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HOTELS & RESORTS

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Contents

Group structure 3

Chairman’s report 5

Chief executive officer’s report 9

Directorate and executive 14

Senior management 22

Corporate governance 25

Sustainability report 35

Annual financial statements

Directors’ responsibility statement 38

Company secretary’s certificate 38

Auditors’ report 39

Report of the directors 40

Balance sheet 44

Income statement 45

Statement of changes in equity 46

Cash flow statement 47

Notes to the annual financial statements 48

Definitions 88

Corporate information 89

Shareholders’ diary 90

Notice of annual general meeting 91

Proxy inserted

2

The Palm, Jumeirah – Dubai, United Arab Emirates

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Group Structure

IFA Hotels & Resorts

(SA)(Pty) Limited

(”IFA Hotels”)

100%

IFA Zimbali Lodge

(Pty) Limited

(”IFA Zimbali”)

100%

IFA Boschendal

Investments

(Pty) Limited

100%

International Financial Advisors KSCC (”IFA”)

(listed in Kuwait)

IFA Hotels & Resorts KSCC (”IFA H&R Kuwait”)

(listed in Kuwait)

IFA Assets

(Pty) Limited

(”IFA Properties”)

IFA Hotels & Resorts Limited (”IFA SA”)

(listed on JSE)

55% (45% free float)

85% (15% free float)

100%

100%

Moreland IFA

Joint Venture

(”Mifaz”)

50%

Zimbali Estates

(Pty) Limited

50%

Boschendal

Limited

(”Boschendal”)

19,25%

Purple Plum

Properties 59

Limited

19,25%

“THE GROUP”

IFA Hotels & Resorts 8

(Pty) Limited

(”IFA Estates”)

4

Laguna Tower – Dubai, United Arab Emirates

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Chairman’s Report

Introduction

The listing of IFA SA on the JSE marked a further milestone in the growth of the global IFA group

as a leading international hospitality and real estate developer. The JSE-listing followed the

earlier listing in January 2006 of IFA H&R Kuwait on the Kuwait Stock Exchange, with a market

capitalisation of over $1 billion.

IFA H&R Kuwait has maintained a majority stake in IFA SA, manifesting our commitment to foreign

direct investment in South Africa. In fact IFA H&R Kuwait has to date been the largest single foreign

investor in KwaZulu-Natal tourism – through IFA SA it owns the exclusive Zimbali Lodge on

KwaZulu-Natal’s north coast, rated by Condé Nast as one of the world’s top hotels, and a 50% stake

in the development of the Zimbali Coastal Resort. The Mifaz joint venture to develop this Resort has

continued the IFA group’s world-wide tradition of strong strategic partnerships and alliances.

June 2006 saw the Mifaz joint venture further acquire 255 hectares on the south bank of the

Tongaat River, opposite the soon-to-be-developed ‘Zimbali Lakes’ on the north bank. The land

for development is north-facing with spectacular lake and sea views over the Tongaat River

estuary and Zimbali Lakes, towards the Zimbali Coastal Resort. The acquisition will enable the

Mifaz joint venture to leverage the value-add of the prestigious Zimbali brand to successfully

conclude the sale and development of the intended residential estate including a proposed

retirement village.

Also in June 2006 IFA SA purchased a significant stake in Boschendal (“the Boschendal

Investment”), which aligned us with an iconic South African brand. We intend to elevate

Boschendal onto the international real estate market and present the estate as a world-class

destination.

Results

We are very pleased with the strong performance of IFA SA reflected in the first set of annual

results since listing. The company has achieved significant growth in all major key performance

indicators (set out in detail in the annual financial statements which form part of this report.)

BEE

Our commitment to sustainable transformation is further evidenced by our Boschendal Investment.

The Boschendal Treasury Trust, in which IFA SA will now participate, was established to administer

the 5% of gross land sales to be donated by Boschendal to the local community. Gross land sales

are expected to generate approximately R2,2 billion over the next ten years. The Dwarsriver

community stands to benefit materially as the transformation initiative should see more than

R100 million in cash and 270 hectares of land contributed to the community over the next ten

years. In addition the development is expected to boost real wages in the area by 30%.

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Zanzibar Beach Hotel and Resort – Zanzibar, Tanzania

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Chairman’s Report

Directorate

On listing I was pleased to welcome as CEO Talal Al-Bahar, who is also the Chairman and

Managing Director of IFA H&R Kuwait. He was joined by James Wilson, Phillip de Sylva and Elliot

Nkosi as executive directors and Greg Larson as a non-executive director.

On 8 June 2006 Werner Burger, who is also the COO and President of IFA H&R Kuwait, was

appointed to the board as a non-executive director and James Wilson changed his status to non-

executive director on the same date.

Prospects

South Africa has emerged as an ideal investment opportunity in light of positive economic

factors and an untapped property asset base. IFA H&R Kuwait’s multi-million rand investment

in South African property development to date reflects its confidence in the economy given the

strict regulatory controls and economic stability. It remains committed to investing further

capital and management expertise in resort development in South Africa, through IFA SA.

IFA SA itself is well-positioned for further expansion and will continue to pursue new integrated

resort developments, boosted by the exponential growth of the tourism industry and increasing

demand for premier resorts in South Africa.

Further, the international IFA group reaffirms its commitment to leverage the South African

operation to continue wider investment in Africa. This will enable us to expand our global

network of resorts and offer prime opportunities to investors world-wide.

Appreciation

I wish to thank my colleagues on the board, executive management and all employees for their

efforts and perseverance which were integral to achieving the group’s successful listing and

good performance. I also extend my appreciation to our new fellow shareholders, and our

strategic partners, for their loyal support.

JASSIM AL-BAHAR

Chairman

24 August 2006

8

Zimbali Coastal Resort – Durban, South Africa

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Chief Executive Officer’s Report

Introduction

The year saw the global IFA group cement its commitment to investment in South Africa

through the listing on the JSE of IFA SA. IFA SA has provided the international group with a

platform to capitalise on robust tourism and global investment interest in South Africa,

to maximise shareholder returns.

Our first set of annual results since the reverse-listing into Moribo of IFA Zimbali and IFA Hotels,

reflects strong growth for our underlying operations where strict focus on operational

efficiencies was evidenced in improved earnings before interest, tax, depreciation and

amortisation (“EBITDA”).

Shortly before year-end IFA SA acquired a significant stake in a third property – the Boschendal

estate – marking the first-time entry of IFA SA into the Western Cape. This investment has

positioned the company to partner in the proposed mixed-use development on the world-

renowned estate, at the same time fulfiling IFA SA’s commitment to sustainable transformation

through an upliftment initiative to benefit the local surrounding community (see ‘Acquisition’

below).

Financial results

See note 40 to the annual financial statements for accounting assumptions in respect of

comparative information.

The consolidated revenue for the group has increased by 57% to R161,0 million for the year.

This has translated to net earnings after tax of R42,0 million, which is up 209% over the same

period in 2005. Earnings per share amounted to19,52 cents and headline earnings per share to

19,56 cents.

Listing

IFA H&R Kuwait reverse-listed two South African subsidiaries – IFA Zimbali and IFA Hotels – into

JSE cash-shell Moribo (“the reverse takeover”) and subsequently listed on 27 February 2006 on

the JSE’s main board under the banner IFA Hotels & Resorts Limited. The share debuted at R4,50

to generate a market capitalisation of just under R1 billion on listing.

A number of transactions devised to streamline the company’s share capital took place

following the reverse takeover:

• The Moribo Share Incentive Trust was terminated after IFA SA’s repurchase of the Trust’s

677 843 shares, for an aggregate price of R1;

• The number of shares in issue was reduced to a manageable level when the company’s

shares were consolidated on a one-for-ten basis; and

• The share capital was increased to 500 000 000 consolidated shares by the creation of

461 121 152 new consolidated shares to facilitate future growth.

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Boschendal Estate – Western Cape, South Africa

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In addition the company changed its main business and trading objectives to reflect its core

business of investing in, developing and managing land, apartments, hotels and timeshare

resorts. Finally, IFA H&R Kuwait has the option to settle any liabilities that may arise within

three years of the reverse takeover, relating to activities conducted by the former Moribo (prior

to becoming a cash shell), in exchange for the issue of additional shares in IFA SA subject to a

maximum aggregate issue value of R20 million.

Acquisition

Boschendal

As announced on 20 June 2006, the group has acquired a 19,25% stake in Boschendal and

Purple Plum for an aggregate consideration of R54 million. Development plans for the

2 400 hectare Boschendal estate near Franschhoek include an upmarket retirement village

with 500 individual homes, a boutique hotel with upwards of 80 rooms and a mixed-use

development of a shopping centre, offices and apartments.

The investment is in line with the IFA group’s strategy of delivering new premier resort and

residential developments in South Africa.

Further, the investment enables IFA SA to participate in the Boschendal community programme

spearheaded by BEE shareholder Kovacs Investments 609 (Pty) Limited.

Operations

See note 40 to the annual financial statements for accounting assumptions in respect of

comparative information.

IFA Zimbali

The Zimbali Lodge has also shown steady improvement in revenues with an increase of 12%

from R31,0 million for the previous year to R34,8 million. EBITDA has similarly shown

improvement over 2005 as a result of securing additional income streams in the form of

ongoing service fees and rental commissions. EBITDA grew by 9% to R4,3 million. Of significance

is earnings before interest and taxation (“EBIT”) which has shown a strong improvement over

2005 and the R0,1 million achieved this year has reversed a trend of losses, the most recent

being R1,3 million for the previous year. The net asset value of IFA Zimbali has increased by

R20,2 million as a result of revaluing the property. The revaluation is not reflected in earnings.

The directors are pleased at the positive EBITDA and EBIT trend as well as the growth in value

of the business and will continue focusing on increasing the brand equity of the Zimbali Lodge,

which they believe is a key driver of higher occupancies and average revenue per visit.

IFA Hotels

The Mifaz joint venture has shown strong growth in land sales. Revenue increased by 78% to

R127,3 million from R71,3 million for the previous year. Healthy EBITDA has followed in this

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segment of the business with R55,9 million for the year reflecting a 126% increase over 2005.

A pleasing aspect of this profit growth is the reduction in operating costs as a percentage of

revenue from 18% to 11%. As the scale of the operation increases IFA SA intends to further

leverage the fixed-cost base. The heightened awareness of the Zimbali brand should ensure that

value is achieved for land currently in inventory, which includes “The Lakes” and the recently

acquired 255 hectare piece of land on the south bank, which have yet to be released to the

market.

Prospects

The continued positive performances of IFA SA’s assets bode well for future growth, particularly

in light of increasing tourism as South Africa’s coastline finds favour with international tourists.

The standard of leisure and living offered by Zimbali continues to attract holidaymakers and

serious international property investors alike.

In light of the rapid take-up of properties in the Zimbali Coastal Resort, a 300 hectare extension,

“The Lakes” and a 255 hectare development on the south bank are being planned for

development by the joint venture. The Lakes will include a Gary Player golf course. Both

developments are expected to be completed in time for the 2010 World Cup. The area’s growth

prospects are further supported by the proposed King Shaka airport to be established between

Zimbali and Durban.

The recent addition to the IFA SA portfolio of the Boschendal brand represents the strategic

entry into the booming Western Cape tourism industry and enables the company to utilise

Boschendal’s prime real estate for development.

Further, IFA SA has a strong balance sheet with no borrowings other than shareholder’s loans.

The board is currently investigating opportunities to leverage this to further maximise returns

to shareholders. To this end IFA SA will continue to pursue new integrated resort developments

in South Africa and across Africa and the Indian Ocean region.

Thanks

Thank you to our management and staff for their hard work and dedication during the year.

I also thank our partners. customers and suppliers for their continued invaluable support of our

developments.

TALAL AL-BAHAR

CEO

24 August 2006

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Directorate and Executive

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The following persons were directors of the company when it was known as Moribo Leisure Limited

and all of them resigned with effect from 16 January 2006, as a result of the implementation

of the reverse takeover of Moribo by IFA H&R Kuwait: Messrs WS Yeowart, SA Levitt, A Ball,

M Lutrin, KN Michael, A Norman and EP Rechter.

The following persons comprise the current board of IFA SA:

Jassim M Al-Bahar Non-executive Chairman appointed 16 January 2006

Talal JM Al-Bahar Chief Executive Officer appointed 16 January 2006

James AM Wilson Non-executive appointed 16 January 2006

Werner J Burger Non-executive appointed 8 June 2006

Phillip GR de Sylva Executive appointed 16 January 2006

Vusumuzi M Nkosi Executive appointed 16 January 2006

Gregory E Larson Non-executive appointed 16 January 2006

The board is therefore currently made up of seven directors, three executive members and three

non-executive directors as well as a non-executive chairman. The ages, qualifications,

nationality, business addresses and profiles of these directors are set out on the following pages.

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Jassim Mohamed Al-Bahar (64) Non-executive Chairman

Education

BA International Relations Programme (London School of Economics)

BA Political Science, International Relations

Master of Public Administration (University of Southern California)

Nationality

Kuwaiti

Address

Al Salhiya Complex, Gate 1, Floor 5

PO Box 4694, Zip Code 13047, Safat-Kuwait

Mr Al-Bahar commenced his career as the President of MAR Al-Bahar, the CaterpillarTM dealer for

Kuwait, Bahrain, Qatar, United Arab Emirates and the Sultanate of Oman. During this period he

was appointed as a board member to the Kuwait International Investment Company (“KIIC”)

and was ultimately appointed as the chairman and managing director of KIIC. He held this

position from 1987 to 2000. Mr Al-Bahar is currently the chairman and managing director of IFA

and has held this appointment since 2002. He is also the chairman and CEO of United

Investment Portugal, which has invested approximately $120 million in the Sheraton Algarve

and Pine Cliffs Resort. He was the chairman of the Kuwait Portugal Fund, which has invested $40

million in ESPART, part of Espirito Santo Group, and in the Saviotti Group and the Dom Pedro

Hotel in Portugal. Mr Al-Bahar was elected to the Senior Supervisory Board of Banco

Commercial Portuguese (BCP) and is on the board of BCP. He is also on the board and the

executive board of Kingdom Hotel Investments (KHI), part of Kingdom Holding Company,

chaired by HRH Prince Alwaleed Bin Talal Bin Abdelaziz Al-Saud.

Mr Al-Bahar also serves as chairman of the Kuwait Heart Foundation, is a board member of the

Kuwait American Foundation and a board member and treasurer of the Kuwait Society for the

Advancement of Arab Children and a board member of Al-Qabas newspaper.

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Talal Jassim Mohamed Al-Bahar (28) Chief Executive Officer

Education

BA Business Studies (Loyola Marymount University, Los Angeles)

Nationality

Kuwaiti

Address

Al Salhiya Complex, Gate 1, Floor 5

PO Box 4694, Zip Code 13047, Safat-Kuwait

Mr Al-Bahar currently serves as chairman and managing director of IFA H&R Kuwait based in

Dubai;. He is also the general manager of United Investments in Portugal; and an executive

director of Drake & Skull Kuwait. He has served as chairman and managing director of Kuwait

Investment Holding Company.

He also serves on the board of Jeezan Real Estate, where he is vice chairman and Al-Deera

Holding Company as vice chairman. He was also previously a director of Marketing Services

Company (MMS) and International Finance Company (IFCO).

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James AM Wilson (48) Non-executive

Education

Degree in Hospitality Management Oxford Brookes and HCIMA and

Member of WTTC (World Travel and Tourism Council)

Nationality

British

Address

Dubai Media City, Boutique Office, Villa No. 6

Mr Wilson has had extensive exposure to trading and corporate strategies, including expansion

and development, franchising, international hotel management contracts, cohesive negotiation,

financial, development and asset management, site sourcing and acquisitions.

Prior to joining the IFA group, Mr Wilson held a number of senior positions within the Five Star

hospitality industry covering the management and development of hotels, timeshare resorts,

integrated Five Star resorts, golf development with Southern Sun Hotels (South Africa), Trust

House Forte (London – Hyde Park Hotel), Whitbread Plc, UK Country Club Hotels (Marriott),

Radisson Roe Park (Northern Ireland), Quinta Do Lago Resort (Portugal), Rothschild Investment

Trust (Invicta Golf and Leisure) and has had extensive experience in choosing and evaluating

property types and sectors which will work best for investors.

