Swaziland was compounded by the difficult economic challenges facing Mozambique. Both Tables and Slots business reflected negative growth of 36% and 1.3% respectively whilst hospitality revenues increased by 15% on the previous year.

The growth in hospitality revenue for the six month period ended 31 December 2016, is attributed to an increase in international, corporate and non-campaign business which increased by 32%, 3% and 27% respectively, partly offset by a decline of 6% in group and convention business and 20% in sport and leisure business. The increase of 14% in food and beverage revenues is the direct result of an increase in room nights sold compounded by various festive season as well as outside catering functions held during this reporting period. The room occupancy increased by 1.6% points whilst the room rate was 16% up on the prior year.

Despite an increase in room nights sold and food covers served, the increase in direct costs was limited to 2%. Indirect costs were 2% up on last year mainly as a result of control measures. This resulted in an EBITDA of E9.2 million, an increase of 10% on the prior year.

Headline earning per share of 55.4 cents (2015: 60 cents) was achieved.

Capital expenditure of E5.8 million was incurred during the period, which included the refurbishment of the Convention Centre, slot machines, computer equipment, televisions, room safes, motor vehicles and kitchen equipment.

FUNDING At 31 December 2016 the Company had bank borrowings of E14.7 million, E2.5 million up on the previous year. Given the high level of borrowings and the difficult trading conditions the directors are reviewing the Company’s funding requirements on an ongoing basis.

CHANGE IN FINANCIAL YEAR ENDThe Group has changed its financial year end from 30 June to 31 December. The past six months’ is the first period reflecting the 31 December year end.

HUMAN RESOURCESDuring the six months ended 31 December 2016, 5 new staff members were appointed and there were 1 resignation, 4 dismissals and 2 retirements, resulting in a net decrease of 2 staff members. The head count currently stands at 207 (2015: 210) of which 204 (2015: 208) are Swazi citizens and 3 (2015: 2) are expatriates.

CORPORATE SOCIAL DEVELOPMENTBeing financially sustainable enables the Company to promote social responsibility by giving back to society and the environment. The Company actively supports the local communities by working with community members with the objective of promoting the upliftment and socio-economic development of these communities.

Chairman’s Review

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The Company ensures that it operates its gaming activities in a responsible manner and that there is strict adherence to the standards that have been implemented with regards to problem gambling in Swaziland.

CUSTOMER SERVICEThe employees are vital in ensuring compliance and adherence to the vision and values of the Company. Keeping the employees informed and motivated is essential as the Company depends on its people to achieve set objectives and the quality of their interaction with guests plays an important part in guest experience.

Training and development of the employees continued to receive high priority during the period with in excess of 6 070 hours spent on training. The majority of these training hours were focused on “Safety Health and Environmental Awareness”, “Management Development Program”, “Housekeeping Skills”, “Responsible Gambling Program” and “First Aid Courses”. The majority of the remaining hours spent on training related to training that was done in the work place with emphasis on employees’ leadership skills, kitchen hygiene and employee wellness.

FUTURE PROSPECTSFacing difficult economic challenges regionally, trading is expected to remain challenging on the casino side of the business. Overall a marginal revenue growth is expected in the year ahead. The Company will continue to explore new gaming markets and will focus on gaming promotions, innovative equipment and offerings as well as cost control. It is expected that the Company will continue to generate positive operating cash flows in the year ahead.

THE MINT ACQUISITIONSun International Limited (“Sun International”) entered into an agreement with Minor International Public Company Limited (“MINT”) that will result in Sun International’s effective shareholding in the Company decreasing from 50.6% to 10.12% with MINT acquiring an effective 40.48% interest in the Company (“the MINT acquisition”). Sun International and MINT will continue to hold their respective effective interest in the Company via St Vincent Investments Limited.

The MINT acquisition is subject to the fulfillment or waiver of certain conditions precedent including inter alia the finalisation of transaction documents, which remain outstanding.

APPRECIATIONThe Company has an experienced board whose members have the ability to provide direction to the Company going forward, a management team with a good understanding of the business and employees who are doing an excellent job.

I would like to thank the board, management and employees for their support and commitment in the achievement of the satisfactory results during the period under review. I appreciate that we face challenging economic conditions in Swaziland but believe in the Company’s ability to continue growing, thereby creating stakeholder value.

D D DlaminiChairman23 February 2017

Chairman’s Review

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Corporate Governance ReportOUR COMMITMENTSun International Limited (hereinafter referred to as “the Group”) is committed to and endorses the application of the principles recommended in the South African King Report on Governance for South Africa ( “King III”). The Group is in the process of reviewing the King IV principles and will be adopting these principles as appropriate.

The board is continuously addressing those areas which require improvement in line with best practice, thereby fostering a corporate culture which recognises transparency, independency, accountability, responsibility, discipline, fairness and social responsibility.

BOARD OF DIRECTORSThe Company has a unitary board structure comprising of executive and non-executive directors. The board is chaired by Mr D D Dlamini, an independent non-executive director. Details pertaining to the directors are set out on page 8. Appointments to the board are a matter for the board as a whole.

Independent professional advice and Company SecretaryThe directors may take independent professional advice, for the furtherance of their duties, if necessary, at the Company’s expense, subject to prior notification to the board chairman or the company secretary. The company secretary provides advice to the board on relevant statutory requirements and good corporate governance, as adopted by the Group. The appointment and removal of the company secretary is a matter for the board as a whole.

Conflicts of interestDirectors are required to inform the board of any conflicts or potential conflicts of interest which, they may have, in relation to particular items of business. Directors are required to recuse themselves from discussions or decisions on those matters where they have conflicts or potential conflicts of interest and the board may, if it deems appropriate, request a director to recuse himself/herself from the meeting for the duration of the matter under discussion.

Board meetingsA minimum of four board meetings are scheduled per financial year to consider and deal with, inter alia, strategic and key issues, financial issues, the review of quarterly operational performance, and any specific proposals for capital expenditure relative to the Company and the Group. The board met two times during the period under review.

Directors are requested to use their best endeavours to attend board meetings and to prepare thoroughly therefore and are expected to participate fully, frankly and constructively in discussions and to bring the benefit of their particular knowledge and expertise to the board table.

Board committeesThe board considered it appropriate to constitute the audit committee as an audit and risk committee on which non-executive directors play an active and fundamental role.

The audit and risk committee is composed of Dr VM Mhlanga (Chairman), Messrs D D Dlamini, S Z Simelane and D R Mokhobo.

The terms of reference of the committee were amended and approved by the board and have been adopted by the committee. The terms of reference of the committee are subject to review and amendment on an annual basis. The chairperson of the committee reports to the board on a bi-annual basis in terms of the committee’s terms of reference and copies of all committee minutes are circulated to the full board.

The board does not consider it appropriate to retain a remuneration or nomination committee as the Company. Any matters which would normally fall under the mandate of such committees from a remuneration and nomination perspective, are dealt with by the board.

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Corporate Governance ReportThe purpose of the audit and risk committee is to assist the board in discharging its fiduciary duties relating to the safeguarding of assets, the operation of adequate systems, control processes and the preparation of accurate financial reporting and statements in compliance with all applicable legal requirements and accounting standards, as well as the effectiveness, integrity and reliability of the risk management processes.

The audit and risk committee operates under board-approved terms. Two meetings are scheduled annually. The committee met once during the period under review.

RISK MANAGEMENT, ACCOUNTABILITY AND AUDITRisk managementThe Group has adopted the following risk management policy, which through a process of communication and application to all business units has been successfully embedded throughout the Group.

Directors of the Group have committed the Company to a process of risk management that is aligned to the principles of King III. The features of this process are outlined in the Company’s risk policy framework. All Group business units, divisions and processes are subject to the risk policy framework.

Effective risk management is imperative to a Company operating within the risk profile. The realisation of the Group’s business strategy depends on being able to take calculated risks in a way that does not jeopardise the direct interests of stakeholders. Sound management of risk enables the Group to anticipate and respond to changes in the business environment, as well as take informed decisions under conditions of uncertainty.

An enterprise-wide approach to risk management has been adopted by the Group, which means that every key risk in each part of the Group is included in a structured and systematic process of risk management. All key risks are managed within a unitary framework that is aligned to the Group’s corporate governance responsibilities.

Risk management processes are embedded in the Group’s business systems and processes, so that responses to risk remain current and dynamic. All key risks associated with major change and significant actions by the Group also fall within the processes of risk management. The nature of risk profile demands that the Group adopts a prudent approach to corporate risk, and decisions around risk tolerance and risk mitigation reflect this. Nonetheless, it is not the intention to slow down the Group’s growth with inappropriate bureaucracy. Controls and risk interventions are chosen on the basis that they increase the likelihood that the Group will fulfill their intentions to stakeholders.

Every employee has a part to play in this important endeavour and in achieving these aims.

The Group pursues strategies aimed at maximising long-term shareholder value. The risks to which the Group’s existing businesses are exposed are continuously identified and mitigated in terms of a Group process that allocates responsibility, determines the action to be taken and monitors compliance with that action. This involves managing existing businesses in a changing and challenging environment as well as pursuing new business opportunities. Any new business opportunity which exposes the Group to risk results in a risk analysis being carried out by management as a pre-requisite to board consideration and approval. This ensures the overall level of risk is assessed in relation to the potential returns.

Internal auditThe Group internal audit department is designed to serve management and the board through independent evaluations and examinations of the Group’s activities and resultant business risks, including gaming compliance and compliance with the Responsible Gambling Programme.

The internal audit department is designed to respond to management’s needs while maintaining an appropriate degree of independence to render impartial and unbiased judgments in performing its services. The scope of the internal audit function includes performing independent evaluations of the adequacy and effectiveness of Group companies’ controls, financial reporting mechanisms and records, information systems and operations, reporting on the adequacy of these controls and providing additional assurance regarding the safeguarding

6

of assets and financial information. Internal audit is also responsible for monitoring and evaluating operating procedures and processes through, inter alia, gaming compliance, Responsible Gambling Programme compliance, operational safety and health and environmental audits. Risk assessment is co-ordinated with the board’s assessment of risk through interaction between internal audit, the Company’s audit and Group’s risk committees which also minimises duplication of effort.

