United Kingdom Lebanon Thailand · Company secretary’s certificate 27 Auditor’s report 28 Report of the directors 29 Balance sheet 34 ... staff capacity with a wealth of experience

Seychelles

Zanzibar

Kenya

Thailand

United Arab Emirates

Kuwait

Lebanon

Namibia

South Africa

United Kingdom

Portugal

Annual Report 2007

Colour plates

Far left: Manor House, Boschendal Estate, South Africa

Left: Namib desert, Namibia

Below: Mokuti Lodge, Namibia

Page 3: The Heights, Phuket, Thailand

Page 4: IFA Yacht Ownership Club

Page 5: Pine Cliff Renderings, Portugal

Page 6: Zimbali Coastal Resort, Durban, South Africa

Page 7: Mount Kenya Safari Club, Kenya

Page 8: Kata Gardens, Phuket, Thailand

Page 9: The Serengeti, Tanzania

Page 20: The Ark, Kenya

Page 21: Boschendal Estate, South Africa

Page 22: IFA Yacht Ownership Club

Page 23: Zanzibar Beach Hotel and Resort, Zanzibar, Tanzania

Page 24: The Heights, Phuket, Thailand

Page 25: Seychelles

3IFA Hotels & Resorts Annual Report 2007

Contents

Group financial summary and ratios 4

Group profile and structure 5

Chairman’s report 6

Chief executive officer’s report 8

Directorate and executive 10

Senior management 18

Corporate governance 20

Sustainability report 24

Directors’ responsibility statement 26

Company secretary’s certificate 27

Auditor’s report 28

Report of the directors 29

Balance sheet 34

Income statement 35

Statement of changes in equity 36

Cash flow statement 37

Notes to the annual financial statements 38

Shareholder analysis 80

Definitions 81

Corporate information 82

Shareholders’ diary 83

Notice of annual general meeting 84

Notes 90

Form of proxy attached

4 IFA Hotels & Resorts Annual Report 2007

Group financial summary and ratios

2007 2006

Financial results

Revenue R 120 521 871 161 006 555

Operating profit before interest and taxation (EBIT) R 31 263 415 55 599 395

Profit attributable to ordinary shareholders R 20 320 784 41 977 905

Financial ratios

Debt equity ratio % 48:52 52:48

External debt equity ratio (excluding shareholder loans) % 6:94 0:100

Return on shareholder funds % 11 28

Return on total assets % 7 12

Operating margin % 26 35

Net profit margin % 17 26

Current ratio 2,60 1,77

Ordinary share performance

Earnings per share cents 9,31 19,52

Headline earnings per share cents 10,82 19,56

Closing share price at year-end R 4 4,05

Market capitalisation at year-end R 872 842 720 883 753 254

2005 2006 2007

17 740

148 654178 112

Net assets (R’000)

2005 2006 2007

71 331

161 007

120 522

Revenue ( R’000)


Group profile and structure

International Financial Advisors KSCC (IFA) (listed in Kuwait)

IFA Hotels & Resorts KSCC (IFA H&R Kuwait) (Listed in Kuwait)

IFA Assets(Pty) Limited

t/a IFA Properties

IFA Zimbali Lodge(Pty) Limited(IFA Zimbali)

IFABoschendal Investments

(Pty) Limited(IFA Boschendal)

IFA Hotels and Resorts(Namibia)

(Pty) Limited(IFA Namibia)

IFA Hotels & Resorts 8(Pty) Limited

t/a IFA Estates

Zimbali Estates(Pty) Limited

IFA Hotels & Resorts(SA) (Pty) Limited

(IFA Hotels)

IFA Hotels & Resorts Limited (IFA SA) (Listed on JSE)

57% (43% free float)

85% (15% free float)

100%

100%

100% 100% 100% 100%

50% 50% 26,57% 26,57% 50%

Moreland/IFAJV

(MIFAZ)

Purple PlumProperties 59 Limited

(Purple Plum)

Heike Fourty-oneInvestments

(Pty) Limited (OLIFA)

BoschendalLimited

(Boschendal)

IFA SA is a holding company principally investing in subsidiaries, joint ventures and associates.


Chairman’s report

Chairman’s report

INTRODUCTION

IFA SA’s progress towards sustainable

growth is largely attributable to proactive

management and the benefits of increased

staff capacity with a wealth of experience.

The group has efficiently capitalised on

opportunities arising out of a buoyant

economy and continued to contribute

significantly to the strategy of parent

company, IFA H&R Kuwait, to expand its

geographic reach as a global developer of

mixed-use integrated resorts. IFA H&R

Kuwait owns 85% of IFA SA.

MILESTONES

Our flagship initiative remains the Zimbali

Coastal Resort development that continues

to strengthen as reflected in the four

prestigious awards at the International

Property Awards 2006:

• Best Development South Africa

• Best Golf Development South Africa

• Best Property Marketing South Africa

• Best International Property Marketing

Zimbali Lakes is in the advanced planning

stages. Our confidence in this region has led

to further investment in over 680 hectares

of land between the Watson Highway and

the Tongaat River, adjacent to and south of

the Zimbali Coastal Resort.

During the year we also increased our stake

in Boschendal from 19,25% up to 26,57%.

Outside of South Africa, we announced our

entry into the Namibian hospitality market

in March 2007 in a joint venture with

Ohlthaver & List. This reflects the group’s

commitment to expanding its global

network of resorts, with a focus on Africa,

ensuring that we continue to deliver prime

tourism and real estate opportunities to our

global investors.

FINANCIAL RESULTS

The performance of the group is in line with

expectations in light of the current phase of

the various business units’ life cycles.

Please see the Chief Executive Officer’s

Report for further detail.

BEE

During the year the directors commissioned

a report to identify the necessary steps to

achieve a level 4 BEE rating in terms of the

Department of Trade and Industry’s draft

BBBEE Codes of Good Practice. A strategic

three-year plan is being developed to

achieve this desired rating. In the year

ahead we will seek to increase spending on

skills development programmes to enhance

job performance across the board and to

accelerate advancement of black staff to

managerial positions. We will also seek to

accurately ascertain the BEE rating of our

suppliers to further enhance our preferential

procurement policy.

Black executive representation at board

level currently stands at 33,3%.

Corporate Social Responsibility (‘CSR’)

We continue to formulate CSR strategies on

a project-specific basis in order to achieve

maximum and direct benefit to the

communities surrounding, or in close

proximity to our developments. Many of

the CSR programmes in place focus on job

creation to stimulate sustainable economic

growth in the relevant communities.


Transformation and CSR programmes

currently in place at Boschendal are in line

with President Mbeki’s State of the Nation

Addresses in 2004 and 2005 to adopt

responsible corporate citizenship.

Boschendal has pledged land as well as

guaranteeing annuity income in perpetuity

to the Local Community Trust through a

5% contribution from first-time property

sales, and 0,5% from future property

resales. This CSR programme is estimated to

raise more than R100 million for the local

community over the next 10 years. Job

creation in the region is expected to lead to

a 30% increase in real wages.

DIRECTORATE

The board of directors would like to express

its appreciation to the national and local

governments and local authorities.

Furthermore we would like to thank our

shareholders for their continued support

and in addition, would like to thank our

staff, management and all directors, who

have been ably lead by CEO Talal Al-Bahar.

PROSPECTS

As a developer of world-class integrated

leisure resorts IFA SA stands to gain

substantially from South Africa’s burgeoning

tourism sector. These prospects are

supported by Government’s commitment

to infrastructure development, particularly

in anticipation of the 2010 Soccer World Cup.

We remain confident that we will continue

to attract strong demand for our properties,

despite the recent increases in interest

rates. Our target market is the more

affluent investor who tends to focus on the

long-term quality of investments and

commensurate capital appreciation rather

than cyclical interest-rate fluctuations.

South Africa remains an attractive emerging

market investment destination and

indications are that this will continue to

improve, particularly in anticipation of the

2010 Soccer World Cup.

The IFA SA team is currently assessing a

number of exciting opportunities, the most

viable of which we anticipate will be

concluded during the first half of the 2008

financial year.

APPRECIATION

I extend my appreciation to all our strategic

partners for their loyal support. Our strong

strategic partnerships and relationships with

international hospitality partners such as

Tongaat Hulett Developments, Kingdom

Hotel Investments, Nakheel, Istithmar,

United Investments Portugal, Raimon Land

and Ohlthaver & List offer a synergy of

skills that will add significant value for all

stakeholders.

JM AL-BAHAR

Chairman

27 July 2007


Chief executive officer’s report

Chief executive officer’s

INTRODUCTION

The year has seen IFA SA successfully further its

strategy of building a platform for sustainable

growth in profits. Acquisitions and other

initiatives concluded during the year (see

‘Operations’ below), as well as the benefits of

developing a strong head office team, have

positioned the group to achieve its performance

targets going forward. IFA SA is continually

identifying and pursuing appropriate

opportunities to boost the group’s critical mass

and enhance value for stakeholders.

FINANCIAL RESULTS

Group revenue of R120,5 million was achieved

for the year, which translated to net profit of

R20,3 million. Earnings per share for the year

amounted to 9,31 cents and headline earnings

per share to 10,82 cents.

The decline in net profit is attributable to IFA

Hotels where the expected slowing in sales

towards the end of Phase 1 of the Zimbali

Coastal Resort development has been realised, as

well as to IFA Boschendal and IFA Estates, both of

which have recently been established with their

relevant underlying projects still in planning

phase. (See ‘Operations’ below.)

ACQUISITIONS

Through IFA Boschendal: as announced in

May 2007 IFA SA acquired a further 7,32% in

Boschendal to increase its total stake to 26,57%.

The acquisition furthers the strategy of parent

company, IFA H&R Kuwait, to expand its reach as

a global developer of mixed-use integrated

resorts. It further reinforces IFA H&R Kuwait’s

commitment to transformation in South Africa as

it ensures that IFA SA becomes a more integral

contributor to Boschendal’s transformation,

empowerment and development plans.

Through IFA Namibia: in March 2007 IFA SA

formed a joint venture with the Ohlthaver & List

Group (‘the Olifa joint venture’) to redevelop

three hotels – The Strand Hotel in Swakopmund,

Kings Den Lodge on the banks of the Chobe River

and Mokuti Lodge located at the gateway to the

renowned Etosha Park game reserve. It will also

develop a fourth site in Windhoek into a five star

hotel. IFA H&R Kuwait has introduced five star

international hotelier Kempinski Hotels to

Namibia, to operate these hotels going forward.

Through IFA Hotels: as announced in March 2007

the Mifaz joint venture acquired a further

427 hectares of land between Zimbali and the

proposed King Shaka International Airport from

the Tongaat Hulett Group. This brings the total

amount of additional land acquired by the Mifaz

joint venture since June 2006 to 681 hectares

(‘the additional Mifaz land’). (Mifaz acquired

254 hectares of land on the south bank of the

Tongaat River in June 2006.)