His group has been instrumental in Europe and the Middle East in changing the way branded

hotels are planned and developed to include residential, fractional, timeshare components to

deliver accelerated returns and to maximise the potential of common marketing investment

and achieving what high-net-worth real estate investors are looking for in today’s market, with

an optimum property portfolio.

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Werner Johannes Burger (37) Non-executive

Education

BSc Building Management (University of Pretoria)

Nationality

South African

Address

Dubai Media City, Boutique Office, Villa No. 6

Mr Burger has extensive experience in all aspects of property and resort development and

management across southern Africa, the Middle East and various other markets and regions.

In Dubai, UAE, Mr Burger has held, amongst other executive positions in the industry, that of

Vice President Sales and Marketing for IFA H&R Kuwait before his current appointment as

President and COO.

As COO, he plays a critical role in the management and future expansion of IFA H&R Kuwait,

locally and internationally. His portfolio includes, inter alia, the strategic positioning of the IFA

H&R Kuwait group globally, the development of new market sectors, the identification and

acquisition of new projects and the building of strategic alliances with key industry leaders and

hospitality operators. His diverse areas of responsibility encompass; financial, organisational and

strategic planning; in addition he spearheads the development of new divisions within the group

that add value and diversity to the current portfolio.

Mr Burger works with the CEO to develop and implement short- and long-term strategy and is

responsible for all major operational decisions.

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Phillip Guy René de Sylva (50) Executive

Education

National Diploma in Surveying

National Diploma in Property Valuations (Natal Technikon)

Nationality

South African

Address

1 Amanbali, Zimbali Coastal Resort, Zimbali, 4422

Mr De Sylva was registered as a professional valuer with the SA Council for the Property Valuers

Profession in September 1986.

He is a past president of the SA Institute of Valuers (SAIV), and past chairman of the SAIV’s

KwaZulu-Natal branch. He is currently a Fellow Member of the institute.

He was appointed by the Minister of Justice as an appraiser for the district of Durban in

October 1994.

Mr De Sylva was employed by Marriott Properties from January 1981 – November 1993 and

managed the Pinetown branch of Marriott for a four-year period up to July 1992.

He acquired PDS Property Consultants CC (“PDS”) (a property valuation practice) in December

1993 as the sole member. He sold PDS in January 2005 to take up an appointment as IFA SA’s

Vice President Operations (Africa and Indian Ocean).

Mr De Sylva has held company directorships in property owning, development and management

companies as well as acting as a consultant to various institutions, government departments

and private sector clients in the past.

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Vusumuzi Mhlawuleni Nkosi (35) Executive

Education

Diploma Golf Course Management (Pretoria Business School)

Nationality

South African

Address


Mr Nkosi was a touring golf professional (PGA Sunshine Tour) for a period of four years and

qualified as golf teaching professional. He acted as operations manager (1998-2000) and

assistant golf director (2000-2003) of the Zimbali Country Club.

Mr Nkosi’s current responsibilities include developing IFA SA’s social responsibility programme,

initiating and implementing a BEE strategy and overseeing the various stakeholders’ needs at

the Zimbali Coastal Resort.

His current business interests further include:

1 Leitch Landscapes (Pty) Limited, shareholder and director, a landscaping, golf course

maintenance and horticultural services company;

2 NVZ Property Management (Pty) Limited, sole shareholder and managing director, a

property maintenance and cleaning services company;

3 Marine Docksworks CC, member, a marine services/stevedoring company.

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Gregory Errol Larson (53) Non-executive

Education

BProc (University of Natal, Pietermaritzburg)

Nationality

South African

Address

3rd Floor Momentum House, 125 Prince Alfred Street, Durban, 4001

Mr Larson was admitted as an attorney, notary public and conveyancer on 5 March 1979 and

has practised law ever since. He is currently practising as a director of Larson Falconer Inc of

Durban specialising in commercial and property law.

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Senior Management

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Kevin Watson (34) Financial Manager and Company Secretary

(Africa and Indian Ocean)

Education

Bachelor of Accounting Science (Honours) (University of South Africa)

Chartered Accountant (South Africa)

Master of Business Administration (Edinburgh Business School)

Nationality

South African

Address


After completing four years of accounting articles, including involvement in numerous

construction and leisure industry audits, Mr Watson relocated to the UK in 1995 where he

worked as a treasury analyst for Bull Information Systems, a large IT company listed in Paris. In

1997 he joined Canary Riverside Developments (a JV between companies listed on the UK and

Singapore exchanges) as financial controller. The JV was responsible for a $500 million mixed

use development, the first in the UK. After the project completion in 2000, Mr Watson worked

as a financial consultant in Switzerland for SITA, preparing one of their subsidiaries for an

Amsterdam listing.

In 2001 Mr Watson returned to South Africa in the position of financial manager for one of Shell

Oil Company’s subsidiaries and in 2003 moved to the USA to another Shell subsidiary as

internal controls manager, then chief financial officer and ultimately general manager. While in

the USA he was involved extensively in implementing corporate governance in compliance with

the Sarbanes Oxley Act and introducing a performance driven business model.

Mr Watson returned to South Africa for the opportunity presented by IFA SA in April 2006 and

currently heads up the full financial function for Africa and the Indian Ocean, which includes

the company secretarial duties.

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Senior Management

Wessel Witthuhn (45) Vice President Design and Development

(Africa and Indian Ocean)

Education

BSc Building Science

MSc Construction Management

CIOB

AAArb

Nationality

South African

Address

Amanbali, Zimbali Coastal Resort, Zimbali, 4422

Mr Witthuhn commenced his career in the construction industry in 1987 and in 1992 started

his own company Rig Construction. In 1997 he joined Grinaker Building Cape to project manage

a $45 million refurbishment of the Cavendish Square Shopping Centre. Mr Witthuhn was made

a director of Grinaker Cape where his responsibilities included procuring new work, marketing,

negotiating, financial management, budgeting and strategic planning.

In 2000 Mr Witthuhn was appointed as general manager of Grinaker Infrastructure Development

in Johannesburg where his role included negotiating with the Parliamentary Ministers.

Mr Witthuhn joined Damac Properties in 2002 as the vice president for projects – Damac was

the first private developer in Dubai to sell freehold property. He successfully set up the design

and development division within the company, and managed the feasibility of developments

within Dubai to the value of $250 million.

In September 2003 Mr Witthuhn was headhunted to take over the management of the entire

Real Estate and Property Management Divisions within the Al-Rostamani Group. Mr Witthuhn

had full responsibility and control over the entire property portfolio of approximately

$550 million. Also during his tenure, he managed and coordinated the acquisition of certain

lands on a concession basis, including the complete development of these lands from concept

(master planning) to financing, marketing, selling and developing. The total value of these

developments was in the region of $2,2 billion.

In May 2006 he joined IFA SA as the Vice President Design and Development (Africa and Indian

Ocean). His portfolio includes all developmental aspects within this region.

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Corporate Governance

The company’s directors acknowledge the importance of sound corporate governance and are

committed to implementing the principles of the King II Report. During the year the directors’

primary focus was to achieve a successful listing on the JSE in the ‘Travel & Leisure’ sector.

Subsequent to the listing on 27 February 2006, the directors are now able to focus on improving

and codifying operational and corporate practices to achieve compliance with the Code of

Corporate Practices and Conduct (“the Code”) set out in the King II Report.

The appointment on 8 June 2006 of a company secretary with extensive corporate governance

experience will facilitate the ongoing effort to enhance the company’s governance framework.

The board

Post listing the unitary board consists of seven directors and is chaired by non-executive

Chairman JM Al-Bahar. In line with the King II Report recommendations it comprises three

executive directors, including the CEO TJM Al-Bahar, and a further three non-executive directors.

JAM Wilson (who had served previously on the board as an executive director) and WJ Burger

were appointed as non-executive directors with effect from 8 June 2006. The group recognises

the King II Report recommendations that board membership include independent non-executive

directors and will seek to facilitate compliance with future board appointments.

As set out in the Board Charter the roles of the non-executive Chairman and CEO are strictly

separated. The clear division of responsibilities is echoed across the board and ensures a balance of

authority which precludes any one director from exercising unfettered powers of decision-making.

Currently none of the directors have entered into service contracts in excess of three years.

In accordance with the articles of association directors retire every three years and being

eligible, offer themselves for re-election at the annual general meeting. JM Al-Bahar, GE Larson

and JAM Wilson retire by rotation at the forthcoming annual general meeting and, being eligible,

will offer themselves for re-election. WJ Burger, being a new director, is also required to retire

and will make himself available for re-election.

The board meets at least four times a year with additional meetings held where necessary.

Subsequent to the listing on the JSE in February 2006 the board has formally met once on

8 June 2006, with attendance as indicated:

26

Rhodes Cottage, Boschendal Estate – Western Cape, South Africa

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Directors Board meetings

JM Al-Bahar*▼ Chairman 0 (1)

TJM Al-Bahar▼ CEO 1 (1)

WJ Burger* appointed 8 June 2006 1 (1)

PGR de Sylva 1 (1)

GE Larson* 1 (1)

VM Nkosi 1 (1)

JAM Wilson*▲ 1 (1)

*non-executive ▼Kuwaiti ▲British

The board maintains full and effective control over the company and is responsible for

monitoring executive management, ensuring the proper direction and control of the company

and any acquisitions or disposals. A Board Charter formally setting out the board’s composition

and procedures was proposed for discussion at the board meeting on 8 June 2006 and will be

adopted at the next board meeting.

The Charter codifies the board’s duties and responsibilities which include determining the

group’s overall policy, strategic direction and goals, acquisitions and resource allocation,

monitoring key risks and legal and regulatory compliance. Steps for the appointment of

directors and the formation of sub-committees are also codified.

All directors have unrestricted access to the advice and services of the company secretary and

to company records, information, documents and property. Non-executive directors also have

unfettered access to management at any time. All directors are entitled, at the company’s

expense, to seek independent professional advice on any matters pertaining to the group

necessary to discharge their responsibilities.

Board processes

Share dealings

Directors are required to declare their shareholdings, additional directorships, potential conflicts

of interest and any dealings in securities of the company to an appointed executive director and

the company secretary, who together with the sponsor ensure that such dealings are released

on SENS.

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In addition, all directors and management with access to financial information and any other

price sensitive information are prohibited from dealing in the shares of the company during

‘closed periods’, as defined by the JSE.

New appointments

Presently the board as a whole is responsible for the appointment of new directors. Going

forward the board in conjunction with the remuneration committee will regularly review and

assess the mix of skills and experience on the board as well as its composition in light of South

African transformation policies. The board has a formal Board Appointment policy which is used

when appointing directors.

Self-evaluation

The group is cognisant of the King II Report’s recommendation for a board self-evaluation

procedure as well as the need for the sub-committees to conduct annual self-evaluation

exercises. Accordingly a formal self-evaluation procedure is set out as a future imperative in the

Board Charter.

Company secretary

The company secretary is responsible for providing the directors with up-to-date information

on regulatory developments as well as corporate governance. Where appropriate, the company

secretary will involve the sponsor and other relevant experts in this regard. GL Evans resigned

as company secretary during the year to focus on his financial controller duties, and KA Watson

was appointed in his stead with effect from 8 June 2006.

Board committees

The company has established a group audit, risk and compliance and a remuneration

committee. The committees are governed by written terms of reference which were tabled at

the recent board meeting on 8 June 2006 and will be approved at the next board meeting.

Group Audit Risk and Compliance (“ARC”) committee

The ARC committee comprises non-executive directors GE Larson, who chairs the committee,

JAM Wilson and Chairman JM Al-Bahar. Although the committee has not met since the

company’s listing on the JSE, going forward it will meet at least four times a year in line with

the King II Report recommendations.

30


HOTELS & RESORTS

31


The ARC committee is responsible for monitoring the company’s risk and environmental

management and the safeguarding of assets and internal control. It also reviews the

performance of the external auditors and the company’s compliance with laws and regulations.

The committee is further responsible for recommending the use of the external auditor for non-

audit services. The committee’s Charter sets guidelines for determining audit and non-audit

services including differing approval procedures for varying project costs.

Remuneration committee

The remuneration committee comprises the CEO TJM Al-Bahar and non-executive director

JAM Wilson, who chairs the committee. The CEO is recused from discussions regarding his own

remuneration. Although the remuneration committee has formally not met during the year,

going forward the committee will meet twice a year and will look to add an additional non-

executive director to its membership.

The committee is responsible for reviewing and approving the remuneration and terms of

employment of the executive directors and senior employees. When making appointments the

committee takes into account IFA SA’s board appointment policy which formalises a transparent

procedure for new appointments. The fees of both executive and non-executive directors are

approved by shareholders at the annual general meeting in line with the King II Report.

Directors’ emoluments are disclosed in note 27 to the annual financial statements.

The committee is further tasked with reviewing the composition of the board and making

recommendations for the appointment of new directors.

Accounting and auditing

The group is fully audited by the external auditors twice a year with an additional two quarterly

reviews. The preparation of the financial statements remains the responsibility of the directors.

32


HOTELS & RESORTS

33


Internal control and risk management

Internal control

The board, through the ARC committee, is responsible for the group’s systems of internal control

and risk management and reviewing the effectiveness of these systems. In light of the current

size of the group, the board has deemed a dedicated internal audit function to be impractical.

Nothing has come to the attention of the board to indicate that there has been a material

breakdown in the internal systems of control during the year.

Stakeholder communication

The company is committed to timely, consistent and transparent communication with all

stakeholders.

Company announcements are released on SENS and financial results announcements are also

posted to shareholders, who are encouraged to attend the annual general meeting to facilitate

ongoing interaction with the board.

The company is committed to the highest standards of integrity, behaviour and ethics in dealing

with all stakeholders. Employees are required to adhere to integrity in all business dealings,

confidentiality of information, timeous dissemination of information and a non-discriminatory

work environment.

34


HOTELS & RESORTS

35

Sustainability Report

BEE

The group is committed to sustainable transformation as a business imperative. To this end

IFA SA has begun the process of determining its current BEE status in terms of a generic

scorecard to assess the requirements for achieving the necessary BEE platform. Going forward

the group will monitor the applicable industry transformation charters, in particular the Tourism

Charter, and the Department of Trade and Industry’s Broad-Based BEE (BBBEE) Codes of Good

Practice.

IFA SA’s commitment to transformation was recently evidenced by the acquisition of a stake in

Boschendal as announced on 20 June 2006, which will enable the group to contribute towards

Boschendal’s transformation initiative. The programme, set up by Boschendal BEE shareholder

Kovacs Investments 609 (Pty) Limited, intends to contribute over R100 million in trust and

270 hectares of land to the local Dwarsriver community over the next ten years.

Employees

IFA SA is committed to achieving an employment status that fairly represents the demographics

of the country and to fostering a non-discriminatory work environment in which all employees

enjoy equal rights.

Skills development and training

In light of the group’s recent listing and the small number of employees at holding company

level, no formal skills development programme is presently in place. However, IFA SA will

re-assess the need to implement formal skills and development programmes commensurate

with the growth of the group.

Health and safety

IFA SA is committed to ensuring full compliance with the South African Occupational Health

and Safety Act. Although the group presently has no formal health and safety policy, it facilitates

compliance through adherence to those of its joint venture partner (Moreland at Zimbali

Coastal Resort) and hotel operators (Sun International (South Africa) Limited) at Zimbali Lodge,

respectively. At Zimbali Lodge a committee is responsible for monitoring compliance with the

policies in place, and in addition regular safety, health and environment audits are conducted by

independent contractors and bodies.

36


HOTELS & RESORTS

37

Sustainability Report

Environment

The group is committed to the preservation and conservation of the environment and the

natural resources of the local regions in which it operates. Environmental impact studies are

conducted at all new developments prior to the commencement of construction.

The Zimbali Coastal Resort includes a 50 hectare nature reserve with all primary dune areas

demarcated as conservation areas to conserve the local flora and fauna. The group further

adheres to the environmental policies of its joint venture and management partners, Moreland

and Sun International. In this regard Zimbali Lodge, managed by Sun International (South Africa)

Limited, has received a Gold Award from the Heritage Environmental Rating Programme and

Moreland is ISO 14001 certified.