External auditThe external auditors provide the board with their independent observations and suggestions on the Group’s internal controls, as well as suggestions for the improvement of the financial reporting and operations of the business.

The external auditors’ audit approach is risk-based, requiring them to continually identify and assess risks throughout the audit processes. The external auditors are reliant on the operating procedures and place emphasis on understanding how management obtains comfort that the business is generating reliable information and then evaluating and validating the basis of this assurance. This approach aligns the Company’s methodology with the organisational structures and risk management processes.

There is close co-operation between internal and external audit and reliance is placed, where possible, on the work of internal audit, therefore minimising the duplication of effort. The external auditors attend all shareholder meetings of the Company.

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

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

Continual review and reporting structures enhance the control environments. Nothing has come to the attention of the board to indicate that a material breakdown in the controls within the Company has occurred during the period under review.

HIV/AIDSThe Group has comprehensive programmes aimed at educating staff (and communities) on the risks related to HIV/AIDS and to assist in reducing the incidence thereof.

COMMUNICATIONSThe board strives to provide its shareholders, employees, government regulatory bodies, and the media with relevant and accurate information, promptly and transparently. In this regard, the regulatory requirements relating to the dissemination of information are strictly observed.

CODE OF ETHICSThe Group has adopted an internal code of ethics, which commits management and employees to the highest ethical standards of conduct. The code articulates the Group’s commitment to its stakeholders, comprising its shareholders, customers, suppliers and the broader community, as well as policies and guidelines regarding the personal conduct of management, officials and other employees.

Corporate Governance Report

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Group Value Added Statements6 Months 12 Months

31 December 30 June2016 2016

E000’s % E000’s %

Revenue 105 278 193 335 Income from investments 51 103 Value generated 105 329 193 438 Paid to Suppliers for materials and services (66 995) (127 034)Management fees (4 135) (6 060)

Value added and total wealth created 34 199 100 60 344 100

Distributed as follows:

Employees of Swazispa Holdings Limited - Salaries & Wages (23 324) 68 (44 686) 74 Less: PAYE 3 440 (10) 5 292 (9)

(19 884) 58 (39 394) 65

Government of Swaziland

Income tax (normal and deferred) (1 536) 4 (1 491) 2 PAYE (3 440) 10 (5 292) 9 Casino levies (1 647) 5 (3 323) 6 VAT and other levies - - - - Withholding tax on dividends - - - -

(6 623) 19 (10 106) 17

Shareholders

Dividends paid - - - - Interest paid (756) 2 (1 478) 2

(756) 2 (1 478) 2

Reinvested in group to maintain and develop operations

Depreciation and amortisation (2 981) 9 (5 668) 9 Retained earnings (3 955) 12 (3 698) 6

(6 936) 21 (9 366) 15

Total value distributed (34 199) 100 (60 344) 100

Value added is a measure of the wealth the Group has been able to create in its operations by “adding value” to the cost of raw materials, products and services purchased. The statement shows the total wealth created and how it was shared by employees and other parties who contributed to the Group’s operations, taking into account the amount retained and reinvested in the Group for the replacement of assets and the further development of operations.

for the period ended

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Directorate, Administration and Management

Board Of DirectorsExecutive

DR Mokhobo

RC Hawkins

Non-Executive

DD Dlamini (Chairman)

Prince Masitsela

Princess Ngebeti

SZ Simelane

VM Mhlanga

AT Ngcobo

ManagementArea General Manager

LE Rossouw

Regional Financial Manager

GJ Richter

Gaming Manager

J De Lange

Human Resources Manager

M Ntsoelikane

Operations Manager – Lugogo Sun

D Mavuso

Operations Manager – Royal Swazi Spa

P V Vilakati

Marketing Manager

B Mavuso

Maintenance Manager

S Zvinairo

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Five Year Financial ReviewStatistics


31 Dec 30 June 30 June 30 June 30 June

2016 2016 2015 2014 2013

ORDINARY SHARE PERFORMANCE

Shares in issue 000’s 6 994 6 994 6 994 6 994 6 994

Headline earnings / (loss) per share cents 55 53 19 59 37

Dividends per share cents - - - - -

Dividend cover times - - - - -

Net asset value per share cents 444 387 334 316 257

PROFITABILITY AND ASSET MANAGEMENT

Operating profit / (loss) margin % 6 3 2 4 2

Effective tax rate % 28 29 31 29 (18)

Return / (loss) on net assets % 18 19 8 26 12

Return / (loss) to equity shareholders % 13 14 6 19 9

LIQUIDITY AND LEVERAGE

Cash generated / (absorb) byoperations E000’s 15 602 7 038 9 364 12 336 10 320

Total liabilities to total shareholders’ funds % 155 185 196 212 322

Total shareholders’ funds to total assets % 39 35 34 32 24

Current ratio :1 0,6 0,5 0,4 0,4 0,4

EMPLOYEES

Number of employees at 31 December 207 209 214 208 199

Revenue per employee E000’s 509 925 807 825 808

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6 Months 12 Months 12 Months 12 Months 12 Months31 Dec 30 June 30 June 30 June 30 June

2016 2016 2015 2014 2013E000’s E000’s E000’s E000’s E000’s

Revenue 105 278 193 335 172 754 171 696 160 837

Operating profit / (loss) 6 196 6 564 3 257 7 296 3 826 Interest income 51 103 91 66 24 Interest expense (756) (1 478) (1 461) (1 568) (1 680)

Profit / (loss) before taxation 5 491 5 189 1 887 5 794 2 170 Taxation (1 536) (1 491) (582) (1 681) 393

Profit / (loss) for the period 3 955 3 698 1 305 4 113 2 563 Minority interest - - - - -

Total comprehensive income / (loss) 3 955 3 698 1 305 4 113 2 563

Five Year Financial Review Group Consolidated Statements of

Comprehensive Income

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Five Year Financial Review Group Consolidated Statements of

Financial Positionfor the period ended

31 December 30 June 30 June 30 June 30 June2016 2016 2015 2014 2013

E000’s E000’s E000’s E000’s E000’s

ASSETSNon current assetsProperty, plant and equipment 54 455 51 383 49 908 46 741 49 808 Deferred tax asset 51 1 587 3 078 3 659 5 341

54 506 52 970 52 986 50 400 55 149

Current assetsInventory 1 626 1 633 1 321 1 133 1 049 Trade and other receivable 10 074 12 229 6 447 8 568 9 733 Cash and cash equivalents 11 302 8 643 6 605 6 933 8 071 Taxation prepaid 1 728 1 728 1 728 1 728 1 728

24 730 24 233 16 101 18 362 20 581 Total assets 79 236 77 203 69 087 68 762 75 730

EQUITY AND LIABILITIESCapital and reserves attributable to:Equity holders of the parent 31 028 27 073 23 375 22 070 17 957 Minority interest - - - - -

31 028 27 073 23 375 22 070 17 957

Non current liabilitiesDeferred taxation - - - - - Non current liabilities 4 582 4 696 4 193 3 946 3 734 Borrowings - 471 2 236 - 225

4 582 5 167 6 429 3 946 3 959

Current liabilitiesBorrowings 14 717 19 921 13 677 15 009 23 244 Trade and other payables 28 909 25 042 25 606 27 737 30 570 Taxation payable - - - - -

43 626 44 963 39 283 42 746 53 814 Total liabilities 48 208 50 130 45 712 46 692 57 773 Total equity and liabilities 79 236 77 203 69 087 68 762 75 730

Note: - the above figures have been restated where necessary to take account of changes in accounting policies and so as to provide a meaningful comparison over five years

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DefinitionsOperating Profit MarginOperating profit expressed as a percentage of revenue.

Interest CoverOperating profits (including interest income) divided by interest expense.

Effective Tax RateTaxation per the income statement expressed as a percentage of profit before taxation.

Headline Earnings Per ShareHeadline earnings attributable to ordinary shareholders divided by the number of shares in issue during the year.

Dividend CoverHeadline earnings attributable to ordinary shareholders divided by dividends paid and declared during the year.

Net AssetsTotal assets less total liabilities.

Net Asset Value Per ShareShareholders’ equity divided by the number of ordinary shares in issue at the end of the year.

Current RatioCurrent assets divided by current liabilities.

Return on Net AssetsThe sum of operating profits, interest income and share of associate companies’ profits expressed as a percentage of average net assets excluding interest bearing liabilities.

Return to Equity ShareholdersHeadline earnings attributable to ordinary shareholders expressed as a percentage of average shareholders equity.

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Statement of Responsibilityby the Directors

Financial Statements The Company and Group consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards (“IFRS”) and in the manner required by the Swaziland Companies Act, 2009. They are based on appropriate accounting policies, which have been consistently applied and which are supported by reasonable and prudent judgements and estimates.

The directors of the Company are responsible for the preparation of consolidated financial statements that fairly present the state of affairs and the results of the Company and the Group. The external auditors are responsible for independently auditing and reporting on these consolidated financial statements, in conformity with International Standards on Auditing.

Internal Controls The board of directors is responsible for the Group’s systems of internal control. These systems are designed to provide reasonable, but not absolute assurance as to the integrity and reliability of the financial statements and to safeguard and maintain accountability of its assets and to detect and minimise significant fraud, potential liability, loss and material misstatement while complying with applicable laws and regulations. The controls concentrate on critical risk areas. These areas are identified by operational management and are monitored by the directors. All controls relating to the critical risk areas are closely monitored and are subject to internal audit. Nothing has come to the attention of the directors to indicate that a material breakdown in the controls within the Group has occurred during the year.

Going Concern The directors have recorded that they have reasonable expectation that the Group has adequate resources and the ability to continue in operation for the foreseeable future. For these reasons, the financial statements have been prepared on a going concern basis.

31 December 2016

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Report on Audit Committee Functions Following agreement with the Swazispa Holdings Limited audit committee, the Swazispa Holdings Limited audit committee has agreed to perform the functions required under the Swaziland Companies Act, 2009, (“the Act”) on behalf of the company.