OPERATIONS

IFA Hotels

As expected recognized revenue from land sales

has decreased by 39,5% from R124,0 million in

the previous year to R75,0 million. The decline is

largely attributable to the expected decrease in

land inventory which is normally associated with

the conclusion of a development phase – in this

instance Zimbali south and west of Zimbali

Coastal Resort. The mehod of accounting for

revenue and profits has resulted in deferred

revenue being released to the income statement

which has countered to some extent, the slowing

in sales. Commission earned from land re-sales is

up 394% from R0,53 million in the previous year

to R2,65 million as a result of the increasing

inventory or re-sale stock.

EBITDA decreased by R7,7 million to

R48,2 million after taking into account the

positive impact of a reduction in operating costs

of R5,7 million.

IFA Zimbali

Zimbali Lodge performed well and posted

improved revenue of R38,0 million reflecting an


report

increase of 9% from R34,8 million for the previous

year. EBITDA also grew, by a significant 25% to

R5,4 million. The net asset value of IFA Zimbali has

increased by R12,2 million as a result of the

revaluation of land and buildings at year-end.

IFA Boschendal

The 2400 hectare Boschendal estate is still in the

planning phase and is accordingly incurring costs

in anticipation of future revenues. The group

recognised an after-tax loss of R6,1 million.

IFA Estates

IFA SA’s estate agency has the sole mandate to sell

the R1,1 billion Fairmont Zimbali project.While

sales activity only began in January 2007, costs

were incurred in setting up the operation. As a

result an after-tax loss of R3,7 million was incurred.

IFA SA

IFA SA is the holding and administration

company of the group. Net profit after tax of

R7,1 million was achieved for the year.

PROSPECTS

IFA Hotels

In addition to the remaining sales in Zimbali South

and West, deferred revenue on the balance sheet

will be recognised as this phase is completed.

It is further anticipated that planning approvals

will be obtained in Q4 2007 for the 300 hectare

extension of the Zimbali Coastal Resort –

‘Zimbali Lakes’. This should generate sales

beginning in the 2008 financial year. Through the

Mifaz joint venture, IFA SA stands to benefit from

50% of the sales revenue and attributable profits.

Whilst the additional Mifaz land offers further

opportunity for expanding the current Zimbali

resort and additional residential nodes as well as

introducing a significant business/commercial

node close to the new airport, planning thereof is

not expected to commence until construction of

the new airport has begun.

Our investment to date in Boschendal, IFA

Estates and IFA Namibia has laid the foundation

for long-term growth. Following capital

expenditure on set-up and development costs,

the operations should begin to yield benefit for

the group in the year ahead.

IFA Boschendal

Boschendal is expected to generate in excess of

R1,7 billion in sales going forward, of which

approximately R660 million has already been

reserved. IFA SA’s increased stake in the above

revenues to 26,7% should accordingly impact

positively on group revenues.

IFA Estates

Approximately R176,5 million of sales in the

Fairmont Zimbali project have already been

reserved. It is anticipated that related

commissions will begin to be recognised in the

2008 financial year as these sales become legally

binding.

IFA Namibia

Revenues from running the three existing hotels

that form part of the Olifa joint venture

following their redevelopment and/or

refurbishment should begin impacting on results

in the 2008 financial year. Olifa will also be

looking at the best mixed use of these sites to

maximize values. The development of the land in

Windhoek included in the acquisition is also likely

to commence in 2008.

APPRECIATION

I thank our staff, management and fellow

directors for their hard work and dedication

during the year.

I also thank our shareholders, partners, customers

and suppliers for their continued invaluable

support.

TJM AL-BAHAR

CEO

27 July 2007


Directorate and executive

Directorate and executive

The following persons comprise the current board

of the company:

JM Al-Bahar

Non-executive Chairman,

appointed 1 February 2006

TJM Al-Bahar

Chief Executive Officer,

appointed 1 February 2006

JAM Wilson

Non-executive, appointed 1 February 2006

WJ Burger

Non-executive, appointed 8 June 2006

PGR de Sylva

Executive, appointed 1 February 2006

VM Nkosi

Executive, appointed 1 February 2006

GE Larson

Non-executive, appointed 1 February 2006

The board therefore currently is 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 in the following pages.


Jassim Mohamed Al-Bahar

Non-executive Chairman

Age 65

Nationality Kuwaiti

Qualifications

BA International Relations Programme

(London School of Economics),

BA Political Science, International Relations

(University of Southern California),

Master of Public Administration

(University of Southern California)

Business 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 Caterpillar 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 he

was ultimately appointed as the chairman and

managing director of KIIC and held this position

from 1987 to 2000. Mr Al-Bahar is currently the

chairman and managing director of International

Financial Advisors (‘IFA’) and has held this

appointment since 2002. He is also the chairman

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 a board member of

Al-Qabas Newspaper, as chairman of the Kuwait

Heart Foundation, a board member of the Kuwait

American Foundation and a board member and

treasurer of the Kuwait Society for the

Advancement of Arab Children.


Directorate and executive continued

Talal Jassim Mohamed Al-Bahar

Chief Executive Officer

Age 29

Nationality Kuwaiti

Qualifications

Bachelor Degree in Business Studies

(Loyola Marymount University, Los Angeles)

Business 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 Hotels & Resorts KSCC

based in Kuwait; CEO of United Investments in

Portugal; Executive Director of Drake & Skull;

Chief Executive Officer of IFA Hotels & Resorts

Limited South Africa; Director/Chairman of

Executive Committee of Raimon Land PLC and

has served as Chairman and Managing Director

of Kuwait Invest Holding Co.

He also serves on the board of Jeezan Real Estate,

where he is Vice Chairman, Al-Deera Holding Co

as Vice Chairman, Kuwait Holding Company as

Vice Chairman and CEO, Marketing Services Co

(MMS) and International Finance Company

(IFCO).


James Andrew McNaughton Wilson

Non-executive

Age 49

Nationality British

Qualifications

Degree in Hospitality Management Oxford

Brookes and HCIMA and Member of WTTC

(World Travel and Tourism Council)

Business 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 which property types and sectors 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 and timeshare components

to deliver accelerated returns and to maximise

the potential of common marketing investment,

to achieve what high-net-worth real estate

investors are looking for in today's market with

an optimum property portfolio.

Werner Johannes Burger

Non-executive

Age 38

Nationality South African

Qualifications

BSc Building Management

Business 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 chief operating officer (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.

He leads the acquisition and development of

projects as well as initiating expansion into global

areas of hospitality and resort development.

Mr Burger works with the CEO to develop and

implement short and long-term strategy and is

responsible for all major operational decisions;

from strategic business development to key

corporate planning issues and makes

recommendations on major business decisions.

He monitors business activities, assesses

potential threats, evaluates opportunities, and

recommends actions. He also determines

resource allocation among divisions.

His objective is to shape and develop division

strategy and organisation to ensure proper report

structure within departments. He also leads and

encourages managers to evaluate and take

actions that are consistent with overall strategy,

which will lead to high performance.

He sets performance goals, develops operational

goals and ensures adherence to annual budgets.




Phillip Guy René de Sylva

Executive

Age 51


Qualifications

National Diploma in Surveying,

National Diploma in Property Valuations

(Natal Technikon)

Business 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 SAIVs

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 until November 1993 and

managed the Pinetown Branch of Marriott over 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 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.

Vusumuzi Mhlawuleni Nkosi

Executive

Age 36


Qualifications

Diploma: Golf course management

(Pretoria Business School)

Business 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 from 1998 to

2000 and Assistant Golf Director from 2000 to

2003 of the Zimbali Country Club.

Mr Nkosi’s responsibilities include developing

IFA SA’s social responsibility programme,

initiating and implementing a BEE strategy and

overseeing the various stakeholders’ needs at the

Zimbali Resort.

His current business interests include:

Leitch Landscapes (Pty) Limited, shareholder and

director, a landscaping, golf course maintenance

and horticultural services company;

NVZ Property Management (Pty) Limited, sole

shareholder and managing director, a property

maintenance and cleaning services company.

Marine Docksworks CC, shareholder, a marine

services/stevedoring company.




Gregory Errol Larson

Non-executive

Age 54


Qualifications

BProc (University of Natal, Pietermaritzburg)

Business address

Third Floor Momentum House

125 Prince Alfred Street, Durban, 4001

Mr Larson was admitted as an attorney, notary

and conveyancer on 5 March 1979 and has

practiced law ever since. He is currently practising

as a director of Larson Falconer Inc of Durban

specialising in commercial and property law.

Kevin Anthony Watson

Vice-President: Finance (Africa and Indian Ocean)

and Company Secretary (IFA SA)

Age 36


Qualifications

Bachelor of Accounting Science (Honours)

(University of South Africa),

Chartered Accountant (South Africa),

Master of Business Administration

(Edinburgh Business School)

Business address


After completing four years of accounting

articles, including involvement in numerous

construction and leisure industry audits,

Mr Watson headed to the United Kingdom 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 joint venture (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 of its kind in the United

Kingdom. 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 where he was

responsible for the due diligence, acquisition and

ultimate integration of over 20 businesses into

the company.

In 2003 he moved to the USA to another Shell

subsidiary as Internal Controls Manager where he

was involved extensively in implementing

Corporate Governance in compliance with the

Sarbanes Oxley Act and setting up policies and

procedures for newer companies in the group. He

was then promoted to Chief Financial Officer and

eventually General Manager of a newly acquired

Shell business where he was ultimately

responsible for the performance of the company

to shareholders.

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 region as well as

being the company secretary for IFA SA.


Senior management


Wessel Pretorius Witthuhn

Vice-President: Design and Development

(Africa and Indian Ocean)

Age 46


Qualifications

BSc Building Science,

MSc Construction Management,

CIOB,

AAArb

Business address


Mr Witthuhn commenced his career in the

construction industry in 1987 and in 1992

started his own company. 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. His role included negotiating

with the Parliamentary Ministers for Department

of Finance and Department of Public Works

pertaining to public private partnerships and

infrastructure development.

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 which is one of

the largest privately owned conglomerates within

the UAE. Mr Witthuhn had full responsibility and

control over the entire property portfolio of

approximately $550 million which consisted of

real estate, facilities management, new

developments, marketing and sales of all freehold

property. Also during Mr Witthuhn’s 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 were in the region of $2,2 billion.

In May 2006 he joined IFA H&R Kuwait as the

Vice-President: Design and Development (Africa

and Indian Ocean). His portfolio includes all

developmental aspects within this region

incorporating market positioning, strategic

planning, implementation and developing new

economic areas.