IFA SA’s commitment to conservation is further evidenced in the Boschendal co-development

which includes a 750 hectare nature reserve, and recognises a social accord with Dwarsriver

residents to conserve the natural resources in the valley. In designing and planning the

development, IFA SA and Boschendal are cognisant of its status as a heritage site and have taken

the viewpoint of the South African Heritage Association into consideration in this regard.

Corporate Social Investment (“CSI”)

IFA SA acknowledges its responsibility towards the communities in which it operates as well as

broader development projects. Following the successful listing the group is now able to establish

a formal CSI structure. To this end the group has tasked an executive director with identifying

suitable beneficiaries for social and community upliftment programmes.

38

Company Secretary’s Certificate

HOTELS & RESORTS

I, KA Watson, company secretary of IFA Hotels & Resorts Limited, certify that, to the best of my knowledge and belief, all returns required

of a public company have, in respect of the period under review, been lodged with the Registrar of Companies and that all such returns

are true, correct and up to date.

KA WATSON Durban

Company Secretary 24 August 2006

Directors’ Responsibility Statement

The directors are responsible for the maintenance of adequate accounting records and the preparation and integrity of the financial

statements and related information. The auditors are responsible to report on the fair presentation of the financial statements. The

financial statements have been prepared in accordance with International Financial Reporting Standards and in the manner required by

the Companies Act in South Africa.

The directors are also responsible for the group and company’s system of internal financial control. These are designed to provide

reasonable, but not absolute, assurance as to the reliability of the financial statements, and to adequately safeguard, verify and maintain

accountability of assets, and to prevent and detect misstatement and loss. Nothing has come to the attention of the directors to indicate

that any material breakdown in the functioning of these controls, procedures and systems has occurred during the period under review.

The financial statements have been prepared on the going concern basis, since the directors have every reason to believe that the group

and company has adequate resources in place to continue in operation for the foreseeable future.

The directors of the company, whose names are set out on page 14, collectively and individually accept full responsibility for the accuracy

of the information given in this report and these annual financial statements and certify to the best of their knowledge and belief that:

• no facts have been omitted, which would make any statement in this report false or misleading;

• all reasonable enquiries to ascertain such facts have been made; and

• the report contains all information required by the South African Companies Act and the JSE Listings Requirements.

The annual financial statements set out on pages 40 to 88 were approved by the board of directors on 24 August 2006 and are signed

on their behalf by:

JM AL-BAHAR TJM AL-BAHAR

Chairman CEO

39

HOTELS & RESORTS

Auditors’ Report

Report of the independent auditors to the shareholders of IFA Hotels & Resorts Limited

We have audited the group and company annual financial statements of IFA Hotels & Resorts Limited set out on pages 40 to 88 for the

period ended 30 June 2006. These financial statements are the responsibility of the company’s directors. Our responsibility is to express

an opinion on these financial statements based on our audit.

Scope

We conducted our audit in accordance with statements of International Standards on Auditing. Those standards require that we plan and

perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit

includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes

assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial

statement presentation. We believe that our audit provides a reasonable basis for our opinion.

Audit opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the group and the company at

30 June 2006 and the results of their operations and their cash flows for the period then ended in accordance with International Financial

Reporting Standards, and in the manner required by the Companies Act in South Africa.

BDO SPENCER STEWARD (KZN) INCORPORATED

Chartered Accountants (South Africa)

Registered Auditors

Durban

24 August 2006

40

HOTELS & RESORTS

Report of the Directors

To the shareholders of IFA Hotels & Resorts Limited

Your directors submit their report for the period ended 30 June 2006. This report forms part of the audited financial statements.

Year-end

The group changed its year-end in the previous financial year from 31 December to 30 June. The results of the group’s operations and cash

flows in the comparative year are for the period of six months ended 30 June 2005.

The company changed its year-end in the current financial year from 31 December to 30 June. The results of the company’s operations and

cash flows in the current year are for the period of 18 months ended 30 June 2006.

Review of operations

Detailed commentary is set out in the CEO’s report.

Investments in wholly-owned subsidiaries and principal subsidiaries

Details of the company’s subsidiaries are set out on page 3 of the annual report.

The company’s three principal subsidiaries are IFA Zimbali Lodge (Pty) Limited, IFA Hotels and Resorts (South Africa) (Pty) Limited and

IFA Boschendal Investments (Pty) Limited. IFA Zimbali Lodge (Pty) Limited owns the Zimbali Lodge. Sun International Management Limited

has the management contract and is responsible for the day-to-day operations of the Zimbali Lodge. IFA Hotels and Resorts (South Africa)

(Pty) Limited holds a 50% interest in two joint ventures with Moreland-Zimbali Resorts (Pty) Limited known as Mifaz and Zimbali Estates (Pty)

Limited. They are jointly controlled. IFA Boschendal Investments (Pty) Limited owns a 19,25% stake in Boschendal Limited and Purple Plum

Properties 59 Limited which is responsible for developing the Boschendal estate.

Financial review

Detailed commentary is set out in the CEO’s report and the annual financial statements.

Borrowing powers

The borrowing powers of the company are not limited.

The IFA SA group currently has no external borrowings. It is financed entirely by shareholder’s loans and internally generated cash.

The aggregate of the shareholder’s loans, both interest-bearing and non-interest bearing, can be found in note 21 to the annual financial

statements.

Dividends

No dividends were declared or recommended during the period (2005: RNIL).

As set out in the Circular to the shareholders of Moribo Leisure Limited issued on 22 December 2005 (“the Circular”), the board of directors

undertook to distribute all of the company’s excess cash that existed before the implementation of the reverse takeover to its shareholders

who were recorded in the register as such on the record date.

41

HOTELS & RESORTS


The last date to trade in order to participate in the dividend was Friday, 10 February 2006 and the record date was Friday, 17 February 2006

and was prior to the implementation of the reverse takeover.

During the period and subsequent to the implementation of the reverse takeover the South African Revenue Service (“SARS”) acquired all of

the excess cash, to settle certain claims. The previous directors of the company continue to apply for the settlement of the company’s previous

receivables including the excess cash acquired by SARS. It is not possible at this time to quantify the extent, if any, of the dividend.

Share capital

The authorised and issued share capital of the company, at 30 June 2006, was as follows: R

Authorised

500 000 000 ordinary shares of 1 cent each 5 000 000

Issued

218 210 680 ordinary shares of 1 cent each 2 182 107

Share premium 207 054 943

All changes in the authorised and issued share capital are set out in note 19 to the financial statements.

Unlisted securities

IFA SA has no unlisted securities.

Major shareholders

Based on the share register at 30 June 2006, the following shareholders held in excess of 5% in the capital of the company:

Number of shares held Percentage of

Name of shareholder Direct Indirect issued share capital

IFA Hotels & Resorts KSCC 185 479 078 – 85,0

International Investment Projects Company KSCC 20 730 015 – 9,5

The holding company of IFA Hotels & Resorts KSCC is International Financial Advisors KSCC. Both of these entities are incorporated in Kuwait.

42


HOTELS & RESORTS

Shareholder spread

The number of public shareholders and the percentage of shares held by public and non-public shareholders, as well as an analysis of the

non-public shareholdings, are set out below as at 30 June 2006:

Number of % of Number of % of

shareholders shareholders shares held issued shares

Non-public shareholders

Directors – direct interests – – – –

Directors – indirect interests – – – –

Associates of the directors – – – –

Entities with a right to nominate a director – – – –

Trustees of the company’s share scheme – – – –

Strategic holdings (more than 10%) 1 0,16 185 479 078 85

Public shareholders 632 99,84 32 731 602 15

Total 633 100 218 210 680 100

Auditors

BDO Spencer Steward (KZN) Incorporated have indicated their willingness to continue in office as auditors of the company. A resolution

to reappoint them as auditors will be proposed at the next annual general meeting of shareholders scheduled to take place on

20 September 2006.

Directors’ fees

As the reverse listing of the company onto the JSE was implemented shortly before year-end, the directors have agreed not to be paid any

directors’ fees for the year ended 30 June 2006. The directors have also agreed not to take any directors’ fees for the year ending 30 June 2007.

This further applies to members of the ARC and remuneration committees. Please see note 27 of the financial statements for further details

on directors’ remuneration.

Directors’ interests in the company

At 30 June 2006, none of the directors held direct or indirect interests in the company. There have been no changes in this status between the

year-end and the date of this report.

Special resolutions

All the ordinary and special resolutions proposed at the general meeting of shareholders held on Monday, 16 January 2006 were passed by

shareholders at the meeting and have been registered by the Companies and Intellectual Property Registration Office of South Africa.

IFA Zimbali Lodge (Pty) Limited and IFA Hotels and Resorts (South Africa) (Pty) Limited both amended their Articles of Association prior to the

reverse listing onto the JSE. These resolutions were both passed on 16 January 2006.

43

Report of the Directors HOTELS & RESORTS

Litigation statement

There are no legal or arbitration proceedings, including any proceedings which are pending or threatened, of which the company is aware which

may have, or have had, during the twelve month period preceding the date of these annual financial statements, a material effect on the

financial position of the group.

Events subsequent to year-end

Other than as set out in these financial statements, there have been no material facts or circumstances that have occurred or changes in the

financial or trading position of the company or its subsidiaries between the year-end date and the date of this report.

Company secretary

GL Evans Appointed 1 February 2006, resigned 8 June 2006

KA Watson Appointed 8 June 2006

Business and postal address

1 Amanbali, Zimbali Coastal Resort, KwaZulu-Natal, South Africa

PO Box 12, Zimbali, 4422, South Africa

The directors’ report set out on pages 40 to 43 was approved by the board of directors on 24 August 2006 and is signed on their behalf

by:

JM AL-BAHAR TJM AL-BAHAR

Chairman CEO

44

Balance Sheetas at 30 June 2006

HOTELS & RESORTS

Group Company

30 June 30 June 30 June 31 December

2006 2005 2006 2004

Note R R R R

Restated

Assets

Non-current assets 146 051 959 68 251 862 183 842 869 556 132

Property, plant and equipment 7 83 132 333 57 455 949 – 156 332

Intangible assets 8 5 533 763 2 297 759 – –

Investment in subsidiaries 9 – – 57 548 727 1 000

Loans to subsidiaries 9 – – 126 294 142 –

Investment in associates 10 13 902 778 – – –

Loan to associate 10 35 851 326 – – –

Investments 11 7 300 000 7 300 000 – –

Other financial assets 12 – – – 398 800

Deferred tax 13 331 759 1 198 154 – –

Current assets 312 644 707 191 430 799 1 637 035 5 808 287

Township properties 14 86 217 232 77 606 681 – –

Inventories 15 2 453 812 2 176 994 – –

Trade and other receivables 16 142 739 260 57 975 325 115 694 1 350 112

Other financial assets 12 1 094 977 983 886 1 094 977 –

Assets held for sale 17 211 765 – 211 765 –

Cash and cash equivalents 18 79 927 661 52 687 913 214 599 4 458 175

Total assets 458 696 666 259 682 661 185 479 904 6 364 419

Equity and liabilities

Capital and reserves 148 653 825 17 738 815 120 945 299 5 764 905

Issued capital and share premium 19 71 891 716 200 209 237 050 83 033 588

Non-distributable reserve 20 23 796 690 – – 5 251 216

Distributable reserve 52 965 419 17 738 615 (88 291 751) (82 519 899)

Non-current liabilities 133 593 638 103 618 960 55 298 878 –

Shareholder’s loan 21 113 570 846 96 227 384 55 298 878 –

Deferred tax 13 20 022 792 7 391 576 – –

Current liabilities 176 449 203 138 324 886 9 235 727 599 514

Shareholder’s loan 21 47 794 492 74 578 080 – –

Liabilities held for sale 17 211 765 – 211 765 –

Trade and other payables 22 66 706 480 19 069 956 8 401 265 599 514

Advance deposits 23 903 154 302 267 – –

Deferred revenue 24 50 885 092 43 540 092 – –

Taxation 9 948 220 834 491 622 697 –

Total equity and liabilities 458 696 666 259 682 661 185 479 904 6 364 419

45

Income Statementfor the period ended 30 June 2006

HOTELS & RESORTS

Group Company

Twelve Six Eighteen Twelve

months ended months ended months ended months ended


2006 2005 2006 2004

R R R R

Note Restated

Continuing operations

Revenue 25 161 006 555 55 458 306 2 623 769 546 306

Cost of sales (72 174 742) (25 137 105) – –

Gross profit 88 831 813 30 321 201 2 623 769 546 306

Other income 160 967 33 832 – 3 943 000

Distribution costs (562 574) (541 244) – –

Administrative expenses (10 747 258) (9 717 558) – (3 466 000)

Other expenses (22 083 553) (2 823 815) (2 957 580) (3 286 323)

Operating profit/(loss) 26 55 599 395 17 272 416 (333 811) (2 263 017)

Interest received 29 15 227 074 3 242 605 8 911 063 –

Finance costs 30 (10 731 269) (4 307 578) (6 399 122) (1 095)

Profit/(loss) before tax 60 095 200 16 207 443 2 178 130 (2 264 112)

Taxation 31 (18 117 295) (3 910 788) (622 697) –

Profit/(loss) after tax from continuing operations 41 977 905 12 296 655 1 555 433 (2 264 112)

Discontinuing operations

Loss on discontinued operations 17 – – (5 764 905) –

Net profit/(loss) 41 977 905 12 296 655 (4 209 472) (2 264 112)

Attributable to:

– Equity holders of the parent 41 977 905 12 296 655 (4 209 472) (2 264 112)

Earnings per share

– Basic and diluted basic earnings per share (cents) 32 19,52 5,78

– Headline and diluted headline earnings per share (cents) 32 19,56 5,78

46

Statement of Changes in Equityfor the period ended 30 June 2006

HOTELS & RESORTS

Non-

Share Share distributable Distributable

capital premium reserve reserve Total

Group R R R R R

Balance at 1 January 2005 200 – – 5 441 960 5 442 160

Net profit for the year 12 296 655 12 296 655

Balance at 1 July 2005 200 – – 17 738 615 17 738 815

2 181 907 69 709 609 23 796 690 35 226 804 130 915 010

Issue of share capital 2 181 907 69 709 609 71 891 516

Transaction costs (6 814 273) (6 814 273)

Surplus on revaluation of land and buildings 28 933 303 28 933 303

Deferred tax on revaluation surplus (5 073 441) (5 073 441)

Net profit for the period 41 977 905 41 977 905

Transfer to distributable reserve (63 172) 63 172 –

Balance at 30 June 2006 2 182 107 69 709 609 23 796 690 52 965 419 148 653 825

Non-

Share Share distributable Distributable

capital premium reserve reserve Total

Company R R R R R

Balance at 1 January 2004 (restated) 55 231 82 978 357 5 251 216 (80 255 787) 8 029 017

Net loss for the period (restated) (2 264 112) (2 264 112)

Balance at 1 January 2005 (restated) 55 231 82 978 357 5 251 216 (82 519 899) 5 764 905

2 126 876 124 076 586 (5 251 216) (5 771 852) 115 180 394

Share buyback (677) 677 –

Transfer to distributable reserve (5 251 216) 5 251 216 –

Issue of share capital 2 127 553 124 076 586 126 204 139

Transaction costs (6 814 273) (6 814 273)

Net loss for the period (4 209 472) (4 209 472)

Balance at 30 June 2006 2 182 107 207 054 943 – (88 291 751) 120 945 299

47

Cash Flow Statementfor the period ended 30 June 2006

HOTELS & RESORTS

Group Company




2006 2005 2006 2004

R R R R

Note Restated

Cash flows from operating activities 23 482 286 11 922 952 4 510 748 (2 656 825)

Cash generated/(utilised) by operating activities 38.1 21 816 326 13 056 239 6 856 782 (2 655 730)

Interest received 8 827 952 3 242 605 2 511 941 –

Interest paid (6 582 595) (4 307 578) – (1 095)

Taxation paid 38.2 (579 397) (68 314) – –

Cash utilised by discontinued operations 17 – – (4 857 975) –

Cash flows from investing activities (55 042 775) (407 637) (63 638 051) 6 187 000

Expenditure to maintain operating capacity

Property, plant and equipment acquired (1 139 997) (407 637) – (9 000)

Proceeds of disposal of investments – – – 5 962 000

Proceeds of discontinued operation 17 – – 399 800 –

Long-term loan receivable repaid – – – 234 000

Expenditure for expansion

Subsidiary acquired 38.3 – – (100) –

Investment in associates (13 902 778) – – –

Loans to subsidiaries and associate (40 000 000) – (64 037 751) –

Cash flows from financing activities 58 800 237 4 292 983 54 883 727 –

Transaction costs (6 814 273) – (6 814 273) –

Loans raised 71 614 510 5 641 292 61 698 000 –

Loans repaid (6 000 000) (1 348 309) – –

Increase/(decrease) in cash and cash equivalents 27 239 748 15 808 298 (4 243 576) 3 530 175

Cash and cash equivalents at beginning of the period 38.4 52 687 913 36 879 615 4 458 175 928 000

Cash and cash equivalents at end of the period 38.4 79 927 661 52 687 913 214 599 4 458 175

48

Notes to the Annual Financial Statementsat 30 June 2006

HOTELS & RESORTS

1. Adoption of new and revised International Financial Reporting Standards (IFRS)

The group has previously adopted all of the following new and revised Standards and Interpretations issued by the International

Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) of the IASB that are

relevant to its operations.

