Tsogo Sun Heritage

lE.'TS L I KERSAF INVEST IT ED

CORPORATE PROFILE

KERSAF INVESTMENTS LIMITED IS INVESTED IN AND PROVIDES THE RELEVANT

MANAGEMENT SERVICES FOR BUSINESSES IN THE LEISURE INDUSTRY

IN SOUTHERN AFRICA AND OVERSEAS.

THE GROUP FOCUSES ON GAMING, CASINO RESORTS, HOTELS AND

THE CINEMA BUSINESS.

CORPORATE VISION

KERSAF INVESTMENTS LIMITED PROVIDES SHAREHOLDERS WITH THE OPPORTUNITY

TO INVEST IN A RANGE OF LEISURE RELATED ACTIVITIES WITHIN A FOCUSED VISION.

By SPREADING ITS INTERESTS BOTH GEOGRAPHICALLY AND OPERATIONALLY, THE GROUP

IS ABLE TO MINIMISE RISK AND BY FOCUSING SECTORALLY TI-IE GROUP CAN

MAXIMISE SYNERGIES.

\.VITHIN ITS MARKETS THE GROUP ENJOYS STRONG TO DOMINANT POSITIONS DUE

TO ITS ABILITY TO TAKE ADVANTAGE OF MARKET OPPORTUNITIES AND

ITS INNOVATIVE APPROACH TO NEW IDEAS AND CONCEPTS.

BOTH IN SOUTHERN AFRICA AND INTERNATIONALLY, THE GROUP VIGOROUSLY

PURSUES INVESTMENT OPPORTUNITIES WHICH IT BELIEVES WILL

CONTRIBUTE SIGNIFICANTLY TO FUTURE GROWTH.

CONTENTS

FINANCIAL HIGHLIGI-ITS 1 CORPQRAT.': CODE OF ETI-IICS 2 VALUE ADDED STATEMENT 3

GROLIP STRUCTURE 4 DIRECTORATE AND ADMINISTRATION 6 CIIAIRMAN'S REVIE'-'V B

I~EVIEW OF OPERATIONS - SUN INTI:RNATIONAL 18 REVlE\N OF OPI:RATIONS - Cj-r-v LODGE 30

REVIE\I\I OF OPERATIONS - INTERLE,SURE 34 FINANCIAL COMMENTARY 38

O\tVNERSI-IlP OF SI-IARI: CAPITAl. 43 SEVEN YEAR FINANCIAL I:tEVIEW 44

CORPORATE GOVERNANCE STATCM[:NT 48 ApPROVAL OF ANNUAL FINANCIAL. STATEMENTS 49

REPORT OF THE INDEPENDENT AUDITORS 50 REPORT OF TI-IE DIRl:CTORS 51

ANNUAL FINANCIAL STATI:MI:NTS 52

FORM OJ.' PROXY 75

NOTICE OF ANNUAL GJ:NI:I~L MEI:TING 74

SHAREI-IOLDERS' DIARY IBC

FINANCIAL HIGHLIGHTS

----_._- -----

1996 1995 Change

Rm Rn1 %

TJ:ading (excluding exceptional items)

Ia-enue 2649,8 2428,3 9

Operating profit 766,3 661,5 16

t after taxation 549, I 500,9 10

.\mibutable earnings 263,1 208,7 26

Ordinary share performance Earnings (before exceptional items) 317c 252c 26

Oi\;dends 183c 162c 13

"'et worth R16,88 R15,53 9

Fmancial ratios ~ to equity shareholders 18% 17%

rest bearing debt to total shareholders' funds 3% 170/0

t cover (times) II 12

loIarket share price at 30 June R44,40 R32,SO

Employees at 30 June 15 815 16410

REVENUE (R million)

3000---------------------------------

2 SOD - - - • ~ - -- - - , I

- ,- - - - -

- -

2000

1500

1000

500

o 95 96 90 91 92 93 94

EARNINGS AND DIVIDENDS PER SHARE (cents)

350-----------------------------------

90 91 96 92 93 94 95

... Earnings .... Dividends

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CORPORATE CODE OF ETHICS

THE GROLIP RECOGNISES THE VESTED INTERESTS OF ALL STAKEHOLDERS IN THE MANNER

IN WHICH ITS VARIOUS BUSINESSES ARE CONDUCTED. THIS CODE OF ETHICS WILL ASSIST

IN FLILFILLING OLIR RESPONSI131LITY TO THESE STAI<EHOLDER$.

THE GROUP VVILL ACT IN A WAY THAT WILL EARN IT AND ITS $LIBSIDIARIES AND

ASSOCIATES THROUGHOUT THE WORLD THE REPUTATION OF BEING:

.:. OPEN AND HONEST IN ALL DEALINGS

.:. CONSISTENT IN FLILFILLING ITS MORAL AND LEGAL OBLIGATIONS

.:. SOCIALLY RESPONSIBLE

.:. ENVIRONMENTALLY RESPONSIBLE

.:. NON-SECTIONAL

.:. NON-POLITICAL

-e- SUPPORTIVE OF LOYALTY AND LONG STANDING RELATIONSHIPS

.:. PROTECTIVE OF THE QUALIT'i OF ITS SERVICES AND PRODUCTS

As REGARDS ITS PEOPLE RESOURCES, THE GROUP IS COMMITTED TO ENLIGHTENED

EMPLOYMENT POLICIES AND PRACTICES WHEREBY:

.:. DISCRIMINATION IS ELIMINATED

.:. TRAINING AND SKILLS DEVELOPMENT IS EMPHASISED

.:. EMPLOYEES HAVE AN LINCONTESTED RIGHT TO ORGANISE AND NEGOTIATE Tl-IEIR

CONDITIONS OF EMPLOYMENT

•

ADDED STATEMENT

2649,8 2428,3

(rom investments 291,6 71,8

generated 2 941,4 2500,1 18

- to suppliers for materials and services (1010,6) (784,2)

value added 1 930,8 I 715,9 13

tion to stakeholders

613,6 576,9 6

ents 581,5 444,6 31 ers and lenders

idmds to shareholders 208,0 340,1 (39)

costs 70,7 55,8 27

1 473,8 I 417,4 4

in business

capitalisation awards 139,8

retentions 317,2 298,5

e to fund the replacement of assets and facilitate further growth 457,0 298.5 53

FOR THE YE,\R ENDED 30 JUNE 1996

1996

Rm 1995

Rnl Change

%

lI'I[]JDO"- VALUE ADDED (R million)

1996

DISTRIBUTION TO STAKEHOLDERS (%)

1995

... Employees 42%

.... Gove ... nrnents 39%

... Shareholders 14% • -~--+--_'--+---'--~--I'

... Lenders 5% 90 91 92 93 94 95 96

• .... Employees 4 I %

... Governments 3 1%

... Shareholders 24%

... Lenders 4%

GROUP STRUCTURE

-7 ACTIVITIES ~

<@P 80%

SUN INTERNATIONAL INC CASINO RESORTS, HOTELS AND CASINOS

41% SUN INTERNATIONAL

SOUTH AFRICA+

• 100% NORTH WEST PROVINCE SUN CITY' The Palace of the Lost City (350 rooms) Cascades (245 rooms) Sun City Hotel and Enrertainmenr Centre (340 rooms) Cabanas (380 rooms)

MMABATHO Mmabatho Sun" (150 rooms) Molopo Sun" (220 rooms)

MABOPANE Morula Sun" (74 rooms)

BABELEGI The Carousel Casino and Entertainment World* (60 rooms)

TLHABANE Tlhabane Sun" (30 rooms)

TAUNG Taung Sun= (40 rooms)

• 100% EASTERN CAPE PROVINCE BISHO Amatola Sun" (85 rooms)

PEDDIE Mpekwenl Sun Marine Resort (100 rooms) Fish River Sun* (120 rooms)

MDANTSANE Mdantsane Hotel and Entertainment Centre" (8 rooms)

MZAMBA Wild Coast Sun" (400 rooms)

UMTATA Ttansgamesf

BUTTERWORTH Transgames*

• 100% NORTHERN PROVINCE THOHOYANDOU Venda Sun* (82 rooms)

• 100% FREE STATE PROVINCE THABA 'NCHU Thaba 'Nchu Sun" (120 rooms) Nalcdl Sun" (30 rooms)

OTHER SOUTHERN

AFRICA

• 80% BOTSWANA Gaborone Sun" (203 rooms)

• 47% LESOTHO Maseru Sun Cabanas" (J 12 rooms)

• 49% LESOTHO Lesotho Sun" (236 rooms)

• 51 % NAMIBIA Kalahari Sands" (J 87 rooms)

• 51 % SWAZILAND Royal Swazi Sun" (145 rooms) Ezulwini Sun (120 rooms) Lugogo Sun (202 rooms) Nhlangano Sun" (47 rooms)

• 100% RIVIERA The Riviera International (100 rooms)

•

73°.16 ROYALE RESORTS

HOLDINGS LIMITED

• 100% SI MANAGEMENT LIMITED Southern African management contracts

• 19% SUN INTERNATIONAL HOTELS LIMITED·

23% SUN RESORTS LIMITED+ MAURITIUS Le Saint Geran (175 rooms) La Pirogue (248 rooms) Le Touessrok (200 rooms) Le Coco Beach (333 rooms)

COMORES Lc Galawa Beach Hotel" (182 rooms)

100% PARADISE ISLAND Atlantis Resort and Casino" (1147 rooms) Paradise Paradise Beach Resort (/00 rooms) Ocean Club Golf and Tennis Resort (59 rooms)

25% FRANCE Ruhl'" Cassls'" Carry-le-Rouet" Chamontx"

50% TRADING COVE ASSOCIATES Mohegan Sun casino management contract

Casino licence " 1Wo casino licences • Listed on the Johannesburg Stock Exchange • Listed on New York Stock Exchange to Listed on Mauritius Stock Exchange

GROUP STRUCTURE

~ ACTIVITIES ~

43%

LODGE HOTELS LIMITED'" AFFORDABLE HIGH QUALITY HOTELS

• CITY LODGE BwEMFONTEIN \\lortrekker Street (152 rooms)

CAPE TOWN ),Iowbray Golf Park (134 rooms) :"ittoria and Alfred ~aterfront (164 rooms)

DuRBAN - khill Road (I6 J rooms)

joHANNESBURG labannesburg International Mpon (J6/ rooms) &mdburg (123 r00111s) Sandran Katherine Street (J 59 rooms) Saldton Morningside (161 r00111s)

PORT ELIZABETH Scac:h Road (I48 rooms)

• TOWN LODGE eWE TOWN

rille (106 rooms)

esburg International (135 r00111s)

nd (118 rooms)

NELSPRUIT General Dan Pienaar Street (106 rooms)

• ROAD LODGE JOHANNESBURG Johannesburg International Airport (92 rooms)

• THE COURTYARD INN CAPE TOWN Mowbray (70 rooms)

JOHANNESBURG Bruma Lake (69 rooms) Rosebank (83 rooms) Sandron (69 rooms)

PRETORIA Arcadia (69 rooms)

•

37%

INTERLEISURE'" LIMITED

CINEMA AND FILM RELATED ENTERTAINMENT

• fILM EXHIBITION AND DISTRIBUTION

100% STER-KINEKOR 283 cinema screens at 48 locations countrywide and t3 drive-ins Distribution rights in South Africa for Columbta-Tri Star, Twentieth Century Fox and Disney

50% STER-MoRIBO 24 cinema screens at 6 locations 60% of Maxi-Movies Franchising (Pry) Limited which franchises cinemas in rural and disadvantaged areas

85% STER-KINEKOR HOME ENTERTAINMENT

• FILM AND TELEVISION PRODUCTION

100% TORON INTERNATIONAL

50% THE VIDEO LAB GROUP

• ANCILLARY SERVICES 100% COMPUTICKET

100% CINEMARK

DIRECTORATE AND AD.1I.ISTRATION

~ BOARD OF DIRECTORS ~

EXECUTIVE DIRECTORS D A HAWTON (59) F.c.I.S.

Chairman Appointed to the board in 1987

Chairman and chief executive, Safrnartne and Rennies Holdings Limited

P D BACON (50) M.H.C.I.M.A. (BRITISII) Reappointed to the board in 1994

Originally appointed in 1985 Managing director, Sun International

DC CouTTs-TROTTER (34) B.Bus.SCI., B.Acc .. C.A.(S.A.) Appointed to the board in 1996

Group financial director

M P EGAN (41) B.Co,1., C.A.(S.A.) Appointed to the board in 1992

Managing director, Interleisure Limited

H R ENDERLE (53) Appointed to the board in 1994

Executive chairman, City Lodge Hotels Limited

F W J KILBOURN (34) B.CoM.LLB, B.A. (HONS), H.DIP.TAX Appointed to the board in 1996

Corporate development director, Safmarine and Rennies Holdings Llmited

NON-EXECUTIVE DIRECTORS t*W F DE LA H BECK (73) B.COM., C.A.(S.A.)

Appointed to the board in 1985 Director of companies

t*G A MACMILLAN (75) C.A.(S.A.) Appointed to the board in 1984

Director of companies

*1 N MATTHEWS (50) M.A. (OXON), M.B.A. Appointed to the board in 1996

Director of companies

'" Member of the audit committee t Menlber of the remuneration committee

ADMINISTRATION

KERSAF Il\rvESTi\1ENTS LIMITED

Incorporated in the Republic of South Africa Registration number 67/07528/06

GROLIP SECI~[TAnY S A Bailes EC.I.S .. EC.I.B.M.