Corporate governance

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.

THE BOARD

The unitary board consists of seven directors and

is chaired by non-executive group 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. 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, if eligible,

offer themselves for re-election at the annual

general meeting. TJM Al-Bahar, PGR de Sylva and

VM Nkosi retire by rotation at the forthcoming

annual general meeting and, being eligible, will

offer themselves for re-election.

Meetings were held on 19 September 2006,

18 December 2006, 28 March 2007 and

8 June 2007. TJM Al-Bahar, WJ Burger,

PGR de Sylva, GE Larson and VM Nkozi attended

all meetings while JAM Wilson was only able to

attend the meeting on 18 December 2006 and

JM Al-Bahar was precluded from attending

meetings as a result of distance and time

constraints.

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 has been adopted.

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 published on SENS.

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

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 the South African

transformation policies. The board has a formal

Board Appointment Policy which is used when

appointing directors.

Self-evaluation

The group is committed to 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 has been developed and a formal

policy in this regard is being considered. Once

finalised the policy will be implemented and

directors will be required to submit a board self-

evaluation to the Chairman. It is anticipated that

this should take place for the first time during

the current financial year.

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.

BOARD COMMITTEES

The company has a group audit, risk and

compliance and a remuneration committee. The

committees are governed by written terms of

reference which have now been approved at

board level and adopted.

Group Audit Risk and Compliance (‘ARC’)

Committee (‘ARC’)

The ARC comprises non-executive directors

GE Larson, who chairs the committee, WJ Burger

and JAM Wilson. Group chairman JM Al-Bahar

resigned during the year and WJ Burger was

appointed in his stead. The committee meets

at least four times a year in line with the

King II Report recommendations.

Meetings were held on 23 August 2006,

27 November 2006, 27 March 2007 and

8 June 2007. WJ Burger and GE Larson attended

all meetings while JAM Wilson attended all

except the meeting on 8 June 2007.

The ARC 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

accounting services and financial reporting as

well as 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. Details of

non-audit services provided during the year can

be found in note 26 to the annual financial

statements.

The committee has unrestricted access to the

external auditor to ensure their independence is

in no way impaired.

Remuneration Committee

The remuneration committee comprises non-

executive directors WJ Burger, who chairs the

committee, and JAM Wilson. CEO TJM Al-Bahar

resigned during the year and WJ Burger was

appointed in his stead. The CEO continues to be

invited but is excused from discussions regarding

his own remuneration on attendance. The

remuneration committee has formally met once

on 18 December 2006. WJ Burger and

JAM Wilson were in attendance. Going forward

the committee will meet twice a year in January

and July.

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.


Corporate governance continued


ACCOUNTING AND AUDITING

The external auditors of the company are

responsible for complete audits of the company

twice a year with an additional two quarterly

reviews. They are responsible for providing an

independent assessment of internal controls and

reporting on whether the financial statements

are fairly presented in compliance with

International Financial Reporting Standards. The

preparation of the financial statements remains

the responsibility of the directors.

INTERNAL CONTROL AND RISK MANAGEMENT

The board, assisted by the ARC, is responsible for

the group’s systems of internal control and risk

management and for reviewing the effectiveness

of these systems. These systems are designed to

provide reasonable but not absolute assurance as

to the integrity and reliability of the financial

statements, the safeguarding and accountability

of the group’s assets, compliance with statutory

laws and regulations and the maintenance of

proper accounting records as well as the

adequacy and reliability of financial information.

The group’s systems of internal control are

further designed to detect and minimise

significant fraud, potential liability, loss and

material misstatement. There are inherent

limitations to the effectiveness of any systems of

internal control, including the possibility of

human error and the circumvention or overriding

of controls. The system is therefore designed to

manage rather than eliminate risk of failure and

opportunity risk.

Nothing has come to the attention of the board

to indicate that there has been a material

breakdown in the systems of internal control

during the year.

In light of the growth being experienced by the

IFA group worldwide, parent company, IFA H&R

Kuwait has deemed a dedicated internal audit

function necessary to monitor the whole group

including IFA SA and will ensure that this is

implemented during the current financial 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.

A formal code of ethics is currently under

consideration encapsulating the group’s policy of

adhering to the strictest standards of ethical

conduct, fair dealing and integrity in business

practice. IFA SA anticipates that the code of

ethics will be approved during the current

financial year.

BEE

Please see Chairman’s Report.

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

employees enjoy equal rights. The relevant annual

employment equity reports are submitted in line

with the Department of Labour’s regulatory

requirements and in particular with employment

equity legislation.

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 in place, it

facilitates compliance through adherence to

those of its development partner THD

(Mifaz joint venture) and hotel operator

(Sun International at Zimbali Lodge). 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.

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.


Sustainability report

Sustainability report


IFA SA’s commitment to conservation is

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.

The Zimbali estate 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

partner, Tongaat Hulett Developments, which is

ISO 14001 certified. In addition Zimbali Lodge,

which is managed by Sun International, has

received a Gold Award from the Heritage

Environmental Rating Programme.

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 strategy. To this end the

group has tasked an executive director with

identifying suitable beneficiaries for social and

community upliftment programmes on a project

specific basis. It is anticipated that during the

course of the current financial year, appropriate

beneficiaries will be submitted to the board of

directors for approval.


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 for reporting 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 systems 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 have adequate resources in

place to continue in operation for the foreseeable future.

The directors of the company, whose names are set out on page 10, 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 29 to 80 were approved by the board of directors on 27 July 2007 and are signed on their behalf by:

JM AL-BAHAR TJM AL-BAHAR

Chairman CEO


Company secretary’s certificate

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 that have, in respect of

the period under review, been lodged with the Companies and Intellectual Property Registration Office are true, correct and up to date.

KA WATSON

Company Secretary

Durban

27 July 2007


Auditor’s report

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF IFA HOTELS & RESORTS LIMITED

We have audited the accompanying group and company annual financial statements of IFA Hotels & Resorts Limited, which comprise the balance sheet as at 30 June 2007, and the

income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management is responsible for the preparation and the fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the

manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair

presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making

accounting estimates that are reasonable in the circumstances.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those

standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material

misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s

judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit 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 2007 and of their financial performance

and their cash flows for the year 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 Durban

Registered Auditors 27 July 2007


Report of the directors

TO THE MEMBERS OF IFA HOTELS & RESORTS LIMITED

Your directors submit their report for the year ended 30 June 2007.

YEAR-END

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

period of 18 months ended 30 June 2006.

REVIEW OF OPERATIONS

Commentary is included in the Chairman’s report and CEO’s report.

INVESTMENTS IN WHOLLY OWNED SUBSIDIARIES AND PRINCIPAL SUBSIDIARIES

Details of the company’s subsidiaries are set out on page 52 of the annual report.

The aggregate after-tax earnings attributable to the company from its subsidiaries are R13,3 million (2006: R40,4 million).

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

(Pty) Limited and IFA Hotels & Resorts (Namibia) (Pty) Limited.

• IFA Zimbali Lodge (Pty) Limited controls the Zimbali Lodge hotel. Sun International holds the management agreement and is responsible for the day-to-day operations of the hotel.

• IFA Hotels and Resorts (South Africa) (Pty) Limited holds a 50% interest in two joint ventures with Moreland-Zimbali Resorts (Pty) Limited. The joint ventures are jointly

controlled by the two entities.

• IFA Boschendal Investments (Pty) Limited owns a 26,57% stake in Boschendal and Purple Plum which are responsible for developing the Boschendal estate.

• IFA Assets (Pty) Limited wholly owns the estate agency which has the sole mandate to sell the R1,1 billion Fairmont Zimbali Project.

• IFA Hotels & Resorts (Namibia) holds a 50% interest in a joint venture (Heike Fourty-one Investments (Pty) Limited) with the Ohlthaver & List Group.

FINANCIAL REVIEW

Commentary is included in the CEO’s report and in the annual financial statements.

BORROWING POWERS

The borrowing powers of the company are not limited.

The IFA SA group has obtained a loan facility from Nedbank Limited of R200 million which is to be used as bridging finance for potential acquisitions. The group is also financed by

shareholders’ loans and internally generated cash. The aggregate of all loans, both interest-bearing and non-interest-bearing, can be found in notes 20 and 21 to the annual report.

DIVIDENDS

The group and company are currently investing profits back into the business to enable future growth. As such the directors have decided not to declare a dividend for this period.

CORPORATE GOVERNANCE

The group complies in all material respects with the JSE Limited Listings Requirements and the Code of Corporate Practice and Conduct published in the King II Report on Corporate

Governance. For more information, please refer to the corporate governance report set out on pages 20 to 25 of the annual report.

SHARE CAPITAL

The authorised and issued share capital of the company, at 30 June 2007, is as follows:

R’000

Authorised

500 000 000 ordinary shares of 1 cent each 5 000

Issued

218 210 680 ordinary shares of 1 cent each 2 182

Share premium 207 055


continuedReport of the directors


ISSUE OF SHARES FOR CASH

There has been no issue of shares for cash in the financial year ended 30 June 2007.

UNLISTED SECURITIES

IFA has no unlisted securities.

DIRECTORS’ INTERESTS IN SHARES

At 30 June 2007 (2006: nil), the interests of the directors in the share capital of the company was as set out below:

Number of shares held

Name Direct Indirect Total

WJ Burger 152 876 – 152 876

GE Larson 10 000 – 10 000

The interests are held beneficially.

There have been no changes in these holdings subsequent to 30 June 2007.

SHAREHOLDERS

An analysis of the shareholders is given on page 80.

Based on the share register at 30 June 2007, 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 company’s holding company is IFA Hotels & Resorts KSCC and the ultimate holding company is International Financial Advisors KSCC. Both of these entities are incorporated in

Kuwait.

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 6 September 2007.

DIRECTORS’ FEES

The directors have agreed not to draw any directors’ fees for the year ended 30 June 2007 (2006: nil). This applies to members of the audit and remuneration committees as well.

Refer to note 27 of the financial statements for further details on directors’ remuneration.

SPECIAL RESOLUTIONS

There have been no special resolutions passed by the company’s subsidiaries since the date of the previous directors’ report.

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

12-month period preceding the date of these annual financial statements, a material effect on the financial position of the group.


continuedReport of the directors


EVENTS SUBSEQUENT TO YEAR-END

Other than as set out in this report, there have been no changes in the financial or trading position of the company or its subsidiaries subsequent to 30 June 2007.

DIRECTORS

The board as it is currently constituted is set out on page 10.