Based on confirmation received from the Swazispa Holdings Limited audit committee describing how it has performed the audit committee functions in respect of the financial year ended 31 December 2016, the company is satisfied that the Swazispa Holdings Limited audit committee has:

1. Nominated for appointment as auditor of the company a registered auditor who, in the opinion of the Swazispa Holdings Limited audit committee, is independent of the company;

2. Determined the fees to be paid to the auditor and the auditor’s terms of engagement;

3. Ensured that the appointment of the auditor complies with the Act and any other legislation relating to the appointment of auditors;

4. Determined the nature and extent of any non-audit services which the auditor has provided to the company;

5. Pre-approved any proposed contract with the auditor for the provision of non-audit services to the company.

The Swazispa Holdings Limited audit committee has also confirmed that it has not received any complaints (whether from within or outside the company) relating either to the accounting practices and internal audit of the company or to the content or auditing of its financial statements, or to any related matter and that it has not been requested to perform any other functions by the board of the company.

for the period ended 31 December 2016

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Our opinion

In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Swazispa Holdings Limited (the Company) and its subsidiaries (together the Group) as at 31 December 2016, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Swaziland Companies Act 2009.

What we have audited

Swazispa Holdings Limited consolidated and separate financial statements set out on pages 20 to 57 comprise:• the consolidated and separated statements of financial position as at 31 December 2016;• the consolidated and separated statements of comprehensive income for the year then ended;• the consolidated and separated statements of changes in equity for the year then ended;• the consolidated and separated statements of cash flows for the year then ended; and• the notes to the financial statements, which include a summary of significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordance with the requirement of the International Federation of Accountants’ (IFAC) Code of Ethics for Professional Accountants. In some instances our internal rules are more stringent than the IFAC Code of Ethics where we believe it is necessary to further protect our independence and consequently the interests of our clients. Locally the Swaziland Institute of Accountants (SIA) has adopted IFAC’s Code of Ethics. Where our clients operate in jurisdictions that enforce more stringent auditor independence requirements than required by IFAC, these requirements are followed.

Independent Auditor’s Report to the Shareholders of Swazispa Holdings Limited

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Our audit approachOverview

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated and separate financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Overall group materiality

Overall group materiality: E 270 006, which represents 5% of the consolidated profit before tax.

Group audit scope

We audited all four components of the Group.

Key audit matters

Post-retirement Medical Aid Benefits

Materiality

Group scoping

Key audit

matters

Overall group materiality

E 270 006

How we determined it 5% of the consolidated profit before tax

Rationale for the materiality benchmark applied

We chose profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is a generally accepted benchmark. We chose 5% which is consistent with quantitative materiality thresholds used for profit- oriented companies in the sector.

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How we tailored our group audit scope

We audited all four components of the Group. These components are all incorporated and located in Swaziland. They are all managed by same management team. A full scope statutory audit was performed on all four components because separate audit opinions are issued for all components.

Key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

The following key audit matter relates to the consolidated financial statements. We have determined that there are no key audit matters in respect of the separate financial statements to report.

Key audit matter How our audit addressed the key audit matter

Post-retirement Medical Aid Benefits Employee benefits liabilities are recognised for employees who joined the company before July 2003. This liability relates for post-retirement medical benefits. Employees are eligible for benefits on retirement based on the number of years of service. The methods of accounting and valuation are similar to those used for defined benefit schemes. An actuarial valuation to determine the liability is performed annually. The disclosure of this liability is on Note 16.1 –Post-retirement medical aid benefits. We considered this matter to be of audit significance to our audit because of the high level of estimates, assumptions and judgements involved in performing an actuarial valuation.

We made used of our actuarial valuation expertise and performed the following procedures:

• We obtained the membership data used in the valuation and agreed it to the payroll register.

• We inspected the valuation noted that the Projected Unit Credit Method was used.

• We inspected the valuation report and noted that the correct plan terms were used.

• We inspected the valuation method used in the current year and compared it with the prior year method and noted that the valuation method used for the two years was consistent.

• We inspected the valuation and noted that discounting was applied to the whole post-employment benefit as opposed to a portion.

Based on the result of our audit procedures we noted that management’s estimates, assumptions and judgements fell within reasonable ranges.

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Other informationThe directors are responsible for the other information. The other information comprises the Report on the audit committee functions and the Report of the Directors as required by the Swaziland Companies Act 2009, which we obtained prior to the date of this auditor’s report. Other information does not include the consolidated and separate financial statements and our auditor’s report thereon.

Our opinion on the consolidated and separate financial statements does not cover the other information and we do not and will not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the consolidated and separate financial statementsThe directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Swaziland Companies Act 2009, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and/or the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated and separate financial statementsOur objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.


19

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group and / or Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirementsWe have a professional duty as auditors of the Company to report to management and those charged with governance, in terms of our Swaziland Accountants Act 1985, all material irregularities that become known to us during the course of our audit and as such the team is well aware of the definition of a material irregularity, how to document a material irregularity, processes involved in reporting a material irregularity and consultations required when necessary.

PricewaterhouseCoopersPartner: Theo MasonChartered Accountant (Swaziland)Mbabane23 February 2017


20

Report of the DirectorsThe directors present their report, which forms part of the audited financial statements of the Group and Company for the period ended 31 December 2016.

PRINCIPAL ACTIVITY OF THE COMPANY

The principal activity of the Company, which is incorporated in the Kingdom of Swaziland, during the period under review was an investment holding company. The Group during the period under review operated two hotels, a casino and entertainment facilities situated in the Ezulwini Valley.

CHANGE IN FINANCIAL YEAR END

The Group has changed its financial year end from 30 June to 31 December. This is the first period reflecting the 31 December year end and is therefore only for 6 months. The comparative disclosures are for a 12 month period.

RESULTS AND DIVIDEND

The results for the period are fully disclosed in the attached financial statements.

Group profit before taxation for the period under review totalled E5.4 million (for the year ended 30 June 2016: E5.1 million) whilst profits attributable to ordinary shareholders amounted to E4 million (for the year ended 30 June 2016: E3.7 million) or 57 cents per share (30 June 2016: 53 cents per share). Headline earnings per share were 55 cents per share (30 June 2016: 53 cents per share).

Dividends totalling nil cents per share (for the year ended 30 June 2016: nil cents per share) have been declared by the directors in respect of the period under review as follows: Interim, for the year ended 30 June 2016, declared on 26 February 2016 0 centsFinal, for the year ended 30 June 2016, declared on 17 August 2016 0 centsFinal, for the period ended 31 December 2016, declared on 23 February 2017 0 cents

AUTHORISED AND ISSUED SHARE CAPITAL

Details of the authorised and issued share capital are set out in note 13 to the annual financial statements.

DIRECTORS

The directors of the Company holding office during the period and at the date of this report were as follows:

Executive Non executiveD R Mokhobo D D Dlamini - Chairman (Independent)R C Hawkins Prince Masitsela Princess Ngebeti S Z Simelane V M Mhlanga A T Ngcobo

As at 31 December 2016 the directors of the Company beneficially held, directly and indirectly, a total of 7 708 (30 June 2016: 7 708) shares in the issued share capital of the Company. No material changes have taken place between the end of the financial year and the date of this report.

No director had a material interest in any contract with any Group company during the year under review.


21

Report of the DirectorsSECRETARY

G J Richter

REGISTERED OFFICE POSTAL ADDRESS

Umkhiwa House Private Bag195 Kal Grant Street EzulwiniMbabane H106H100 SwazilandSwaziland

PHYSICAL ADDRESS

Old Mbabane / Manzini Main Road Ezulwini Swaziland

HOLDING COMPANY

The Company is a subsidiary of Sun Intenational Limited, a company incorporated in the Republic of South Africa.

AUDITORS

PricewaterhouseCoopers RHUS Office Park Kal Grant Street P O Box 569 Mbabane H100 Swaziland

PricewaterhouseCoopers will continue in office in accordance with the Swaziland Companies Act, 2009.

SUBSEQUENT EVENTS

Sun International Limited (“Sun International”) has entered into an agreement with Minor International Public Company Limited (“MINT”) that will result in Sun International’s effective shareholding in Swazispa decreasing from 50.6% to 10.12% with MINT acquiring an effective 40.48% interest in Swazispa (“the MINT acquisition”). Sun International and MINT will continue to hold their respective effective interest in Swazispa via St Vincent Investments Limited. The MINT acquisition is subject to the fulfillment or waiver of certain condition precedents including inter alia the finalisation of transaction documents and regulatory approvals.

LEVEL OF ASSURANCE

The financial statements have been audited in compliance with the applicable requirements of the Swaziland Companies Act, 2009.

PREPARER

The financial statements were independently prepared by Cobus Richter (Regional Financial Manager).

PUBLISHED

The annual financial statements were published on 22 March 2017.


22

Accounting PoliciesThe principal accounting policies adopted in the preparation of these financial statements are set out below:

BASIS OF PREPARATION

The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. The policies used in preparing the financial statements are consistent with those of the previous year except as indicated in the paragraph on “Accounting policy developments”.

Preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. More detail on the estimates and assumptions are included under the policy dealing with “Critical accounting estimates and judgements”. Actual results may differ from those estimates.

GROUP ACCOUNTING

Subsidiaries

Subsidiaries, which are those companies in which the Group has an interest of more than half of the voting rights or otherwise has power to exercise control over the operations, are consolidated. Subsidiaries are consolidated from the date on which control is transferred to the Group and are no longer consolidated from the date that control ceases. All inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless costs cannot be recovered. Where necessary the accounting policies for subsidiaries have been changed to ensure consistency with policies adopted by the Group.

FOREIGN CURRENCIES

Transactions denominated in foreign currencies are translated at the rate of exchange ruling on the transaction date. Monetary items denominated in foreign currencies are translated at the rate of exchange ruling at the statement of financial position date. Gains or losses arising on translation are credited to or charged against income. The functional and reporting currency is Emalangeni.

PROPERTY PLANT AND EQUIPMENT

Freehold land is stated at cost and not depreciated.