ATTORNEYS Edward Nathan & Friedland Inc

TRANSfER OFFICE Fraser Street Registrars (Pty) Limited Ground Floor, Sage Centre 10 Fraser Street Johannesburg, 2001 Gauteng

REGISTERED OFFICE

3 Sandown Valley Crescent Sandown Sandton, 2031 Gauteng Republic of South Africa Telephone (+2711) 780-7444 Telefax (+2711) 783-7446

AUDITORS

Price Waterhouse

BANKERS

Nedcor Bank Limited The Standard Bank of South Africa Limited

•

Hails Enderle. David Contts-Trouer; A4il.'e Egan, I.'ralll., Kilbourn, Seated: Elldtl), Hasaou alit I Peter Bacon

I N Matthews

•

W Fdeta H Bed

G A Macmilloll

CHAIRMAN'S REVIEVV

~ KERSAF INVESTMENTS LIMITED ~

Buddy Hawton EXECUTIVE CHA1Rl,lAN

his year's results are particularly pleasing as they clearly reflect the strength inherent in the broad spread of Ke r safs investments within the leisure sector as well as the benefits of their geographic diversity. The

material impact on the earnings of Sun International in South Africa by the activities of

the illegal casinos and by the higher taxation was mitigated by the excellent progress achieved in the offshore operations, the strong performance from City Lodge and the sustained improvement in Interleisure's profitability.

Sun International South Africa faced difficult market conditions in gaming, particularly due to increased competition from illegal casino operators although the hotel operations generally performed well and pre-tax profit showed a healthy increase. City Lodge had another

excellent year with increased margins reflecting the improved efficiencies achieved during the year and the benefits of the Courtyard a cqu i sition. Interleisure benefited from focusing on its core cinema businesses and has progressed in its planned move to expand internationally.

Trading conditions prevailing during the year were generally satisfactory although consumer and business confidence was somewhat dampened during the second half and in particular the last quarter of the year by the sharp depreciation in the rand and increases in interest rates. The rate of growth in personal consumption expenditure declined from 5% in the six months to December 1995 to 2% in the six month period to June 1996.

RESULTS

Revenues for the year at R2,7 billion were 9% higher than in 1995 and 10% higher if the disposed Douglas Green Bellingham business is excluded. Improved margins and foreign exchange gains raised profit from operations by 11% to R677,3 million. Strong cash flows and capitalisation share awards in lieu of intcr im dividends, resulted in net interest inC0111e of R 18.3 million versus a net expense of

. R2,6 million in the prior year and consequently a 14% improve me nr in profit before tax to R684,3 million notwithstanding the R8,0 million increase in exceptional costs. The '4,1 percentage point increase in the effective tax rate, due mainly to the full applicability of the South African legislation to the earnings of Sun International South Africa, reduced the increase in profit after tax to 8%.

Normal associate company profits were up 156% to R46,8.million as a result of the excellent results achieved by City Lodge and Sun

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CHAIRMAN'S REVIEW

•

CHAIRMAN'S REVIEW

International's offshore operations conducted CHANG ES IN TH E G RO U P through Sun International Hotels Limited. An STRUCTU RE exceptional associate C0l11pany profit arose

during the year, representing the increase in

the value of the group's interest in the net assets of Sun International Hotels, following

the successful public offering which raised $285 million.

Earnings attributable to ordinary shareholders increased 67% to R344,5 million although on

exclusion of the exceptional items the improve ment reduced to 26%. Earnings per share before

exceptional items for the year were 26% higher. It is notable that dollar based earnings in 1996

contributed 16% of total attributable earnings before exceptional items, up substantially on the

II%ofI995.

The aggregate of the capitalisation share award

and the final cash dividend totalling 183 cents

per share is 13% higher than the total dividends for the previous year. In accordance with the

indication given last year, the percentage payout has reduced Irorn the previous year's 640/0 to 580/0. It is likely that the payout ratio will be further

reduced in the year ahead so as to achieve the

targeted two times dividend cover.

The group's balance sheet remains strong with

gearing reducing from 17% in the previous year to 3% at the year end. Furthermore, the group has

significant cash resources at its disposal which is pleasing as it is the intention of the group to

actively pursue new investment opportunities within the hotel, ganling and leisure industries both in southern Africa and internationally. The

return on net assets for the year of 24% repre sents an increase of 3 percentage points over the previous year and continues the positive trend re established last year.

During the year Sun International's South African

gaming and hotel interests were successfully restructured under one listed cOI1'pany, the former Sun International (Bophuthatswana) Limited. which was renamed Sun International (South Africa) Limited ("SISA"). This restructure

will facilitate any future rationalisation of SISA's

operations in compliance with the new gaming dispensation in South Africa and enhances the ability of SISA to finance potential new gaming developments.

The group divested its 50% interest in the Douglas Green Bellingham partnership ("DGB") to its joint venture partner, Kangra Holdings (Proprietary) Limited, with effect from 26 April 1996. DGB did not form part of the group's core activities being gaming, hotels and leisure. The

disposal consideration was not materia l and nor was the i mpac t on current or future earnings.

SOCIO-POLITICAL AND ECONOMIC CONSIDERATIONS

South Africa's remarkable political transforma

tion and re-acceptance into the world community are now substantially complete. The recent announcement of the Government's Gr owth , Employment and Redistribution strategy is encouraging as it appears to contain many of the

elements required for South Africa to achieve Government's target of sustained economic growth in excess of 6% by the year 2000. The Government's c o mrn i trne n t s to monetary and fiscal discipline, the accelerated reduction of the

fiscal deficit. the relaxation of exchange controls, the privatisation of state assets, an increase in labour market Ilexibf htv and productivity, and a reduction in real interest rates are to be welcomed. The success of this strategic plan and

CHAIRMAN'S REVIEVV

CHAIRMAN'S

its acceptance by local and international investors and markets requires specific action plans and tangible evidence of this corurnitrnc nt. In particular there should be further relaxation of exchange controls and more rapid progress to privatise state assets, so as to improve their efficiency and reduce the level of state borrowing.

The achievement of an investor friendly environ ment is essential if South Africa is to attract the levels of long-term international investment required to achieve significant development, empowerment and economic growth. A serious threat to the achievement of such an environment is the current level of crime and violence that pervades our society. This situation discourages direct investment, inhibits the growth of tourism and is eroding the country's skills base through emigration. It is particularly noteworthy that the rate of growth in foreign tourism to South Africa has declined over the last two quarters. The full cornmttrnenr of Government, business and com munities is essential if law and order are to prevail and the human rights and dignity of every citizen are to be protected.

Whilst the sharp decline in the value of the rand has had a positive impact on the group's earnings from its international investments, it has also, over the past few months, placed upward pres sures on real interest rates and inflation. The resultant slowdown in the economy and in particular consumer discretionary expenditure is of concern although it still appears possible that gross domestic product growth of 3% can again be achieved over the next twelve months.

GAMING IN SOUTH AFRICA

The National Gambling Bill, which is intended to provide a national fr a mewo rk within which the gaming industry will operate, was passed by Parliament during June this year. This Bill contains certain specific issues that are

REVIEW

of particular relevance to the group, i.e ,

.:. a maximum of 40 licences are to be granted nationally, with specified maxima per province;

.:. a limitation per investor or operator to 16 licences nationally and 2 per province with the exception of the Eastern Cape and the North West provinces where, in recognition of its existing investments and the related employment, Sun International will be allowed to operate 3 licences in each province; and

.:. the prohibition of the State or any of its bodies from having a financial interest in companies holding, managing or operating casino licences.

Sun International has until 10 May 1999 to com ply with these provisions of the national gambling legislation.

Sun International has committed significant resources so as to continue its success in a regulated gaming industry in South Africa. Applications for new casino licences are well advanced and strong alliances have been forged with a number of national and provincial partners recognising the principles of black economic ernpowermcnr and the participation of histori cally disadvantaged persons and communities. Strategies for the rationalisation and sale of certain existing licences have been developed but their implementation is not d ee med practicable until such time as clarity on the location of new casino licences and the rcquirc m e n t s of provincial gaming legislation and the respective provincial gaming boards are clarified.

The group has assumed a prudent view and made full provision against the costs incurred in progressing plans for new casino projects, inter alia acquiring options over properties, engaging consultants and relevant experts and preparing licence applications.

CHAIRMAN'S REVIEW

ment is at its greatest. The group promotes

improvements through the lnvesrrnenr of finan cial resources as well as skills, advice, leadership and capacity building. The communities, how

ever, lead the way in identifying [heir real nee and the cornerstone of the process is the involve rne nt of staff and community reprc sentatives ] the analysis, planning and implementation of the various projects.

CHAIRMAN'S REVIEW

CORPORATE RESPONSIBILITY in rural areas where the need for social invest-

The Kersaf group believes that the new democracy in South Africa must be supported by creating a just and equitable society where all stakeholders take responsibility for and make a

positive contribution to their economic develop ment and well-being.

To this end the group is committed to both the principle and spirit of economic empowerment and devotes time, effort and resources to ensure that previously disadvantaged individuals and communities are brought into the mainsrream of the economy, have access to employment opportunities and have access to facilities and training to ensure the transference of skills and knowledge.

Our employees, which number over 15500 at year end, participated in 42% of the value added that was distributed to stakeholders in the period under review. The principle of affirmative action is fully supported by the group and is aimed at developing and promoting the skills and abilities of those disadvantaged by past discrimination. The ultimate objective is to establish a workforce that at all levels reflects the demographics of the economically active population in southern Africa. Sun International, which employs over three quarters of the total staff complement of the group, has already made Significant progress in this regard with over 50% of management and supervisory positions being occupied by black, coloured and Asian staff.

It is recognised that the community is a stakeholder in the group and that a social respcnsibi lity exists to assist with the upliftment and development of those communities where the group operates. This is especially important given that nlany of the group's operations arc situated

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Projects undertaken and sponsored in rural areas include the upgrading of the Greenville Hospital and Vulindlela Technical School ncar the Wild Coast Sun, upgrading of the Sekampaneng Primary School near the Carousel, establishment of the Saulspoort Sewing Centre and partic ipatton in the building of the Sandfontien Clinic near Sun City. Other donations include those made to the Nelson Mandela Children's Fund, Keep South Africa Beautiful project, Rustenburg Street Children's project, Lambani water relief scheme and the construction of the Mdantsane indoor sports complex.

On a broader front various corporate sponsorship initiatives have been undertaken. These include being a founding trustee to The Sports Trust and the Arts and Culture Trust as well as being an official sponsor to the national team which successfully participated in the 1996 Atlanta Olympic Games.

In pursuing its cornrnirrnenr to the principle of black economic empowerment the group has forged strong alliances with a number of national and provincial partners in applying for new casino licences in terms of the new gaming dispensation. City Lodge launched an employees share trust scheme during the year in which approximately 4% of its share capital has been

CHAIRMAN'S REVIEW

CHAIRMAN'S

issued to the IrUSl, which will enable all employees to participate in the wealth they help to create. Interleisure has continued to develop Ster-Moribo, a joint venture with Thebe Investment Corporation, with t he opening of Dobsonville and Davey ton cinema complexes and the establishment of Maxi-Movies Franchis ing. wh ich franchises cinemas to rural and disadvantaged areas.

PROSPECTS

The year ahead will be a very important one for the Kersaf group. There are many challenges to

face, particularly with regard to the group's gaming interests in South Africa. However, the year also holds a number of significant develop ments and opportunities including:

+:+ the finalisation of the structure of South Africa's casino gaming industry, with applica tions for new casino licences and, in the case of certain provinces, the award of these licences;

+:+ further rapid growth of the group's offshore earnings with commencement of operations at the Mohegan Sun, which was recently awarded a permanent licence, as well as expansion of Sun International Hotels' existing facilities and the planned major expansion and refurbishment of the recently acquired Atlantic City casino resort;

.:. lnterleisure's venture into international cinema markets and, potentially, domestic television; and

+:+ City Lodge's further expansion through the development of new locations.

The slowdown in the growth in the economy and particularly in personal consumption expenditure will place pressure on Sun International's local operations. We nevertheless expect that with

REVIEW

the imminent closure of the illegal casinos, which has C0l11111cnced in certain provinces, and given the group's strong positioning in the market place, revenues should show growth in real terms in the year ahead. This growth, coupled with the strong performances anticipated from Sun International's offshore operations and the increased earnings expected from Interleisure and City Lodge, indicate that the group should achieve real earnings growth for the year.

ApPRECIATION

I would like to thank the management and staff of all the group's many enterprises for their significant contribution to the group's success over the past year, particularly in the face of the uncertainty created by the unresolved future of casino ganling in South Africa. The commitment. profe ssionalism and loyalty shown by all has been extremely encouraging and augurs well as we e nte r into an even more competitive environment and as South Africa establishes itself in the global market place.

I wish particularly to thank Alan van Biljon, who resigned during the year, for his very valuable contribution to the group over the past len years. Alan's integrity, energy and dedication will be missed and we wish him every success in the future. Finally, it is my pleasure to welcome Frank Kilbourn, David Coutts-Trotter and Nigel Matthews onto the board and I believe that they will make a Significant contribution in the years to come.

D A Hawton Executive Chairman

CHAIRMAN'S REVIEW

•

REVIEW OF OPERATIONS

~ SUN INTERNATIONAL ~

SUN INTERNATIONAL WAS FORMED IN OCTOBER 1983 TO ACQUIRE CONTROL

OF THE CASINO RESORTS OF SOUTIIERN SUN HOTEL HOLDINGS LIMITED AND

RENNIES CONSOLIDATED HOLDINGS LIMITED IN SOUTHERN AFRICA AND MAURITIUS.