COMPANY SECRETARY

KA Watson

Business address Postal address

1 Amanbali PO Box 12

Zimbali Coastal Resort Zimbali

KwaZulu-Natal South Africa, 4422

The directors’ report set out on pages 29 to 33 was approved by the board of directors on 27 July 2007 and is signed on their behalf by:

JM AL-BAHAR TJM AL-BAHAR

Chairman CEO

GROUP COMPANY30 June 30 June 30 June 30 June

2007 2006 2007 2006Note R R R R

AssetsNon-current assets 164 199 041 146 051 959 186 971 309 183 842 869

Property, plant and equipment 6 95 072 387 83 132 333 559 167 –Intangible assets 7 2 297 759 5 533 763 – –Investment in subsidiaries 8 – – 57 548 927 57 548 727Loan to subsidiaries 8 – – 126 235 535 126 294 142Investment in associates 9 25 380 513 13 902 778 – –Loan to associate 9 35 148 382 35 851 326 – –Investments 10 6 300 000 7 300 000 – –Deferred tax 11 – 331 759 2 627 680 –

Current assets 283 496 772 312 644 707 16 218 882 1 637 035

Township properties 12 81 015 892 86 217 232 – –Inventories 13 2 818 979 2 453 812 – –Trade and other receivables 14 153 300 881 142 733 119 13 468 295 115 694Other financial assets 15 672 602 1 094 977 38 366 1 094 977Assets held for sale 16 – 211 765 – 211 765Taxation – – 622 697 –Cash and cash equivalents 17 45 688 418 79 933 802 2 089 524 214 599

Total assets 447 695 813 458 696 666 203 190 191 185 479 904

Equity and liabilitiesCapital and reserves 178 111 731 148 653 825 128 002 965 120 945 299

Issued capital and share premium 18 71 891 716 71 891 716 209 237 050 209 237 050Non-distributable reserve 19 32 829 850 23 796 690 – –Distributable reserve 73 390 165 52 965 419 (81 234 085) (88 291 751)

Non-current liabilities 160 754 869 133 593 637 65 367 498 55 298 878

Shareholders’ loans 20 125 405 419 113 570 846 53 134 083 55 298 878Borrowings 21 12 233 415 – 12 233 415 –Deferred tax 11 23 116 035 20 022 791 – –

Current liabilities 108 829 213 176 449 204 9 819 728 9 235 727

Shareholder’s loan 20 42 191 779 47 794 492 – –Liabilities held for sale 16 – 211 765 – 211 765Trade and other payables 22 30 432 036 66 706 483 9 819 728 8 401 265Advance deposits 23 1 206 874 903 154 – –Deferred revenue 24 27 098 528 50 885 092 – –Taxation 7 899 996 9 948 218 – 622 697

Total equity and liabilities 447 695 813 458 696 666 203 190 191 185 479 904


as at 30 June 2007Balance sheet


for the year ended 30 June 2007Income statementGROUP COMPANY

Twelve months Twelve months Twelve months Eighteen months

ended ended ended ended

30 June 30 June 30 June 30 June

2007 2006 2007 2006

Note R R R R

Continuing operations

Revenue 25 120 521 872 161 006 555 6 677 772 2 623 769

Cost of sales 38 065 552 72 174 742 – –

Gross profit 82 456 320 88 831 813 6 677 772 2 623 769

Other (loss)/income (21 640) 160 967 2 468 –

Distribution costs (5 827 710) (562 574) (1 728 824) –

Administrative expenses (12 475 278) (10 747 258) (4 124 817) –

Other expenses (28 485 658) (22 083 553) (5 823 303) (2 957 580)

Operating profit/(loss) 26 35 646 034 55 599 395 (4 996 704) (333 811)

Investment income 29 7 142 670 15 227 074 9 442 238 8 911 063

Finance costs 30 (9 661 655) (10 731 270) (638 245) (6 399 122)

Share of loss of associates (4 382 619) – – –

Profit before tax 28 744 430 60 095 199 3 807 289 2 178 130

Taxation 31 (8 423 644) (18 117 294) 3 250 377 (622 697)

Profit after tax from continuing operations 20 320 786 41 977 905 7 057 666 1 555 433

Discontinuing operations

Loss on discontinued operations 16 – – – (5 764 905)

Net profit/(loss) 20 320 786 41 977 905 7 057 666 (4 209 472)

Attributable to:

Equity holders of the parent 20 320 786 41 977 905 7 057 666 (4 209 472)

Earnings per share

Basic and diluted earnings per share (cents) 32 9,31 19,52 – –


for the year ended 30 June 2007Statement of changes in equity

Non-distributable Distributable

Share capital Share premium reserve reserve Total

R R R R R

Group

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 1 July 2006 2 182 107 69 709 609 23 796 690 52 965 419 148 653 825

– – 9 033 160 20 424 746 29 457 906

Surplus on revaluation of land and buildings – – 12 256 507 – 12 256 507

Deferred tax on revaluation surplus – – (3 119 387) – (3 119 387)


Transfer to distributable reserve – – (103 960) 103 960 –

Balance at 30 June 2007 2 182 107 69 709 609 32 829 850 73 390 165 178 111 731

Company

Balance at 1 January 2005 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 1 July 2006 2 182 107 207 054 943 – (88 291 751) 120 945 299


Balance at 30 June 2007 2 182 107 207 054 943 – (81 234 085) 128 002 965


for the year ended 30 June 2007Cash flow statementGROUP COMPANY

Twelve months Twelve months Twelve months Eighteen months

ended ended ended ended


2007 2006 2007 2006

Note R R R R

Cash flows from operating activities (35 200 708) 23 488 424 (8 641 140) 4 510 748

Cash (utilised in)/generated by operating activities 40.1 (23 018 247) 21 822 465 (16 822 436) 6 856 782

Interest received 6 942 500 8 827 951 9 242 068 2 511 941

Interest paid (8 958 711) (6 582 595) (438 075) –

Taxation paid 40.2 (10 166 250) (579 397) (622 697) –

Cash utilised by discontinued operations 16 – – – (4 857 975)

Cash flows from investing activities (17 710 122) (55 042 775) (667 773) (63 638 051)

Expenditure to maintain operating capacity

Property, plant and equipment acquired (2 997 289) (1 139 997) (673 550) –

Proceeds on disposals of property, plant and equipment 147 503 – 5 977 –

Proceeds on discontinued operation 16 – – – 399 800

Expenditure for expansion

Subsidiary acquired 40.3 – – (200) (100)

Investment in associates 40.4 (15 860 336) (13 902 778) – –

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

Other investments 1 000 000 – – –

Cash flows from financing activities 18 665 446 58 800 237 11 183 838 54 883 727

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

Loans raised 18 665 446 71 614 510 11 183 838 61 698 000

Loans repaid – (6 000 000) – –

(Decrease)/increase in cash and cash equivalents (34 245 384) 27 245 886 1 874 925 (4 243 576)

Cash and cash equivalents at beginning of the period 40.5 79 933 802 52 687 916 214 599 4 458 175

Cash and cash equivalents at end of the period 40.5 45 688 418 79 933 802 2 089 524 214 599

1. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

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

IFRS 7 Financial Instruments: Disclosures

IFRS 8 Operating Segments

IFRIC 10 Interim Financial Reporting and Impairment

IFRIC 11 IFRS 2 Group and Treasury Share Transactions

IFRIC 12 Service Concession Arrangements

IFRIC 13 Customer Loyalty Programmes

IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

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 andcompany other than requiring additional disclosure.


at 30 June 2007Notes to the annual financial statements


2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements are prepared in accordance with International Financial Reporting Standards and the Companies Act in South Africa. The financial statements areprepared under the historical cost convention, modified for certain items measured at fair value and the principal accounting policies, which have been consistently applied, areset 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 entitiesthat it has the ability to control) as well as those acquired in 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 reverseacquisition 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 (i.e. the acquirerfor 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 theacquirees 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 ofdisposal, as appropriate. Where necessary, adjustments are made to the financial statements of acquirees to bring their accounting policies into line with those used byother members of the group.

All intragroup transactions, balances, income and expenses are eliminated on consolidation. Minority interests in the net assets of consolidated acquirees are identifiedseparately 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’sshare 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 thenet 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 areallocated 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 thelosses.

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 ofexchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the group in exchange for control of the acquiree, plus any costs directlyattributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3Business 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 inaccordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which are recognised at fair value less costs to sell. In a reverse acquisition, the costof the business combination is deemed to have been incurred by the legal subsidiary (i.e. the acquirer for accounting purposes) in the form of equity instruments issued tothe owners of the legal parent (i.e. the acquiree for accounting purposes). When equity instruments are issued as part of the cost of the acquisition, the cost of theacquisition 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 equityinstruments 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.



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 ventures’ individual incomeand 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 orlosses 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 thejoint 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 isrecognised 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 exercise significant influence and that is neither a subsidiary nor an interest in a joint venture. Significantinfluence 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 andassets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held forsale, 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 arecarried in the consolidated balance sheet at cost plus equity accounted earnings less dividends received and any impairment in the value of individual investments. Lossesof 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 theassociate) 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 agroup 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 costof 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 ofacquisition is recognised as 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’sinterest 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 theacquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately in profit or loss.

Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill is tested at least annually forimpairment and whenever there is an indicator of impairment.

For the purpose of impairment testing, goodwill is allocated to each of the group’s cash-generating units expected to benefit from the synergies of the combination.Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may beimpaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carryingamount of any goodwill allocated to the unit and then to the other assets of the unit pro rata on the basis of the carrying amount of each asset in the unit. An impairmentloss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

The group’s policy for goodwill arising on the acquisition of an associate is described under ‘Investments in associates’ above.



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 ofbusiness, net of discounts, rebates and sales related taxes.

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

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

• 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).

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 transactionassessed 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 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 furthersubstantial acts to complete in the development of a township property, revenue is deferred and recognised as the acts are performed. Revenue is recognised by referenceto 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 costsincurred 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 judgement is 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. Cost includes costs incurredinitially to acquire or construct an item of plant and equipment and costs incurred subsequently to add to, replace part of, or service it to the extent that it is probable thatfuture economic benefits will flow to the entity and the cost can be measured reliably. If a replacement part is recognised in the carrying amount of an item of plant andequipment, the carrying amount of the replaced part is derecognised.

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 thebalance 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 berecoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down totheir 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’ residualvalues and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. Where parts of an asset have different useful lives or depreciation methods tothe item itself, these parts are separately depreciated over their estimated useful lives if they have a cost that is significant in relation to the total cost of the asset.

Increases in the carrying amount arising on revaluation are credited to non-distributable reserves in shareholders’ equity. Decreases that offset previous increases of thesame asset are charged against the non-distributable reserve; all other decreases are charged to the income statement. Each year the difference between depreciation basedon the revalued carrying amount of the assets (the depreciation charged to the income statement) and depreciation based on the asset’s original cost is transferred fromnon-distributable reserves to retained earnings.