All other items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is recognised so as to write off the cost or valuation of assets (other than freehold land) less the residual values over their useful life, using the straight-line method. The principal useful lives over which the assets are depreciated are as follows: Freehold buildings 10 to 50 yearsInfrastructure 5 to 50 yearsPlant and machinery 10 to 25 yearsEquipment 4 to 15 yearsFurniture and fittings 5 to 10 yearsVehicles 4 to 15 years


23

Accounting PoliciesPROPERTY PLANT AND EQUIPMENT (continued)

The assets’ residual values and useful lives are reviewed annually, and adjusted, if appropriate, at each statements of financial date.

Operating equipment (which includes uniforms, casino chips, kitchen utensils, crockery, cutlery and linen) is recognised as an expense based on usage. The period of usage depends on the nature of the operating equipment and varies between one to three years.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the statements of comprehensive income.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as the owned assets or, where shorter, the term of the relevant lease.

When the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

Costs arising subsequent to the acquisition of an asset are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is then derecognised. All other repairs and maintenance costs are charged to the statements of comprehensive income during the financial period in which they are incurred.

Borrowing costs and certain direct costs relating to major capital projects are capitalised during the period of development or construction.

IMPAIRMENT OF NON-FINANCIAL ASSETS

Assets that have an indefinite useful life that are not subject to depreciation or amortisation are tested annually for impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (‘cash-generating units’).

INVENTORY

Inventory comprises of merchandise, consumables and food and beverage stock. Merchandise and consumables is valued at the lower of cost and net realisable value on a weighted average basis. Food and beverage stock is valued at the lower of cost and net realisable value on a weighted average basis. Net realisable value is the estimated selling price in the ordinary course of business less any costs necessary to make the sale.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents are carried in the statements of financial position at face value. Cash and cash equivalents comprise cash on hand, deposits held on call with banks. In the statements of financial position and statements of cash flows bank overdrafts are included in borrowings.


24

Accounting PoliciesCURRENT AND DEFERRED TAX

The tax expense for the period comprises current and deferred tax. Tax is recognised in the statements of comprehensive income, except to the extent that it relates to items recognised directly in equity.

Deferred tax is provided in full, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes.

Current tax and deferred tax are calculated on the basis of the tax laws enacted or substantively enacted at the statements of financial position date.

Deferred tax assets relating to the carry forward of unused tax losses are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised in the foreseeable future.

LEASES

Leases of assets where a Group company assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at commencement and are measured at the lower of the fair value of the leased asset and present value of minimum lease payment. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The corresponding lease obligations, net of finance charges, are included in borrowings. The interest element of the lease payment is charged to the statements of comprehensive income over the lease period. The assets acquired under finance leasing contracts are depreciated over the shorter of the useful life of the asset, or the lease period. Where a lease has an option to be renewed, the renewal period is considered when the period over which the asset will be depreciated is determined.

Leases of assets under which substantially all the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the statements of comprehensive income on a straight-line basis over the period of the lease.

When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of a penalty is recognised as an expense in the period in which termination takes place.

BORROWINGS

Borrowings, inclusive of transaction costs, are recognised initially at fair value. Borrowings are subsequently stated at amortised cost using the effective interest rate method; any difference between proceeds and the redemption value is recognised in the statements of comprehensive income over the period of the borrowing using the effective interest rate method.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the statements of financial position date.

REVENUE RECOGNITION

Revenue comprises the fair value of the consideration received or receivable from the sale of goods and services in the ordinary course of the Company’s activities. Revenue is recognised when it is probable that the economic benefits associated with a transaction will flow to the Company and the amount of revenue, and associated costs incurred or to be incurred can be measured reliably.


25

Accounting PoliciesREVENUE RECOGNITION (continued)

Revenue includes income derived from hotel trading, casino winnings, entertainment revenues, restaurant revenues, other fees, dividend income, rental income and the invoiced value of goods and services sold less returns and allowances. Taxes levied on casino winnings are included in revenue and treated as overhead expenses as these are borne by the Group and not customers. Value Added Tax (VAT) on revenue transactions (excluding casino winnings) is considered to be a tax collected as an agent on behalf of the revenue authorities and is excluded from revenue. Revenue is recognised on the accrual basis.

Customer loyalty points are provided against revenue when points are earned.

PROVISIONS

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation.

EMPLOYEE BENEFITS

Defined benefit scheme

The Group operates one defined benefit plan and a number of defined contribution plans, the assets of which are generally held in separate trustee-administered funds. The plans are generally funded by payments from employees and by the relevant Group companies, taking account of the recommendations of independent qualified actuaries.

For the defined benefit plan, pension costs are assessed using the projected unit credit method. The cost of providing pensions is charged to profit or loss so as to spread the regular cost over the service lives of employees in accordance with the advice of the actuaries who carry out a full valuation of the plan every three years. The pension obligation is measured at the present value of the estimated future cash outflows using interest rates of government securities, which have terms to maturity approximating the term of the related liability. Remeasurements of the net defined liability is recognised in other comprehensive income and comprise of actuarial gains and losses and the effect of changes in the asset ceiling.

Defined contribution scheme

The Group’s contributions to defined contribution plans are charged to the statements of comprehensive income in the period to which the contributions relate. The defined contribution plans are provident funds under which the Group pays fixed contributions.

Post-retirement medical aid contributions

The Group contributes towards the post retirement medical aid contributions of eligible employees. The method of accounting and frequency of valuations are similar to that used for defined benefit schemes. The actuarial valuation to determine the liability is performed annually. Remeasurement of the net defined liability is recognised in other comprehensive income and comprise of actuarial gains and losses.


26

Accounting PoliciesEMPLOYEE BENEFITS (continued)

Long service awards

The Group recognises long service after five years of continuous service. The Group then pays its employees a long service benefit after initial ten years of service and then each five year period of continuous service. The benefit is paid in the month the employee reaches the milestone. The method of accounting and frequency of valuation are similar to those under the defined benefit schemes. The actuarial valuation to determine the liability is performed annually. Remeasurement of the net defined liability is recognised profit or loss.

Farewell gifts

The Group pays for a farewell gift and function for employees, with a minimum of a ten year service with the Group, who leave as a result of a voluntary resignation or retirement. The value of the gift is calculated on a formula based on years of service and monthly base rate and is subject to tax. The method of accounting and frequency of valuation are similar to those under the defined benefit schemes. The actuarial valuation to determine the liability is performed annually. Remeasurement of the net defined liability is recognised profit or loss.

SHARE CAPITAL

Ordinary shares are classified as equity.

External costs directly attributable to the issue of new shares, other than on a business combination, are shown as a deduction from the proceeds, net of income taxes, in equity.

INVESTMENT IN SUBSIDIARIES

Investment in subsidiaries are carried at cost less accumulated impairment losses in the entity’s balance sheet. On disposal of investment in subsidiaries, the difference between disposal proceeds and the carrying amounts of the investment are recognized in profit or loss.

FINANCIAL INSTRUMENTS

Financial instruments carried at statements of financial position date include loans and receivables, accounts receivable, cash and cash equivalents, borrowings and accounts payable and accruals.

Financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition financial instruments are measured as described below.

Financial assets

The classification of financial assets depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. The financial assets carried at statements of financial position date are classified as “Loans and receivables”.

All purchases and sales of financial assets are recognised on the trade date, which is the date that the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.


27

Accounting PoliciesFINANCIAL INSTRUMENTS (continued)

Financial assets (continued)

The Group assesses at each statements of financial position date whether there is objective evidence that a financial asset or a group of financial assets is impaired. A provision for impairment is established where there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the loans or receivables. Significant financial difficulties of the counterparty, and default or delinquency in payments are considered indicators that the loan or receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statements of comprehensive income. When a loan or receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited in the statements of comprehensive income.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are classified as non-current assets unless receipt is anticipated within 12 months in which case the amounts are included in current assets. The Group’s loans and receivables comprise ‘Loans and receivables’, ‘Accounts receivable’ (excluding VAT and prepayments) and ‘Cash and cash equivalents’.

Subsequent to initial recognition, loans and receivables are carried at amortised cost using the effective interest method, less any impairment.

Financial liabilities

The Group’s financial liabilities at statement of financial position date include ‘Borrowings’ and ‘Accounts payable and accruals’ (excluding VAT and employee related payables). These financial liabilities are subsequently measured at amortised cost using the effective interest method. Financial liabilities are included in current liabilities unless the company has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.

The Group will remove the financial liability (or a part of a financial liability) from its statement of financial position when, and only when, it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expires.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. Actual results may differ from these estimates.


28

Accounting PoliciesCRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

Asset useful lives and residual values

Property, plant and equipment is depreciated over its useful life taking into account residual values where appropriate. The actual useful lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing asset useful lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

Impairment of assets

Property, plant and equipment and intangible assets are considered for impairment if there is a reason to believe that an impairment may be necessary. Factors taken into consideration in reaching such a decision include the economic viability of the asset itself and where it is a component of a larger economic unit, the viability of that unit itself.

Future cash flows expected to be generated by the assets are projected, taking into account market conditions and the expected useful lives of the assets. The present value of these cash flows, determined using an appropriate discount rate, is compared to the current net asset value and, if lower, the assets are impaired to the present value. If the information to project future cash flows is not available or could not be reliably established, management uses the best alternative information available to estimate a possible impairment.

Post retirement benefits

The present value of the post retirement benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for post retirement benefits include the discount rate. Any changes in these assumptions will impact the carrying amount of post retirement benefit obligations.

The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the post retirement benefit obligations.

In determining the appropriate discount rate, the company considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related post retirement benefit obligation.

ACCOUNTING POLICY DEVELOPMENTS

Accounting policy developments include new standards issued, amendments to standards, and interpretations issued on current standards.

Standards and amendments issued but not effective in 2016

The Group has evaluated the effect of all new standards, amendments and interpretations that have been issued but which are not yet effective.

Based on the evaluation, management does not expect these standards, amendments and interpretations to have a significant impact on the company’s results and disclosures. The expected implications of applicable standards, amendments and interpretations are dealt with below.