THE GROLlI' IS 80% OWNED BY KERSAF.

- ... r---

I! un International's philosophy is to acquire a

substantial equity interest in the casino resorts

and hotels under its banner as well as to

provide the necessary management services.

The focus of the group is the development and

management of casino resorts with a range of gaming,

entertainment and sporting facilities available to guests

and visitors. The group's portfolio currently includes

35 hotels with over 6 000 rooms in southern Africa, the

Indian Ocean Islands of Mauritius and Cornores, and in

the Bahamas. In addition to its hotel and resort facilities,

Sun International has casino operations in France. The

group's interest in the Marrakech casino was sold during

the year.

Sun International Inc's overall results for the year were

satisfactory, with revenues up 10% and profit before tax up

12% due to containment of costs and higher net interest

income. Attributable income before exceptional items was

19% higher due mainly to the increase in the offshore

associate company profits.

SOUTHERN AFRICA

The South African hotel industry enjoyed an increase in

occupancy levels over the year as the number of business

and holiday visitors again increased over the prior

year, albeit at a slower rate. The hotel room capacity in

the more important business and tourist regions is I

increasing rapidly and if current high occupancies are to

continue, more rapid economic growth and a significant

reduction in the current levels of crime and violence are

required.

The status and future of a regulated ganling industry in

South Africa, which is of great importance to the group,

has been dealt with by the Chairman in his review. It

is hoped that over the next year the Significant outstand

ing issues will be addressed by central and provincial

governments and that the process of awarding licences will

be well advanced. The group will then be in a position to

plan any rationalisation that may be required and there

after to proceed with the expansion of existing facilities

and in the event of obtaining new licences, the develop

ment of new casino based projects.

Sun International's resorts in southern Africa continued to

enjoy strong demand for accommodation, with an average

occupancy attained of 63% being I percentage point up on

last year at an average room rate! 4% higher. This demand

unfortunately did not extend to gaming, particularly slots

revenues, which continue to be impacted by the activities

of the illegal casinos, most notably in KwaZulu Natal and

Gauteng. Casino revenues have also to an extent been

impacted by the n1any other entertainment activities

on offer and the downward pressure on consumer

discretionary spending, which was particularly evident

during the last quarter.

Sun International (South Africa) Limited ("SISA"),

was constituted following the acquisition by Sun Inter

national (Bophuthatswana) Limited, renamed SISA, of the

entire issued share capitals of Transkei Sun International

Limited, Sun International (Ciskei) Limited and Venda

Sun Limited. The acquisition was funded by an issue

of shares or at the election of the shareholders, cash. This

restructuring resulted in the rationalisation of Sun


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REVIEVV OF OPERATIONS

~ SUN INTERNATIONAL ~ (continued)

International's existing South African gaming and resort

interests under one listed company. All shareholders will

now be afforded the opportunity to participate in the

benefits of new investment opportunities in South Africa

and the group's ability to fund future expansion is

enhanced. Kersaf's effective interest in the reconstituted

S[SA group is 33%.

SUN INTERNATIONAL (SOUTH AFRICA) LIMITED

% Rm [996 change 1995

Revenue 2 160,7 10 1 957,9

Profit from operations 519,9 11 469,2

Atrributable earnings 386,3 6 364,1

Earnings per share (cents) 49,8 6 47,2

Total assets 2624,0 - 2626,9

Operating margin (%) 24 24

Rooms available 2767 2763

Average occupancy (%) 70 68

Slot machines 6867 6595

Employees 11 912 11 941

SISA's results for the year were satisfactory bearing in mind

that revenue growth was restricted to 10% prtmartly as a

result of the increased level of activity of the illegal

casinos. Hospitality revenues showed good growth as a

result of improved occupancy, 2 percentage points higher

than last year at 70%, and strong rate growth of 15%

due largely to the strong foreign demand which was

particularly evident at Sun City. Management continues

to place emphasis on overhead cost containment, which,

together with the significantly reduced net interest cost

boosted the growth in profit before taxation to 14%. The

growth in attributable earnings was reduced to 6% by the

taxation charge that was 52% higher than last year and at

an effective rate of 22%, up 5 percentage points. This

•

increase was due to the full applicability of South African

tax legislation to the earnings of the SISA group

companies, including the imposition of STC on the final

cash dividend. The relatively 10v,1 effective tax rate is as a

result of the utilisation of the tax equalisation reserve

which it is anticipated will be utilised over the next two to

three years. The results for the second half of the year

reflected the slowdown in consumer spending and the

slower rate of growth of tourism with revenues and

attributable earnings growth of S% and 4% versus 13% and

10% during the first half.

The Sun City resort continued to benefit from strong

international demand with occupancy for the year of

79%, up 4 percentage points on last year. Table revenues

benefited from the increase in the number of hotel

guests although slots revenues continued to decline in

the face of illegal competition and hence reduced day

visitor numbers. Overall the resort increased revenues by

15% while, increasing margins and containment of costs

resulted in the attributable loss at the resort being

materially reduced. The refurbishment of the Main Hotel

was completed during the year and enhancements were

made to the Entertainment Centre so as to improve the

day visitor experience at Sun City. The total cost of

these refurbishments was RII7,S million and the resort

is now in a position where all the facilities are in an

excellent condition having been recently refurbished.

In response to the demand for more affordable

accommodation at Sun City, the Sun City Vacation Club

was launched. This innovative concept will allow club

members access to the refurbished staff flats on a

reservation basis. To date the response from the public has

been excellent. The development is anticipated to be

completed by mid 1997 at a total cost, including

construction of the new improved staff facilities, of approxi

marely R97 million. Sun City continued to host numerous

major events and the Miss World pageant was held at the

resort for the fourth consecutive year creating considerable

international exposure for Sun City and the region.


~ SUN INTERNATIONAL ~ (con tin LIed)

The Million Dollar Golf Challenge was again held in

December and continued to generate substantial local and

foreign support and ranks amongst the top invitational golf

tournaments.

The Carousel and Morula Sun, SISA's two major day

visitor gaming facilities both of which are dependent on

the Gauteng marker. experienced mixed fortunes. The

Ca.rousel traded very well while the Morula Sun was

somewhat disappointing, with the combined revenues

of these operations 100/0 higher at R870,S million and

operating profit showing a similar Improvement. The

~loruJa Sun was impacted by the refurbishment which was

completed during the first half year, the poor condition of

the major access road and the ongoing security threat

posed to customers by local criminal elements and taxi

violence. The Implementation of an on-line player tracking

system through the Most Valued Guest program has been

successful in reducing the impact of illegal competition

and has been very well received by punters. In addition

to this, the market for substantial linked progressive

jackpots continues to grow and has resulted in the

successful addition of two new products, Dream Machine

and Poker Magic.

The Wild Coast Sun achieved an occupancy of 76%,

3 percentage points up, which assisted in raising r00l11

revenues 17% v v hile casino revenues were 10% higher.

This performance is commendable given the level of illegal

competition in and around Durban where it is estimated

that there are currently at least 3 500 unlicensed slot

machines. The resort improved margins despite these

competitive pressures resulting in an increase in operating

profit of 13%.

The Arnatola Sun and the Fish River Sun resort both

showed improved occupancies while casino revenues,

particularly slots revenues, were noticeably impacted by

the illegal casinos that opened in both Port Elizabeth and

East London during the second half of the year. The region

•

achieved revenue growth of 12% and with improved

margins increased profit from operations by 14%.

The smaller operations located in Mmabatho, Tlhabane,

Taung, Thaba 'Nchu. Naledi, Umtata, Butterworth,

Mdantsane and Thohoyandou did not trade as well with

revenue growth generally disappointing and negative in

real terms. This was due to a movement of business away

from the old TBVC centres as well as the impact of the

illegal casinos that opened in and around these centres.

Except for the Sun City staff flats and Vacation Club

development, no major capital expenditure on new projects

has been planned for the 1997 financial year. SISA will

continue with the regular replacement of operating assets,

and in particular slot machines, to ensure that customers

are offered the highest quality of entertainment and

comfort. Capital expenditure for 1997 is budgeted at

R151,9 million.

SISA has formed strong consortia comprising SISA,

AfriSun Leisure Investments, a consortium of significant

black controlled companies with a wide spread of

shareholders including Real Africa Holdings and Thebe

Investment Corporation, and regiona!ly based empower ment partners. It is intended that these consortia will make

application for the casino licences to be granted in terms of

the new ganling dispensation in South Africa. Significant

progress has been made in progressing the project design,

shareholder and management structure, financial feasi

bility and structuring, as well as the economic, social,

environmental and other impact studies on five major

projects in each of Mpurnalanga. Western Cape, Eastern

Cape, KwaZuJu Natal and Gauteng. Several smaller

projects are also being investigated and it is likely that at

least one other bid for a major casino project will be

tendered for in Gauteng. SISA and Sun International

Management Limited have the necessary expertise and

resources, which should enable the Sun International

consortia to produce winning and yet deliverable

REVIEVV OF OPERATIO S


-7 SUN INTERNATIONAL ~ (contil1ued)

and viable casino projects which will contribute to

employment, empowerment and tourism in South Africa.

Mpumalanga is the province most advanced in the casino

licencing process and the Sun International consortium's

preliminary bid is due to be submitted to that province's

ganling board on 2 September 1996. The four licences in

Mpumalanga are expected to be awarded late in March

1997. The licencing process in the other eight provinces is

likely to commence shortly and should be concluded by

late 1997. The group therefore does not anticipate any

capital expenditure on new casino projects during the

1997 financial year.

Other southern African operations, include the casino, resort and hotel facilities in Swaziland, Lesotho, Botswana

and Namibia, and the Riviera International.

OTHER SOUTHERN AFRICAN OPERATIONS

% Rm 1996 change 1995

Revenue 146,1 6 138.3

Profit (rom operations 17,4 (4) 18,2

Atrributable earnings 13,5 22 11.1

Total assets 91,0 8 84,6

Operating margin (0/0) 12 t3

R00l11S available 1 327 1 338


Slot machines 507 483

Employees 2059 2006

These units produced mixed results wlth overall revenues

only 6% higher than last year and profit from operations

declining by 40/0 although strong associate company profits

from the Lesotho operations Improved attributable

earnings by 229{:' over last year. The Swaziland and

Lesotho units traded well lifting revenues by 11 % and 23%

respectively. Occupancy in Swaziland remained at 53%,

with Lesotho improving 3 percentage points to 34%. The

casinos in both regions performed well. The trading at both

the Gaborone Sun and the Kalahari Sands was adversely

impacted by increased cornpetitlon and at Gaborone by

the major refurbishment currently underway. Occupancy

at the Kalahari Sands was down 13 percentage points at

41 % with average room rate achieved up only 2% while

casino revenues in Gaborone remained unchanged on

last year. Operating profit at these two units declined

310/0. The Kalahari Sands vilas recently awarded a casino

licence and a new casino is currently under construction

together with a refurbishrnent of the hotel facilities at

a total cost of R25,8 million. This casino is expected

to open early in November 1996. The Gaborone Sun is

likewise undergoing a major refurbishment of the hotel

and casino at a cost of R 18,6 million and is expected to

resume normal operations during September 1996. In

addition a small casino facility is being constructed at

Selebe Pikwe at a cost of R3,5 million. The profitability of

the Botswanan and Namibian operations is expected to

lmprove during 1997.


~ SUN INTERNATIONAL ~ (continued)

OFFSHORE

Sun International's offshore interests include the opera

tions of Royale Resorts Holdings, in which Kersaf holds an

effective 59% interest, and cash available for investment

which is held on short tern, deposit and amounted to $54 million at 30 June 1996. The Royale interests include

an indirect equity investment in the New York Stock

Exchange listed Sun International Hotels Limited ("SIHL"),

Sun International Management Limited's contracts to

manage the casino and hotel operations in southern

Africa, and the portfolio funds and cash.

Royale Resorts Holdings Limited's earnings before exceptional items for the year were 28% up on those of

1995 in Rand terms. This improvement was due to

the substantial increase in the income from the portfolio

funds, with dollar income up by 32%, and the equity

earnings attributable to 51 HL that increased from

$1,4 rnilllon to $7,2 million. Earnings attributable to

the management activities were only 2% higher despite

the 100/0 minority equity interest acquired effective I July

1995. The portfolio funds and cash held by Royale, which

are available for the pursuit of future investment

opportunities, totalled $93 million at 30 June 1996. The

improved returns on the portfolio funds were as a result

of the strong performance of dollar denominated bond

markets during the year, and particularly during the first six

months of the year.

Sun International Management Limited's management

activities in southern Africa generated fee income 90/0

higher than in the previous year. Costs however rose

39% as a result of the additional resources and

expenditure relating to potential new casino developments

in South Africa, the effects of the Rand devaluation

on offshore costs and the higher rate of taxation

payable. This increase in costs resulted in Sun Inter

national Management's earnings declining by 8% on the

prior year.

Sun International Hotels Limited currently comprises

the Paradise Island operations, equity interests in Sun

Resorts Limited (Mauritius and Comores) of 23%, and the

casino facilities in France of 25%, and the management

activities relating to all of these operations. During March

1996 Royale Resorts' effective equity interest in SIHL

reduced from 26% to 190/0 as a result of the public offering

in SIHL. The public offering was extremely well received

by the investment C0l11111unity allowing the company to

raise $285 million on an historic earnings multiple of over

40. These funds were used to redeem debt of approxi

mately $135 million, with the balance to be applied to

funding SIHL's commitments to the Mohegan Sun as well

as the planned expansion of the Paradise Island facilities.