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

Buildings 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 thecarrying 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 isregarded 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, theprice 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 oneyear from the date of the classification.

Immediately prior to being classified as held for sale, the carrying amount of assets and liabilities are measured in accordance with the applicable standard. Afterclassification 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 anyinitial and subsequent writedown 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 losspreviously 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 withNon-current 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, sitemaintenance 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 assetsare 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 contractualprovisions 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 aknown amount of cash and are subject to an insignificant risk of changes in 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 subsequentlymeasured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss whenthere 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 ofestimated future cash flows discounted at the effective interest rate computed at initial recognition.




2.10 Financial instruments continued

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 oftransaction costs incurred. Financial liabilities are subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemptionvalue is recognised in the income statement over the period of the financial liabilities using the effective interest rate method.

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 theinvestment 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 the investments. Investments are classified as either investments held for tradingor 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 changesin 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 inequity, until the investment is disposed of or is determined to be impaired, at which time the impairment or the cumulative gain or loss previously recognised in equity isincluded 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 lossesrecognised 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 objectivelyrelated 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 havebeen incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents theestimated 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 ofresources 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.



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 foreigncurrency 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 thetransaction; 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 weredetermined.

Exchange differences arising on the settlement of monetary items or on reporting monetary items at rates different from those at which they were initially recorded duringthe 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 madeunder 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 inthe 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 taxableprofits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises fromgoodwill 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 theaccounting 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 willbe available for 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 statementbecause 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’sand 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.




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 informationis 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 reportingfor management purposes as well as the source and nature of business risks and returns. All intrasegment transactions are eliminated on consolidation.

2.20 Derecognition of assets and liabilities

Financial assets are derecognised when the contractual rights to receive cash flows have been transferred or have expired or when substantially all the risks and rewards ofownership have passed.

All other assets are derecognised on disposal or when no future economic benefits are expected from their use.

Financial liabilities are derecognised when the relevant obligation has either been discharged or cancelled or has expired.

3. CRITICAL JUDGEMENTS IN APPLYING THE ACCOUNTING POLICIES

In the process of applying the accounting policies, which are described in note 2.1 to 2.20, management has made the following judgements that have the most significant effecton 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 R6 300 000 at 30 June 2007. In making this judgement it was determined that thefair 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, andthe fair value of the investment is not considered to be less than cost.

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 independentexternal valuers on the capitalised rental approach basis which takes into account projected sustainable revenue and has been capitalised at a recognisable market capitalisationrate amounting to 9%, which accommodates perceptions of future growth.

Asset life and residual values

Property, plant and equipment are depreciated over their useful life taking into account residual values. The useful life of the assets and residual values are assessed annually andhave been established by reference to technological innovation expected to occur in the near future, current economic conditions of the asset, planned maintenanceprogrammes, current market conditions and the future plans of the company.


3. CRITICAL JUDGEMENTS IN APPLYING THE ACCOUNTING POLICIES continued

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 costsincurred to date bear to the estimated total land and development costs for each development phase. Some revenue on the sale of development property has therefore beendeferred.

Impairment of assets

Application of external and internal impairment indicators to investments and property, plant and equipment resulted in the recoverable amount of the aforementioned assetsnot being determined in view of no indication of impairment existing at year-end.

The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. In addition, goodwillis tested on an annual basis for impairment. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets andliabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flowsused to determine the value in use of goodwill and tangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number offactors including but not limited to entity specific variables, i.e. development estimates, supply demand, together with economic factors such as exchange rates, inflation andinterest.

4. KEY SOURCES OF ESTIMATION UNCERTAINTY

There are no significant assumptions made concerning the future or other sources of estimation uncertainty that has been identified as giving rise to a significant risk of causing amaterial adjustment to the carrying amount of assets and liabilities within the next financial year.

5. REVERSE ACQUISITION

On 16 January 2006, the company acquired from IFA Kuwait, as an indivisible transaction, IFA 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 forIFA Zimbali shares and loan account was R85 000 000 and IFA Hotels shares was R41 204 139 which totalled R126 204 139. This transaction has been accounted for as a reverseacquisition.

Computer Furniture,

Land and and office fittings and soft Plant and

buildings equipment furnishings Motor vehicles equipment Total

R R R R R R

6. PROPERTY, PLANT AND EQUIPMENT

Group

At 1 July 2005

Cost or valuation 51 792 430 881 577 5 428 155 533 750 3 649 590 62 285 502

Accumulated depreciation (1 474 116) (368 382) (2 289 535) (169 857) (527 663) (4 829 553)

Net book value 50 318 314 513 195 3 138 620 363 893 3 121 927 57 455 949

Year ended 30 June 2006

Opening net book value 50 318 314 513 195 3 138 620 363 893 3 121 927 57 455 949

Additions – 191 892 462 361 286 456 199 288 1 139 997

Revaluation surplus 28 933 302 – – – – 28 933 302

Disposals (89 784) – – – – (89 784)

Depreciation charge (1 751 616) (225 946) (1 596 323) (212 108) (521 138) (4 307 131)

Closing net book value 77 500 000 479 141 1 914 874 438 241 2 800 077 83 132 333

At 30 June 2006

Cost or valuation 77 500 000 1 054 768 5 774 553 820 206 3 848 878 88 998 405

Accumulated depreciation – (575 627) (3 859 679) (381 965) (1 048 801) (5 866 072)

Net book value 77 500 000 479 141 1 914 874 438 241 2 800 077 83 132 333


Opening net book value 77 500 000 479 141 1 914 874 438 241 2 800 077 83 132 333

Additions 98 559 590 517 1 941 326 250 319 116 568 2 997 289

Revaluation surplus 12 256 507 – – – – 12 256 507

Disposals – (96 923) (91 518) (223) (5 348) (194 012)

Depreciation charge (1 855 066) (175 894) (640 928) (142 591) (305 251) (3 119 730)

Closing net book value 88 000 000 796 841 3 123 754 545 746 2 606 046 95 072 387

At 30 June 2007

Cost or valuation 88 000 000 1 299 904 6 927 790 1 064 525 3 965 447 101 257 666

Accumulated depreciation – (503 063) (3 804 036) (518 779) (1 359 401) (6 185 279)

Net book value 88 000 000 796 841 3 123 754 545 746 2 606 046 95 072 387




Computer Office Furniture

equipment equipment and fittings Motor vehicles Total

R R R R R

6. PROPERTY, PLANT AND EQUIPMENT continued

Company


Opening net book value – – – – –

Additions 219 089 33 901 221 933 198 627 673 550

Revaluation surplus – – – – –

Disposals (3 509) – – – (3 509)

Depreciation charge (50 934) (6 816) (23 330) (29 794) (110 874)

Closing net book value 164 646 27 085 198 603 168 833 559 167

At 30 June 2007

Cost or valuation 214 410 33 901 221 933 198 627 668 871

Accumulated depreciation (49 764) (6 816) (23 330) (29 794) (109 704)

Net book value 164 646 27 085 198 603 168 833 559 167


at 30 June 2007Notes to the annual financial statementsGROUP COMPANY


2007 2006 2007 2006

R R R R

6. PROPERTY, PLANT AND EQUIPMENT continued

Land and buildings can be reconciled as follows:

At cost 2004 51 792 431 51 792 431 – –

Revaluation 2006 28 933 302 28 933 302 – –

2007 12 256 507 – – –

Additions at cost 2006 98 559 – – –

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

2005 (831 987) (831 987) – –

2006 (1 751 616) (1 751 616) – –

2007 (1 855 066) – – –

88 000 000 77 500 000 – –

Land and buildings comprise Erf 189 Port Zimbali, KwaZulu-Natal, in extent 3 824 hectares. Land and buildings have been pledged as security for the Nedbank loan facility (refer

note 21).

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 2007 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 R47 088 872 (June 2006: R48 655 670).


2007

Adjustments due

to recognition 2006

of deferred Accumulated

Cost tax assets Carrying value Cost impairment Carrying value

R R R R R R

7. INTANGIBLE ASSETS

Goodwill 5 533 763 3 236 004 2 297 759 5 533 763 – 5 533 763

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

Adjustments due

to recognition

Carrying value at of deferred Carrying value at

beginning of year Additions tax assets end of year

R R R R

2007

Goodwill 5 533 763 – (3 236 004) 2 297 759

2006

Goodwill 2 297 759 3 236 004 – 5 533 763

GROUP COMPANY


2007 2006 2007 2006

R R R R

Goodwill comprises:

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

Acquisition of Moribo – 3 236 004 – –

2 297 759 5 533 763 – –

The reduction in goodwill arises from the potential benefit of the acquiree’s income tax loss carried forward of which did not qualify for separate recognition upon initially

accounting for the business combination being subsequently recognised as a deferred tax asset.




2007 2006 2007 2006

R R R R

8. INVESTMENT IN SUBSIDIARIES

Shares at cost – – 57 548 927 57 548 727

Loans to subsidiaries – – 126 235 535 126 294 142

IFA Zimbali – – 78 420 828 70 995 264

IFA Boschendal – – 47 809 707 55 298 878

IFA Assets – – 5 000 –

– – 183 784 462 183 842 869

Loans to subsidiaries are unsecured and not repayable before 30 June 2008 (2006: 30 June 2007). The loan to IFA Zimbali bears interest at prime lending rates, while the loan to

IFA Assets is interest free. The loan to IFA Boschendal is interest free and is carried at present value. A notional interest adjustment of R6 599 292 (2006: R6 399 122) has been

made.