The financial statements of the company were prepared in accordance with IFRS for the first time. The company previously prepared its

financial statements under South African Statements of Generally Accepted Accounting Practice. The date of transition to IFRS is

1 January 2004 and accordingly comparative information has been restated. The impact of IFRS on the company’s financial statements

is immaterial.

Where applicable, changes to recognition, measurement and disclosures were made as a result of the adoption of the following standards:

IAS 1 Presentation of Financial Statements

IAS 2 Inventories

IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors

IAS 10 Events after the Balance Sheet Date

IAS 16 Property, Plant and Equipment

IAS 17 Leases

IAS 21 Accounting for the Effects of Changes in Foreign Exchange rates

IAS 24 Related Party Disclosures

IAS 31 Interests in Joint Ventures

IAS 32 Financial Instruments: Disclosure and Presentation

IAS 36 Impairment of Assets

IAS 38 Intangible Assets

IAS 39 Financial Instruments: Recognition and Measurement

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.

At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:

IFRS 6 Exploration for and Evaluation of Mineral Resources

IFRS 7 Financial Instruments: Disclosures

IFRIC 4 Determining whether an Arrangement contains a Lease

IFRIC 5 Right to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds

IFRIC 6 Liabilities Arising from Participating in a Specific Market – Waste Electrical and Electronic Equipments

IFRIC 7 Applying the Restatement Approach under IAS 29 – Financial Reporting in Hyperinflationary Economies

IFRIC 8 Scope of IFRS 2.

The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the

financial statements of the group and company other than requiring additional disclosure.

49


HOTELS & RESORTS

2. Significant accounting policies

The financial statements are prepared in accordance with International Financial Reporting Standards. The financial statements are

prepared under the historical cost convention, modified for certain items measured at fair value and the principal accounting policies

adopted are set out below.

2.1 Consolidation

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the company and entities controlled by the company

(its legal subsidiaries and those entities that it has the ability to control) as well as business combinations, commonly referred to as

reverse acquisitions, where the acquirer (the legal subsidiary) is the entity whose equity interests have been acquired and the issuing

entity (the company) is the acquiree. Consolidated financial statements prepared following a reverse acquisition are issued under

the name of the company but are described in the notes as a continuation of the financial statements of the legal subsidiary

(ie: the acquirer for accounting purposes).

Control is achieved where the acquirer has the power to govern the financial and operating policies of an entity so as to obtain

benefits from its activities. The results of the acquirees acquired or disposed of during the year are included in the consolidated

income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary,

adjustments are made to the financial statements of acquirees to bring their accounting policies into line with those used by other

members of the group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation. Minority interests in the net assets of

consolidated acquirees are identified separately from the group’s equity therein. Minority interests consist of the amount of those

interests at the date of the original business combination and the minority’s share of changes in equity since the date of the

combination. The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair

value of the assets, liabilities and contingent liabilities recognised. Losses applicable to the minority in excess of the minority’s

interest in the acquiree’s equity are allocated against the interests of the group except to the extent that the minority has a binding

obligation and is able to make an additional investment to cover the losses.

Business combinations

The acquisition of businesses is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate

of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group

in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable

assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 – Business Combinations are

recognised at their fair values at the acquisition date, except for non-current assets (or disposal groups) that are classified as held

for sale in accordance with IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations. In a reverse acquisition, the cost

of the business combination is deemed to have been incurred by the legal subsidiary (ie: the acquirer for accounting purposes) in

the form of equity instruments issued to the owners of the legal parent (ie: the acquiree for accounting purposes). When equity

instruments are issued as part of the cost of the acquisition, the cost of the acquisition is calculated as the fair value of those equity

instruments at the date of exchange. In the absence of a reliable published price, the fair value of the equity instruments is estimated

by reference to the fair value of the acquirer or the fair value of the acquiree, whichever is more clearly evident.

Investments in subsidiaries are carried at cost in the company financial statements.

50


HOTELS & RESORTS

2. Significant accounting policies continued

2.1 Consolidation continued

Jointly controlled entities

The group’s interests in jointly controlled entities are accounted for by proportionate consolidation. The group combines its share

of the joint venture’s individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items

in the group’s financial statements. The group recognises the portion of gains or losses on the sale of assets by the group to the

joint venture that is attributable to the other venturers. The group does not recognise its share of profits or losses from the joint

venture that result from the group’s purchase of assets from the joint venture until it resells the assets to an independent party.

However, a loss on the transaction is recognised immediately if the loss provides evidence of a reduction in the net realisable value

of current assets, or an impairment loss.

Investments in associates

An associate is an entity over which the group has the ability to excercise significant influence and that is neither a subsidiary nor

an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the

investee but is not control or joint control over those policies. The results and assets and liabilities of associates are incorporated in

these financial statements using the equity method of accounting except when the investment is classified as held for sale, in which

case it is accounted for under IFRS 5 – Non-current Assets Held for Sale and Discontinued Operations. Under the equity method,

investments in associates are carried in the consolidated balance sheet at cost plus equity-accounted earnings less dividends

received and any impairment in the value of individual investments. Losses of an associate in excess of the group’s interest in that

associate (which includes any long-term interests that, in substance, form part of the group’s net investment in the associate) are

not recognised unless the group has a liability to pay certain amounts, has given a guarantee or has made payments on behalf of

the associate. Where a group entity transacts with an associate of the group, profits and losses are eliminated to the extent of the

group’s interest in the relevant associate. Any excess of the cost of acquisition over the company’s share of the net fair value of the

identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition, is recognised as goodwill

in terms of the company’s policy on goodwill. The goodwill is included within the carrying amount of the investment and is assessed

for impairment as part of the investment.

2.2 Goodwill

Goodwill arising on an acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the

business combination over the group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities

recognised. If, after reassessment, the group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and

contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

2.3 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and

services provided in the normal course of business, net of discounts, rebates and sales-related taxes.

Revenue from the sale of goods is recognised when all of the following conditions have been satisfied:

• The entity has transferred to the buyer the significant risks and rewards of ownership of the goods;

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2.3 Revenue recognition continued

• The entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective

control over the goods sold;

• The amount of revenue can be measured reliably;

• It is probable that the economic benefits associated with the transaction will flow to the entity; and

• The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue from the sale of township property is recognised in accordance with the group’s accounting policy on township property

developments (refer to note 2.4 below).

Revenue from the rendering of services is recognised in the accounting period in which the services are rendered, by reference to

completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to

be provided.

The outcome of a transaction can be estimated reliably when all of the following conditions are satisfied:

• The amount of revenue can be measured reliably;

• It is probable that the economic benefits associated with the transaction will flow to the entity;

• The stage of completion of the transaction at the balance sheet date can be measured reliably; and

• The costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

Interest is recognised on a time proportion basis which takes into account the effective yield on the asset over the period it is

expected to be held.

2.4 Township property developments

Revenue from the sale of township property is recognised when legal title passes or when the equitable interest in the property

vests in the buyer. Where there are further substantial acts to complete in the development of a township property, revenue is

deferred and recognised as the acts are performed. Revenue is recognised by reference to the stage of completion of the

development of the township property at the balance sheet date, as measured by the proportion that land and development costs

incurred to date bear to the estimated total land and development costs.

In assessing whether equitable interest vests in the buyer prior to legal title passing, management’s judgements are based on

whether the following conditions have been met:

• The relevant agreements are unconditional and binding on the purchaser;

• The purchaser has paid a meaningful deposit or has made arrangements to secure payment of the purchase price;

• Zoning and final conditions of establishment have been obtained; and

• Servicing arrangements and costs are substantially finalised.

2.5 Property, plant and equipment

Property, plant and equipment, other than land, are stated at cost less any accumulated depreciation and any accumulated

impairment losses.

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2.5 Property, plant and equipment continued

Land and buildings held for use in the production or supply of goods or services or for administrative purposes are stated in the

balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated

depreciation and subsequent accumulated impairment losses. Land is not depreciated. Revaluations are performed with sufficient

regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the

balance sheet date.

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate

that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated

recoverable amount, the assets or cash-generating units are written down to their recoverable amount.

Depreciation is charged so as to write off the cost of assets less their residual values over their estimated useful lives, using the

straight-line method. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet

date.Where significant parts of an item have different useful lives to the item itself, these parts are depreciated over their estimated

useful lives.

Increases in the carrying amount arising on revaluation are credited to non-distributable reserves in shareholders’ equity. Decreases

that offset previous increases of the same asset are charged against the non-distributable reserve; all other decreases are charged

to the income statement. Each year the difference between depreciation based on the revalued carrying amount of the asset

(the depreciation charged to the income statement) and depreciation based on the asset’s original cost is transferred from

non-distributable reserves to retained earnings.

The estimated useful lives of the major categories of property, plant and equipment are:

Buildings 1 – 50 years

Computer equipment 1 – 4 years

Furniture and fittings 1 – 7 years

Motor vehicles 1 – 5 years

Office equipment 1 – 7 years

Plant and equipment 1 – 50 years

Soft furnishings 1 – 5 years

The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference

between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.

2.6 Non-current assets held for sale

Non-current assets are classified as held for sale if the carrying amount will be recovered principally through sale rather than

through continuing use. This condition is regarded as met only when the sale is highly probable, the asset is available for immediate

sale in its present condition, management is actively looking for a buyer, the price is reasonable in relation to fair value and

management is committed to the sale which should be expected to qualify for recognition as a completed sale within one year from

the date of the classification.

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2.6 Non-current assets held for sale continued

Immediately prior to being classified as held for sale, the carrying amount of assets and liabilities are measured in accordance with

the applicable standard. After classification as held for sale it is measured at the lower of the carrying amount and fair value less

costs to sell. An impairment loss is recognised in profit or loss for any initial and subsequent write-down of the asset and disposal

group to fair value less costs to sell.

A gain for any subsequent increase in fair value less costs to sell is recognised in profit or loss to the extent that it is not in excess

of the cumulative impairment loss previously recognised. Non-current assets or disposal groups that are classified as held for sale

are not depreciated.

2.7 Discontinued operations

The results of discontinued operations are presented separately in the income statement and the assets and liabilities associated

with these operations are included with Assets/Liabilities Held for Sale in the balance sheet.

2.8 Township properties

Township properties comprise land at cost and development expenditure attributable to unsold property. Development expenditure

consists of township planning, site maintenance and servicing.Township properties are valued at the lower of cost and net realisable value.

2.9 Government grants

Government grants relating to assets are presented in the balance sheet by reducing the carrying value of the related asset.

The grant is recognised as income as the assets are sold by reducing the cost of sale charge to the income statement.

2.10 Financial instruments

Financial assets and financial liabilities are recognised on the group’s and the company’s balance sheet when the group or company

becomes a party to the contractual provisions of the instrument.

Cash and cash equivalents

Cash and cash equivalents comprise balances with banks, cash on hand, demand deposits, and other short-term highly liquid

investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in fair value.

Loans and trade and other receivables

Loans and trade and other receivables are initially measured at cost which is the fair value of the amount receivable in future, plus

transaction costs. These are subsequently measured at amortised cost using the effective-interest rate method. Appropriate

allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is

impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of

estimated future cash flows discounted at the effective-interest rate computed at initial recognition.

Financial liabilities and trade and other payables

Financial liabilities consist of shareholders’ loans, loans from group companies, other loans and trade and other payables. They are

recognised initially at fair value, net of transaction costs incurred. Financial liabilities are subsequently stated at amortised cost.

Any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement

over the period of the financial liabilities using the effective-interest rate method.

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2.10 Financial instruments continued

Investments

Investments are recognised and derecognised on a trade date basis where the purchase or sale of an investment is under a contract

whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially

measured at cost, which is the fair value, plus directly attributable transaction costs.

The group and company have no expressed intention or ability to ‘hold-to-maturity’ any of its investments. Investments are

classified as either investments held for trading or as available for sale, and are measured at subsequent reporting dates at fair value.

Where investments are held for trading purposes, gains and losses arising from changes in fair value are included in profit or loss for

the period. For available-for-sale investments, gains and losses arising from changes in fair value are recognised directly in equity,

until the security is disposed of or is determined to be impaired, at which time the impairment or the cumulative gain or loss

previously recognised in equity is included in the profit or loss for the period.

Impairment losses recognised in profit or loss for equity investments classified as available for sale are not subsequently reversed

through profit or loss. Impairment losses recognised in profit or loss for debt instruments classified as available for sale are

subsequently reversed if an increase in the fair value of the instrument can be objectively related to an event occurring after the

recognition of the impairment loss.

2.11 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct

labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost

is calculated using the weighted average method. Net realisable value represents the estimated selling price less all estimated costs

of completion and costs to be incurred in marketing, selling and distribution.

2.12 Provisions

Provisions are recognised when the group and/or company has a present legal or constructive obligation as a result of past events,

it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable

estimate of the amount of the obligation can be made.

If the effect is material, provisions are determined by discounting the expected future cash flows at a rate that reflects current

market assessments for such liabilities.

2.13 Equity

All transactions relating to the acquisition and sale of shares in the group and company, together with their associated costs, are

accounted for in equity.

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2.14 Translation of foreign currencies

Transactions

Foreign currency transactions are recorded, on initial recognition in Rand, by applying to the foreign currency amount the exchange

rate between the Rand and the foreign currency at the date of the transaction.

At each balance sheet date:

(a) foreign currency monetary items are reported using the closing rate;

(b) non-monetary items, which are carried in terms of historical cost denominated in a foreign currency, are reported using the

exchange rate at the date of the transaction; and

(c) non-monetary items which are carried at fair value denominated in a foreign currency are reported using the exchange rates

that existed when the values were determined.

Exchange differences arising on the settlement of monetary items or on reporting an entity’s monetary items at rates different from

those at which they were initially recorded during the period, or reported in previous financial statements, are recognised in profit

or loss in the period in which they arise.

2.15 Borrowing costs

All borrowing costs are recognised in profit or loss in the period in which they are incurred.

2.16 Leased assets

Leases of assets under which substantially all of 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 income statement 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 penalty is recognised as an expense in the period in which termination takes place.

2.17 Taxation

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the

extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such

assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than

in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer

probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year plus secondary tax on companies. Taxable profit differs from profit

as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years

and it further excludes items that are never taxable or deductible. The group’s and company’s liability for current and deferred tax

is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

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2.18 Employee benefits

Defined contribution plans

Contributions to a defined contribution plan in respect of services in a particular period are recognised as an expense in that period.

2.19 Segmental reporting

Segment accounting policies are consistent with those adopted for the preparation of the group financial statements. The primary

basis for reporting segment information is business segments and the secondary basis is by significant geographical region, which

is based on the location of assets. The basis is consistent with internal reporting for management purposes as well as the source and

nature of business risks and returns. All intra-segment transactions are eliminated on consolidation.

3. Critical judgements in applying the accounting policies

In the process of applying the accounting policies, which are described in note 2.1 to 2.19, management has made the following

judgements that have the most significant effect on the amounts recognised in the financial statements.