29

Accounting PoliciesACCOUNTING POLICY DEVELOPMENTS (continued)

Amendment to IAS 7 “Cash flow statements”

The amendment requires additional disclosure that will enable users of financial statements to evaluate changes in liabilities arising from financing activities. This will help users better understand changes in an entity’s debt.

The effective date of this amendment is 1 January 2017.

Management is currently considering the effect of this change.

Amendment to IAS 12 “Income taxes”

Amendments were issued to clarify the requirements for recognising deferred tax assets on unrealised losses. The amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base. They also clarify certain other aspects of accounting for deferred tax assets.

The effective date of this amendment is 1 January 2017.

Management is currently considering the effect of this change.

IFRS 15 “Revenue from contracts with customers”

The Financial Accounting Standards Board and the International Accounting Standards Board (IASB) issued their long awaited converged standard on revenue recognition on 29 May 2014. It is a single, comprehensive revenue recognition model for all contracts with customers to achieve greater consistency in the recognition and presentation of revenue. Revenue is recognised based on the satisfaction of performance obligations, which occurs when control of goods or services transfers to a customer.

The effective date of this IFRS is 1 January 2018.

Management is currently considering the effect of the change.

IFRS 9 “Financial Instruments” and amendments to IFRS 9

This IFRS is part of the IASB’s project to replace IAS 39 “Financial Instruments Recognition and Measurement”. IFRS 9 addresses classification and measurement of financial assets and replaces the multiple classification and measurement models in IAS 39 with a single model that has only two classification categories: amortised cost and fair value.

The IASB has amended IFRS 9 to align hedge accounting more closely with an entity’s risk management. The revised standard also establishes a more principles-based approach to hedge accounting and addresses inconsistencies and weaknesses in the current IAS 39.

Early adoption of the above requirements has specific transitional rules that need to be followed. Entities can elect to apply IFRS 9 for any of the following:

- Their own credit risk requirements for financial liabilities;- Classification and measurement requirements for financial assets and financial liabilities;- The full current version of IFRS 9


30

Accounting PoliciesACCOUNTING POLICY DEVELOPMENTS (continued)

IFRS 9 “Financial Instruments” and amendments to IFRS 9 (continued)

The transitional provisions described above are likely to change once the IASB completes all phases of IFRS 9.


Management is currently considering the effects of these changes.

IFRS 16 “Leases”

This new standard introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of a low value (such as laptops and office furniture). A lessee is required to recognise a right-of-use asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. As a consequence, as lessee recognises depreciation of the right-to-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion.

Apart from the changes mentioned above, further implications of the new standard will be changes to key financial ratios such as performance and leverage ratios.



31

Statement of Comprehensive Incomefor the period ended 31 December 2016

Group Company31 December 30 June 31 December 30 June

Notes 2016 2016 2016 2016E000’s E000’s E000’s E000’s

Revenue 105 278 193 335 - -

Casino 38 484 77 124 - -Rooms 30 861 53 383 - -Food and beverage 32 554 56 419 - -Other 3 379 6 409 - -

Employee costs 1 (23 324) (44 686) - -Levies on casino revenues (1 647) (3 323) - -Depreciation and amortisation (2 981) (5 668) - -Promotional and marketing costs (9 521) (18 352) - -Consumables and services (33 546) (62 581) - -Property costs (13 268) (25 088) - -Management fees (4 135) (6 059) - -Other operational costs (10 751) (21 125) -

Operating profit 2 6 105 6 453 - -Finance income 3 51 103 - -Finance expense 4 (756) (1 478) - -

Profit before tax 5 400 5 078 - -Tax 5 (1 511) (1 460) - -Profit for the year 3 889 3 618 - -

Other comprehensive income: Items that will not be reclassified to profit or lossRemeasurements of post employment benefit obligations 16 91 111Tax on remeasurements of post employment benefit obligations 5 (25) (31)

Total comprehensive income 3 955 3 698

Attributable to:Equity holders of the parent 3 955 3 698Minority interests - -

3 955 3 698Earnings per share (cents) Basic and diluted 6 57 53

The notes on pages 35 to 57 are an integral part of these financial statements.

32

Statement of Financial Positionat as December 2016


Notes 2016 2016 2016 2016E000’s E000’s E000’s E000’s

ASSETSNon current assetsProperty, plant and equipment 7 54 455 51 383 - -Investment in subsidiaries 8 - - 3 086 3 086Deferred tax asset 13 51 1 587 - -Other non current assets 9 - - 6 347 6 347

54 506 52 970 9 433 9 433Current assetsInventory 10 1 626 1 633 - -Accounts receivable 11 10 074 12 229 - -Cash and cash equivalents 17.5 11 302 8 643 - -Tax prepaid 17.3 1 728 1 728 - -

24 730 24 233 - -Total assets 79 236 77 203 9 433 9 433

EQUITY AND LIABILITIESCapital and reserves attributableto equity holders of the parentShare capital 12 3 497 3 497 3 497 3 497Share premium 12 1 390 1 390 1 390 1 390Retained earnings 26 141 22 186 4 519 4 519Total equity attributable toequity holders of the parent 31 028 27 073 9 406 9 406Minority interest - - - -Total equity 31 028 27 073 9 406 9 406

Non current liabilitiesBorrowings 14 - 471 - -Employee Benefits 16 4 582 4 696 - -

4 582 5 167 - -Current liabilitiesBorrowings 14 14 717 19 921 - -Accounts payable and accruals 15 28 909 25 042 27 27

43 626 44 963 27 27Total liabilities 48 208 50 130 27 27Total equity and liabilities 79 236 77 203 9 433 9 433


33

Statement of Cash Flowsfor the period ended 31 December 2016

Group Company

31 December 30 June 31 December 30 June

2016 2016 2016 2016

Notes E000’s E000’s E000’s E000’s

Cash flows from operating

activities

Cash generated from operations 17.1 15 602 7 038 - -

Interest paid 17.6 (756) (1 478) - -

Net cash inflow from operating

activities 14 846 5 560 - -

Cash flows from investing activities

Purchase of property, plant

and equipment:

- Replacement 7 (6 640) (8 104) - -

Proceeds on disposal of PPE 77 - - -

Investment income 17.2 51 103 - -

Net cash outflow from

investing activities (6 512) (8 001) - -

Cash flows from financing activities

Increase in borrowings 17.4 (5 675) 4 479 - -

Net cash outflow from financing

activities (5 675) 4 479 - -

Net decrease in cash and cash

equivalents 2 659 2 038 -

Cash and cash equivalents at the

beginning of the year 8 643 6 605 - -

Cash and cash equivalents at

the end of the year 17.5 11 302 8 643 - -


34

Statement of Changes in Equityfor the period ended 31 December 2016

Share Share Retained Minority Total

Notes capital premium earnings Total interest equity

Group E000’s E000’s E000’s E000’s E000’s E000’s

Balance at 1 July 2015 3 497 1 390 18 488 23 375 - 23 375

Total comprehensive

income/(loss) for the year:

Profit - - 3 618 3 618 - 3 618

Other comprehensive income - - 80 80 - 80

Balance at 1 July 2016 3 497 1 390 22 186 27 073 - 27 073

Comprehensive

income/(loss) for the year:

Profit - - 3 889 3 889 - 3 889

Other comprehensive income - - 66 66 - 66

Balance at 31 December 2016 3 497 1 390 26 141 31 028 - 31 028

Share Share Retained

capital premium earnings Total

Company E000’s E000’s E000’s E000’s

Balance at 1 July 2015 3 497 1 390 4 519 9 406

Total comprehensive

income/(loss) for the year - - - -

Balance at 1 July 2016 3 497 1 390 4 519 9 406

Total comprehensive

income/(loss) for the year - - - -

Balance at 31 December 2016 3 497 1 390 4 519 9 406


35

Notes to the Financial Statementsfor the period ended 31 December 2016

Group Company31 December 30 June 31 December 2016

2016 2016 30 June 2016E000’s E000’s E000’s E000’s

1. EMPLOYEE COSTS

Salaries, wages, bonuses and other benefits

(20 801) (39 136) - -

Pension costs- Defined contribution plans (2 714) (5 136) - -- Defined benefit plan (12) (23) - -Other benefits- Long service award 152 (131) - -- Farewell gifts 24 (35) - -Post-employment medical aidcontributions 27 (225) - -

(23 324) (44 686) - -

Number of employees at the end of theperiod 207 209

2. OPERATING PROFIT / (LOSS) IS STATED AFTER (CHARGING)/CREDITING THE FOLLOWING:

Depreciation and amortisation- Property, plant and equipment (2 981) (5 668) - -Operating equipment usage (588) (959)Auditors’ remuneration- Audit fees (current year) (432) (685) - -- Audit fees (prior year) (181) (305) - -- Expenses (11) (17) - -Directors fees (92) (191) - -Professional fees (146) (471) - -Profit on disposal of property, plant andequipment 77 - - -Management fees (4 135) (6 060) - -

3. FINANCE INCOME

Interest earned on cash and cash equiv-alents

51 103 - -

4. FINANCE EXPENSE

Interest paid on borrowings (756) (1 478) - -Interest paid on lease liabilities - - - -

(756) (1 478) - -

36


Group31 December 30 June

2016 2016E000’s E000’s

5. TAX

Normal tax - SwazilandDeferred tax- this year (1 511) (1 460)- other comprehensive income (25) (31)

(1 536) (1 491)

Reconciliation of rate of tax % %Standard rate - Swaziland 27.5 27.5Adjust for:- disallowable expenditure 0.5 1.2- prior years building allowances disallowed - -- prior year under provision - -- change in standard tax rate - -Effective tax rate 28.0 28.7

Further information on deferred taxation is presented in note 13.

6. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the total comprehensive income attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the year.