Principal subsidiary undertakings

Subsidiary Country of incorporation

IFA Hotels South Africa

IFA Zimbali South Africa

IFA Boschendal South Africa

IFA Assets South Africa

IFA Namibia Namibia

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


GROUP COMPANY


2007 2006 2007 2006

R R R R

9. INVESTMENT IN ASSOCIATES

Associates 60 528 895 49 754 104 – –

Associates

Equity accounted

Boschendal

26,57% (2006: 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 29 763 095 13 902 751 – –

Share of losses (4 382 619) – – –

25 380 476 13 902 751 – –

Loan to associate 35 148 382 35 851 326 – –

60 528 858 49 754 077 – –

Directors’ valuation 60 528 858 49 754 077 – –

The loan to associate is interest free, and carried at present value, is unsecured and

has been subordinated in favour of Nedbank. A notional interest adjustment of

R4 851 618 (2006: R4 148 674) has been made. The loan is not repayable before

30 June 2008 (2006: 30 June 2007).

Summarised financial information of Boschendal:

Assets

Non–current 25 065 610 19 670 062 – –

Current 32 802 775 20 797 870 – –

57 868 385 40 467 932 – –

Equity and liabilities

Equity and reserves 2 601 894 5 493 593 – –

Non-current liabilities 54 017 687 34 158 178 – –

Current liabilities 1 248 804 816 161 – –

57 868 385 40 467 932 – –

Revenue 2 529 483 4 278 954 – –

Net loss (4 382 619) (10 400 982) – –




2007 2006 2007 2006

R R R R

9. INVESTMENT IN ASSOCIATES continued

Purple Plum

26,57% (2006: 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 37 27 – –

Share of losses – – – –

37 27 – –

Directors’ valuation 37 27 – –

Summary financial information of Purple Plum

Assets

Non-current – – – –

Current 465 924 – – –

465 924 – – –

Equity and liabilities

Equity and reserves (969 768) – – –

Non-current liabilities – – – –

Current liabilities 1 435 692 – – –

465 924 – – –

Revenue – – – –

Net loss (702 625) – – –


GROUP COMPANY


2007 2006 2007 2006

R R R R

10. INVESTMENTS

Available-for-sale financial assets

Zimbali Country Club

Promoter membership debentures 6 000 000 7 000 000 – –

Hotel membership debentures 300 000 300 000 – –

6 300 000 7 300 000 – –

Directors’ valuation of unlisted debentures 6 300 000 7 300 000 – –

Details of available-for-sale financial asset:

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.




2007 2006 2007 2006

R R R R

11. DEFERRED TAX

The following are the major deferred tax liabilities and assets recognised by the

group and company, and the movements thereon, during the current and

prior reporting periods.

Balance at beginning of year/period (19 691 032) (6 193 422) – –

Movements during year attributable to:

Available unutilised tax losses 5 620 790 109 256 2 482 323 –

Capital allowances – buildings (1 042 579) (3 317 216) – –

Capital allowances – land (2 021 793) (1 730 423) – –

Capital allowances – other assets (915 788) (472 595) – –

Income and expenditure accruals (5 800 025) (7 821 466) 145 357 –

Unrealised fair value adjustments 734 392 (265 167) – –

Balance at end of year/period (23 116 035) (19 691 032) 2 627 680 –

The balance comprises:

Available unutilised tax losses 5 730 046 109 256 2 482 323 –

Capital allowances – buildings (4 359 795) (3 317 216) – –

Capital allowances – land (3 752 216) (1 730 423) – –

Capital allowances – other assets (286 220) 629 568 – –

Income and expenditure accruals (21 183 695) (15 383 670) 145 357 –

Unrealised fair value adjustments 735 845 1 453 – –

(23 116 035) (19 691 032) 2 627 680 –

The following is the analysis of the deferred tax balances for balance sheet purposes:

Deferred tax liabilities (23 116 035) (20 022 791) – –

Deferred tax assets – 331 759 2 627 680 –

(23 116 035) (19 691 032) 2 627 680 –

At the balance sheet date, the group has unutilised tax losses of R19 596 903 (2006: R14 601 103) available for offset against future profits and a capital loss of approximately

R3 497 763 (2006: R3 497 763). No deferred tax asset has been recognised in respect of the unutilised capital losses of approximately R3 497 763 (2006: R3 497 763).

At the balance sheet date, the company has unutilised tax losses of R8 559 733 (2006: R14 491 847) available for offset against future profits and a capital loss of approximately

R1 148 549 (2006: R1 148 549). No deferred tax asset has been recognised in respect of the unutilised capital losses of approximately R1 148 549 (2006: R1 148 549).


GROUP COMPANY30 June 30 June 30 June 30 June

2007 2006 2007 2006R R R R

12. TOWNSHIP PROPERTIES

LandBalance at beginning of year 59 066 370 49 154 069 – –Acquisitions in current year – 31 240 986 – –Allocated to cost of sales (9 543 958) (21 328 685) – –

49 522 412 59 066 370 – –

Development expenditureBalance at beginning of year 27 150 862 28 452 612 – –Capitalised expenditure in current year 17 135 060 36 007 562 – –Allocated to cost of sales (12 792 442) (37 309 312) – –

31 493 480 27 150 862 – –

Total 81 015 892 86 217 232 – –

Included in township properties above, is a government grant of R5 000 000 (2006: R5 000 000) relating to the realignment of an existing national road.

13. INVENTORIES

The amounts attributable to the different categories are as follows:

Consumable stores 503 946 560 738 – –Hotel inventories 2 315 033 1 893 074 – –

2 818 979 2 453 812 – –

14. TRADE AND OTHER RECEIVABLES

Prepayments and deposits 1 174 994 566 391 92 100 –Sundry debtors 5 350 140 954 262 27 086 –Trade debtors 146 183 565 141 096 773 13 349 109 –Value-added tax 592 182 115 693 – 115 694

153 300 881 142 733 119 13 468 295 115 694

15. OTHER FINANCIAL ASSETS

Zimbali Country Club 634 236 – – –IFA Resorts – 945 422 – 945 422Ocean Leisure 38 366 149 555 38 366 149 555

672 602 1 094 977 38 366 1 094 977

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


at 30 June 2007Notes to the annual financial statementsCOMPANY

30 June 30 June

2007 2006

R R

16. DISCONTINUED OPERATIONS

In 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 will be distributed to shareholders, the remaining assets of the company will be

realised, the liabilities settled and any remaining cash balance in the company distributed to shareholders as the dividend.

The company reports all of these activities as a discontinued operation. The sales, results, cash flows and net assets of the

discontinued operations were as follows:

Loss on discontinued operations

Operating loss – 433 092

Operating and administration expenses – 5 331 81

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:

Currents assets – 211 765

Liabilities directly associated with assets classified as held for sale – (211 765)

Net assets – –


GROUP COMPANY


2007 2006 2007 2006

R R R R

17. CASH AND CASH EQUIVALENTS

Cash and cash equivalents comprise:

Bank balances 20 498 231 705 697 2 089 524 214 599

Cash on hand 58 224 3 100 – –

Short-term deposits 25 131 963 79 225 005 – –

45 688 418 79 933 802 2 089 524 214 599

Short-term deposits are funds placed on deposit with Tongaat Hulett Developments

(Pty) Limited and earn interest at an average rate of 10% (2006: 11 6%) per annum.

The banking facilities of the group are secured by:

• Letter of comfort by IFA Kuwait for R15 000 000.

• 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).

18. ISSUED CAPITAL AND SHARE PREMIUM

Authorised

500 000 000 Consolidated ordinary shares of R0,01 each 5 000 000 5 000 000 5 000 000 5 000 000

Issued

218 210 680 Consolidated ordinary shares of R0,01 each 2 182 107 2 182 107 2 182 107 2 182 107

Share premium 69 709 609 69 709 609 207 054 943 207 054 943

71 891 716 71 891 716 209 237 050 209 237 050

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.

There are no restrictions on the distribution of dividends and the repayment of capital.

GROUP COMPANY


2007 2006 2007 2006

R R R R

19. NON-DISTRIBUTABLE RESERVE

Balance at beginning of year 23 796 690 – – 5 251 216

Movement during the year:

Surplus arising from revaluation of freehold land and buildings 12 256 507 28 933 303 – –

Deferred tax on land at capital gains tax rate (435 000) (3 317 216) – –

Deferred tax on buildings at income tax rate (2 684 387) (1 756 226) – –

Transfer to retained earnings (103 960) (63 171) – –

Reversal of surplus above – – – (5 251 216)

Balance at end of year 32 829 850 23 796 690 – –

Comprising:

Surplus arising from revaluation of freehold land and buildings 32 829 850 23 796 690 – –

20. SHAREHOLDERS’ LOANS

IFA H&R Kuwait

Non-interest-bearing loan 42 191 779 47 794 492 – –

The loan is unsecured and has no fixed terms of repayment.

Non-interest-bearing loan held at present value 53 134 083 55 298 878 53 134 083 55 298 878

The loan is unsecured, interest free, is carried at present value, and is not repayable

before 30 June 2008 (2006: 30 June 2007). A notional interest adjustment of

R6 599 292 (2006: R6 399 122) has been made.

Interest-bearing loan 72 271 336 58 271 968 – –

The loan is unsecured, bears interest at prime lending rates and is not repayable

before 30 June 2008 (2006: 30 June 2007).

Less 167 597 198 161 365 338 53 134 083 55 298 878

Short-term portion (42 191 779) (47 794 492) – –

125 405 419 113 570 846 53 134 083 55 298 878




GROUP COMPANY


2007 2006 2007 2006

R R R R

21. BORROWINGS

Nedbank Limited 12 233 415 – 12 233 415 –

Secured loan bearing interest at prime less 1,75% annum repayable over ten years

with interest payable on the utilised portion only for first four years, and thereafter

interest and capital for remaining term.

The loan facility is secured by:

• Investment and loan accounts in IFA Boschendal and IFA Hotels.

• Negative pledge by IFA Hotels and IFA Boschendal not to encumber assets of

the company.

• Deeds of suretyships limited to R135 000 000 from IFA Boschendal, IFA Hotels

and IFA Resorts.

22. TRADE AND OTHER PAYABLES

Trade payables 12 573 639 41 035 847 7 483 373 2 167 836

Accruals 4 928 547 2 801 404 2 001 233 442 854

Sundry payables 4 275 838 8 511 858 – 5 790 575

Value-added tax 8 654 012 14 357 374 335 121 –

30 432 036 66 706 483 9 819 728 8 401 265

23. ADVANCE DEPOSITS

Advance deposits for hotel accommodation 1 206 874 903 154 – –

24. DEFERRED REVENUE

The substantial acts required to complete the development of a township property are expected to be completed within the next 12 months, therefore the revenue that has been

deferred in terms of the revenue recognition policy, is likely to be recognised within the next 12 months.