Investments

The fair value of the investment in Zimbali Country Club is included in the balance sheet at R7 300 000 at 30 June 2006. In making this

judgement it was determined that the fair value would not exceed cost. The profitability of the Club and future developments envisaged

in the Zimbali Estate will impact favourably on the Club’s financial position, and the fair value of the investment is not considered to be

less than cost.

Investment in associate

The investment in Boschendal has been accounted for using the equity method. Income from the associate was not recorded in the

current year as the 19,25% interest in the unlisted shares in Boschendal and Purple Plum only took place on 21 June 2006 and the effect

is immaterial.

Revaluation of land and buildings

As described in note 2.5, it is the group’s accounting policy to carry land and buildings at fair value. The fair value has been based on

valuations performed by independent external valuers on the capitalised rental approach basis.

Asset life and residual values

Property, plant and equipment are depreciated over their useful lives taking into account residual values. The actual life of the assets and

residual values are assessed annually and are influenced by factors such as technological innovation, product life cycles and maintenance

programmes. Residual value assessments consider issues such as market conditions, the remaining life of the asset and estimated current

disposal values.

Revenue recognition

Revenue on the sale of development property is recognised using the percentage of completion basis and has been measured by the

proportion that land and development costs incurred to date bear to the estimated total land and development costs for each

development phase. Revenue on the sale of development property has therefore been deferred.

Impairment of assets

Ongoing assessments are made regarding any potential impairment of assets.

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HOTELS & RESORTS

4. Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date that have a

significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are

discussed below.

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill

has been allocated. The value-in-use calculation requires the entity to estimate the future cash flows expected to arise from the

cash-generating unit and a suitable discount rate in order to calculate present value.

5. Changes in accounting policy

Property, plant and equipment

During the year, the group changed its policy for the subsequent measurement of land and buildings from the cost model to the

revaluation model. The impact of the change in accounting policy in the current year has resulted in an increase in operating expenses

being additional depreciation of R88 973 before deferred tax of R25 802; an increase in land and buildings of R28 933 302 before deferred

tax of R5 047 639 and an increase in net assets of R23 796 690 at 30 June 2006.

6. Reverse acquisition

On 16 January 2006, the company acquired from IFA H&R Kuwait, as an indivisible transaction, IFA H&R Kuwait’s entire shareholding and

a portion of its loan account (R68 655 512) in IFA Zimbali and its entire shareholding in IFA Hotels in exchange for the issue of

212 755 413 shares (97,5% of the voting equity in the company). The purchase consideration for IFA Zimbali’s shares and loan account

was R85 000 000 and IFA Hotel’s shares was R41 204 139 which totalled R126 204 139. This transaction has been accounted for as a

reverse acquisition. The consolidated annual financial statements of the group for the comparative period ended 30 June 2005 comprise

the results of IFA Hotels and IFA Zimbali for the six months then ended.

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7. Property, plant and equipment2006 2005

Accumulated Accumulated

Cost/valuation depreciation Carrying value Cost/valuation depreciation Carrying value

Group R R R R R R

Owned assets

Land 24 000 000 – 24 000 000 1 122 649 – 1 122 649

Buildings 53 500 000 – 53 500 000 50 669 781 1 474 116 49 195 665

Computer equipment 947 690 501 451 446 239 768 401 327 731 440 670

Furniture and fittings 4 872 168 3 235 987 1 636 181 4 645 456 1 922 657 2 722 799

Motor vehicles 820 206 381 965 438 241 533 750 169 857 363 893

Office equipment 113 176 80 274 32 902 113 176 40 651 72 525

Plant and equipment 3 848 878 1 048 801 2 800 077 3 649 590 527 663 3 121 927

Soft furnishings 902 385 623 692 278 693 782 699 366 878 415 821

89 004 503 5 872 170 83 132 333 62 285 502 4 829 553 57 455 949

The carrying amounts of property, plant and equipment can be reconciled as follows:

Carrying value Carrying value

at beginning at end of

of year Additions Revaluation Impairments Depreciation year

June 2006 R R R R R R

Owned assets

Land 1 122 649 – 22 877 351 – – 24 000 000

Buildings 49 195 665 – 6 055 951 – (1 751 616) 53 500 000

Computer equipment 440 670 191 892 – – (186 323) 446 239

Furniture and fittings 2 722 799 342 675 – (89 784) (1 339 509) 1 636 181

Motor vehicles 363 893 286 456 – – (212 108) 438 241

Office equipment 72 525 – – – (39 623) 32 902

Plant and equipment 3 121 927 199 288 – – (521 138) 2 800 077

Soft furnishings 415 821 119 686 – – (256 814) 278 693

57 455 949 1 139 997 28 933 302 (89 784) (4 307 131) 83 132 333

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HOTELS & RESORTS

7. Property, plant and equipment continued



of period Additions Revaluation Impairments Depreciation period

June 2005 R R R R R R

Owned assets

Land 1 122 649 – – – – 1 122 649

Buildings 50 027 652 – – – (831 987) 49 195 665

Computer equipment 414 247 121 328 – – (94 905) 440 670

Furniture and fittings 3 621 232 157 436 – – (1 055 869) 2 722 799

Motor vehicles 460 959 – – – (97 066) 363 893

Office equipment 71 385 24 666 – – (23 526) 72 525

Plant and equipment 3 354 706 65 761 – – (298 540) 3 121 927

Soft furnishings 585 244 38 445 – – (207 868) 415 821

59 658 074 407 636 – – (2 609 761) 57 455 949

2006 2004



R R R R R R

Company Restated Restated Restated

Owned assets

Computer equipment – – – 154 662 135 546 19 116

Furniture and fittings – – – 281 643 218 707 62 936

Motor vehicles – – – 142 542 75 973 66 569

Office equipment – – – 88 251 80 540 7 711

– – – 667 098 510 766 156 332

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HOTELS & RESORTS

7. Property, plant and equipment continued

The carrying amounts of property, plant and equipment can be reconciled as follows:


at beginning at end

of period Additions Disposals Depreciation of period

June 2006 R R R R R

Owned assets

Computer equipment 19 116 – (19 116) – –

Furniture and fittings 62 936 – (62 936) – –

Motor vehicles 66 569 – (66 569) – –

Office equipment 7 711 – (7 711) – –

156 332 – (156 332) – –


at beginning at end

of year Additions Disposals Depreciation of year

R R R R R

December 2004 Restated Restated Restated Restated Restated

Owned assets

Computer equipment 21 595 7 000 – (9 479) 19 116

Furniture and fittings 89 869 1 000 – (27 933) 62 936

Motor vehicles 94 077 1 000 – (28 508) 66 569

Office equipment 10 346 – – (2 635) 7 711

215 887 9 000 – (68 555) 156 332

Group Company

2006 2005 2006 2004

R R R R

Land and buildings can be reconciled as follows: Restated

At cost – 2004 51 792 431 51 792 431 – –

Revaluation – 2006 28 933 302 – – –

Depreciation – 2004 (642 130) (642 130) – –

– 2005 (831 987) (831 987) – –

– 2006 (1 751 616) – – –

77 500 000 50 318 314 – –

Land and buildings comprise Erf 189, Port Zimbali, KwaZulu-Natal, in extent 3 824 hectares.

Land and buildings have been valued by an independent valuer (Norman Griffiths FRICS FIV (SA), Professional valuer of Norman

Griffiths & Associates CC) as at 30 June 2006 on the capitalised rental approach basis, in accordance with International Valuation

Standards.

Had the revalued properties been measured on the historical cost basis, their carrying amount would have been R48 655 670.

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HOTELS & RESORTS

8. Intangible assets

2006 2005



R R R R R R

Goodwill 5 533 763 – 5 533 763 2 297 759 – 2 297 759

The carrying amounts of intangible assets can be reconciled as follows:



of year Additions year

2006 R R R

Goodwill 2 297 759 3 236 004 5 533 763



of period Additions period

2005 R R R

Goodwill 2 297 759 – 2 297 759

Group Company

2006 2005 2006 2004

R R R R

Goodwill comprises: Restated

Acquisition of Zimbali Lodge business 2 297 759 2 297 759 – –

Acquisition of Moribo 3 236 004 – – –

5 533 763 2 297 759 – –

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HOTELS & RESORTS

Group Company

2006 2005 2006 2004

R R R R

Restated

9. Investment in subsidiaries

Shares at cost less provisions and amounts written off – – 57 548 727 1 000

Loans to subsidiaries – – 126 294 142 –

IFA Zimbali – – 70 995 264 –

IFA Boschendal – – 55 298 878 –

– – 183 842 869 1 000

Loans to subsidiaries are unsecured and not repayable before 30 June 2007. The loan to IFA Zimbali bears interest at prime lending

rates. The loan to IFA Boschendal is interest-free and is carried at present value.

Principal subsidiary undertakings Country of incorporation

IFA Hotels South Africa

IFA Zimbali South Africa

IFA Boschendal South Africa

All subsidiaries are wholly owned unless otherwise stated. All holdings are in the ordinary share capital of the undertaking concerned.

Group Company

2006 2005 2006 2004

R R R R

Restated

10. Investment in associates

Associates 49 754 104 – – –

Associates

Equity accounted

Boschendal

19,25% interest in unlisted shares and voting rights of

Boschendal, a company in the business of

property development.

Carrying value of investment:

– Shares at cost 13 902 759 – – –

Loan to associate 35 851 326 – – –

49 754 085 – – –

Directors’ valuation 49 754 085 – – –

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HOTELS & RESORTS

10. Investment in associate continued

The loan to associate is interest free, and carried at present value, is unsecured and has been subordinated in favour of Nedbank.

The loan is not repayable before 30 June 2007. Income from the associate was not recorded in the current year as the acquisitiion

of the 19,25% interest in the unlisted shares in Boschendal only took place on 21 June 2006 and is not material.

Summarised financial information of Boschendal:Group Company

2006 2005 2006 2004

R R R R

Restated

Assets

Non-current 19 670 062 – – –

Current 20 797 870 – – –

40 467 932 – – –

Equity and liabilities

Equity and reserves 5 493 593 – – –

Non-current liabilities 34 158 178 – – –

Current liabilities 816 161 – – –

40 467 932 – – –

Group Company




2006 2005 2006 2004

R R R R

Restated

Revenue 4 278 954 – – –

Net loss (10 400 982) – – –

Group Company

2006 2005 2006 2004

R R R R

Restated

Purple Plum

19,25% interest in the unlisted shares and voting rights

of Purple Plum, a company in the business

of property development.

Carrying value of investment:

– Shares at cost 19 – – –

Directors’ valuation 19 – – –

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HOTELS & RESORTS

Group Company

2006 2005 2006 2004

R R R R

Restated

11. Investments

Available-for-sale financial assets

Zimbali Country Club

Promoter membership debentures 7 000 000 7 000 000 – –

Hotel membership debentures 300 000 300 000 – –

7 300 000 7 300 000 – –

Directors’ valuation of unlisted debentures 7 300 000 7 300 000 – –

Details of available-for-sale financial assets:

Number of debentures Number of debentures

Class P – Promoter membership debentures 350 350 – –

Class H – Hotel membership debentures 15 15 – –

The debentures are interest-free and no fixed terms of repayment have been set

Group Company

2006 2005 2006 2004

R R R R

Restated

12. Other financial assets

Afrisun – 983 886 – –

Games Africa – – – 398 800

IFA Resorts 945 422 – 945 422 –

Ocean Leisure 149 555 – 149 555 –

1 094 977 983 886 1 094 977 398 800

The above loans, except Games Africa, bear interest at prime lending rates, are unsecured and will be repaid within one year.

A provision for the write-down of the Games Africa loan was made during the year.

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HOTELS & RESORTS

Group Company

2006 2005 2006 2004

R R R R

Restated

13. Deferred tax

The following are the major deferred tax liabilities and

assets recognised by the group and company,

and the movements therein, during the current and

prior reporting periods.

Balance at beginning of year/period (6 193 422) (3 117 125) – –

Movements during year/period attributable to:

– Available unutilised tax losses 109 256 (461 317) – –

– Capital allowances – buildings (3 317 216) – – –

– Capital allowances – land (1 730 423) – – _

– Capital allowances – other assets (472 595) 1 102 163 – –

– Change in tax rate – 103 904 – –

– Income and expenditure accruals (7 821 466) (3 582 042) – –

– Unrealised fair value adjustment (265 167) (239 005) – –

Balance at end of year/period (19 691 033) (6 193 422) – –

The balance comprises:

– Available unutilised tax losses 109 256 – – –

– Capital allowances – buildings (3 317 216) – – –

– Capital allowances – land (1 730 423) – – _

– Capital allowances – other assets 629 568 1 102 163 – –

– Income and expenditure accruals (15 383 670) (7 562 204) – –

– Unrealised fair value adjustments 1 452 266 619 – –

(19 691 033) (6 193 422) – –

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HOTELS & RESORTS

Group Company

2006 2005 2006 2004

R R R R

Restated

13. Deferred tax continued

The following is the analysis of the deferred tax balances

for balance sheet purposes:

Deferred tax liabilities (20 022 792) (7 391 576) – –

Deferred tax assets 331 759 1 198 154 – –

(19 691 033) (6 193 422) – –

At the balance sheet date, the group has unutilised tax losses of R14 601 103 (2005: RNIL) available for offset against future profits and

a capital loss of approximately R3 497 763 (2005: RNIL). A deferred tax asset has been recognised in respect of R109 256 (2005: RNIL)

of such losses. No deferred tax asset has been recognised in respect of the remaining unutilised tax losses of R14 491 847 (2005: RNIL)

and unutilised capital losses of approximately R3 497 763 (2005: RNIL) due to the unpredictability of future profit streams in the

particular company within the group.

At the balance sheet date, the company has unutilised tax losses of R14 491 847 (2004: R11 076 156) available for offset against future

profits and a capital loss of approximately R1 148 549 (2004: R1 148 549). No deferred tax asset has been recognised in respect of the

unutilised tax losses of R14 491 847 (2004: R11 076 156) and unutilised capital losses of approximately R1 148 549 due to the

unpredictability of future profit streams in the company.

67


HOTELS & RESORTS

Group Company

2006 2005 2006 2004

R R R R

Restated

14. Township properties

Land

Balance at beginning of year/period 49 154 069 56 737 812 – –

Additions/acquisitions in current year/period 31 240 986 – – –

Allocated to cost of sales (21 328 685) (7 583 743) – –

59 066 370 49 154 069 – –

Development expenditure

Balance at beginning of year/period 28 452 612 21 748 568 – –

Capitalised expenditure in current year/period 36 007 562 17 308 864 – –

Allocated to cost of sales (37 309 312) (10 604 820) – –

27 150 862 28 452 612 – –

Total 86 217 232 77 606 681 – –

Included in township properties above, is a government

grant of R5 000 000 (2005: R5 000 000) relating

to the re-alignment of an existing national road.

15. Inventories

The amounts attributable to the different categories

are as follows:

Consumables 560 738 419 623 – –

Hotel stocks 1 893 074 1 757 371 – –

2 453 812 2 176 994 – –

16. Trade and other receivables

Prepayments and deposits 566 391 562 883 – 13 000

Sundry debtors 960 403 1 014 915 – 1 291 000

Trade debtors 141 096 773 56 296 597 – 441 112

Value-added Tax 115 693 100 930 115 694 60 000

Loan to director – – – 586 000

Provisions for impairments – – – (1 041 000)

142 739 260 57 975 325 115 694 1 350 112

68


HOTELS & RESORTS

17. Discontinued operations

In the company’s annual report for the year ended 31 December 2004, the company announced that its investment in preference

shares in Main Street 47 (Pty) Limited and a loan to WBS Investments (Pty) Limited had been redeemed on 31 May 2004 and that

it had sold its investment in The Beverage Worx (Pty) Limited with effect 1 July 2004 and that it had discontinued all of its operations

with effect from the same date. All of the shares in each of the subsidiaries of the company are now to be distributed to shareholders,

the remaining assets of the company are to be realised, the liabilities settled and any remaining cash balance in the company

distributed to shareholders as the dividend. The company reports in the financial statements all of these activities as a discontinued

operation. The sales, results, cash flows and net assets of the discontinued operations were as follows:

Group Company

2006 2005 2006 2004

R R R R

Restated

Loss on discontinued operations

Revenue and other operating loss – – 433 092 –

Operating and administration expenses – – 5 331 813 –

Loss from discontinuing operations – – 5 764 905 –

Tax – – – –

Loss after tax of discontinuing operations – – 5 764 905 –

Operating cash flows – – (4 857 975) –

Investing cash flows – – 399 800 –

Financing cash flows – – – –

Total cash flows – – (4 458 175) –

Assets classified as held for sale

Disposal group held for sale:

Current assets 211 765 – 211 765 –

Liabilities directly associated with assets

classified as held for sale (211 765) – (211 765) –

Net assets – – – –

69


HOTELS & RESORTS

Group Company

2006 2005 2006 2004

R R R R

Restated

18. Cash and cash equivalents

Cash and cash equivalents comprise:

Bank balances 699 556 7 718 576 214 599 4 458 175

Cash on hand 3 100 1 000 – –

Short-term deposits 79 225 005 44 968 337 – –

79 927 661 52 687 913 214 599 4 458 175

Short-term deposits are funds placed on deposit with Moreland Developments (Pty) Limited, and earn interest at an average rate of

11,6% (2005: 11,6%) per annum.