SUN INTERNATIONAL HOTELS LIMITED

% $111 1996 change 1995

Revenue 242,1 52 159,8

Profit from operations 26,4 (0,9)

Attributable earnings 28,3 (1,0)

Earnings per share ($) 1,04 (0,08)


Operating margin (%) II

Rooms available 2444 2 165

SIHL's results for the year to [une 1996 were excellent with

attributable earnings of $28,3 million and earnings per

share of $1,04 versus an operating loss of RO,9 million and

a loss per share of $0,08 for the previous year. This

performance is due mainly to the Paradise Island resort

which has traded exceptionally well since re-opening in

December 1994. The three hotels achieved an average

occupancy for the year of 87%, and for the six months

to June 1996 of 9 I %, 5 percentage points up 011 the

comparable period last year. The average room rate


~ SUN INTERNATIONAL ~ (conltnuecl)

achieved for the six months to June was $167, almost

30% higher than last year. Growth in casino revenues

has been relatively less spectacular while margins have

shown continual lmprovernent. The Mauritian, Comorian

and French operations all experienced improved trading

although their earnings are equity accounted by SIHL and

represent a relatively small contribution to SIHL earnings.

The hotels in Mauritius and Comores achieved occupan

cies ahead of last year at 75% and 61 % respectively,

although rate growth was marginal.

SIHL recently acquired the 562-f00111 Holiday Inn which is

located adjacent to Atlantis on Paradise Island and will be

completely renovated and integrated into the overall

Atlantis Resort. In addition to the Holiday Inn acquisition,

SIHL will shortly be commencing a $380 million expan

sion progran1 to Atlantis, which will include a new 1 200-

room hotel, a new casino, convention facilities and various

themed attractions around the wonders of the ocean and

the spectacular Bahamian beaches. Following the

completion of the Atlantis expansion and the Holiday Inn

acquisition and renovation, the Paradise Island complex

will comprise over 3 000 rooms in five hotels, each appeal

ing to a different market segment, and will become one of

the most unique resort destinations in the world.

SIHL and the required executive personnel recently

received permanent gaming licences from the State of

Connecticut for the Mohegan Sun Casino that is expected

to open during October this year. SIHL has a 50% interest

in Trading Cove Associates, the company that holds a

seven year contract to manage the Mohegan Sun.

The 333-ro0111 Le Coco Beach resort was opened in

Mauritius during April 1996 and has immediately found

acceptance in the value conscious family marker, achiev

ing occupancy of 70% in the period to June. A fifth hotel in

Mauritius, the 240-r00111 Sugar Beach is scheduled to open

during October 1996.

SIHL announced recently that it had reached agreement to

acquire AMEX-listed Griffin Gaming & Entertainment Inc.

in a share for share merger with a total equity value of

approximately $210 million. It is intended that Griffin's

existing resort in Atlantic City will be extensively

refurbished and revitalised following which a major new

project will be developed on an adjacent property which is

owned by Griffin. A further major project in Atlantic City is

also under consideration. The merger reams Sun

International's proven expertise in casino and hotel

development and management with Griffin's excellently

located existing facility and property in Atlantic City. SIHL

has applied to the New Jersey Casino Commission for a

licence to operate in Atlantic City.


~ CITY LODGE ~

CITY LODGE WAS ESTABLISHED WHEN THE FIRST LODGE OPENED IN

AUGUST 1985 AND THE GROUP WAS SUCCESSFULLY LISTED ON THE

JOHANNESBURG STOCK EXCHANGE IN NOVEMBER 1992. KERSAF ACQU IRED ITS

INTERESTS IN THE GROUP IN JANUARY 1995 AT WHICH TIME THE GROUP HAD A MARKET

CAPITALISATION OF R391 MILLION. THE GROUP CURRENTLY OPERATES

20 HOTELS AND HAS A MARKET CAPITAUSATION OF Rl 328 MILLION.

his year the City Lodge group consolidated iIS

position as South Africa's premier selected services hotel chain and laid the foundations for further sound growth in its four brands;

Courryard Suite Hotels, City Lodge, Town

Lodge and Road Lodge.

The group produced another impressive financial perfor mance with the maintenance of high occupancy levels and

an improvement in operating margins contributing to the

excellent results. Revenues grew by 17% to R I 08,7 million, pre-tax profit increased by 31 % to R4S,O million and

attributable earnings before exceptional items were up

CITY LODGE HOTELS LIMITED

% Rm 1996 change 1995

Revenue 108,7 17 92,S

Profit from operations 55, I 22 45,2

Attributable earnings* 33,S 40 23,9

Earnings per share (cents)* 128,7 35 95,3


Operating margin (0,.6) 51 49

Rooms available 2278 2 162


Employees 796 787

* Excludes the Impact of exceptional items

40% to R33,S million. Average room occupancy levels at

City Lodge, Town Lodge and Road Lodge increased by I percentage point to 82% and with the inclusion of the

five Courtyard Suite Hotels, overall occupancy was 810/0

compared with 80% in the previous year. Although the

expected high growth in international guests did not

materialise, the group experienced strong demand for accommodation from corporate travellers.

The group continued its ongoing refurbishment pro

gramme in order to maintain the high standards guests

have come to expect in addition to which 26 new suites

were added to the Courtyard hotel in Pretoria. The imple mentation of the 'Room 2000' conversion commenced

during the current year. This progranlme focuses 011

meeting the changing needs of guests and includes

reducing noise pollution; using information technology to

maxirnlse business inforrnation and entertainment for

guests; implementing card-based access and security measures: improved bathroom layouts: and enhanced

overall comfort and appeal. The first of these conversions

was successfully completed at City Lodge Randburg and

similar conversions will take place at two further City

Lodges during the 1997 financial year.

The group continued to expand capacity and began

construction on t\VO new lodges during the year, a 142-

room Town Lodge in Sandton and a 92-ro0111 Road Lodge

in the Cape Peninsula. Prospects for both Lodges are

good as they meet the growing demand for affordable accommodation in two of the country's major economic


-7 CITY LODGE ~ (continued)

growth areas. The Road Lodge will open its doors to the

public on 25 August 1996 and the Town Lodge is due to open in November 1996.

Significant progress has been made in gaining further sites

in Gauteng, Durban and other parts of South Africa, which will enable the group to increase its accommodation

offering in 1997, Foreign exchange approval from the Zimbabwe authorities is still awaited on the joint venture

agreement signed with Cresta Hospitality, a division of

Zimbabwe's TA Holdings group, which will enable City Lodge to expand into Zimbabwe and Botswana. City

Lodge's total capital expenditure for the past year was R23,O million and given the further expansion planned,

it is expected to increase to at least R59,O million in the year ahead.

The continued success of the group lies in its ability to attract, retain and develop a highly motivated and dedi cated staff committed to providing guests with excellent

service. With this in mind, the directors, with the

approval of the shareholders, introduced the City Lodge

lOth Anniversary Employees Share Trust as a mechanism whereby all employees share in the group's wealth

creation. Employees, who in November each year have been in the full time employ of the City Lodge group for one year or longer, will be eligible to participate in the

distribution of dividends and in the allocation of shares.

The board believes this to be a true empowerment scheme

that will enable all employees to become shareholders and thus share in the wealth that they help to create.

Marketing efforts are to be increased during the forth

coming year, in order to increase weekend occupancies

and the 'Team Scheme' and 'Spouse 011 the House' week

end specials are proving popular with guests around the country.

With four distinctive brands covering the one to four star

selected services hotel market, the group is ideally posi

tioned to take advantage of any futur.e expansion in the economy and the growth of local and foreign business and leisure travel. The resounding success of the first Road

Lodge has stimulated the intention to rapidly expand this

brand within the next few years. Courtyard too, in its first

full year in the group, made a significant contribution and is "veil placed to strengthen its position at the upper end of the quality, selected services hotel market.

REVIEVV OF OPERATIONS


~ INTERLEISURE ~

THE INTERI.EISURE GROUP, \VHICH HAS l'J.:COMr: THE LEADING FORCE IN THE

SOL1TH AFI~ICAN FILM /\ND CINEMA lNDL1Sl-RY, WAS FORMI:L) (_jN 1 fL1LY 1987 AND

LISTED ON TIlE IOHANNI:Sl1URG STOCK EXCHANGE ON 24 ALI(_~L1ST OF TIIAT YEAR.

KERSAF HAS AN EFFECTIVE 37% SHAREHOLDING IN THE GROLlP, AND ITS

RESL1LTS IIAVE BEEN INCLL1DED ON TI-IE PROP(_)RTIONATE C()NSOLIDAT[ON METI-{OD

IN ReCOGNrTION OF TIlE IOINT CONTR<.)L SITLIATION TIIAT I":XISTS "VITI I

SI:RVGRO INTCRNATIONAl LIMI1-1_:[).

he Interleisure group grew earnings before

exceptional items by 18% for the year and has

shown a good three-year profit trend since the

decision to focus on its core cinema and film interests.

Group revenues increased by 14% reflecting real growth,

despite Ster-Kinekor's continued policy of low price

increases. The increase in Ster-Klnekor's average admis

sion price was contained to only 4% for the year due

primarily to the half-price Tuesday promotion which ran

from October 1995 to year end. This promotion signifi

cantly gre\v market share, with attendances increasing by

INTERLEISURE LIMITED %

Rm 1996 change 1995

Revenue 462,5 14 407,4

Profit from operations 78,3 15 68,0

Attributable earnings* 51,7 18 43,7

Earnings per share (cents)* 27,2 18 23,1


Operating margin (%) 17 17

Employees 2080 1990

Cinema attendances (millions) 19,9 17,9

.. Excludes the impact of exceptional items

10% for the year. The concomitant boost to catering was

evident as these revenues rose by 23% with price increases

accounting for only I 00/0 of this increment. Drive-in

attendances and revenues were dampened by the heavy

seasonal rains over the summer months. Ster-Kinekor

invested in additional people and infrastructure in

advance of its planned entry into the European cinema

market in the forthcoming year. This higher overhead

served to dilute the 18°;6 operating profit growth achieved

at the cinema level.

The other business units in the group had mixed results.

Ster-Moribo, lnterleisure's joint venture with the Thebe

group, grew revenues by 24%, helped by the opening of

the Davey ton complex during the year. This venture

produced a positive cash flow, but high depreciation on

its predominantly new assets gave rise to a break-even

at operating profit level, Srer-Ktnekor Home Entertainment

experienced a resurgence in market share growing

revenues by 35% and more than doubling its operating

profit during the year. Cinemark provided revenue growth

of 23% despite the uncertainty surrounding Cigarette

advertising, and achieved similar growth in operating

profit. Toran increased revenues by 12% despite no feature

film production with a strong demand for its television

production and editing facilities. Computicket's innovative

telephone booking system was well supported by South

African consumers and helped boost its revenues and

operating profit by 19% for the year,

•


~ ,:-~

}. ;"~~I


~ INTERLEISURE ~ (continued)

The group's overall operating margin was maintained at last year's level of 17% despite the additional overhead

incurred to investigate and develop expansion opportu

nities, Interleisure continues to be a strong cash generator

with borrowings all but eliminated at year end. This

resulted in net interest paid of only RO,7 million against last year's R2,3 million and a healthy interest cover of over 100 times. The effective tax rate approximated that of last

year, resulting in earnings per share before exceptional

items of 27,2 cents, an 18% increase on last year, and after

exceptional items of 26,4 cents, some 25% higher.

The plan to rapidly develop the Ster-Kinekor chain in the late eighties and early nineties has been achieved although

there was little expansion over the past year. lnterleisure's

total capital expenditure was consequently reduced from

last year's R44,6 million to R24,9 million in the year under review. Ster-Kinekor accounted for Rl I ,3 million

of this through the opening of two new complexes - the six-screen Kolonade in Pretoria and three screens in

Windhoek - and the refurbishment of two existing

complexes. Srer-Moribo opened a three-screen complex in

Davey ton, Benoni. The Video Lab spent R12,O million on

editing, graphics origination and post-production equipment, half of which cost is attributable to the Inter

leisure group. Computicker accounted for R3,O rnllllon,

with this expenditure incurred on the telephone booking

system and automatic dispensing technology.

Interleisure plans to spend a further R24,7 million on

capital items in the year ahead. Ster-Kinekor will open the

new eight-screen Bayside complex in Tableview, Cape Town and will extend its Stellenbosch complex from four

to six screens. Major refurbishments will be undertaken at five existing complexes. Srer-Moribo plans to open a five

screen complex in Mabopane near Pretoria. The Video Lab

and Computicket will incur further capital expenditure in continuing to advance their respective technologies.

Interleisure has formed a development company together

with Kerry Packer's Nine Network Australia and the Thebe

group to investigate the viability of launching a free-to-air terrestrial television station in South Africa. Business plans

are well advanced and the development company is awaltlng guidelines for the issue of television licences from

the Independent Broadcasting Authority.

Ster-Kinekor is well advanced in its plans to extend its

cinema operations into Europe, with the first partnership agreement finalised in Greece, where the group plans to open several cinema complexes over the next three years.

FINANCIAL

NCOME STATEMENT

Overall, trading for the year "vas pleasing wlrh the strength arising front the group's geo

graphic diversity becoming evident in the earnings as illustrated in the segmental

information on page 40.

Revenues for the year of R2 649,8 million were 9%

higher than the prior year, impacted by the disposal of Douglas Green Bellingham during April 1996 and the

pedestrian growth in gaming revenues due to the activities of the illegal casinos, the quantum of alternative enter tainrnent on offer and, particularly during the final quarter,

the decline in consumer discretionary spending. In

contrast rooms revenues grew by 17% as occupancies and rates improved on the strength of foreign tourist and

business travellers.