Total comprehensive income per the statements of comprehensive income 3 955 3 698

Headline earnings adjustmentsProfit on disposal of property, plant and equipment (77) -

Headline earnings 3 878 3 698

Number of shares for Earnings Per Share and HeadlineEarnings Per Share calculation (‘000s)Weighted average number of shares in issue 6 994 6 994

Earnings per share (cents)

Basic and diluted earnings per share 57 53Headline earnings per share 55 53

37



2016 2016E000’s E000’s

7. PROPERTY, PLANT AND EQUIPMENTNet carrying valueFreehold land 2 458 2 458Freehold buildings 21 664 21 922Infrastructure 1 944 2 023Plant and machinery 4 090 4 406Equipment 5 453 5 650Furniture and fittings 11 977 8 356Vehicles 695 672Operating equipment 6 173 5 896Capital work in progress - -

54 455 51 383

Freehold land comprises: Manzane Estates Limited: Portion 42 of farm 50, situate in the district of Hhohho, Swaziland Manzane Estates Limited: Portion 43 of farm 50, situate in the district of Hhohho, Swaziland Manzane Estates Limited: Portion 44 of farm 50, situate in the district of Hhohho, Swaziland Manzane Estates Limited: Portion 45 of farm 50, situate in the district of Hhohho, Swaziland Manzane Estates Limited: Portion 46 of farm 50, situate in the district of Hhohho, Swaziland Manzane Estates Limited: Portion 93 of farm 50, situate in the district of Hhohho, Swaziland Manzane Estates Limited: Portion 94 of farm 50, situate in the district of Hhohho, Swaziland Manzane Estates Limited: Portion C of farm 50, situate in the district of Hhohho, Swaziland Manzane Estates Limited: Remainder of farm 50, situate in the district of Hhohho, SwazilandEzulwini Properties (Proprietary) Limited: Portion 98 of farm 50, situate in the district of Hhohho, Swaziland

Included in the entity’s plant and equipment are assets with zero net book values which are still being used by the entity. Summarised details of the assets are as follows:

Group 31 December 30 June

2016 2016E000’s E000’s

Cost 11 226 40 403Accummulated depreciation (11 226) (40 403)Net carrying amount - -

Opening assets with zero book value at cost 40 403 37 869Assets with zero net book value additions for the year 2 702 4 524Assets with zero book value disposals / scrapped during the year (31 879) (1 990)Closing assets with zero book value at cost 11 226 40 403

Net book value of property, plant and equipment held under finance lease - -

Net book value of property, plant and equipment encumbered by secured loans - -

38


7. PROPERTY, PLANT AND EQUIPMENT (continued)

Cost

Usage on

operating

Opening Disposals Additions equipment Closing

Movements for the period

E000’s

31 December 2016 - Group

Freehold land 2 458 - - - 2 458

Freehold buildings 46 905 (16 108) - - 30 797

Infrastructure 7 484 (3 385) - - 4 099

Plant and machinery 10 045 (637) - - 9 408

Equipment 23 391 (8 251) 688 - 15 828

Furniture and fittings 21 318 (3 344) 4 868 - 22 842

Vehicles 2 050 (154) 219 - 2 115

Operating equipment 5 896 - 865 (588) 6 173

Capital work in progress - - - - -

119 548 (31 879) 6 640 (588) 93 721

Accumulated Depreciation

Opening DisposalsDeprecia-

tionClosing

Movements for the period

E000’s

31 December 2016 - Group

Freehold land - - - -

Freehold buildings (24 983) 16 101 (251) (9 133)

Infrastructure (5 461) 3 354 (48) (2 155)

Plant and machinery (5 639) 669 (348) (5 318)

Equipment (17 741) 8 258 (892) (10 375)

Furniture and fittings (12 962) 3 344 (1 247) (10 865)

Vehicles (1 378) 153 (195) (1 420)

Operating equipment - - - -

Capital work in progress - - - -

(68 164) 31 879 (2 981) (39 266)

39


7. PROPERTY, PLANT AND EQUIPMENT (continued)

CostUsage onoperating

Opening Disposals Additions equipment Closing

Movements for the yearE000’s30 June 2016 - Group

Freehold land 2 458 - - - 2 458Freehold buildings 46 920 (15) - - 46 905Infrastructure 7 965 (481) - - 7 484Plant and machinery 11 067 (1 022) - - 10 045Equipment 20 245 (7) 3 153 - 23 391Furniture and fittings 18 695 (466) 3 089 - 21 318Vehicles 1 818 - 232 - 2 050Operating equipment 5 225 - 1 630 (959) 5 896Capital work in progress - - - - -

114 393 (1 991) 8 104 (959) 119 547

Accumulated DepreciationOpening Disposals Depreciation Closing

Movements for the yearE000’s30 June 2016 - Group

Freehold land - - - -Freehold buildings (24 453) 15 (545) (24 983)Infrastructure (5 782) 481 (160) (5 461)Plant and machinery (6 015) 1 022 (646) (5 639)Equipment (15 765) 7 (1 983) (17 741)Furniture and fittings (11 398) 466 (2 030) (12 962)Vehicles (1 072) - (306) (1 378)Operating equipment - - - -Capital work in progress - - - -

(64 485) 1 991 ( 5 670) (68 164)

40



2016 2016 2016 2016E000’s E000’s E000’s E000’s

8. INVESTMENT IN SUBSIDIARIES

Shares at cost - - 3 086 3 086

The interest of the Company in the aggregate profit before tax of its subsidiaries amounted to E5.4 million (for the year ended 30 June 2016: E5.1 million). The interest of the Company in the aggregate profit after tax of its subsidiaries amounted to E4 million (for the year ended 30 June 2016: E3.7 million).

9. OTHER NON CURRENT ASSETS

Loans to subsidiary - - 6 347 6 347

The loans are unsecured, interest-free and are repayable on demand on or after 1 January 2018.

10. INVENTORY

Merchandise 335 620 - -Consumables and hotel stocks 1 291 1 013 - -

1 626 1 633 - -

The cost of inventories recognised as an expense and included in consumables and services, amounted to E13 million (for the year ended 30 June 2016: E24.1 million).

41



2016 2016E000’s E000’s

11. ACCOUNTS RECEIVABLE

Financial instrumentsTrade receivables 8 882 10 424Less: impairment - (44)Net trade receivables 8 882 10 380Other receivables 249 1 029

9 131 11 409Non financial instrumentsPrepayments 943 820

10 074 12 229

The fair values of trade and other values receivables approximate their carrying values.

Other receivables are expected to be fully recoverable. The trade receivables which are fully performing and past due but not impaired relate to customers that have a good track record with the Group in terms of recoverability.

Movements in the provision for impairment of trade and other receivables were as follows: Balance at the beginning of the year (44) (267)Charge for the year - (44)Amounts written off - 82Unused amounts reversed 44 185

- (44)

The creation and usage of the provision for impaired receivables have been included in other operational costs in the statements of comprehensive income.

The aging of trade receivables at the reporting date was: 31 December 2016 Fully performing 544 -Past due by 1 to 30 days 3 201 -Past due by 31 to 60 days 4 191 -Past due by 61 to 90 days 504 -Past due by more than 90 days 443 -

8 883 -30 June 2016Fully performing 1 511 -Past due by 1 to 30 days 4 154 -Past due by 31 to 60 days 2 282 -Past due by 61 to 90 days 1 980 -Past due by more than 90 days 499 (44)

10 426 (44)

42



2016 2016 2016 2016E000’s E000’s E000’s E000’s

12. SHARE CAPITAL AND PREMIUM

Authorised

10 000 000 (for the period ended 30 June2016: 10 000 000) ordinary shares of 50 centseach 5 000 5 000 5 000 5 000

Issued

6 994 494 (for the period ended 30 June2016: 6 994 494) ordinary shares of 50cents each 3 497 3 497 3 497 3 497Share premium 1 390 1 390 1 390 1 390

4 887 4 887 4 887 4 887

All issued shares are fully paid.

The entire authorised but unissued share capital of the Company comprising 3 005 506 ordinary shares of 50 cents each are under the control of the board of directors, until the next annual general meeting of the Company, for allotment and issue to such persons on such conditions as the directors may deem fit.

Reconciliation of number of shares in issue

Balance at the beginning and end of the year 6 994 6 994 6 994 6 994

43



2016 2016E000’s E000’s

13. DEFERRED TAX

Deferred tax assets:- Deferred tax asset to be realised within 12 months (4 415) (5 426)- Deferred tax asset to be recovered after 12 months (2 070) (2 665)

(6 485) (8 091)

Deferred tax liabilities:- Deferred tax liabilities to be realised within 12 months 259 225- Deferred tax liabilities to be realised after 12 months 6 175 6 279

6 434 6 504Net deferred tax (asset)/liability (51) (1 587)

The gross movement on the deferred income tax account is as follows:Balance at the beginning of the year (1 587) (3 078)Statements of comprehensive income charge/(credit) for the year 1 536 1 491Prior year under/(over) provision - -Balance at the end of the year (51) (1 587)

The movement in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the sametax jurisdiction is as follows:

Deferred tax liabilities Accelerated asset allowances 6 175 6 279Balance at the beginning of the year 6 279 6 498Charged to income statement (104) (219)

Prepayments 259 225Balance at the beginning of the year 225 236Charged/(credited) to income statement 34 (11)

6 434 6 504

Deferred tax assetsDisallowed accruals and provisions (2 070) (2 665)Balance at the beginning of the year (2 665) (2 396)Charged/(credited) to income statement 595 (269)

Tax losses (4 415) (5 426)Balance at the beginning of the year (5 426) (7 416)Charged/(credited) to income statement 1 011 1 990

(6 485) (8 091)

Net deferred tax (asset)/liability (51) (1 587)

44



2016 2016E000’s E000’s

14. BORROWINGS

Non current:Bank borrowings - 471

Current:Bank overdrafts 13 337 18 148Bank borrowings 1 380 1 773Lease liabilities - -

14 717 19 921Total borrowings 14 717 20 392

Secured - -Unsecured 14 718 20 392

14 718 20 392

The fair value of borrowings approximate their carrying values.