The banking facilities of the group and company are secured by:

• Letter of comfort by IFA H&R Kuwait for R15 000 000; and

• Unlimited suretyship by IFA Resorts, a fellow subsidiary company, (supporting security of First Sectional Mortgage Bond of

R1 800 000 over Section No 1 in a scheme known as “Amanbali” situated at Port Zimbali, and First Covering Bond of

R14 200 000 over Portions 23, 24, 25, 26, 27 and 28 (of 22) of Erf 6 Zimbali South).

70


HOTELS & RESORTS

Group Company

2006 2005 2006 2004

R R R R

Restated

19. Issued capital

Authorised

500 000 000 Consolidated ordinary shares of R0,01 each.

(2004: 388 788 480 Unconsolidated ordinary shares

of R0,001 each) 5 000 000 200 5 000 000 388 789

Issued

218 210 680 Consolidated ordinary shares of R0,01 each.

(2005: 55 230 513 Unconsolidated ordinary shares

of R0,001 each) 2 182 107 200 2 182 107 55 231

Share premium 69 709 609 – 207 054 943 82 978 357

71 891 716 200 209 237 050 83 033 588

The directors are authorised, until the forthcoming annual general meeting, to dispose of the unissued shares for any purpose and upon

such terms and conditions as they deem fit.

The company has one class of ordinary shares which carries no right to fixed income and no shares are reserved for issuance under options

and sales contracts.

Repurchase

In terms of a shareholders’ resolution passed at the general meeting held on 16 January 2006, 677 843 shares (i.e. 67 784 consolidated

shares) held by the Moribo Share Incentive Trust were repurchased by the company for an aggregate purchase consideration of R1,00 and

were cancelled. The Moribo Share Incentive Scheme has been terminated.

Increase in authorised share capital

In terms of a shareholders’ resolution passed at the general meeting held on 16 January 2006, the company increased its authorised share

capital to 500 000 000 consolidated shares by the creation of 461 121 152 consolidated shares.

Consolidation and increase in issued share capital

On 27 February 2006, the company’s shares were consolidated on a one-for-ten basis and 212 755 413 new shares were issued for a

purchase consideration of R126 204 139.

The specific issue of shares

Should any liabilities arise within three years from the effective date of the reverse takeover (23 January 2006) that relate to any activities

conducted by the company prior to that effective date which, in aggregate, exceed the Moribo group’s cash resources as determined at

the effective date, IFA H&R Kuwait will settle the balance of any such liabilities which cannot be settled out of cash resources plus any

transaction costs. In exchange for settlement, the company will issue consolidated shares to IFA H&R Kuwait at the weighted average

traded price of such shares over the 30 days prior to the date that the price of issue is agreed by the directors of the company or at such

prices as determined by a JSE-approved independent advisor appointed to indicate that the issue price is fair and reasonable, subject to

a maximum total value in aggregate of all such issues of consolidated shares of R20 million.

At the date of this report, there are no indications that IFA H&R Kuwait will be required to settle any such liabilities.

71


HOTELS & RESORTS

Group Company

2006 2005 2006 2004

R R R R

Restated

20. Non-distributable reserve

Balance at beginning of the period – – 5 251 216 –

Movement during the period:

– Surplus arising from revaluation of freehold land and buildings 28 933 303 – – –

– Deferred tax on land at capital gains tax rate (3 317 216) – – –

– Deferred tax on buildings at income tax rate (1 756 226) – – –

– Transfer to retained earnings (63 171) – – –

– Surplus on realisation of investments, plant and equipment – – – 5 251 216

– Reversal of surplus above – – (5 251 216) –

Balance at end of period 23 796 690 – – 5 251 216

Comprising:

Surplus on realisation of investments, plant and equipment – – – 5 251 216

Surplus arising from revaluation of freehold land and buildings 23 796 690 – – –

23 796 690 – – 5 251 216

21. Shareholder’s loan

IFA H&R Kuwait

Non-interest-bearing loan 47 794 492 115 492 368 – –

The loan is unsecured and has no fixed terms of repayment.

Non-interest-bearing loan held at present value 55 298 878 – 55 298 878 –

The loan is unsecured, interest-free, is carried at present

value and is not repayable before 30 June 2007.

Interest-bearing loan 58 271 968 55 313 096 – –

The loan is unsecured, bears interest at prime lending rates

and is not repayable before 30 June 2007.

161 365 338 170 805 464 55 298 878 –

Less short-term portion (47 794 492) (74 578 080) – –

113 570 846 96 227 384 55 298 878 –

72


HOTELS & RESORTS

Group Company

2006 2005 2006 2004

R R R R

22. Trade and other payables

Trade payables 41 035 847 8 201 154 2 167 836 78 127

Accruals 2 801 405 2 066 172 442 854 141 387

Sundry payables 8 511 856 997 155 5 790 575 107 000

Directors’ fees – – – 273 000

Value-added Tax 14 357 372 7 805 475 – –

66 706 480 19 069 956 8 401 265 599 514

23. Advance deposits

Advance deposits for hotel accommodation 903 154 302 267 – –

24. Deferred revenue

The substantial acts required to complete the development of a township property are expected to be completed within the next

twelve months, therefore the revenue that has been deferred in terms of the revenue recognition policy is likely to be recognised

within the next twelve months.

73


HOTELS & RESORTS

Group Company




2006 2005 2006 2004

R R R R

Restated

25. Revenue

Revenue comprises turnover, which excludes value-added tax

and represents the fair value of goods and services supplied.

Major classes of revenue comprise:

Sale of township properties 123 747 207 37 358 337 – –

Hotel accommodation and services 33 505 478 16 344 142 – –

Commission income 1 832 125 1 755 827 – –

Management and marketing fees 1 921 745 – 2 623 769 –

Interest received – – – 546 306

161 006 555 55 458 306 2 623 769 546 306

26. Operating profit/(loss)

Operating profit/(loss) is stated after:

Income

Profit on foreign exchange 16 923 17 206 – –

Expenditure

Auditors’ remuneration

– Audit fee 527 138 208 528 411 207 90 966

Depreciation

– Property, plant and equipment 4 307 131 2 609 761 – 68 555

Impairment losses

– Property, plant and equipment 89 784 – – –

Lease rentals

– Equipment 131 514 – – –

74


HOTELS & RESORTS

Group Company




2006 2005 2006 2004

R R R R

Restated

27. Directors’ emoluments

Executive

Mr R Biesheuvel *

Director’s fees – – – –

Salary – – – 758 000

Pension fund contributions – – – 93 000

– – – 851 000

Mr PGR de Sylva


Salary 700 000 – – –

Bonus 162 500 – – –

862 500 – – –

Mr VM Nkosi


Salary 128 000 – – –

Bonus 10 000 – – –

138 000 – – –

Non-executive directors – accumulative amounts due

Mr AJ Hugo * – – 15 000 –

Mr AM Ball * – – 10 000 –

Mr WS Yeowart * – – 30 000 53 000

Mr SA Levitt * – – 20 000 –

Mr M Lutrin * – – 50 000 40 000

Ms P Mashabela * – – – 40 000

Mr K Michael * – – 20 000 20 000

Mrs H Ndude * – – – (20 000)

Mr A Norman * – – 20 000 20 000

Mr M Ramollo * – – – 20 000

Mr EP Rechter * – – 20 000 20 000

Mr V Zwane * – – – 60 000

– – 185 000 253 000

* Resigned

As the reverse listing of the company on the JSE was implemented shortly before year-end, the directors have agreed not to take

any directors’ fees for the year ended 30 June 2006. The directors have also agreed not to take any directors’ fees for the year ending

30 June 2007. This includes members of the audit and remuneration committees.

75


HOTELS & RESORTS

Group Company

2006 2005 2006 2004

R R R R

Restated

27. Directors’ emoluments continued

Loan to director

Balance at the beginning of the period – – 586 000 1 768 000

Loans repaid – – (600 000) (1 308 000)

Interest – – 14 000 126 000

Balance at the end of the period – – – 586 000

A loan of R950 000 was advanced to R Biesheuvel in 2002 at the prime rate of interest. Life insurance with disability was given as

security for the loan. In terms of an agreement the loan was fully repayable on 30 June 2004 inclusive of interest. It was repaid during

the year.

Group Company




2006 2005 2006 2004

R R R R

Restated

28. Staff costs

Salaries and wages 13 345 995 5 289 294 – 1 419 000

Defined contribution retirement plan 679 203 406 586 – 162 000

Medical aid – – – 42 000

14 025 198 5 695 880 – 1 623 000

Defined contribution retirement plan

It is the policy of a subsidiary company to provide retirement benefits to all its employees. A defined contribution provident fund,

The Old Mutual Retirement Fund, which is subject to the Pensions Fund Act, exists for this purpose. The scheme is funded both by

member and by the subsidiary company contributions, which are charged to the income statement as they are incurred.

76


HOTELS & RESORTS

Group Company




2006 2005 2006 2004

R R R R

Restated

29. Investment income

Interest received 8 827 952 3 242 605 2 511 941 –

Notional interest received 6 399 122 – 6 399 122 –

15 227 074 3 242 605 8 911 063 –

Notional interest has arisen due to certain loans being

held at present value.

30. Finance costs

Bank overdrafts and acceptances 17 000 397 – 1 095

Long-term loans 6 564 502 4 307 181 – –

Other 1 093 – – –

Interest paid 6 582 595 4 307 578 – 1 095

Notional interest 4 148 674 – 6 399 122 –

10 731 269 4 307 578 6 399 122 1 095

Notional interest has arisen due to certain loans being

held at present value.

31. Taxation

South African normal tax

– Current tax 9 693 126 834 491 622 697 –

– Deferred tax

– Current year 8 424 169 3 076 297 – –

Tax for the year 18 117 295 3 910 788 622 697 –

Reconciliation of rate of taxation % % % %

South African normal tax rate 29,0 30,0 29,0 30,0

Adjusted for:

– Disallowable expenditure 1,1 (5,3) (0,4) (49)

– Deferred tax rate change – (0,6) – –

– Utilisation of assessed losses – – – 19

Net increase/(reduction) 1,1 (5,9) (0,4) (30)

Effective rate 30,1 24,1 28,6 –

An STC liability of R8 529 123 (2005: R1 970 957) would arise if all of the retained earnings of the group were declared as a dividend.

77


HOTELS & RESORTS

32. Earnings per share

The calculation of basic earnings per share is based on net profit attributable to ordinary shareholders of R41 977 905

(2005: R12 296 655) and a weighted average of 215 028 441 (2005: 212 755 413) shares in issue throughout the year.

The calculation of headline earnings per share is based on earnings of R42 067 689 (2005: R12 297 792) and a weighted average of

215 028 441 (2005: 212 755 413) shares in issue throughout the year.

Group

Net profit Net profit

2006 2005

R R

Reconciliation between earnings and headline earnings:

Per the financial statements 41 977 905 12 296 655

Impairment losses 89 784 –

Loss on disposal of property, plant and equipment – 1 137

42 067 689 12 297 792

33. Segmental analysis

Business segments

For management purposes, the group is currently organised into three divisions: IFA Zimbali, IFA Hotels and IFA Boschendal.

These divisions are the basis on which the group reports its primary segment information.

Principal activities are as follows:

IFA Zimbali

IFA Zimbali is the owner of the Zimbali Lodge which is operated by Sun International Management Limited. The Zimbali Lodge is a

magnificent five-star boutique hotel with 76 luxurious rooms to be expanded in 2007/8 with an additional 20 rooms and is rated by

Condé Nast Traveller magazine as one of the top hotels in the world. Zimbali Lodge is located amongst indigenous semi-tropical

gardens, and overlooks the signature hole of the scenic Tom Weiskopf-designed championship golf course, the magnificent lakes and

conservation area and the Indian Ocean beyond.

IFA Hotels

In 2003, IFA Hotels formed a joint venture with Moreland to participate in the development of the Zimbali Coastal Estate. IFA Hotels

is responsible for the sales and marketing and Moreland is responsible for the technical and development functions thereof.

The Zimbali Coastal Resort covers 3,7 million square metres (370 hectares) of coastal forest estate with 3,5 km of coastline.

The Zimbali Lakes Development covers 3 million square metres (300 hectares) and is adjacent to the Zimbali Coastal Resort.

The piece of land on the south bank covers 2,55 million square metres (255 hectares).

The principal business of the Moreland joint venture is the subdivision and servicing of land in the Zimbali Coastal Estate for

subsequent sale.

IFA Boschendal

During the current year IFA Boschendal acquired a 19,25% stake in Boschendal and Purple Plum. These companies have development

plans for the 2 400 hectare Boschendal estate near Franschhoek, which includes an upmarket retirement village with 500 individual

homes, a boutique hotel with upwards of 120 rooms and a mixed-use development of a shopping centre, offices and apartments.

78


HOTELS & RESORTS

33. Segmental analysis continued

IFA Hotels IFA Zimbali IFA Boschendal Other Eliminations Consolidated

2006 R R R R R R

Revenue 127 313 626 34 755 676 – 2 623 769 (3 686 516) 161 006 555

Other income 144 044 16 923 – – – 160 967

Total revenue 127 457 670 34 772 599 – 2 623 769 (3 686 516) 161 167 522

Segment result 55 827 495 109 316 (4 700) (333 809) 1 093 55 599 395

EBITDA * 55 922 651 4 321 291 (4 700) (333 809) 1 093 59 906 526

Depreciation (95 156) (4 211 975) – – – (4 307 131)

Interest income 9 865 764 200 799 6 493 809 8 911 063 (10 244 361) 15 227 074

Interest expense (6 581 502) (3 845 239) (4 148 674) (6 399 122) 10 243 268 (10 731 269)

Income taxes (16 747 511) (68 361) (678 726) (622 697) – (18 117 295)

Net profit/(loss) 42 364 246 (3 603 485) 1 661 709 1 555 435 – 41 977 905

Other information

Segment assets 292 035 632 105 984 660 57 639 413 188 501 139 (182 855 602) 461 305 242

Segment liabilities (214 420 282) (84 202 169) (55 298 878) (65 876 594) 127 460 304 (292 337 619)

Capital expenditure (142 340) (997 658) – – – (1 139 998)

Other non-cash items (16 386) (89 784) – – – (106 170)

2005

Revenue 38 939 737 16 518 569 – – – 55 458 306

Other income 17 763 16 069 – – – 33 832

Total revenue 38 957 500 16 534 638 – – – 55 492 138

Segment result 17 504 668 (232 252) – – – 17 272 416

EBITDA * 17 534 409 2 347 768 – – – 19 882 177

Depreciation (29 741) (2 580 020) – – – (2 609 761)

Interest income 3 161 438 81 167 – – – 3 242 605

Interest expense (2 959 269) (1 348 309) – – – (4 307 578)

Income taxes (5 031 079) 1 120 291 – – – (3 910 788)

Net profit/(loss) 12 675 758 (379 103) – – – 12 296 655

Other information

Segment assets 204 196 514 80 762 217 – – – 284 958 731

Segment liabilities (175 876 529) (84 315 472) – – – (260 192 001)

Capital expenditure (102 887) (304 750) – – – (407 637)

Other non-cash items (6 441) (129 403) – – – (135 844)

* EBITDA – Earnings before interest, tax, depreciation and amortisation

Geographical segments

The group's operations are located in one region – South Africa.