Operating profit for the year of R755,O million was 15%

higher (160/0 on excluding exceptional items). with the

operating margin 0,5 percentage points up as a result of overhead savings. Interest income, which is included in

operating profit, was substantially higher than the previous year due mainly to the increase in the rates of interest at which the group's cash resources were deployed.

The interest expense for the year of R70,7 million was 27% higher than in 1995, with this increase mainly related to higher rates on borrowings whose average level was similar to that of 1995. The group's interest cover at II times, although marginally down on last year's

12 times, remains satisfactory despite being below the group's longer term average.

Profit after taxation of R537,8 million was 8% higher, with the effective rate of taxation for the year of 21 %

compared with the 170/0 of the previous year. The 40%

increase in the tax charge was due to the full applicability

of (he South African legislation to the earnings of Sun International South Africa, although the part utilisation of the tax equalisation reserve provided some relief. It is

COMMENTARY

anticipated that the effective rate of taxation will increase further in 1997.

Attributable earnings for the year increased 67% to

R344,5 million although on exclusion of exceptional items the

Improvement was 26%, with earnings per share before exceptional items up similarly to 317 cents. The group's share of normal associate companies' profits of R46,8 million was

considerably higher than the R18,3 million of the previous

year due to the continued excellent growth in earnings from

City Lodge and the profitability achieved by the New York

Stock Exchange listed Sun International Hotels Limited.

The total dividend for the year of 183 cents per share

is 13°Al higher than last year's 162 cents. The dividend

payout percentage of 58% is lower than the previous year's

payout of 64% and it is expected that this percentage will be further reduced in the coming year, closer to a target

of 50%. This payout percentage is in line with the dividend policies of certain of the subsidiary companies

and is necessary in recognition of the fact that the major

associates have to date not paid cash dividends and are

unlikely to do so in their current growth phases.

BALANCE SHEET

The balance sheet at the year end reflects a strong financial position, with the group well able to finance

substantial expansion in the years ahead both in South

Africa and offshore. Significant movements in important balance sheet components over the year were as follows:

Shareholders' funds of R3 358,6 million were R528,9 mil

lion higher with this increase mainly due to the profit

retentions at both equity and outside shareholder levels, the capitalisation share awards in lieu of interim dividends, the R155,8 million associate cornpany exceptional profit,

and the gains arising on the translation of the balance sheets of offshore subsidiaries,

Interest bearing borrowings of RI09,3 million were

R379,2 million lower, with the percentage of interest

FINANCIAL COMMENTARY

bearing borrowings to total shareholders' funds at 3% declines were caused by the large scale capital projects compared with the previous year's 170/0 and the group's completed over this period, in addition to which earnings

self-imposed constraint of 60% of shareholders' funds. declined in real terms as a result of the cconomlc down-

This substantial reduction results mainly from the turn and the erosion of gaming revenues caused by the relatively ]O\V level of capital expenditure and the activities of the illegal casinos.

capitalisation share awards which were made in lieu of interim dividends. In the presentation of the balance sheet.

cash resources of R733,8 million have not been set off against the interest bearing borrowings although the

availability of such should be taken into account when

assessing the resources, gearing and associated risk profile

of the group.

RETURN TO EQUITY SI-tAREHOLDERS (%)

35

5

• • ~, • - f-

" - 1-11.- I _,1,,· I

- - - -

- - - ~ - - ~ f-

~

30

25

20

15

Operating assets were R42,2 million higher with this

increase being the net movement of capital expenditures,

depreciation and disposals. Capital expenditures which

totalled R 188,8 million were again lower than the group's

historic average with the amounts comprislng mainly the expansion of existing facilities and the replacement of equipment, The offshore capital expenditures over the

year are not included in the group's operating assets due to

the equity basis of accounting adopted for these investments.

10

o 90 91 92 93 94 95 96

RETUR.N ON SHAREHOLDERS' FUNDS (%)

40----------------------------------

Investments and loans were R237,9 million higher due

mainly to the equity accounted earnings of the group's

associates which include the R155,8 million exceptional

profit, and the translation gains arising on the devaluation of the SA rand.

15

- I

- ~ • - ~

- .. - -

- - - - , . , •• 1'1 ~, ~ f-' ~

- ~ - - - ---

35

30

25

20

10

5

o 90 91 92 93 94 95 96

Current assets and interest free liabilities were

RI06,9 million and R237,3 million higher respectively.

The increases in accounts receivable and payable relate

primarily to the higher trading levels while the significantly

higher taxation provision is a function of the higher normal and STC taxation charges.

RETURN ON NET ASSETS ('",)

50--------------------------------

RETURNS

30-

20-

The returns for the year, as graphed alongside, were

satisfactory and continued the improvement of the prior year after the declines of the previous four years. These

I 0 -11---- __ ---111---'

o--·f---~----'~---r---'-----~ ~- 90 91 92 93 94 95 96

FINANCIAL

SEGMENTAL INFORMATION

The group's main divisions comprising

Sun International Inc with:

Sun International South Africa ("SISA"), currently

the only legal casino operator in South Africa with

investments in major casino resorts, day visitor casino

entertainment complexes and hotels. Other southern African operations, with casinos and

hotels in Swaziland. Lesotho, Botswana and Namibia,

and the Riviera International.

Management activities, being the services provided

by SUIl International Management Limited to the casino and hotel operations throughout southern Africa.

Other international activities, including New York Stock Exchange listed Sun International Hotels Limited

with its operations in Mauritius, C0I110reS, France and

the Bahamas, and cash resources held offshore.

Intcrleisure, focused on (ibn and cinema related leisure activities.

City Lodge, which occupies a leading position in the

limited services sector of the South African hotel market,

and

COMMENTARY

Kcrsaf central office and other comprising cash resources, certain local activities undertaken all behalf

of the offshore management c0l11pany and Douglas Green

Bellingham from which the group divested during

April 1996.

Accounting conventions make segmental analysis complex

as associate companies do not contribute to revenue

and operating profit. The information presented below

does however take into account these accounting

conventions and excludes exceptional items so as to

enable comparability and yet reflect the information

as ill the income statements and balance sheets contained

in the annual financial statements. SISA continues to

provide the majority of the group's revenues with casino

gaming the group's dominant activity. The contribution

of the group's interests in SIHL and offshore funds

increased fro 111 R22,4 million to R43,4 million in 1996

and 110\V comprises 16% of total attributable earnings.

The pie charts presented opposite provide additional

information on the composition of Kersaf's revenue,

attributable earnings and net assets.

SEGMENTAL ANALYSIS Revenue Profit front Kersaf share Net assets

operations # of earnings # Rm 1996 1995 1996 1995 1996 1995 1996 t995

Sun International Inc 2 312,2 2 101,4 627,2 577,3 216,6 182,6 3 087,9 2590,5

Sun International (South Nrica) Limited 2 160,7 I 957,9 519,9 469.2 127,9 t21,2 1 955,2 I 754,4 Other southern African activities 146,0 138,t 17,4 18,2 10,8 8,8 102,1 95,3 Management activities 5,5 5,4 122,1 106,2 65,7 60,5 - - Other international activities - - - - 43,4 22,4 1 096,9 759,4 Central office costs and other - - (32,2) (16,3) (31,2) (30,3) (66,3) (18,6)

Interleisure 231,1 203,7 39,1 32,9 19,4 t6,2 80,0 70.8 City Lodge (shares and debentures) - - - - 16,8 13,7 164,0 175.2 Central office and other" 106,5 123,2 11,0 (1,9) 10,3 (3,8) 26,7 (6,8)

2649,8 2428,3 677,3 608,3 263,1 208,7 3358,6 2829,7

.. Includes Douglas Green Bellingham. # Excludes the impact of exceptional items (normal and associate).

FINANCIAL

SEGMENTAL INFORMATION (continued)

REVENUE (Activity analysis)

... Casino gaming 61 % (61 t){,)

... Hospitality 26% (26%)

... Fllnl and cf ne rrm 9"X, (S'X.)

... Other 4% (5%)

SOURCE OF KERSAF EARNINGS

(Currency analysis)

... SA rands 80% (85%)

... US dollars 16% (11%)

... Other 4% (4%)

NET ASSETS (Currency analysis)

... US dollo:lrs 33% (27%)

... Other 3% (4%)

( ) - 1995

COMMENTARY

INFLATION

In the absence of any generally applied and accepted

practice regarding accounting for the effects of inflation, and

recognising that the taxation system in South Africa does not

provide for relief in this area, the group has decided not to

prepare and publish inflation adjusted financial statements.

As in past years. however, in order to provide an indication

of the quality of earnings and dividends per share, these

have been restated below in 1990 base year terms:

DEFLATED EARNINGS

7 year

compound

1996 % 1995 annual

cents change cents growth (%)

Earnings per share

Reported 317 26 252

Deflated 174 18 147

Dividends per share

Reported 183 13 162

Deflated 101 6 95

Consumer price index (1990: 100) 182 171

II

10

As per the above, the growth in reported earnings per share of 26°;6 reduces to 18% on the restatement of the earnings in both years in 1990 base year terms. The increase in real terms of both earnings a~d dividends reverses the trend of

declining real earnings and dividends experienced during

the early to mid 19905 .

FINANCIAL

CAPITAL EXPENDITURE

Details of the group's capital expenditure for the year under review and that proposed for the year ahead are contained

in the individual operational reviews preceding this review and in the cash flow statement and notes 12 and 20

in the annual financial statements.

The 320-room Table Bay Hotel at the Victoria and Alfred

Waterfront in Cape Town is due to be completed by April

1997. The Transnet Pension Fund is funding the building at a total cost of R 190 million with the furniture and fittings

of R60 million to be funded by a subsidiary currently wholly owned by Kersaf.

As a general policy, the holding company does not guarantee the borrowing obligations of subsidiary

companies and, accordingly, approved capital expenditures must be appropriately financed at subsidiary company

level with due regard to the group's overall gearing and

interest cover limitations. The planned capital expenditures

COMMENTARY

for the 1997 year will be financed from internal resources

and existing borrowing facilities. These planned

expenditures do not include any amounts in respect of new

casino resort opportunities in South Africa as it is not

anticipated that any such developments will commence

during the 1997 financial year.

CAPITAL EXPENDITURE (R nlillion)

900 ------------------

800 ----- ... ~-----------

700 -----.' .. -----------

600 -----1.' .f------------

100 - -'1--1 o - --,_--'--I~-'---I--"

90 91 92 93 94 95 96 97

.... Actual ..... Buctgctcct

OVVNERSHIP OF SHARE CAPITAL

AT 30 JUNE 1996

Number of Category Number of 0/0 of total

shareholders shares owned issued shares

Size of shareholding

571 1- 500 shares 92493 0,11

105 501 - I 000 shares 71 572 0.08 116 1001 - 5 000 shares 224928 0,27

19 5 001- 10 000 shares 128692 0,15

29 10 001 - 50 000 shares 569275 0,68

8 50 00 I - 100 000 shares 478782 0,57

16 100 00 I + shares 82656858 98,14

864 84222600 100,00

Type of shareholder

706 Individuals 338973 0,40

27 Investment and trust companies 778690 0,92

6 Insurance and assurance companies 2552 768 3,03

62 Banks and nominee companies 18215402 21,63

32 Pension and provident funds 638827 0,76

30 Other corporate bodies 109837 0,13

Holding company 61 588 103 73,13

864 84222600 100,00

Ten largest shareholders at 30 June 1996

Safrnartne and Rennies Holdings Limited 61588 103 73,13

Standard Bank Nominees (Transvaal) (Pty) Limited 8 091501 9,61

First National Nominees (Pty) Limited 3186371 3,78

CMB Nominees (Pty) Limited 2771568 3,29

South African Mutual Life Assurance Society 2510 569 2,98

Eighty-One Main Street Nominees Limited 2 082 415 2,47

5MBL Nominees (Pty) Limited 528 163 0,63

Sun International Executive Investments Limited 388760 0,46

Indo-China Nominees (Pry) Limited 344492 0,41

edbank Nominees Limited 270 834 0,32

81762776 97.08

•

SEVEN YEAR FINANCIAL REVIEW

GROUP Rm 1996 1995 1994 1993 1992 1991 1990

Consolidated income statements

Revenue 2649,8 2428,3 2217,2 2 05], 7 1861,5 1599,7 1367,2

Profit from operations 677,3 608,3 571,4 534,0 515,4 468,5 412,9 Interest income 89,0 53,2 25,2 27,8 43,3 70,2 68,3

Operating profit 766,3 661,5 596,6 561,8 558,7 538,7 481,2

Interest expense (70,7) (55,8) (54,9) (48,8) (24,S) ( 17,5) (23,7)

Profit before taxation 695,6 605,7 541,7 513,0 534,2 521,2 457,5

Taxation (146,5) (104,8) (98,3) (85,4) (102,8) ( 130,4) ( 122,3)

Profit after taxation 549,1 500,9 443,4 427,6 431,4 390,8 335,2

Share of associate companies' profits 46,8 18,3 6,0 4,0 8,7 6,5 4,5

Outside shareholders (332,8) (310,5) (270,7) (267,3) (258,8) (233,7) (200,4)

Attributable earnings 263,1 208,7 178,7 164,3 181,3 163,6 139,3 Dividends ( 152,9) ( 134,0) (121,0) (I 15,1) ( 111,6) (101,4) (87,0)

110,2 74,7 57,7 49,2 69,7 62,2 52,3

Note: - All exceptional items have been excluded to provkie a more meaningful comparison of historical operating performance. - The above figures have been restated where necessary 10 provide a nlcaningfu[ comparison of perfonnance of the seven years.