Net book value of property, plant and equipment emcumbered bysecured loans - -

Borrowings are repayable as follows:6 months or less 909 8656 months - 1 year 472 9081 - 2 years - 4712 - 3 years - -3 - 4 years - -4 years and onwards - -

1 381 2 244

Year end interest rates are as follows: Bank borrowings and overdraft 10.0 10.0Lease liabilities - -Weighted average 10.0 10.0

The Group has the following undrawn borrowing facilities: Floating Rate: - expiring within one year 20 000 20 000

The company had unutilised borrowings facilities of E6.7 million as at 31 December 2016 (for the year ended 30 June 2016: E1.9 million).The facilities expiring within one year are annual facilities subject to review at various dates during 2017. None of the borrowing facilities have fixed interest rates.

The Group’s borrowings are not restricted by its articles of association.

45



2016 2016 2016 2016E000’s E000’s E000’s E000’s

15. ACCOUNTS PAYABLE AND ACCRUALS

Financial instrumentsTrade payables 5 680 3 736 - -Amounts due to related parties 1 914 (978) - -Accrued expenses 15 750 15 239 - -Other payables - - 27 27

23 344 17 997 27 27Non financial instrumentsVAT and Sales Tax 397 405 - -Employee related accruals 5 168 6 640 - -

28 909 25 042 27 27

The fair value of accounts payable and accruals approximate their carrying value.

16. EMPLOYEE BENEFITS Group

31 December 30 June2016 2016

E000’s E000’s

Non financial instrumentsPost retirement medical aid liability 3 001 2 938Accrual for long service awards 1 338 1 491Accrual for farewell gifts 243 267

4 582 4 696

Sun International Limited operates a pension scheme and a number of provident funds. Currently the provident fund is available to all employees while the pension scheme was closed to new employees in 1995. Contributions are made by both the Group and its employees. 100% (30 June 2016: 100%) of employees were members of one of these schemes as at 31 December 2016.

The pension scheme is a defined contribution plan in the stand alone financial statements of Swazispa Holdings Limited but is treated as a defined benefit plan from a Holding Company perspective and therefore all the defined benefit disclosure is provided in those financial statements.

46


16. EMPLOYEE BENEFITS (continued)

Contributions to the pension scheme, which are charged against profits, are based upon actuarial advice following the periodic valuations of the fund.

Membership of each of the funds and employers contributions for the period then ended were:-

GroupMembers Employer Contributions

31 December 30 June 31 December 30 June2016 2016 2016 2016

E000’s E000’s

Sun International Pension Fund 2 2 12 23Sun International Provident Fund 205 207 2 584 4 891Sun International Swaziland Staff ProvidentFund - - - -Swaziland National Provident Fund 203 206 129 244

2 725 5 158

16.1 Post retirement medical benefits

The Group contributes towards the post retirement medical aid contributions of eligible employees employed by the Sun International group as at 30 June 2003. Employees who joined the Group after 1 July 2003 will not be entitled to any co-payment subsidy from the Group upon retirement. Employees are eligible for such benefits on retirement based upon the number of completed years of service. The method of accounting and frequency of valuation are similar to those used for defined benefit schemes. The actuarial valuation to determine the liability is performed annually.


2016 2016E000’s E000’s

The amounts recognised in the statements of financial position were determined as follows:

Present value of unfunded obligations 3 001 2 938

Movement of unfunded obligation over the year is as follows:

Benefit obligation at beginning of the period 2 937 2 601Pro rata interest cost 99 112Pro rata current service cost 27 385Pro rata actuarial gain 29 (50)Pro rata actuarial gain - other comprehensive income (91) (111)Benefit obligation at end of the period 3 001 2 937

47



2016 2016E000’s E000’s

16.1 Post retirement medical benefits (continued)

The amounts recognised in the statements of comprehensive incomewere as follows:

Current service cost - profit or loss 27 385Interest cost - profit or loss 99 112Pro rata actuarial gain 29 (50)Pro rata actuarial gain - other comprehensive income (91) (111)Total included in employee benefits expense 64 336

The principal actuarial assumptions used for accounting purposes were:

Discount rate 9.65% 9.60%Price inflation allowed by Group 6.75% 7.00%

The average life expectancy in years of a qualifying employee retiring at age 60, on the statements of financial position date is as follows: Male 20.3 20.3 Female 21.2 21.2

16.2 Accrual for long service awards

The Group offers employees a long service award. Employees are eligible for such benefits based upon the number of completed years of service. The method of accounting and frequency of valuation are similar to those used for defined benefit schemes. The actuarial valuation to determine the liability is performed annually.

Movement in unfunded obligation: Benefit obligation at beginning of period 1 491 1 359Interest cost (104) 77Current service cost (115) 85Actuarial (gain)/loss 66 (30)Benefit obligation at end of period 1 338 1 491

The amounts recognised in the statements of comprehensive income are as follows:Current service cost - profit or loss (115) 85Interest cost - profit or loss (104) 77Actuarial (gain)/loss - profit or loss 66 (30)Total (153) 132


Discount rate 9.00% 8.75%Future price inflation 6.35% 6.60%

48


16.3 Accrual for farewell gifts and party

The company pays for a farewell gift and function for employees, with a minimum of a five year service with the Group, who leave as a result of a voluntary resignation or retirement. The value of the gift is calculated on a formula based on years of service and monthly base rate and is subject to tax. The method of accounting and frequency of valuation are similar to those under the defined benefit schemes. The actuarial valuation to determine the liability is performed annually.


2016 2016E000’s E000’s

Movement in unfunded obligation:Benefit obligation at beginning of period 267 232Interest cost 11 44Current service cost 8 35Actuarial (gain)/loss (43) (44)Benefit obligation at end of period 243 267

The amounts recognised in the statements of comprehensive income are as follows:Current service cost - profit or loss 8 35Interest cost - profit or loss 11 44Actuarial (gain)/loss - profit or loss (43) (44)

Total (24) 35


Discount rate 9.80% 9.60%Salary inflation assumption 7.15% 8.85%Future price inflation 7.15% 7.35%

49



2016 2016 2016 2016E000’s E000’s E000’s E000’s

17. CASH FLOW INFORMATION

17.1 Cash generated by operations

Operating loss / income 6 196 6 564 - -Non cash items and items dealt withseparately:

Dividend income - - - -Depreciation and amortisation 2 981 5 668 - -Profit on disposal of property, plantand equipment (77) - - -Operating equipment usage 588 959 - -Increase/(decrease) in long service award commitments (153) 132Increase/(decrease) in farewell gifts commitments (24) 35Increase/(decrease) in retirement benefit commitments 63 336 - -

Cash generated by operations beforeworking capital changes 9 574 13 694 - -Working capital changes

Inventory 7 (312) - -Accounts receivable 2 155 (5 781) - -Accounts payable and accruals 3 866 (563) - -

15 602 7 038 - -

In the cash flow statement, proceeds from sale of property, plant and equipment comprise:

Net book value - - - -Profit on sale of property, plant andequipment 77 - - -Proceeds from sale of property, plant andequipment 77 - - -

50



2016 2016E000’s E000’s

17. CASH FLOW INFORMATION (continued)

17.2 Investment income Interest income 51 103

17.3 Tax paid

Overpayment/(liability) at the beginning of year 1 728 1 728Prior year tax provided (note 5) - -Liability/(overpayment) at the end of year (1 728) (1 728)Cash amount paid - -

17.4 Increase/(decrease) in borrowings

Increase/(decrease) in borrowings (864) (1 622)Increase /(decrease) in bank overdrafts (4 811) 6 101

(5 675) 4 479

17.5 Cash and cash equivalents consists of:

Cash at bank 8 465 7 229Cash floats 2 837 1 414

11 302 8 643

17.6 Interest paid

Interest expense (756) (1 478)

51


Group 31 December 30 June

2016 2016E000’s E000’s

18. CAPITAL COMMITMENTS

Capital commitments

Contracted - -Authorised by the directors but not contracted 8 200 14 200

8 200 14 200

To be spent in forthcoming financial year 8 200 14 2008 200 14 200

Future capital expenditure will be funded by internally generated cash flows and debt facilities.

19. RELATED PARTIES

Related parties have been defined as Swazispa Holdings Limited’s board of directors, the holding companies and subsidiary companies.

Key management has been defined as Swazispa Holdings Limited’s board of directors and Sun International Management Limited. The definition of a related party includes the close members of family of key management personnel and any entity over which key management exercise control. Close members of family are those members who may be expected to influence, or be influenced by that individual in their dealings with the company. They may include the individual’s domestic partner and children, the children of the individual’s domestic partner and dependants of the individual or the individual’s domestic partner. Transactions with related parties are at arms length prices.

The immediate holding companies and subsidiary companies are as follows:

Holding companies

Sun International Limited St Vincent Investments Limited All Saints (Proprietary) Limited

Subsidiary companies

Ezulwini Properties (Proprietary) Limited (100% held directly) Manzane Estates Limited (100% held directly) Spa Financing Company Limited (100% held directly) Swaziland Spa Development Company Limited (100% held directly)

52


19. RELATED PARTIES (continued)

All purchasing and selling transactions are concluded at arms length. Management fees are paid to Sun International Management Limited, a subsidiary of the ultimate holding company, and are calculated as a percentage of revenue. Certain expenses are incurred on a group basis by related companies and are recharged to group companies on an arms length basis. Related company balances are interest free.

Transactions and balances with related parties were as follows:


2016 2016E000’s E000’s

Management fees

Sun International Management LimitedCharges incurred in the year 4 135 6 059Balance owing at year end (1 914) 978

Balances with related parties

Owing to St Vincent Investments Limited (1 271) (1 271)Due by All Saints (Proprietary) Limited 279 279

Director’s emoluments

Non-executive directors fees Note 2 92 191

Key management and executive directors emoluments

Basic remuneration 2 394 4 772Bonuses/performance related payments 961 968Retirement funding contributions 498 1 000Other benefits 431 791

Shareholding of key management

Percentage shareholding 0.1% 0.1%Dividends received by key management - -

There were no share options in Swazispa Holdings Limited granted to key management and executive directors .

Share options in Sun International Limited have been granted to certain directors and staff. The share options were given on the same terms and conditions as those offered to other employees of the Group. Share options are accounted for by Sun International Limited. The costs of such options are borne by Sun International Limited.