Twelve Twelve Twelve Eighteen

months ended months ended months ended months ended


2007 2006 2007 2006

R R R R

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 74 981 103 123 747 207 – –

Hotel accommodation and services 35 518 132 33 505 478 – –

Commission income 3 249 520 1 832 125 – –

Management and marketing fees 6 773 117 1 921 745 6 677 772 2 623 769

120 521 872 161 006 555 6 677 772 2 623 769

26. OPERATING PROFIT/(LOSS)

Operating profit/(loss) is stated after:

Income

Profit on disposals of property, plant and equipment – – 2 468 –

Profit on foreign exchange 9 045 16 923 – –

Expenditure

Auditors’ remuneration 2 374 317 527 138 1 026 257 411 207

– Audit fee 1 727 237 527 138 617 525 411 207

– Other services 647 080 – 408 732 –

Depreciation

– Property, plant and equipment 3 119 731 4 307 130 110 874 –

Impairment losses

– Property, plant and equipment – 89 784 – –

Goodwill adjustments 3 236 004 – – –

Lease rentals 457 043 – 211 747 –

– Premises 319 277 – 211 747 –

– Equipment 137 766 – – –

Loss on disposals of property, plant and equipment 46 509 – – –


GROUP COMPANY




2007 2006 2007 2006

R R R R

27. DIRECTORS’ EMOLUMENTS

Executive

Mr PGR de Sylva

Directors’ fees – – – –

Salary 787 500 700 000 – –

Bonus 268 750 162 500 – –

1 056 250 862 500 – –

Mr VM Nkosi

Directors’ fees – – – –

Salary 153 000 128 000 – –

Bonus 39 000 10 000 – –

192 000 138 000 – –

Non-executive directors – accumulative amounts due

Mr AJ Hugo* – – – 15 000

Mr AM Ball* – – – 10 000

Mr WS Yeowart* – – – 30 000

Mr Levitt* – – – 20 000

Mr M Lutrin* – – – 50 000

Ms P Mashabela* – – – –

Mr K Michael* – – – 20 000

Mrs H Ndude* – – – –

Mr A Norman* – – – 20 000

Mr M Ramollo* – – – –

Mr EP Rechter* – – – 20 000

Mr V Zwane* – – – –

– – – 185 000

* Resigned






2007 2006 2007 2006

R R R R

28. STAFF COSTS

Salaries and wages 13 709 100 13 345 995 2 771 132 –

Defined contribution retirement plan 741 850 679 203 – –

14 450 950 14 025 198 2 771 132 –

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.

29. INVESTMENT INCOME

Interest received 6 942 500 8 827 952 9 242 068 2 511 941

Notional interest received 200 170 6 399 122 200 170 6 399 122

7 142 670 15 227 074 9 442 238 8 911 063

Notional interest has arisen due to certain loans being carried at present value.

30. FINANCE COSTS

Bank overdrafts and acceptances 74 217 2 351 112 080 –

Long-term loans 8 596 847 6 579 152 325 995 –

Other 287 647 1 093 – –

Interest paid 8 958 711 6 582 596 438 075 –

Notional interest 702 944 4 148 674 200 170 6 399 122

9 661 655 10 731 270 638 245 6 399 122

Notional interest has arisen due to certain loans being carried at present value.


GROUP COMPANYTwelve Twelve Twelve Eighteen

months ended months ended months ended months ended30 June 30 June 30 June 30 June

2007 2006 2007 2006R R R R

31. TAXATION

South African normal tax

Current tax 8 185 346 9 693 126 (622 697) 622 697

Deferred tax

– Current year 305 616 8 424 168 (2 627 680) –

– Prior year adjustments (67 318) – – –

Tax for the year 8 423 644 18 117 294 (3 250 377) 622 697

Reconciliation of rate of taxation % % % %

South African normal tax rate 29,0 29,0 29,0 29,0

Adjusted for:

Disallowable expenditure 0,3 1,1 12,0 (0,4)

Temporary differences – – (125,0) –

Net increase/(reduction) 0,3 1,1 (113,0) (0,4)

Effective rate 29,3 30,1 (84,0) 28,6

An STC liability of R11 802 224 (2006: R8 529 123) would arise if all of the retained earnings of the group were declared as a dividend.

An STC liability of R957 011 (2006: R172 826) would arise if all of the retained earnings of the company were declared as a dividend.



2007 2006

R R

32. EARNINGS PER ORDINARY SHARE

Headline and diluted headline earnings per share (HEPS) 10,82 19,56

The calculation of earnings per ordinary share is based on net profit attributable to ordinary shareholders of R20 320 786

(2006: R41 977 905) and 218 210 680 (2006: 215 028 441) ordinary shares in issue throughout the year.

The calculation of headline earnings per share is based on earnings of R23 603 299 (2006: R42 067 689) and a weighted

average of 218 210 680 (2006: 215 028 441) ordinary shares in issue throughout the year.

Reconciliation between earnings and headline earnings:

Net profit Net profit

2007 2006

R R

Profit after tax from continuing operations 20 320 786 41 977 905

Goodwill adjustment/impairment losses 3 236 004 89 784

Profit/loss on disposal of property, plant and equipment 46 509 –

23 603 299 42 067 689


33. SEGMENTAL ANALYSIS

Business segments

For management purposes, the group is currently organised into four divisions: IFA Zimbali, IFA Hotels, IFA Boschendal and IFA Estates. 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 semitropical 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 a subsidiary of Tongaat Hulett Developments (Pty) Limited (‘THD’) to participate in the development of the Zimbali Coastal

Estate. IFA Hotels is responsible for the sales and marketing and THD is responsible for the technical and development functions thereof.

The Zimbali Coastal Resort covers 3,7 million m2 (370 hectares) of coastal forest estate with 3,5 km of coastline. The Zimbali Lakes Development covers 3 million m2

(300 hectares) and is adjacent to the Zimbali Coastal Resort.

The principal business of the Mifaz 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 further 7,32% stake in Boschendal and Purple Plum Properties. 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.

IFA Estates

IFA Assets estate agency has the sole mandate to sell the R1,1 billion Fairmont resort development situated in Zimbali.



IFA Hotels IFA Zimbali IFA Boschendal IFA Estates IFA SA Eliminations Consolidated

R R R R R R R

33. SEGMENT ANALYSIS continued

2007

Revenue from external customers 78 569 161 38 014 851 – 54 000 3 883 859 – 120 521 871

Internal revenue – – – – 2 793 913 (2 793 913) –

Other income 15 826 (43 841) – 3 908 2 426 – (21 681)

Total revenue 78 584 987 37 971 010 – 57 908 6 680 198 (2 793 913) 120 500 190

Segment result 48 135 100 2 461 239 1 652 566 5 263 101 4 796 553 3 238 085 65 546 644

Loss from associates – – (4 382 619) – – – (4 382 619)

EBITDA* 48 201 503 5 387 968 (6 035 185) (5 247 378) (4 685 679) (3 238 085) 34 383 144

Depreciation (66 403) (2 926 729) – (15 723) (110 874) – (3 119 729)

Interest income 6 463 376 13 667 581 379 5 724 9 242 068 (9 163 544) 7 142 670

Interest expense (8 310 346) (8 925 565) (951 039) (59) (638 245) 9 163 598 (9 661 656)

Income taxes (13 853 481) 343 974 310 827 1 524 657 3 250 378 – (8 423 645)

Net profit/(loss) 32 434 649 (6 106 685) (6 094 018) (3 732 779) 7 057 648 (3 238 031) 20 320 784

Other information

Segment assets 279 707 016 120 271 862 66 414 977 1 773 334 203 190 192 (223 661 568) 447 695 813

Segment liabilities (184 736 357) (99 418 016) (70 847 187) (5 506 013) (75 187 226) 166 110 717 (269 584 082)

Investment in associates – – 60 528 895 – – – 60 528 895

Capital expenditure (48 736) (2 162 593) – (112 411) (673 549) – (2 997 289)

Other non-cash items – (46 509) (4 382 619) – – (3 236 004) (7 665 132)

* Earnings before interest, tax, depreciation and amortisation

For details on inter-segment transfers, refer to note 36.


IFA Hotels IFA Zimbali IFA Boschendal IFA Estates IFA SA Eliminations Consolidated

R R R R R R R

33. SEGMENT ANALYSIS continued

2006

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)

* Earnings before interest, tax, depreciation and amortisation

Geographical segments

The group’s operations are principally located in South Africa. On a geographical anlaysis IFA Boschendal falls under the Western Cape segment, with the remaining segments

falling under KwaZulu-Natal.

IFA Boschendal’s principal investment is that of the associates Boschendal and Purple Plum. Refer to note 9 for details for details on these investments.


at 30 June 2007Notes to the annual financial statementsGROUP

30 June 30 June2007 2006

R R

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:

AssetsNon-current assets – 82 780 366Current assets 176 962 468 180 701 116

176 962 468 263 481 482

LiabilitiesNon-current liabilities – 27 202 523Current liabilities 33 680 809 104 950 806

33 680 809 132 153 329

Net assets 143 281 659 131 328 153

12 months ended 12 months ended

30 June 30 June

2007 2006

R R

Income 51 194 539 138 039 201

Expenses (14 679 919) (71 797 380)

Profit 36 514 620 66 241 821


GROUP30 June 30 June

2007 2006R R

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:

AssetsNon-current assets 153 826 419 509Current assets 6 817 558 9 038 983

6 971 384 9 458 492

LiabilitiesCurrent liabilities 5 965 395 8 139 916

Net assets 1 005 989 1 318 576

12 months ended 12 months ended30 June 30 June

2007 2006R R

Income 6 669 944 8 158 107Expenses (6 982 520) (8 457 626)

Loss before tax (312 576) (299 519)






2007 2006 2007 2006

R R R R

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. Intragroup transactions are eliminated on consolidation.

Identity of related parties

The group’s holding company is IFA Kuwait. Its ultimate holding company is IFA.

The subsidiaries of the group are identified in note 8, the associates in note 9 and

joint ventures in notes 34 and 35.

The directors are set out on page 10 of this report.

IFA H&R Kuwait

Accounting and administration 21 667 23 378 21 667 –

Asset management fee – 47 724 – –

Human resources fees – 13 576 – –

General 240 323 19 471 – –

Management fee paid – 190 854 – –

Interest paid 7 884 344 6 115 223 200 170 6 115 223

Notional interest received (200 170) (6 399 122) (200 170) (6 399 122)

Management service fees – 86 576 – –

Transaction costs – 5 790 473 – 5 790 473

Travel and accommodation 156 558 53 465 73 368 53 465

Sales and marketing 119 454 – 2 754 –

8 222 176 5 941 618 97 789 5 560 039

Larson Falconer Inc.

Legal fees 1 500 000 15 750 1 500 000 –


GROUP COMPANY




2007 2006 2007 2006

R R R R

36. RELATED PARTIES continued

Sun International Management Limited

Management fee paid 1 382 455 1 376 247 – –

IFA Zimbali

Interest received – – 8 925 565 2 511 087

Management fee – – 366 062 393 655

– – 9 291 627 2 904 742

Zimbali Country Club

Management fee received (411 463) (948 141) – –

Sale of goods (4 004 013) (3 517 849) – –

(4 415 476) (4 465 990) – –

IFA Resorts

Rental expense 180 000 – 180 000 –

Management fee 2 784 542 220 189 2 784 542 220 189

Management fee received – (1 049 506) – (1 049 506)

Sale of properties – (32 010 965) – –

2 964 542 (32 840 282) 2 964 542 (829 317)

IFA Boschendal

Notional interest paid – – 200 170 6 399 122

Boschendal

Notional interest paid 702 944 4 148 674 – –




2007 2006 2007 2006

R R R R


Related party balances at year-end included in accruals, accounts payable and

accounts receivable at year-end are as follows:

Accruals

Sun International Management Limited – 5 497 – –

Accounts payable

Sun International Management Limited 2 267 661 378 698 – –

IFA H&R Kuwait 526 522 531 700 – –

Zimbali Country Club – 235 927 – –

IFA Resorts 447 033 6 827 – –

Accounts receivable

Forest Suites at Zimbali (Pty) Limited 388 562 158 324 – –

Ocean Leisure 372 346 149 555 – 149 555

IFA Resorts 15 511 900 22 945 422 – 945 422

There are no irrecoverable amounts.