A.TTRIBUTABLE EARNINGS (R million) OPERATING MARGIN ('X.)

300 ---------------------------------- 30

5

• • • - - • • - - ,-- -- -- _ _ _

-

- ,_ - - ~ ,_ _ _ - - - ,_ ~ --

50

-

'. - . • ,_ ,_ "r - , __ I ,_ _ ~ - _

-

25 250

200 20

ISO IS

100 10

o o 90 91 92 93 94 95 96 90 91 92 93 94 95 96

•


<@P :;; ~

--_---- ---- ----

GROUP Rm 1996 1995 1994 1993 1992 1991 1990

Consolidated balance sheets Ordinary shareholders' equiry 1421,9 1284,6 1 205,7 924,4 770,8 575,2 429,5 Outside shareholders' interests I 936,7 1 545,1 1 432,3 1283,7 1 159,3 749,6 578,0

Total shareholders' funds 3358,6 2829,7 2638,0 2208,1 1930,1 1 324,8 1007,5 Interest bearing debt 109,3 488,5 530,1 537,4 368.2 176,5 196,0

Total capital employed 3467,9 3 318,2 3 168,1 2745,5 2298,3 1501,3 1 203,5

Operating assets 2772,0 2729,8 2582,0 2542,6 2 193,6" 1 380,6 955,1 Investments and loans 717,1 479,3 415,4 134,1 112,9 85,2 86,4 Current assets I 013,2 906,2 908,7 804,0 690,0 718,7 817,8

Inventory 24,7 47,6 45,0 64,1 76,0 64,3 45,2 Accounts receivable 254,7 194,1 164,6 149,5 145,2 133,4 217,0 Deposits and cash 733,8 664,5 699,1 590,4 468,8 521,0 555,6

Total assets 4502,3 4 115,3 3 906,1 3480,7 2996,5 2 184,5 1859,3 Interest free liabilities (I 034,4) (797,1) (738,0) (735,2) (698,2) (683,2) (655,8)

Deferred taxation (5,3) (3,7) (2,2) (9,1) ( 11,0) (10,5) (6,8) Long-term borrowing (71,7) Accounts payable and provisions (765,7) (677,6) (619,4) (633,8) (571,9) (506,8) (429,7) Taxation (176,7) (41,3) (49,4) (28,9) (53,3) (108,0) (98,1) Dividends (86,7) (74,5) (67,0) (63,4) (62,0) (57,9) (49,5)

Employment of capital 3 467,9 3318,2 3 168,1 2 745,5 2 298,3 1501,3 1 203,5

Note: The above figures have been restated wnere necessary 10 provide a meallingful comparison of performance over the seven years.

NET WORTH PER 51·IAllE (Il;lnd) CASI-. UTILISATION (R I1llllian)

20---------------------------------- I 000 -----------------------------------

90 91 92 93 94 95 96 90 91 92 93 94 95 96

.. Net cash inflow n-om operating activities

.. Net cash outflow Irom Investing activities

SEVEN YEAR REVIEW FINANCIAL

CONTINUED

GROUP STATISTICS 1996 1995 1993 1991 1994 1992 1990

Ordinary share performance Shares in issue Weighted number of shares in issue Earnings per share before exceptional items Dividends per share Dividend cover Dividend payout Net worth per share Market capitalisation at 30 June Market capitalisation/net worth

000 84223 82 732 82732 78300 76550 75176 74990 000 82981 82 732 79500 77820 75470 75009 74990 cents 317 252 225 211 240 218 186 cents 183 162 150 147 147 135 116 times 1,7 1,6 1,5 1,4 1,6 1,6 1,6 % 58, I 64,2 67,7 70,1 61,6 62,0 62,5 Rand 16,88 15,53 14,57 11,81 10,07 7,65 5,73 Rm 3740 2689 3764 2584 3368 2443 I 462 times 2,6 2,1 3,1 2,8 4,4 4,2 3,4

Profitability and asset management Operating margin Effective tax rate Return on net assets Return on shareholders' funds Return to equity shareholders Net asset turn

% 26 % 21 % 24 % 19 % 18 limes 0,8

Rm 809 times 11

% 3 % 34 % 75 :1 0,9

25 26 26 28 29 30 17 18 17 19 25 27 21 20 22 30 40 42 19 19 21 27 34 36 17 17 19 27 33 34 0,7 0,7 0,8 1,0 1,2 1,2

727 706 705 520 577 363 12 II 12 23 31 20

17 20 24 19 13 19 45 48 57 55 64 84 69 68 63 64 61 54 0,9 1,1 \'0 0,9 1,0 1,4

Liquidity and leverage Cash generated by operations I nterest cover Interest bearing debt to total shareholders' funds Total liabilities to total shareholders' funds Total shareholders' funds to total assets Current ratio

Note: All ratios have been calculated excluding the impact or exceptional items. Operating margin Profit from operations expressed as a percentage of revenue. Effective tax rate Taxation per the income statement expressed as a percentage of profit before taxation. Return on net assets The sum of profit from operations, interest income and share of associate companies' profits (excluding excep tional items), expressed as a percentage of average net assets excluding interest bearing liabilities. Return on shareholders' funds Profit after taxation and share of associate companies' profits (excluding exceptional items) expressed as a percentage of average shareholders' funds. Return to equity shareholders Earnings attributable to ordinary shareholders before exceptional items expressed as a percentage of average shareholders' equiry. Net asset turn Revenue divided by average net assets excluding interest bearing liabilities. Total liabilities The sum of interest free liabilities, excluding deferred taxation, and interest bearing debt.

DEFINITIONS

Earnings per share before exceptional items Earnings attributable to ordinary shareholders before exceptional items divided by the weighted average number of shares in issue during the year.

Interest cover The sum of profit from operations and interest income divided by the interest expense for the year.

Dividend cover Earnings attributable to ordinary shareholders before exceptional items divided by dividends.

Net assets Total assets less interest free and interest bearing liabilities.

Net worth pcr share Shareholders' equity divided by the number of ordinary shares in issue at the end of the year.

Current ratio Current assets divided by current liabilities, with current liabilities comprising the total of short-term bor rowtngs and interest free liabilities excluding deferred taxation.

•


~

----- ----

GROUP STATISTICS 1996 1995 1994 1993 1992 1991 1990

Stock exchange performance Market price Rand

- at 30 June 44,40 32,50 45,50 33,00 44,00 32,50 19,50

- highest 51,00 43,00 53,00 45,00 44,50 36,00 27,00

- lowest 31,00 29,25 28,00 28,00 33,00 17,00 15,00

- weighted average 43,42 37,28 38,01 33,45 38,53 22,49 21,25

Kersaf share price index # 228 167 234 169 226 167 100

]SE actuaries' industrial index # 277 229 212 159 153 129 100

Closing price earnings multiple times 14 13 20 16 18 15 10

Closing dividend yield % 4 5 3 4 3 4 6

Volume of shares traded 000 3223 4 185 3357 2103 2425 876 2665

Volume of shares traded as a percentage of shares in issue % 4 5 4 3 3 4

Value of shares traded Rm 140 156 128 70 93 20 57

Number of transactions 1060 1092 1030 948 767 590 1 212

Growth Reported growth per share %

- earnings 26 12 7 (12) 10 17 21

- dividends 13 8 2 9 16 21

Real growth per share %

- earnings 18 2 (I) (22) (5) 2 7

- dividends 6 (2) (6) ( 10) (6) 7

Consumer price index # 182 171 155 144 131 114 100

Employees

Number of employees at 30 June 15 815 16410 17402 17578 19493 16679 18065

Average number of employees 16256 16906 17490 18536 18086 17372 17851

Revenue per employee* ROOO 169 157 141 123 113 101 87

Wealth created per employee- ROOO 123 113 100 85 75 73 58

* Based on average number of employees adjusted for the proportionate share of joint venture emoicyees.

# Base {or indices: 1990 = 100.

•

CORPORATE GOVERNANCE STATEMENT

FINANCIAL STATEMENTS

The annual financial statements set out in this report have been prepared by management in accordance with generally accepted accounting practice. They are based 011 appropriate accounting policies which have been consistently applied and which are supported by reasonable and prudent judgements and estimates.

The directors of the company are responsible for the preparation of the annual financial statements and related financial tnformatlon that fairly presents the state of affairs and the results of the company and of the group. The external auditors are responsible for independently auditing and reporting on these annual financial statements in conformity with generally accepted auditing standards.

AUDIT COMMITTEE

The Kersaf audit committee which is chaired by a non executive director, Mr G A Macmillan, meets pertodicallv with the group's external and internal auditors and Kersaf's executive management to review accounting, auditing and financial reporting matters to ensure that an effective control environment in the group is maintained. The committee also monitors proposed changes in accounting policy, reviews the internal audit functions and discusses the accounting implications of major transactions. Audit committees are also in place in all listed group companies and their reports are submitted to the Kersaf audit committee on a regular basis.

INTERNAL AUDITING

The internal audit function is designed to serve manage ment and the board of directors through independent evaluations and examinations of the group's activities and resultant business risks. The internal audit department is designed to respond to management's needs while maintaining an appropriate degree of independence to render impartial and unbiased judgements in performing its services. The scope of the internal audit function includes performing independent evaluations of the adequacy and effectiveness of group companies' controls, financial reporting mechanisms and records, information systems and operations, reporting on the adequacy of

these controls and providing additional assurance regarding the safeguarding of group assets and financial information. The Sun International audit department, which has been in existence since the inception of that group, is currently being strengthened and its profile within the group uplifted. This department assumes responsibility for Sun International's southern African operations as well as those of the Sun International and Kersaf central offices. Interleisure and City Lodge have outsourced the internal audit function to the external auditors in recognition of the relatively low risk and cost/benefit considerations. The internal and external auditors have unrestricted access to the chairman of the audit committee.

INTERNAL CONTROLS

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

GOING CONCERN

The annual financial statements have been prepared on the going concern basis since the directors have every reason to believe that the company and the group have adequate resources in place to continue in operation for the foreseeable future,

The auditors have concurred with the directors' statements on internal controls and going concern.

•

ANNUAL FINANCIAL STATEMENTS

THE ANNUAL FINANCIAL STATEMENTS WHICH APPEAR ON PAGES 51 TO 73 AND THE

CORPORATE GOVERNANCE STATEMENT ON PAGE 48 WERE APPROVED BY THE BOARD OF

DIRECTORS ON 19 AUGUST 1996 AND SIGNED ON ITS BEHALF BY

DA Hawton D C Coutts-Trotter Executive Chairman Group Financial Director

INDEX TO THE GROUP ANNUAL

FINANCIAL STATEMENTS

REPORT OF THE INDEPENDENT AUDITORS 50

51

52

54

55

56

REPORT OF THE DIRECTORS

ACCOUNTING POLICIES

INCOME STATEMENTS

BALANCE SHEETS

CASH FLOW STATEMENTS

NOTES TO THE ANNUAL FINANCIAL

STATEMENTS 57

INTEREST IN PRINCIPAL SUBSIDIARIES,

JOINT VENTURES AND ASSOCIATES 73

•

REPORT OF A

THE INDEPENDENT UDITORS

To the members of KERSAF INVESTMENTS LIMITED

We have audited the annual financial statements and group annual financial statements set out on pages 51 to 73. These

financial statements are the responsibility of the company's directors while our responsibility is to report thereon.

We conducted our audit in accordance with generally accepted auditing standards which require that we plan and carry out the

audit to obtain reasonable assurance that fair presentation is achieved in the financial statements in all material respects. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit

also includes assessing the accounting policies used and significant estimates made by manage~ent, as well as evaluating the overall financial statement presentation. We consider that our audit procedures were appropriate in the circumstances to

express the opinion presented below.

In our opinion these annual financial statements fairly present the financial position of the company and the group at 30 June

1996 and the results of their operations and cash now information for the year then ended in conformity with generally accepted

accounting practice and in the manner required by the Companies Act.

p"'u W,J .... L Price Waterhouse. Chartered Accountants (SA)

Sandton 19 August 1996

REPORT OF THE DIRECTORS

FOR THE YEAR ENDED 30 JUNE 1996

RESULTS Group profit before taxation totalled R6B4,3 million (1995: R602,4 million), whilst earnings attributable to ordinary shareholders amounted to R344,5 million (1995: R206,4 million), or 415,1 cents per share (1995: 249,5 cents .per share). Excluding exceptional Items, earnings attributable to ordinary shareholders amounted to R263,1 million (1995: RZOB,7 million) and 317,1 cents per share (1995: 252,2 cents per share).

The interests of the company in the aggregate taxed profits and losses of its subsidiaries amounted to R196,3 million (1995: R1B4,0 million) and R nil (1995: R nil), respectively.

OJVI.DENDS Dividends totalling IB3 cents per share (1995: 162 cents) have been declared by the directors in respect of the year under review, as follows:

Interim, declared 20 February 1996, paid 2 May 1996 80 cents

(1995: 72 cents)

Final. declared 19 August 1996, payable on or about 30 September 1996 103 cents

(1995: 90 cents)

REVIEW OF OPERATIONS AND FUTLIRE DEVELOPMENTS Detailed commentary on the nature of business of the company and its subsidiaries, acquisitions, disposals, ~uture deve~opme,nts a\1d prospects of the group are given In the c~alrman s review and the operational reviews, commencing on pages 8 and 18 respectively.