79


HOTELS & RESORTS

Group

2006 2005

R R

Restated

34. Interest in Moreland/IFA Resort Developments (Joint Venture)

The group has a 50% interest in a partnership, Moreland/IFA Resort Developments (Joint Venture),

which is involved in property development. The following amounts represent the group’s 50%

share of the assets, liabilities, sales and profit of the partnership. They are included in the

balance sheet and income statement on the proportional consolidation basis:

Assets

Non-current assets 82 780 367 76 346 657

Current assets 180 701 116 86 529 774

263 481 483 162 876 431

Liabilities

Non-current liabilities 27 202 523 47 329 210

Current liabilities 104 950 806 50 460 889

132 153 329 97 790 099

Net assets 131 328 154 65 086 332

Twelve Six

months ended months ended

30 June 30 June

2006 2005

R R

Restated

Income 138 039 201 37 358 337

Expenses (71 797 381) (20 350 669)

Profit 66 241 820 17 007 668

80


HOTELS & RESORTS

Group

2006 2005

R R

Restated

35. Interest in Zimbali Estates (Pty) Limited

The group has a 50% shareholding in a company, Zimbali Estates (Pty) Limited, which

sells property developed by Moreland/IFA Resort Developments (Joint Venture). The following

amounts represent the group’s 50% share of the assets, liabilities, sales and profit of the company.

They are included in the balance sheet and income statement on the proportional

consolidation basis:

Assets

Non-current assets 419 509 155 829

Current assets 9 038 983 4 999 925

9 458 492 5 155 754

Liabilities

Current liabilities 8 139 916 3 542 053

Net assets 1 318 576 1 613 701

Twelve Sixmonths ended months ended

30 June 30 June

2006 2005

R R

Restated

Income 8 158 107 4 669 455

Expenses (8 457 626) (2 889 350)

(Loss)/profit before tax (299 519) 1 780 105

81


HOTELS & RESORTS

36. Related parties

During the year, the group and company, in the ordinary course of business, entered into various related-party sales, purchases and

investment transactions. These transactions occurred under terms that are no less favourable than those arranged with third parties.

Intra-group transactions are eliminated on consolidation.

Identity of related parties

The group’s and company's holding company is IFA H&R Kuwait. Its ultimate holding company is IFA.

The subsidiaries of the group are identified in note 9, the associates in note 10 and joint ventures in notes 34 and 35.

The directors are set out on page 14 of this report.Group Company




2006 2005 2006 2004

R R R R

Restated

IFA H&R Kuwait

Accounting and administration 23 378 – – –

Asset management fee 47 724 – – –

Human resources fees 13 576 – – –

General 19 471 – – –

Management fee paid 190 854 98 546 – –

Interest paid 6 115 223 2 958 872 6 115 223 2 958 872

Notional interest received (6 399 122) – (6 399 122) –

Management service fees 86 576 – – –

Transaction costs 5 790 473 – 5 790 473 –

Travel and accommodation 53 465 – 53 465 –

5 941 618 3 057 418 5 560 039 2 958 872

Larson Falconer Inc. legal fees 15 750 – – –

Sun International Management Limited

Management fee paid 1 376 247 720 546 – –

IFA Zimbali

Interest received – – (2 511 087) –

Management fee – – (393 655) –

– – (2 904 742) –

82


HOTELS & RESORTS

Group CompanyTwelve Six Eighteen Twelve



2006 2005 2006 2004

R R R R

Restated

36. Related parties continued

Zimbali Country Club

Management fee received (948 141) (535 116) – –

Sale of goods (3 517 849) (1 653 475) – –

(4 465 990) (2 188 591) – –

IFA Resorts

Management fee 220 189 – 220 189 –

Management fee received (1 049 506) – (1 049 506) –

Sale of properties (32 010 965) (9 854 167) – –

(32 840 282) (9 854 167) (829 317) –

IFA Boschendal

Notional interest paid – – 6 399 122 –

Boschendal

Notional interest paid 4 148 674 – – –

Related-party balances at year-end included in accruals, accounts payable and accounts receivable at year end are as follows:

Group Company2006 2005 2006 2004

R R R R

Restated

Accruals

Sun International Management Limited 5 497 94 223 – –

Accounts payable

Sun International Management Limited 378 698 – – –

IFA H&R Kuwait 531 700 – – –

IFA Hotels 2 167 835 – – –

Zimbali Country Club 235 927 33 299 – –

IFA Resorts 6 827 – – –

Accounts receivable

Forest Suites at Zimbali (Pty) Limited 158 324 – – –

Ocean Leisure 149 555 – 149 555 –

Sun International Management Limited – 487 018 – –

IFA Resorts 22 945 422 – 945 422 –

83


HOTELS & RESORTS

36. Related parties continued

Afrisun

Afrisun is a subsidiary of Sun International (South Africa) Limited.

IFA H&R Kuwait

IFA H&R Kuwait is the holding company of IFA SA.

IFA Hotels

IFA Hotels is a subsidiary company to IFA SA.

IFA Resorts

IFA Resorts is a subsidiary of IFA H&R Kuwait.

IFA Zimbali

IFA Zimbali is a subsidiary company to IFA SA.

Forest Suites at Zimbali (Pty) Limited

Sun International Management Limited is responsible for the management of the day-to-day business activities of Forest suites at

Zimbali.

Larson Falconer Inc.

GE Larson, a director of IFA SA, is also a director of Larson Falconer Inc.

Sun International Management Limited

Sun International Management Limited is responsible for management of the day-to-day business activities of IFA Zimbali.

Ocean Leisure

Ocean Leisure is controlled by IFA H&R Kuwait.

Loans to/from related parties

For details on loans from related parties, refer to notes 9, 10, 12 and 21.

Group CompanyTwelve Six Eighteen Twelve



2006 2005 2006 2004

R R R R

Restated

Compensation of key management personnel

Salaries and other allowances 2 506 992 1 097 757 – –

84


HOTELS & RESORTS

Group Company

2006 2005 2006 2004

R R R R

Restated

37. Commitments

Capital expenditure

Contracted for 35 168 365 22 130 219 35 168 365 22 130 219

Approved by the directors but not contracted for 18 565 201 18 500 000 – –

53 733 566 40 630 219 35 168 365 22 130 219

Contracted for expenditure relates to the group’s share of

approved development expenditure not yet incurred by the

Moreland/IFA Resort Developments (Joint Venture).

The group intends to finance this expenditure from existing

borrowing facilities and from internally generated funds.

Approved by the directors but not contracted for:

– Expansion project for IFA Zimbali for the construction

of 20 additional rooms 18 500 000 18 500 000 – –

– Refurbishment of reception floor 65 201 – – –

Operating lease commitments

The future minimum lease payments under non-cancellable

operating leases are as follows:

Not later than one year 138 729 113 832 – –

Later than one year and not later than five years 165 415 104 346 – –

304 144 218 178 – –

85


HOTELS & RESORTS

Group Company




2006 2005 2006 2004

R R R R

Restated

38. Notes to the cash flow statement

38.1 Cash generated/(utilised) by operating activities

Net profit before tax 60 095 200 16 207 443 2 178 130 (2 264 112)

Adjustments for:

Depreciation 4 307 131 2 609 761 – 68 555

Impairment losses 89 784 – – –

Interest received (8 827 952) (3 242 605) (2 511 941) –

Interest paid 6 582 595 4 307 578 – 1 095

Provision – – – (54 000)

Reversal of provision for impairment of loan – – – (3 793 000)

Notional interest received (6 399 122) – (6 399 122) –

Notional interest paid 4 148 674 – 6 399 122 –

Loan written off – – – 2 297 732

59 996 310 19 882 177 (333 811) (3 689 730)

Movements in working capital

(Increase)/decrease in trade and other receivables (84 875 026) (11 746 225) (1 210 671) 1 276 000

Increase/(decrease) in trade and other payables 55 582 411 3 925 797 8 401 264 (242 000)

(Increase)/decrease in inventories (276 818) 114 791 – –

(Increase)/decrease in township properties (8 610 551) 879 699 – –

21 816 326 13 056 239 6 856 782 (2 655 730)

38.2 Reconciliation of taxation paid during year

Charge in income statement (18 117 295) (3 910 788) (622 697) –

Adjustment for deferred tax 8 424 169 3 076 297 – –

Movement in taxation balance 9 113 729 766 177 622 697 –

Payments made (579 397) (68 314) – –

86


HOTELS & RESORTS

Group Company2006 2005 2006 2004

R R R R

Restated

38. Notes to the cash flow statement continued

38.3 Acquisition of subsidiary

During the period the group and company acquired

the business of IFA Boschendal.

Share capital – – 100 –

Total purchase price – – 100 –

38.4 Cash and cash equivalents

Cash and cash equivalents consist of cash on hand,

balances with banks, demand deposits and other

short-term highly liquid investments that are readily

convertible to a known amount of cash and are subject

to an insignificant risk of change in value. Cash and

cash equivalents included in the cash flow statement

comprise the following balance sheet amounts:

Cash and cash equivalents 79 927 661 52 687 913 214 599 4 458 175

39. Financial instruments

Interest rate risk

The group’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the group to cash flow

interest rate risk.

As part of the process of managing the group’s interest rate risk, interest rate characteristics of new borrowings and the refinancing

of existing borrowings are positioned according to expected movements in the interest rate. Full details of interest rates relating to

borrowings are detailed in note 21.

Credit risk

The group’s principal financial assets are bank balances, demand deposits and cash, trade and other receivables, and investments.

The credit risk on liquid funds is limited because the ultimate counterparties are banks and companies with high credit ratings.

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HOTELS & RESORTS

39. Financial instruments continued

Credit risk continued

The group’s credit risk is primarily attributable to its trade and other receivables. The amounts presented in the balance sheet are net

of allowances for doubtful receivables. An allowance for impairment is made where there is an identified loss event which, based on

previous experience, is evidence of a reduction in the recoverability of the cash flows.

The group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.

Liquidity risk

The group has minimised its liquidity risk by ensuring that it has adequate banking facilities and reserve borrowing capacity.

Fair value

The directors are of the opinion that the carrying amount of financial instruments approximates their fair value.

40. Comparative figures

Certain comparative figures have been reclassified as follows:

– A shareholder’s loan valued at R74 578 080 which was previously classified as a non-current liability, has been reclassified as a

current liability.

– Leave pay and bonus benefits were previously classified as provisions and have been reclassified to accruals in terms of IAS 10

(“Employee Benefits”).

Comparative amounts for the income statement, changes in equity, cash flows and related notes are not comparable due to the

year-end change (refer to the directors’ report).

Comparative results for commentary purposes.

The results of IFA SA for the comparative year ended 30 June 2005 have been taken from management information available. This has

been done for commentary purposes only and is not audited. This approach allows for a more useful comparison as the group’s year-end

has changed and the comparative period’s results are for the six months ended 30 June 2005. The results used are the combination of

IFA Hotels and IFA Zimbali.

To calculate results for the full year from 1 July 2004 to 30 June 2005, the published income statements for the six months to 30 June

2005 were added to the following:

IFA Hotels – the full year audited income statement to 31 December 2004, halved; and

IFA Zimbali – the audited results for the five months to December 2004 (i.e. from the effective date of acquisition of the Zimbali Lodge

by IFA Zimbali), divided by five and multiplied by six.

88

HOTELS & RESORTS

Definitions

“Afrisun” Afrisun KZN (Pty) Limited

“the board” The board of directors of IFA Hotels & Resorts Limited

“Boschendal” Boschendal Limited

“the current year” The year ending 30 June 2006

“Games Africa” Games Africa (Pty) Limited

“the group” IFA Hotels & Resorts Limited and its subsidiaries

“HDI” Historically disadvantaged individual

“IFA” International Financial Advisors KSCC (Incorporated in Kuwait)

“IFA Boschendal” IFA Boschendal Investments (Pty) Limited

“IFA Hotels” IFA Hotels & Resorts (South Africa) (Pty) Limited

“IFA H&R Kuwait” IFA Hotels and Resorts KSCC (Incorporated in Kuwait)

“IFA Estates” IFA Hotels and Resorts 8 (Pty) Limited

“IFA Properties” IFA Assets (Pty) Limited

“IFA Resorts” IFA Zimbali Hotel and Resorts (Pty) Limited

“IFA SA” or “the company” IFA Hotels & Resorts Limited (formerly Moribo Leisure Limited)

“IFA Zimbali” IFA Zimbali Lodge (Pty) Limited

“JSE” JSE Limited

“King II Report” King Report on Corporate Governance for South Africa 2002

“Mifaz” Moreland/IFA Resorts Development (Joint Venture)

“Moreland” Moreland-Zimbali Resorts (Pty) Limited, a wholly owned subsidiary of

Moreland Developments (Pty) Limited

“Moribo” Moribo Leisure Limited

“Ocean Leisure” Ocean Leisure Company Limited

“the previous year” The year ended 30 June 2005 used for commentary purposes (see note 40)

“Purple Plum” Purple Plum Properties 59 Limited

“SENS” Securities Exchange News Service

“the year” or “the year under review” The year ended 30 June 2006

89

HOTELS & RESORTS

IFA HOTELS & RESORTS LIMITED

(Registration number 1919/001318/06)

Share code: IFH

ISIN code: ZAE000075669

Country of incorporation: South Africa

NATURE OF BUSINESS

To invest in land and develop apartments,

hotels and time-share resorts.

DIRECTORS

JM Al Bahar

TJM Al Bahar

WJ Burger

PGR de Sylva

GE Larson

VM Nkosi

JAM Wilson

COMPANY SECTRETARY

KA Watson

REGISTERED OFFICE

1 Amanbali

Zimbali Coastal Resort

KwaZulu-Natal

PO Box 12, Zimbali, 4422, South Africa

Tel: +27 (0)32 538 1988

Fax: +27 (0)32 538 1864

www.ifahotelsresorts.com

HOLDING COMPANY

IFA Hotels & Resorts KSCC (incorporated in Kuwait)

ULTIMATE HOLDING COMPANY

International Financial Advisors KSCC (incorporated in Kuwait)

ATTORNEYS

Larson Falconer Inc

AUDITORS

BDO Spencer Steward (KZN) Incorporated

Chartered Accountants (South Africa)

Registered Auditors

BANKERS

First National Bank Corporate

SPONSOR

BDO QuestCo (Pty) Limited


13 Wellington Road, Parktown, 2193

Private Bag X60500, Houghton, 2041

Tel: +27 (0)11 643 7271

Fax: +27 (0)11 643 6585

Docex 574 JHB

TRANSFER SECRETARIES

Computershare Investor Services 2004 (Pty) Limited


Ground Floor, 70 Marshall Street, Johannesburg, 2001

PO Box 61051, Marshalltown, 2107

Tel: +27 (0)11 370 5000

Fax: +27 (0)11 370 5271

Corporate Information

90

Shareholders’ Diary

HOTELS & RESORTS

REPORTING

Interim 31 December 2006

– Announcement of results End February 2007

Final 30 June

– Announcement of results End August

– Annual report posted by End August

– Annual general meeting 20 September

Please note that the above are only guidelines based on current information and may be subject to slight change.

91

Notice of Annual General MeetingHOTELS & RESORTS

This document is important and requires your immediate attention.

If you are in any doubt as to the action you should take, please consult your stockbroker, accountant, attorney, banker or other independent

professional adviser immediately.


(formerly Moribo Leisure Limited)

Incorporated in the Republic of South Africa

Registration number 1919/001318/06

Share code: IFH


Notice is hereby given that the annual general meeting of IFA Hotels & Resorts Limited, formerly Moribo Leisure Limited, (“IFA SA” or “the

company”) will be held at Zimbali Lodge on Wednesday, 20 September 2006 at 09:00 for the following purposes:

1. To receive and consider the audited annual financial statements for the financial year ended 30 June 2006.

2. To re-elect directors in accordance with the company’s articles of association. The following retiring directors, chosen in alphabetical order

on this first occasion, are eligible and offer themselves for re-election:

Mr Jassim Al-Bahar

Mr James Wilson

Mr Greg Larson

Mr Werner Burger, appointed during the year, is also required to retire and is eligible and offers himself for re-election.