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.


GROUP COMPANY




2007 2006 2007 2006

R R R R


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, 15 and 20.

Compensation of key management personnel

Salaries and other allowances 3 471 888 2 506 992 1 798 222 –




2007 2006 2007 2006

R R R R

37. COMMITMENTS

Capital expenditure

Contracted for 11 045 731 35 168 365 – –

Approved by the directors but not contracted for 18 500 000 18 565 201 – –

29 545 731 53 733 566 – –

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 165 415 138 729 – –

Later than one year and not later than five years – 165 415 – –

165 415 304 144 – –


38. FINANCIAL INSTRUMENTS

Interest rate risk

The group’s interest rate risk arises from long-term borrowings. Borrowings 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 rates. In addition, exposure to interest rate risk on financial assets and liabilities is monitored on a continuous and proactive

basis. The benefits of fixing or capping interest rates on the group’s various financing activities are considered on a case-by-case and project-by-project basis, taking the specific

and overall risk profile into consideration. Full details of interest rates relating to borrowings are detailed in notes 20 and 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.

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 manages liquidity risk by effectively managing its working capital, capital expenditure and cash flows incorporating an ongoing review of future commitments and

credit facilities. The group finances its operations through a mixture of retained earnings and short and long-term banking funding.

Adequate banking facilities and reverse borrowing capacities are maintained. The group has sufficient borrowing facilities, which could be utilised to fund any potential shortfall in

cash resources.

Cash flow forecasts are prepared and the adequate use of borrowing facilities are monitored.

Fair value

The directors are of the opinion that the carrying amount of financial instruments approximates their fair value.

39. COMPARATIVE FIGURES

Comparative amounts for the income statement, changes in equity, cash flows and related notes are not comparable due to the year-end change (please refer to note in the

report of the director’s for details of the year-end change).






2007 2006 2007 2006

R R R R

40. NOTES TO THE CASH FLOW STATEMENT

40.1 Cash (utilised in)/generated by operating activities

Profit before tax 28 744 430 60 095 199 3 807 289 2 178 130

Adjustments for:

Depreciation 3 119 731 4 307 130 110 874 –

Goodwill adjustment/impairment loss 3 236 004 89 784 – –

Investment income (6 942 500) (8 827 952) (9 242 068) (2 511 941)

Interest paid 8 958 711 6 582 595 438 075 –

Loss on disposals of property, plant and equipment 46 509 – (2 468) –

Notional interest received (200 170) (6 399 122) (200 170) (6 399 122)

Notional interest paid 702 944 4 148 674 200 170 6 399 122

Loss from associate 4 382 619 – – –

42 048 278 59 996 308 (4 888 298) (333 811)

Movements in working capital

Increase in trade and other receivables (10 145 387) (84 875 026) (13 352 601) (1 210 671)

(Decrease)/increase in trade and other payables (59 757 291) 55 588 552 1 418 463 8 401 264

Increase in inventories (365 167) (276 818) – –

Decrease/(increase) in township properties 5 201 320 (8 610 551) – –

(23 018 247) 21 822 465 (16 822 436) 6 856 782

40.2 Reconciliation of taxation paid during year

Charge in income statement (8 423 644) (18 117 294) 3 250 377 (622 697)

Adjustment for deferred tax 305 616 8 424 168 (2 627 680) –

Movement in taxation balance (2 048 222) 9 113 729 (1 245 394) 622 697

Payments made (10 166 250) (579 397) (622 697) –


GROUP COMPANY




2007 2006 2007 2006

R R R R

40. NOTES TO THE CASH FLOW STATEMENT continued

40.3 Acquisition of subsidiary

During the period the group acquired the business of IFA Boschendal,

IFA Estates and IFA Namibia.

Share capital – – 200 100

Total purchase price – – 200 100

40.4 Investment in associates

During the period the group acquired a further 7,32% in Boschendal and

Purple Plum.

Shares (15 860 336) (13 902 778) – –

Total purchase price (15 860 336) (13 902 778) – –

40.5 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 45 688 418 79 933 802 2 089 524 214 599

Number of shareholders Number of shares Percentage

SHAREHOLDERS HOLDING MORE THAN 5%

IFA Hotels & Resorts KSCC 185 479 078 85,00

International Investments Projects Company KSCC 20 730 015 9,50

CATEGORIES OF SHAREHOLDERS

Non-public shareholders 3 185 641 954 0,85

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

Directors 2 162 876 0,00

Public shareholders 652 32 568 726 0,15

655 218 210 680 100,00

DISTRIBUTION OF SHAREHOLDERS

Strategic holding 3 212 874 530 97,55

Mutual fund 3 689 682 0,32

Investment company 1 486 640 0,22

Nominees and trusts 25 569 942 0,26

Private companies 22 1 171 982 0,54

Public company 2 264 202 0,12

Close corporations 9 279 789 0,13

Individuals 563 1 682 056 0,77

Banks 12 126 866 0,06

Other corporations 15 64 991 0,03

655 218 210 680 100,00

SHAREHOLDER SPREAD

1 – 1 000 shares 414 100 671 0,05

1 001 – 10 000 shares 186 768 741 0,35

10 001 – 100 000 shares 41 1 215 655 0,56

100 001 – 1 000 000 shares 11 3 251 083 1,49

1 000 001 shares and over 3 212 874 530 97,55

655 218 210 680 100,00


Shareholder analysis


Definitions

‘the board’ The board of directors of IFA Hotels & Resorts Limited

‘Boschendal’ Boschendal Limited

‘the current year’ The year ending 30 June 2007

‘the group’ IFA Hotels & Resorts Limited and its subsidiaries

‘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 Namibia’ IFA Hotels & Resorts (Namibia) (Pty) Limited

‘IFA Resorts’ IFA Zimbali Hotel and Resorts (Pty) Limited

‘IFA SA’ or ‘the company’ IFA Hotels & Resorts 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 Tongaat Hulett Developments (Pty) Limited

‘Moribo’ Moribo Leisure Limited

‘Ocean Leisure’ Ocean Leisure Company Limited

‘Olifa’ Heike Fourty-one Investments (Pty) Limited

‘the previous year’ The year ended 30 June 2006

‘Purple Plum’ Purple Plum Properties 59 Limited

‘SENS’ Securities Exchange News Service

‘the year’ or ‘the year under review’ The year ended 30 June 2007

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 SECRETARY

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

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


Shareholders’ diary

REPORTING

Interim period end for 2008 31 December 2007

Announcement of results end February 2008

Annual results for 2008 30 June 2008

Announcement of results for 2008 mid August 2008

Annual report posted by mid August 2008

Annual general meeting mid September 2008

Please note that the above are only guidelines based on current information and may be subject to slight change.

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.

This annual report is available only in English. Copies may be obtained from the registered office of the company from 15 August 2007 to 6 September 2007.

IFA Hotels & Resorts Limited

Incorporated in the Republic of South Africa

Registration number 1919/001318/06

Share code: IFH

ISIN: ZAE000075669

Notice is hereby given that the annual general meeting of IFA Hotels & Resorts Limited, (‘IFA’ or ‘the company’) will be held at Zimbali Lodge on Thursday, 6 September 2007 at 09:00

for the following purposes:

1. To receive and consider the audited annual financial statements for the financial year ended 30 June 2007.

2. To re-elect directors in accordance with the company’s articles of association. The following retiring directors are eligible and offer themselves for re-election:

Mr PGR de Sylva

Mr TJM Al-Bahar

Mr VM Nkosi

Curriculum vitae of these three directors are set out on pages 12, 15 and 16 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 2007.

4. To renew the appointment of BDO Spencer Steward (KZN) Inc. as the auditors of the company effective from 1 July 2007.

5. To approve the remuneration of the directors paid by way of fees for the financial year ended 30 June 2007.

The directors have again agreed not to take any directors’ fees for the year ended 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:


Notice of annual general meeting


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.’


‘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.’


continuedNotice of annual general meeting


‘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 33 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.’

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.


6.4 ORDINARY RESOLUTION NUMBER 4 continued

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 page 11 – 19

Major shareholders page 32

Directors’ interests in securities page 31

Share capital of the company page 30

Responsibility statement page 26

Material changes page 33

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 12 months, a material effect on financial position of the company or its subsidiaries.

6.5 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 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;


continuedNotice of annual general meeting

6.5 SPECIAL RESOLUTION NUMBER 1 continued

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;

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:

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;

b. the method by which the company intends to re-purchase its securities and the date on which such re-purchase will take place, has not yet been determined.

At the time that any contemplated re-purchase 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.


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 Tuesday, 4 September 2007.

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

27 July 2007

Durban

Transfer secretaries

Computershare Investor Services 2004 (Pty) Limited


70 Marshall Street

Johannesburg 2000

(PO Box 61051, Marshalltown, 2107)

90PRINTED BY INCE (PTY) LTD

designed by IFA Hotels & Resorts Annual Report 2007

Notes


Form of proxy

HOTELS & RESORTS


Incorporated in the Republic of South Africa

Registration number 1919/001318/06

Share code: IFH

ISIN: ZAE000075669

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 Thursday, 6 September 2007 (‘the annual general meeting’).

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 2007

2. Reappoint directors

PGR de Sylva

TJM Al-Bahar

VM Nkosi

3. Authorise the directors to fix the auditor’s 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 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 Ordinary resolution number 4 regarding a general authority for the company to make payments to shareholders

6.5 Special resolution number 1 regarding a general authority for the company and/or its subsidiaries to acquire its own shares

Signed at on this day of 2007

Signature Assisted by me (where applicable)


Notes to the form of proxy

1. An IFA shareholder may insert the name of a proxy or the names of two alternative proxies of the IFA 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 IFA 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 IFA, 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. An IFA shareholder or his/her proxy is not

obliged to use all the votes exercisable by the IFA 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 IFA 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 IFA or waived by the Chairperson of the annual general meeting of IFA 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 IFA.

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 Tuesday, 4 September 2007.

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 IFA.

11. Dematerialised shareholders, other than by own name registration, must NOT complete this form of proxy and must provide their CSDP or broker of 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 Ground Floor

Marshalltown 70 Marshall Street

2107 Johannesburg

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