Sl-tARE CAPITAL Details of the authorised and issued share capital appear in note 7 to the financial statements.

During the financial year, I 490 361 ordinary shares of 8 cents each were allotted in terms of a capitalisation award in the ratio of I,B390BO shares for every 100 held, at an issue price of R43,50 per share.

3403 620 ordinary. shares in the unissued share capital of the company remain under the control of the directors in the form of a specific authority in terms of section 221 (2) of the Companies Act, with power to allot and issue these shares in accordance with the employee share incentive scheme.

Members will be requested to consider the passing of a special resolution at the forthcoming annual general meeting reducing the company's share premium in terms of section 84 of the Companies Act. The reduction is to be effected by way of a write down of the company's investment in a subsidiary and a joint venture of RIll 462 0.00 against the company's share premium accou~t. !hls a'!10unt represents goodwill arising on consolidation, being the excess cost of shares in the subsidiary and the joint venture over the amount of their net assets at dates of acquisition, which amount has historically been set off against shareholders' equity in the balance sheet. The write-off will accordingly have no impact on the net asset value, earnings or cash flows of the group. The

terms and effects of and the reasons for the special resolution are contained in the notice of annual general meeting appearing on page 74 of this report.

EMPLOYEE SHARE iNCENTiVE SCHEME !V10vements in options granted over shares in the company In terms of the employee share incentive scheme during the year are summarised as follows:

Total options at 30 june 1995 Options granted Options lapsed

I 544 5BO 424000 (204 100)

Total options at 30 june 1996 I 7644BO

Options under the scheme are granted at prices ruling on the johannesburg Stock Exchange at the date of granting the. options. The share options are exercisable on the expiry of two years from the date of grant in cumulative tranches of 20% per annum, Options lapse if not exercised within 10 years of their date of grant.

SLIBS10IARIES, JOLNT VENTURES AND ASSOCIATES Particulars relating to investments in principal sub sidiaries, joint ventures and associates appear on page 73.

BORROWING CAPAClTY In terms of the company's articles of association, its borrowings may not exceed the amount authorised by its holding company. This amount is presently unlimited.

DIRECTORS AND SECRETARY The names of the directors in office at the date of this report, as well as particulars of the secretary, appear on page 6.

Mr A F van Biljon resigned as a director on 29 February 1996. Messrs D C Coutts-Trotter and F W J Kilbourn were appointed directors on 20 May 1996 and Mr I N Matthews on 20 june 1996,

In terms of the company's articles of association, Messrs P D Bacon, W F de la H Beck, D C Coutts-Trotter F W j Kilbourn and I N Matthews are required to retir~ fro,m off~c~ at the forthcoming annual general meeting but, being eligible, offer themselves for re-election.

As at 30 june 1996, the directors of the company beneficially held, In aggregate, 6 252 (1995: 7 lB6) shares in the issued capital of the comfany, No director holds in excess of 1 % of the issued capita of the company. There have been no changes in the directors' shareholdings between the date of the financial year end and the date of this report.

134 000 options over shares in the company were held by ~hree .executive directors under the employee share mcennve scheme at 30 june 1996. A full listing of the share dealings and interests of directors and executives of the company is available to the public on request.

HOLDING COMP,\NY The company's holding company is Safmarine and Rennies Holdings Limited, 19 August 1996

•

ACCOUNTING POLICIES

The principal accounting policies of the group, which are set out below, are consistent with those of the previous year. They substantially comply with the International Accounting Standards with the exception of inflation accounting, for which it is considered that a standardised and generally accepted method of benefit to users of financial statements has not yet been developed.

BASIS OP PREPARATION The financial statements have been prepared under the historical cost convention as modified by the revaluation of certain fixed assets.

BASIS OF CONSOLIDATION

The group annual financial statements include financial statements of the company and all its subsidiaries. A company in which the group has the ability to control the board of directors is accounted for as a subsidiary. The results of subsidiaries are included from the effective dates of acquisition and up to the effective dates of disposal.

Investments in joint ventures are accounted for by way of the proportionate consolidation method, whereby the group's proportionate share of the assets, liabilities, revenues, expenses and cash flows of joint ventures are combined, on a line by line basis, with similar items in the financial statements of the group. The results of joint ventures are included from the effective dates of acquisition and up to the effective dates of disposal.

AsSOC1ATE COMPANIES AND OTHER I N-VESTM ENTS

An associate is a company in which the group has a long term interest and over which it has the power to exercise significant influence.

The post-acquisition results of associate companies are included on an equity basis from the effective dates of acquisition up to the effective dates of disposal, unless, in the opinion of the directors, circumstances indicate that it is prudent to account for income from such investments only as and when received.

The group's share of earnings of associates is included in earnings attributable to ordinary shareholders. The retained equity earnings of associates after exceptional items are transferred to non distributable reserves.

Equity accounting is based on the associate companies' most recent financial information to coincide with the financial year end of the group.

Carrying values of investments in films are written off over the period in which income benefits accrue. Other investments are accounted for under the cost convention and dividend income accounted for when received.

GOODVVlLL Goodwill, being the excess of the purchase consideration of shares in subsidiaries over the attributable fair value of their net identifiable assets at date of acquisition, is set off against ordinary shareholders' equity in the balance sheet unless application is made to Court to write off the appropriate amounts against share premium.

FOReIGN CLIRRENCIES Transactions in foreign currencies are accounted for at the rates of exchange ruling on transaction dates.

Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange approximating those ruling at the balance sheet date, or, where applicable, at the forward cover rate. Differences arising are dealt with through the income statement.

Assets and liabilities of foreign subsidiaries are translated at rates of exchange approximating those ruling at the financial year end. Income, expenditure and cash flows of foreign subsidiaries are translated at the weighted average rate of exchange during the year.

Profits and losses arising on the translation of foreign subsidiaries are taken directly to non-distributable reserves.

FLXED ASSETS

Freehold land is included at cost or valuation.

Buildings, including freehold and leasehold hotel properties and related plant and machinery are stated at cos 1 or valuation. Hotel properties are periodically revalued by the directors and are stated at the lower of depreciated replacement cost and market value. Replacement cost is determined by firms of professional quantity surveyors, and market value by reference to the earnings potential of properties on a regional basis.

The depreciable value of hotel properties is considered to be nil on the basis that the residual value of these properties exceeds the current carrying values. Adequate provision is set aside to ensure that the buildings can be continually maintained in a sound state of repair. The quantification and estimation of the timing of such

ACCOUNTING POLICIES

refurbishments and repairs are undertaken by professional quantity surveyors. Management will adjust these estimates to reflect actual planned expenditure in line with known or anticipated future business developments.

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

Hotel and other pre-opening expenses are amortised over a period of five years from the date of commencement of operations.

Other fixed assets are depreciated or amortised over periods of between three and ten years as are deemed appropriate to reduce book values to estimated residual values over their useful lives.

INVENTORY Inventory is valued at the lower of cost and net realisable value on a first-in. first-out basis. Work in progress includes direct and indirect costs. Film and video productions for contractual distribution are amortised over the estimated income generating cycle of each production commencing from the date of release.

PRO'V1srON FOR MAJOR EXPENSES Provision is made for major expenses in order to match operating costs to revenue. Major expenses include ongoing refurbishment programmes on hotels, restaurants and other capital assets in addition to other costs related to the group's operations. Provisions are raised in the year in which the need for the expenditure becomes apparent, the matching is required, or the liability is identified. Costs are charged against provisions as and when the expenditure is incurred.

TAXATTON Current taxation is determined after taking into account investment allowances on capital expenditure, income and expenditure which is not subject to taxation or is to be taxed in another year, and assessed or estimated tax losses brought forward from prior years.

Deferred taxation is set aside on the comprehensive basis taking into account the effect of credits and charges,

including depreciation, attributable for income tax purposes to periods other than the current year. Deferred taxation is not set aside on the recoupable value of allowances claimed for tax purposes on hotel buildings and related fixed plant, as it is anticipated that the allowances will not be recouped and taxed.

A tax equalisation policy has been instituted by the group in recognition of the distortion to earnings that can arise from one year to another as a result of taxation allowances available on major capital projects. In terms of this policy, tax equalisation charges or credits are used to bring the effective tax rate for the year into line with the estimated average rate over a reasonable period of time. The tax equalisation amount is included in the balance sheet in non distributable reserves.

LEASES Leases are classified as finance leases when substantially all the risks and rewards associated with ownership of an asset are transferred from the lessor to the group as lessee. Operating leases are those leases that do not fall within the ambit of the above definition.

Assets leased in terms of finance lease agreements are capitalised at their cash cost equivalent. Depreciation is provided in terms of normal group policy and finance costs are charged to income in relation to the outstand ing liability throughout the lease period.

Operating lease rentals are charged against trading profit as they become due.

RETIREMENT BENEFlTS

Retirement benefit costs are accounted for on the basis of actual contributions made to the group's retirement funds.

REVENUE RECOGNITION This includes revenue derived from hotel trading, casino winnings which are accounted for on a cash received basis, box office income, entertainment revenues, film distribution fees, restaurant revenues, other fees, dividend income, rental income and the invoiced value of goods and services sold, less returns and allowances.

INCOME STATEMENTS


COMPANY GROUP

1995 1996 1996 1995

ROOO's ROOO's Notes ROOO's ROOO's

182969 208682 Revenue 2649830 2428296

131663 160086 Profit from operations 677290 608354

3772 15845 Interest income 88988 53 181

(3 787) Exceptional items (11 291) (3 286)

135435 172 144 Operating profit 754987 658249 (2 171) (7 783) Interest expense 2 (70661) (55 822)

i33264 164361 Profit before taxation 684326 602427 (14) (1 759) Taxation 3 (146543) (104 497)

i33250 162602 Profit after taxation 537783 497930

Share of associate companies' profits - normal 4 46793 18272 - exceptional 4 155829

Earnings attributable to outside shareholders (395 953) (309810)

133250 162602 Earnings attributable to ordinary shareholders 344452 206392 (134 026) (152935) Dividends to ordinary shareholders 5 (152935) (134 026)

(776) 9667 Earnings retained for the year 191517 72 366

1208 432 Retained earnings at beginning of the year 513 916 451310

Transfer to non distributable reserves 9 (135 207) (9 760)

432 10099 Retained earnings at end of the year 9 570226 513916

Earnings per share (cents) - before exceptional items 6 317,1 252,2

- after exceptional items 6 415,1 249,5

Dividends per share (cents) 183,0 162,0

Interest cover (times) 10,7 11,9 Dividend cover (times) 1,7 1,6

Calculated in accordance with the relevant

definitions given on page 46 of this report .

•

BALANCE SHEETS

AS AT 30 JUNE 1996

COMPANY GROUP

1995 1996 1996 1995 ROOD's ROOO's Notes ROOO's ROO~'s

Shareholders' funds 6619 6738 Share capital 7 6738 6619

900670 621 848 Non distributable reserves 8 844 918 764039 432 10099 Distributable reserves 9 570226 513916

907721 638685 Ordinary shareholders' equity 1421882 I 284574 Outside shareholders' interests 1 936679 I 545 105

907721 638685 Total shareholders' funds 3 358561 2829679

Interest bearing debt 697 49 Long term borrowings 10 1 561 313395

51362 97722 Short term borrowings II 107 716 175 129

52059 97771 109277 488524

959780 736456 Total capital employed 3467838 3318203

Fixed assets and investments 33077 38479 Operating assets 12 2 771 988 2729809

925377 697 167 Investments and loans 13 717 165 479282

958454 735646 3489 153 3209091

Current assets 1398 Inventory 14 24679 47623

104926 157845 Accounts receivable 15 254697 194 126 2853 1 166 Deposits and cash 733767 664506

107779 160409 I 013 143 906255

1066233 896055 Total assets 4502296 4 115346

Interest free liabilities Deferred taxation 16 (5 339) (3 745)

(30 235) (69331) Accounts payable and provisions 17 (765 676) (677 643) (I 759) (3 518) Taxation (176693) (41296)

(74 459) (86 750) Dividends (86 750) (74 459)

(106 453) (159599) (I 034458) (797 143)

959780 736456 Employment of capital 3467838 3318203

•

CASH FLOW STATEMENTS


COMPANY GROUP

1995 1996 1996 1995

ROOO's ROOO's Notes ROOO's ROOO's

Cash flows from operating activities Cash receipts from customers 2662851 2405662

Cash paid to suppliers and employees (I 853 995) (1678681)

,(47898) (2 989) Cash generated/(absorbed) by operations 18.1 808856 726981

(2 171) (7 783) Interest expense (70661) (55 822)

145952 107002 Investment income 18.2 95 781 60314

Taxation paid 18.3 (75 862) (85 121)

(126580) (75814) Dividends paid 18.4 (200470) (314449)

(30697) 20416 Net cash inflowl(outflow) from operating activities 557644 331 903

Cash flows from investing activities Purchase of fixed assets - expansion (76978) (121 194)

(23 699) (7 770) - replacement (III 850) (178835)

Proceeds on disposal of fixed assets 4514 15 126 • . (12018) Consideration on sale of joint venture 18.5 (13 371)

Purchase of subsidiaries and businesses 18.6 (1 376)

(10 760) (82 129) New investments and loans made (63 697) (71 906)

34 105 Investments and loans realised 76825 36503

(34 459) (67812) Net cash Dutf10W (rom investing activities (185933) (320 306)

Cash flows from financing activities 42821 45709 (Decrease)lincrease in borrowings 18.7 (344665) (41558)

Decrease in minority shareholder funding (4601) (6987)

42821 45709 Net cash (inflow)loutflow from financing activities (349 266) (48 545)