Curriculum vitae of these four directors are set out on pages 15 to 21 of the annual financial statements of the company of which this

notice of annual general meeting forms part.

3. To authorise the directors to fix the remuneration of the auditors, BDO Spencer Steward (KZN) Inc., with regard to their audit of the

financial statements for the financial year ended 30 June 2006.

4. To renew the appointment of BDO Spencer Steward (KZN) Inc. as the auditors of the company effective from 1 July 2006.

5. To approve the remuneration of the directors paid by way of fees for the financial year ended 30 June 2006 and ending 30 June 2007.

As the reverse listing of the company on the JSE Limited was implemented shortly before year-end, the directors have agreed not to take

any directors’ fees for the year ended 30 June 2006. The directors have also agreed not to take any directors’ fees for the year ending

30 June 2007. This applies to members of the audit and remuneration committees as well.

6. To consider as special business, and if deemed fit, to pass, with or without modification, the following ordinary and special resolutions:

6.1 ORDINARY RESOLUTION NUMBER 1

“RESOLVED THAT the unissued ordinary shares in the authorised share capital of the company be placed under the control of the

directors of the company for allotment and issue at their discretion, as a general authority in terms of section 221 of the Companies

Act, 1973, as amended, and subject to the JSE Limited Listings Requirements.”

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Notice of Annual General Meeting

HOTELS & RESORTS


“RESOLVED THAT the directors have the powers to allot and issue any securities of any class already in issue or convertible into a

class already in issue in the capital of the company for cash when the directors consider it appropriate in the circumstances, subject

to the following:

a. this authority shall not endure beyond the earlier of the next annual general meeting of the company or beyond 15 months

from the date of this meeting;

b. there will be no restrictions in regard to the persons to whom the securities may be issued, provided that such securities are to

be issued to public shareholders (as defined in the JSE Limited Listings Requirements (“the JSE Listings Requirements”) and not

to related parties (as defined by the JSE Listings Requirements);

c. upon any issue of securities which, together with prior issues during any financial year, will constitute 5% or more of the number

of securities of the class in issue, the company shall, by way of a paid press announcement in terms of section 11.22 of the

JSE Listings Requirements, give full details thereof, including the effect on the net asset value of the company and earnings per

share, the number of securities issued and the average discount to the weighted average traded price of the securities over the

30 days prior to the date that the price of such issue was determined or agreed by the company’s directors;

d. that issues in the aggregate in any one financial year may not exceed 15% of the number of securities of that class of the

company’s issued share capital (including instruments which are compulsorily convertible into shares of that class) at the date

of application less any securities of that class issued, or to be issued in the future arising from options/convertible securities

issued during the current financial year, plus any securities to be issued pursuant to an announced, irrevocable and fully

underwritten rights offer or to be issued pursuant to any acquisition for which final terms have been announced; and

e. the maximum discount at which securities may be issued is 10% of the weighted average traded price of those securities over

the 30 business days prior to the date that the price of the issue is determined or agreed by the directors.”

A 75% majority is required of votes cast by the shareholders present or represented by proxy at the annual general meeting to

approve the resolution.


“RESOLVED THAT, subject to the passing of the relevant ordinary and special resolutions at this annual general meeting, any director

of the company or the company secretary be and is hereby authorised to sign any and all documentation required to effect such

ordinary and special resolutions.”

6.4. SPECIAL RESOLUTION NUMBER 1

“RESOLVED THAT the company hereby approves, as a general approval contemplated in sections 85(2) and 85(3) of the Companies

Act, 1973 (Act 61 of 1973), as amended (“the Act”) and in terms of article 7 of the company’s Articles of Association, the acquisition

93


by the company or any of its subsidiaries from time to time of the company’s securities (as defined by the JSE Limited Listings

Requirements (“the JSE Listings Requirements”), upon such terms and conditions and in such amounts as the directors of the

company may from time to time determine, but subject to the Articles of Association of the company, the provisions of the Act and

the JSE Listings Requirements as presently constituted and which may be amended from time to time, and provided that:

a. any such acquisition of the company’s securities shall be effected through the order book operated by the JSE trading system

and done without any prior understanding or arrangement between the company and the counter party;

b. this authority shall not endure beyond the earlier of the next annual general meeting of the company or beyond 15 months

from the date of this meeting;

c. a paid press announcement will be published as soon as the company or its subsidiary(ies) has/have acquired securities

constituting, on a cumulative basis, 3% (three percent) of the number of securities in issue prior to the acquisition pursuant to

which the 3% (three percent) threshold is reached, and in respect of every 3% (three percent) thereafter, which announcement

shall contain full details of such acquisitions;

d. acquisitions of the company’s securities by the company or its subsidiary(ies) in the aggregate in any one financial year may

not exceed 20% (twenty percent) of the company’s issued share capital from the date of the grant of this general authority;

e. repurchases may not be made at a price greater than 10% above the weighted average of the market value for such securities

for the 5 (five) business days immediately preceding the date on which the transaction is effected;

f. the company may at any point in time only appoint one agent to effect any repurchase(s) on its behalf;

g. the company or its subsidiary(ies) may only undertake a repurchase if, after such a repurchase, it shall still comply with the

spread requirements of the JSE Listings Requirements; and

h. the company or its subsidiary(ies) may not repurchase securities during a prohibited period, as defined in the JSE Listings

Requirements.”

The reason for the special resolution is to grant the company a general authority in terms of the Act for the acquisition by the

company or any of its subsidiaries of securities issued by the company, which authority shall be valid until the earlier of the next

annual general meeting of the company or the variation or revocation of such general authority by special resolution by any

subsequent general meeting of the company, provided that the general authority shall not extend beyond 15 (fifteen) months from

the date of this annual general meeting. The passing and registration of this special resolution will have the effect of authorising the

company or any of its subsidiaries to acquire securities issued by the company.

Statement by the board of directors of the company

Pursuant to and in terms of the JSE Limited Listings Requirements (“JSE Listings Requirements”), the directors of the company hereby

state that:

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HOTELS & RESORTS

a. the intention of the directors of the company is to utilise the authority if, at some future date, the cash resources of the

company are in excess of its requirements. In this regard the directors will take account of, inter alia, an appropriate

capitalisation structure for the company, the long-term cash needs of the company, and will ensure that any such utilisation is

in the interests of shareholders; and

b. the method by which the company intends to re-purchase its securities and the date on which such repurchase will take place,

has not yet been determined.

At the time that any contemplated repurchase is to take place, the directors of the company will ensure that:

a. the company and its subsidiaries will be able to pay their debts as they become due in the ordinary course of business for a

period of twelve months after the date of the transaction;

b. the consolidated assets of the company and its subsidiaries, fairly valued in accordance with the accounting policies used in the

company’s latest audited annual group financial statements, will be in excess of the consolidated liabilities of the company and

its subsidiaries for a period of twelve months after the date of the transaction;

c. the issued share capital and reserves of the company and its subsidiaries will be adequate for the purposes of the business of

the company and its subsidiaries for a period of twelve months after the date of the transaction;

d. the working capital available to the company and its subsidiaries will be sufficient for the company and its subsidiaries’

requirements for a period of twelve months after the date of the transaction; and

e. the company will provide its sponsor and the JSE Limited (“JSE”) with all documentation as required in Schedule 25 of the

JSE Listings Requirements, and will not commence any repurchase programme until the sponsor has signed off on the adequacy

of its working capital, advised the JSE accordingly and the JSE has approved this documentation.


“RESOLVED THAT the company hereby approves, as a general approval contemplated in section 90 of the Companies Act, 1973

(Act 61 of 1973), as amended (“the Act”) and in terms of article 7 of the company’s articles of association, the grant of a renewable

mandate to make payments to shareholders on a pro rata basis by way of the reduction of the company’s share capital upon such

terms and conditions and in such amounts as the directors of the company may from time to time determine, but subject to the

articles of association of the company, the provisions of the Act and the JSE Limited Listings Requirements as presently constituted

and which may be amended from time to time, and provided that:

a. this general authority shall only be valid until the company’s next annual general meeting, provided that it shall not extend

beyond 15 (fifteen) months from the date of passing of this ordinary resolution; and

b. any general payment may not exceed, in any one financial year, 20% of the company’s issued share capital including reserves

but excluding minority interests and revaluations of assets and intangible assets that are not supported by a valuation by an

independent expert acceptable to the JSE Limited prepared within the last six months.”

95


Statement by the board of directors of the company

Pursuant to and in terms of the JSE Listings Requirements, the directors of the company hereby state that:

a. the intention of the directors of the company is to utilise the authority if, at some future date, the cash resources of the

company are in excess of its requirements. In this regard the directors will take account of, inter alia, an appropriate

capitalisation structure for the company, the long-term cash needs of the company, and will ensure that any such utilisation is

in the interests of shareholders; and

b. the method by which the company intends to make such payment and the date on which such payment will take place, has

not yet been determined.

At the time that the contemplated payment is to take place, the directors of the company will ensure that:

a. the company and its subsidiaries will be able to pay their debts as they become due in the ordinary course of business for a

period of twelve months after the date of the transaction;

b. the consolidated assets of the company and its subsidiaries, fairly valued in accordance with the accounting policies used in the

company’s latest audited annual group financial statements, will be in excess of the consolidated liabilities of the company and

its subsidiaries for a period of twelve months after the date of the transaction;

c. the issued share capital and reserves of the company and its subsidiaries will be adequate for the purposes of the business of

the company and its subsidiaries for a period of twelve months after the date of the transaction;

d. the working capital available to the company and its subsidiaries will be sufficient for the requirements of the company and its

subsidiaries for a period of twelve months after the date of the transaction; and

e. the company will provide its sponsor and the JSE with all documentation as required in Schedule 25 of the JSE Listings

Requirements, and will not undertake any such payment until the sponsor has signed off on the adequacy of its working capital,

advised the JSE accordingly and the JSE has approved this documentation.

The following information, which is required by the JSE Listings Requirements with regard to the resolutions granting a general authority to

the company to repurchase securities and to make payments to its shareholders by way of a reduction in share capital, appears on the pages

of the annual financial statements to which this notice of general meeting is annexed indicated below:

Directors and management of the company pages 14 – 23

Major shareholders page 41

Directors’ interests in securities page 42

Share capital of the company page 41

Responsibility statement page 38

Material changes page 43

There are no legal or arbitration proceedings, either pending or threatened against the company or its subsidiaries, of which the company is

aware, which may have, or have had in the last twelve months, a material effect on the financial position of the company or its subsidiaries.

96


HOTELS & RESORTS

VOTING AND PROXIES

Shareholders who hold their shares in certificated form or who are own-name registered shareholders holding their shares in dematerialised

form who are unable to attend the annual general meeting but who wish to be represented thereat, are required to complete and return the

attached form of proxy so as to be received by the transfer secretaries by not later than 09:00 on Monday, 18 September 2006.

Shareholders who have dematerialised their shares through a Central Securities Depository Participant (“CSDP”) or broker, other than by

own-name registration, who wish to attend the annual general meeting, should instruct their CSDP or broker to issue them with the necessary

authority to attend the meeting, in terms of the custody agreement entered into between such shareholders and their CSDP or broker.

Shareholders who have dematerialised their shares through a CSDP or broker, other than by own-name registration, who wish to vote by way

of proxy, should provide their CSDP or broker with their voting instructions, in terms of the custody agreement entered into between such

shareholders and their CSDP or broker. These instructions must be provided to their CSDP or broker by the cut-off time or date advised by their

CSDP or broker for instructions of this nature.

Shareholders who have any doubt as to the action they should take, should consult their stockbroker, accountant, attorney, banker or other

professional adviser immediately.

By order of the board


KA WATSON

Company Secretary

28 August 2006

Durban

Transfer secretaries

Computershare Investor Services 2004 (Pty) Limited


70 Marshall Street, Johannesburg 2000

PO Box 61051, Marshalltown, 2107

PRINTED BY INCE (PTY) LTD

97

Form of ProxyHOTELS & RESORTS

For use ONLY by certificated shareholders and own-name dematerialised shareholders at the annual general meeting of shareholders of

IFA Hotels & Resorts Limited to be held at the Zimbali Lodge, Zimbali Coastal Resort, KwaZulu-Natal, at 09:00 on Wednesday,

20 September 2006 (“the annual general meeting”).


(formerly Moribo Leisure Limited)

Incorporated in the Republic of South Africa

Registration number 1919/001318/06

Share code: IFH


(“the company”)

I/We of (address)

being the holders of shares in the company do hereby appoint (see note 1):

1.

2.

3.

or failing him/her, the Chairman of the annual general meeting as my/our proxy to vote for me/us and on my/our behalf at the annual general meeting.

I/We desire to vote as follows:

For Against Abstain

1. Adopt the annual financial statements for the year ended 30 June 2006

2. Reappoint directors

2.1 JM Al-Bahar

2.2 JAM Wilson

2.3 GE Larson

2.4 WJ Burger

3. Authorise the directors to fix the auditors’ remuneration

4. Renew the appointment of BDO Spencer Steward (KZN) Inc. as auditors

5. Approve the fees of the directors for the year ended 30 June 2006 and 30 June 2007

6. Special business

6.1 Ordinary resolution number 1 regarding placing the unissued ordinary shares under directors’ control

6.2 Ordinary resolution number 2 regarding a general authority to issue shares for cash

6.3 Ordinary resolution number 3 regarding an authority for any director or the company secretary

to sign documents to effect all the ordinary and special resolutions

6.4 Special resolution number 1 regarding a general authority for the company and/or

its subsidiaries to acquire its own shares

6.5 Ordinary resolution number 4 regarding a general authority for the company to make payments

to shareholders

Signed at on this day of 2006

Signature Assisted by me (where applicable)

98

Notes to the Form of Proxy

HOTELS & RESORTS

1. A shareholder of the company may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the

space/s provided, with or without deleting “the Chairperson of the annual general meeting”, but any such deletion must be initialled by

the shareholder concerned. The person whose name appears first on the form of proxy and who is present at the annual general meeting

will be entitled to act as proxy to the exclusion of those whose names follow.

2. Please insert an “X” in the relevant spaces according to how you wish your votes to be cast. However, if you wish to cast your votes in

respect of a lesser number of shares than you own in the company, insert the number of ordinary shares held in respect of which you

desire to vote. Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from voting at the annual

general meeting as he/she deems fit in respect of all the shareholder’s votes exercisable thereat. A shareholder or his/her proxy is not

obliged to use all the votes exercisable by the shareholder or by his/her proxy, but the total of the votes cast and in respect whereof

abstentions recorded may not exceed the total of the votes exercisable by the shareholder or by his/her proxy.

3. The date must be filled in on this proxy form when it is signed.

4. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the annual general meeting

and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof.Where there are joint holders of shares,

the vote of the senior joint holder who tenders a vote, as determined by the order in which the names stand in the register of members,

will be accepted.

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to

this form of proxy unless previously recorded by the transfer secretaries of the company or waived by the Chairperson of the annual

general meeting of shareholders.

6. Any alterations or corrections made to this form of proxy must be initialled by the signatory/ies.

7. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or

have been registered by the transfer secretaries of the company.

8. Forms of proxy must be received by the transfer secretaries, Computershare Investor Services 2004 (Pty) Limited, at 70 Marshall Street,

Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) by not later than 09:00 on Monday, 18 September 2006.

9. The Chairperson of the annual general meeting may accept or reject any form of proxy, in his absolute discretion, which is completed

other than in accordance with these notes.

10. If required, additional forms of proxy are available from the transfer secretaries of the company.

11. Dematerialised shareholders, other than by own-name registration, must NOT complete this form of proxy and must provide their CSDP or

broker with their voting instructions in terms of the custody agreement entered into between such shareholders and their CSDP or broker.

To be completed and mailed to: OR To be completed and hand delivered to:

Computershare Investor Services 2004 (Pty) Limited Computershare Investor Services 2004 (Pty) Limited

PO Box 61051, Marshalltown, 2107 Ground Floor, 70 Marshall Street, Johannesburg

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