53



2016 2016E000’s E000’s

19. RELATED PARTIES (continued)

Note for directors emolumentsDirectors Committee

Fees Fees

Executive directors

R C Hawkins - - - -D R Mokhobo - - - -

Total - - - -

Non-executive directors

D D Dlamini (Chairman) 19 4 23 58A T Ngcobo 13 - 13 25Prince Masitsela 10 - 10 17Princess Ngebeti 10 - 10 22V M Mhlanga 10 7 17 39S Z Simelane 13 5 18 31

Total 75 16 91 192

Total fees 75 16 91 192

20. FINANCIAL RISK MANAGEMENT

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group at all times maintains adequate committed credit facilities in order to meet all its commitments as and when they fall due. Repayment of borrowings is structured so as to match the expected cash flows from operations to which they relate.

To manage liquidity risk the company retains undrawn and available banking facilities.

54


20. FINANCIAL RISK MANAGEMENT (continued)

Liquidity risk (continued)


2016 2016E000’s E000’s

Banking facilities:Total banking facilities 20 000 20 000Less: Drawn down portion 13 338 18 149Total undrawn banking facilities 6 662 1 851

All undrawn borrowing facilities are renewable annually and have a variable interest rate.

The following are the contractual undiscounted (including principal and interest payments) maturities of financial liabilities presented in Emalangeni:

Less than 6 months or on

demand

More than 6 months

but not exceeding 1

year

More than 1 year but not exceeding 2

years

More than 2 years but not exceeding 5

yearsMore than

5 years

31 December 2016E000’s

Financial assetsLoans and receivables - - - - -

Accounts receivables * 9 131 - - - -

Bank and cash 11 302 - - - -

20 433 - - - -

Financial liabilitiesTrade payables 5 680 - - - -

Amounts due to relatedparties 1 914 - - - -

Accrued expenses 15 750 - - - -

Term loans 909 472 - - -

Bank overdrafts 13 337 - - - -

37 590 472 - - -Net financial liabilities 17 157 472 - - -

* Prepayments and VAT are excluded from accounts receivable

55



Liquidity risk (continued)

Less than 6months or on

demand

More than 6months but

not exceeding 1

year

More than 1year but notexceeding 2

years

More than 2years but notexceeding 5

yearsMore than 5

years

30 June 2016E000’s

Financial assetsLoans and receivables - - - - -Accounts receivables * 11 408 - - - -Bank and cash 8 644 - - - -

20 052 - - - -

Financial liabilitiesTrade payables 3 736 - - - -Amounts due to related parties (978) - - - -Accrued expenses 14 351 - - - -Term loans 865 908 471 - -Bank overdrafts 18 149 - - - -

36 123 908 471 - -Net financial liabilities 16 071 908 471 - -

* Prepayments and VAT are excluded from accounts receivable

Credit risk

Credit risk arises from loans and receivables, accounts receivable (excluding prepayments and VAT), and cash and cash equivalents. The granting of credit is controlled by application and account limits. Cash investments are only placed with high quality financial institutions.

The maximum exposure to credit risk is represented by the carrying amount of each financial assets determined to be exposed to credit risk.

The Group has no significant concentrations of credit risk with respect to trade receivables due to a widely dispersed customer base. Credit risk with respect to accounts receivables is disclosed in note 11.

56



Market risk

Market risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.

Market risk includes foreign currency risk, interest rate risk and other price risk. The Group’s exposure to other price risk is limited as the Group does not have any investments which are subject to changes in equity prices.

(a) Foreign currency risk

Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate in Emalangeni due to changes in foreign exchange rates.

The Group is not exposed to foreign currency risk.

(b) Cash flow interest rate risk

The Group’s cash flow interest rate risk arises from cash and cash equivalents and variable rate borrowings. The Group is not exposed to fair value interest rate risk as the Group does not have any fixed interest bearing financial instruments carried at fair value.

The Group manages interest rate risk by entering into short and long term debt instruments with a combination of fixed and variable interest rates. The interest rate characteristics of new and refinanced debt instruments are restructured according to expected movements in interest rates.

Interest rate sensitivity

A change of 1% basis points in interest rates at the reporting date would have increased / (decreased) profit or loss before tax by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is performed on the same basis as 30 June 2016.


2016 2016E000’s E000’s

Increase of 1% basis points (20) (95)Decrease of 1% basis points 20 95

A 1% decrease in interest rates at 31 December 2016 would have an equal but opposite effect to the amounts shown above, on the basis that all other variables remain constant.

Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide benefits for its stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust this capital structure, the Group may issue new shares, adjust the amount of dividends paid to shareholders or return capital to shareholders.

57



2016 2016E000’s E000’s


Capital risk management (continued)

The Board of Directors monitors the level of capital, which the Group defines as total share capital and retained earnings.

There were no changes to the Group’s approach to capital management during the year.

The Group is not subject to externally imposed capital requirements.

The gearing ratios at 31 December and 30 June 2016 were as follows:

Total borrowings (note 14) 14 718 20 392Less cash and cash equivalents 11 302 8 643Net debt 3 416 11 749Total equity 31 028 27 073

Gearing Ratio 9.1 2.3

21. SUBSEQUENT EVENTS

Sun International Limited (“Sun International”) has entered into an agreement with Minor International Public Company Limited (“MINT”) that will result in Sun International’s effective shareholding in Swazispa decreasing from 50.6% to 10.12% with MINT acquiring an effective 40.48% interest in Swazispa (“the MINT acquisition”). Sun International and MINT will continue to hold their respective effective interest in Swazispa via St Vincent Investments Limited. The MINT acquisition is subject to the fulfillment or waiver of certain con-dition precedents including inter alia the finalisation of transaction documents and regulatory approvals.

22. CONTINGENCIES

Certain Group Companies are defending a number of actions against them from former employees for unfair dismissal. Liability is not admitted and the Group will defend against the actions. Due to the nature of the claims a realistic estimate of the potential liability and legal costs is not possible. The directors are of the opinion that total costs would not be material.

23. BANK GUARANTEES

The company had a guarantee with Standard Bank Swaziland, being E175 000 for Import Tax with the Swaziland Revenue Authority as at year end.

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Notice of Annual General Meetingfor the 6 months ended 31December 2016

Notice is hereby given that the annual general meeting of members of Swazispa Holdings Limited (“the Company”) will be held at the Convention Centre, Royal Swazi Spa, Ezulwini Valley, Swaziland, on Tuesday, 23 May 2017 at 10h00, for the following purposes, namely:

To consider and approve the following resolutions:

Ordinary ResolutionsOrdinary Resolution 1

6 Months ended 31December 2016 Annual Financial Statements

To receive and adopt the annual financial statements of the Company for the six months ended 31 December 2016.

In order for this resolution to be adopted, the support of more than 50% of the voting rights exercised on the resolution by members present or represented by proxy at the annual general meeting and entitled to exercise voting rights on the resolution is required.

Ordinary Resolution 2

External Auditors

To re-appoint PricewaterhouseCoopers Swaziland as independent registered auditors of the Company to hold office until the conclusion of the next annual general meeting, in accordance with the audit and risk committee’s nomination. Mr T Mason is the individual registered auditor and member of the aforegoing firm who undertakes the audit.



Non-Executive Director Fees

To approve fees payable to the non-executive directors in respect of the six months ending 31 December 2017, as follows:

Payable to: Proposed Fee: Payable Type

Chairman E29 568 Annually Basic Fee

E5 545 Quarterly Attendance Fee*

Directors E14 788 Annually Basic Fee

E3 142 Quarterly Attendance Fee*

* Directors must be in attendance at meetings in order to qualify for the proposed attendance fee


59

Notice of Annual General Meetingfor the 6 months ended 31December 2016


Audit and Risk Committee Member Fees

To approve fees payable to the members of the audit and risk committee in respect of the six months ending 31 December 2017, as follows:

Payable to: Proposed Fee: Payable Type

Chairman E14 784 Annually Basic Fee

E2 773 Bi-annually Attendance Fee*

Members E7 394 Annually Basic Fee

E1 572 Bi-annually Attendance Fee*

* Members must be in attendance at meetings in order to qualify for the proposed attendance fee



Unissued Share Capital

To place the unissued shares for the time being in the capital of the Company under the control of the directors, who shall be authorised to allot such shares at such prices, on such terms and conditions and at such times as they deem fit, subject to the provisions of the Companies Act and the rules and requirements of the Swaziland Stock Exchange.


Voting and Proxies

Members are entitled to attend and vote at the meeting and are entitled to appoint a proxy or proxies to attend, speak and vote in their stead. This person so appointed need not be a member. Proxy forms must be forwarded to reach the Company’s transfer secretaries, KPMG Advisory (Swaziland) (Proprietary) Limited, Um-khiwa House, Lot 195, Kal Grant Street, Mbabane (PO Box 331, Mbabane) by no less than 48 hours before the meeting. A proxy form is enclosed for this purpose.

On a show of hands, every member of the Company present in person or represented by proxy shall have one vote only. On a poll, every member of the Company shall have one vote for every share held in the Company by such member.

By order of the board.

GJ RichterCompany Secretary23 February 2017

Postal Address: Delivery Address: P.O. Box 331 KPMG Advisory (Swaziland) (Proprietary) Limited Mbabane Umkhiwa HouseH100 Lot 195 Kal Grant Street Mbabane

60

All Saints (Pty) Ltd

50.6%

100% 100% 100% 100%

39.7% 9.7%

Tibiyo Taka Ngwane

SWAZISPA HOLDINGS LIMITED

Listed public company with investments in the mainoperating companies shown below

Other Shareholders

SwazilandSpa

Development Company

Limited

Royal SwaziSpa Casino

Royal Swazi Spa

Lugogo SunHotel

Ezulwini SunHotel

(moth-balled)

ManzaneEstatesLimited

PropertyCompany

EzulwiniProperties

(Pty) Limited

PropertyCompany

Spa FinancingCompany

Limited

AdministrationCompany

Ownership and Corporate Structure

Swazispa Holdings Limited Annual Reportese.co.sz.dedi337.nur4.host-h.net/wp/wp-content/uploads/...2016/12/31 · Headline earning per share of 55.4 cents (2015: 60 cents) was achieved.

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