Effects of exchange rate changes on cash and cash equivalents 46816 2368

(22 335) (I 687) Net tncrease/tdecrease) in deposits and cash 69261 (34 580)

25 188 2853 Deposits and cash balances at beginning of year 664506 699086

2853 1 166 Deposits and cash balances at end of year 733767 664506

NOT E S TO THE ANNUAL FINANCIAL STATEMENTS

COMPANY GROUP

1995 1996 1996 1995

ROOO's ROOO's ROOO's ROOO's

1- PROFIT FROM OPERATIONS IS STATED AFTER

(CHARGING)/cREOITING THE FOLLOWING

(2 311) (2 365) Depreciation and amortisation of fixed assets (124851) (133 108) (6 315) (7 019) Leasing charges: (34893) (31 298)

(3 129) (3 390) Operating - properties (30,262) (26304) (3 186) (3629) - plant, vehicles and equipment (4631) (4994)

(350) (364) Auditors' remuneration: (4442) (3 778)

350 (364) Audit fees (3916) (3 403) Fees for other services (390) (261) Expenses (136) (114)

(17) (Loss)/profit on sale of fixed assets (3 738) 817 (3) (2) Profit/(loss) on foreign exchange 25549 573

137708 144755 Dividend income - subsidiaries 4472 5468 - other 374

2_ INTEREST EXPENSE (2 171) (7783) Interest paid on borrowings (83 390) (59 157)

Capitalised to fixed assets 12729 3335

(2 171) (7 783) (70661) (55 822)

3_ TAXATION (14) (I 759) Normal taxation - South African (169 749) (55 492)

- Foreign (21 257) (6376)

( 14) (I 759) (191006) (61 868)

Current taxation - this year (193959) (61 374) (14) (1 759) - prior years 4548 1028

Deferred taxation - this year (I 463) (I 6S I)

'.., , - prior years (132) 129

Withholding taxes 56 (13895) Secondary tax on companies (17896) (1 356) Tax equalisation 64095 (25 952) Other taxes (J 792) (I 426)

(14) (I 759) (146543) (104 497)

NOTE S TO THE ANNUAL STATEMENTS

FINANCIAL

CONTINUED

COMPANY GROUP

1995 1996 1996 1995 ROOO's ROOO's ROOO's ROOO's

3. TAXATION (continued) Reconciliation of rate of taxation % % Standard rate - South Africa 35,0 35,0

Adjusted for: Exempt income/disallowable expenditure (3,0) (0,9) Special allowances (0,3) (11,4) Foreign tax rate variations (1,8) 0,4 Secondary tax on companies 2,6 0,2 Withholding taxes 2,3 Assessed tax losses (1,5) (12,5) Prior year overprovision (0,2) (0, I) Tax equalisation (9,4) 4,3

Effective tax rate 21,4 17,3

Estimated tax losses available for set off against 26040 12 187 future taxable income 58788 209972

Utilised to offset timing differences (279) (92 303)

26040 12 187 58509 117669

4. SHARe OF ASSOCIATE COMPANfES' PROFITS

Dividend income 6793 4779 Equity retained earnings 40000 13493

46793 18272 Exceptional profit 155 829

202622 18272

5. DIVIDENDS PAlO AND PROPOSED Interim dividend - 80 cents (1995: 72 cents)

(59 567) (66 185) paid on 2 May 1996 (66 185) (59 567)

(59 567) - cash paid (1 355) (59567) - capitalisation share award elected (64830)

Final dividend - 103 cents (1995: 88 cents) (74 459) (86 750) payable on 30 September 1996 (86 750) (74 459)

(134 026) (152 935) Total dividend (152935) (134 026)

NOTES TO THE ANNUAL STATEMENTS

FINANCIAL

COMPANY GROUP

1995 1996 1996 1995 ROOO's ROO~'s ROO~'s ROOO's

6, EARNINGS PER SHARE

133250 162602 Attributable earnings per the Income statement 344452 206392

3787 Gross exceptional items (144538) 3286

Associate company exceptional profit (155829) 12018 Loss on sale of Douglas Green Bellingham 15'741 (38817) Profit on sale of City Lodge debentures (38817)

Provision in respect of property, new gaming 30586 dispensation and related costs 30586 15479

Profit on sale of interest in Radio 702 (21 404) Other 3781 9211

Taxation (270) Attributable to outside shareholders 63186 (750)

133250 166389 Attributable earnings before exceptional items 263 100 208658

Weighted average number of shares (000) 82981 82732 Earnings per share (cents) - before exceptional items 317,1 252,2 - after exceptional items 415, I 249,5

7, S.l-IARC CAPITAL

Authorised 110000 000 ordinary shares of 8 cents each

8800 8800 (1995: 110000 000 ordinary shares) 8800 8800

Issued 84 222 600 ordinary shares of 8 cents each

6619 6738 (1995: 82 732 239 ordinary shares) 6738 6619

In terms of a share capitalisation award 1 490 36 I shares were issued at a price of R43,50 to those shareholders who elected to receive shares in lieu of an interim cash dividend.

The unissued shares are under the control of the directors until the forthcoming annual general meeting.

•

NOTE S TO THE ANNUAL STATEMENTS

FINANCIAL

CONTINUED

COMPANY GROUP

1995 1996 1996 1995 ROOD's ROOO's ROOO's ROOO's

1

NON-OfSTRII3UTABLE RESERVES l 8. ~

900670 900670 Balance at the beginning of the year 764039 747782 Equity accounted reserves of associate companies 118889 9760 Cost of control movement 173 527 (2 322)

- Sun International South Africa restructure (145 617) - share premium reduction 343533 - other (24389) (2 322)

Revaluation of assets 169 Disposal of property (I 119) Foreign currency translation reserve 72 297 1879

64 711 Premium arising on share issues 64 711 (343 533) Share premium reduction (343 533)

Tax equalisation (21 228) 8 183 Subsidiary share issues 18887 Other. (I 552) (1 412)

900670 621 848 Balance at the end of the year 844918 764039

Comprising: 841614 562792 Share premium 562792 841614

Cost of control (271 155) (444 682) Equity accounted reserves of associate companies 139414 20525 Foreign currency translation reserve 174 332 102035 Revaluation of land and buildings II I 218 112 337

59056 59056 Revaluation of investments Subsidiary share issues 73697 54810 Tax equalisation reserve 50727 71955 Other reserves 3893 5445

900670 621848 844918 764 039

In terms of the special resolution passed at the last Annual General Meeting and subsequently sanctioned by the Supreme Court, the share premium of the company was reduced by R343 533 000 as from 21 November 1995.

NOT E S TO ANNUAL FINANCIAL THE STATEMENTS

COMPANY

1995 ROOO's

1208 (776)

1996

ROOO's

432 9667

432 10 099

9. DISTRIBLITABLE RESERVES

Balance at the beginning of the year Earnings retained for the year Transfer to non distributable reserves

Balance at the end of the year

The transfer (tol/from non distributable reserves comprises:

Sun International South Africa restructure Retained equity earnings of associate companies Douglas Green Bellingham disposal

Distributable reserves at the end of the year comprise:

Company (before provision for loss in joint venture) Subsidiaries Joint ventures

Any future dividend declarations out of the distributable reserves of the company or any of its subsidiaries incorporated in South Africa will be liable for secondary tax on companies at the prescribed rate which is currently 12,5% of the dividend declared.

1996

ROOO's

513916 191517 (135 207)

GROUP

1995

ROOO's

451 310 72 366 (9 760)

570226 513916

(18639) (118889)

2321 (9 760)

(135 207) (9 760)

10098 508620 51 508

24 196 470335

19385

570226 513916

NOT E S TO THE ANNUAL STATEMENTS

FINANCIAL

CONTINUED

COMPANY GROUP

1995 1996 1996 1995

ROOO's ROOD's ROOO's ROOD's

10. LONG TERM BORROWINGS Long term loans:

1 456 794 Secured 2794 4456 Unsecured 512 310 698

1 456 794 3306 315 154 (759) (745) Less repayable within one year (note 11) (1 745) (1 759)

697 49 1 561 313395

Repayable over the following financial years: 562 1997 311860 135 49 1998 1049 1 135

1999 2000 2001 2002 onwards 512 400

697 49 1 561 313395

Net book values of assets encumbered by secured loans:

Land and buildings 1 702 1200 Moveables 13 676 12618

1 702 1 ZOO 13 676 12618

17,7% 19,5% Weighted average interest rates 13,0% 12,6%

17,7% 19,5% Secured loans 13,5% 14,4% Unsecured loans 10,5% 12,60/0

Average interest rates have been arrived at by taking the rates ruling at 30 June, weighted by the balance outstanding on each interest bearing loan at that date. A register of long term loans is available for inspection at the registered office of the company.

11. SHORT TERl\I( BORROWINGS

759 745 Current portion of long term borrowings (note 10) 1 745 1 759 25625 Bank overdrafts 33677 70572

50603 71 352 Other short term loans 72 294 102798

51 362 97722 107 716 175 129

NOTE S ANNUAL FINANCIAL TO THE STATEMENTS

COMPANY

1995 1996 ROOO's ROOO's

12. OPERATING ASSETS

Revalued historic cost Freehold property

- historic cost - revaluation surplus

1200 I 200 Leasehold property

I 200 1200 - historic cost - revaluation surplus

33664 35687 Plant and equipment Intangible assets

6775 12 519 Capital work in progress Pre-opening expenses

41 639 49406

Accumulated depreciation Freehold property

(960) (1 200) Leasehold property (7602) (9 727) Plant and equipment

(8562) (10 927)

Net carrying value Freehold property

240 Leasehold property :!6 062 25960 Plant and equipment

Intangible assets 6775 12519 Capital work in progress

Pre-opening expenses

33077 38479

GROUP

1996 ROOO's

1995 ROOO's

206553 222 543

203820 218691 2733 3852

1 794630 I 774021

1 686 145 I 665536 108485 108485

147515 I 108187 2 165 4998

171 013 80 129 22505 40843

3 344 381 3230721

(2 835) (7 706) (28559) (27431) (540999) (465 775)

(572 393) (500 912)

203 718 214837 1 766071 I 746 590 606516 642412

2 165 4998 171 013 80129 22505 40843

2 771 988 2 729809

al...,lIllIldand leasehold properties were revalued by the directors on 30 June 1996 at the lower of depreciated replacement _ ddennined by firms of professional quantity surveyors, and market value as determined by reference to the earnings

01 tile properties on a regional basis.

ai property is available for inspection at the registered office of the company, a copy of which will be supplied to • the public on request.

NOTE S TO THE ANNUAL FINANCIAL STATEMENTS

CONTINUED

COMPANY GROUP

1995 1996 1996 1995


12. OPERATING ASSETS (continued) Movements for the year Additions:

Freehold property 431 8258 Leasehold property 19435

17842 2026 Plant and equipment 72 261 140483 5857 5744 Capital work in progress 96430 ISO 021

Pre-opening expenses 271 I 267

23699 7770 188828 300029

Disposals: Freehold property (2 785) (777)

Leasehold property (4) (lOS) (3) Plant and equipment (5 946) (13 002)

Intangible assets (52)

(lOS) (3) (8 731) (13 835)

Disposal of joint venture (15318)

Revaluations (I 119) (5 149)

Exchange adjustments 3370 (82)

Depreciation and amortisation: Freehold property (308) (259)

(240) (240) Leasehold property (I 128) (2215) (2 071) (2 125) Plant and equipment (102 670) (109241)

Intangible assets (2 136) (I 794) Pre-opening expenses (18609) (19 599)

(2 311) (2 365) (124851) (133 108)

21 281 5402 Total movements for the year 42179 147855


COMPANY GROUP

1995 1996 1996 1995 ROOO's ROOO's ROOO's ROOO's

13. INVESTMENTS AND LOA,NS

Investments in subsidiaries and joint ventures: 740510 450577 Shares at cost less provision for losses

14 119 14 119 Amounts owing by joint venture

754629 464696 . Interests in associate companies:

167713 147307 Cost of listed shares and convertible debentures 387557 369656 - - Cost of unlisted shares 2785 2785 - - Increase in equity since acquisition 248003 26522

167713 147 307 638345 398963

Other investments and loans: 284 284 Cost of unlisted shares 1080 673

2 751 2 751 Loans in terms of share incentive schemes 11 316 11 316 - 82 129 Other non current loans 66424 68330

3035 85164 78820 80319

925377 697 167 Book value at the end of the year 717 165 479282

Directors' valuation of unlisted investments and loans 88642 92 156 Market value of listed investments 917631 787273

1 006273 879429

14. INVENTORY - - Raw materials - 10651 - - Merchandise 9776 22725 - 1 398 Consumables and hotel stocks 14903 14247

- 1 398 24679 47623


FINANCIAL

CONTINUED

COMPANY GROUP

1995 1996 1996 1995


15. ACCOUNTS RECEIVABLE 26346 79749 Trade and other accounts receivable 254697 194 126 • 78580 78096 Dividends owing by subsidiaries

104926 157845 254697 194 126

16. DEFERRED TAXATION Deferred taxation (5 339) (3 745)

Had it been deemed appropriate for deferred taxation to be set aside on hotel buildings and related fixed plant, an additional amount of R47 606 000 (1995: RII 057 000) would have been charged in the current year and the aggregate provision for deferred taxation at 30 June would have amounted to R460 611000 (1995: R411 411 000).

17. ACCOLINTS PAYABLE AND PROVIS1ONS

Included in accounts payable and provisions are amounts set aside to cover major expenses including refurbishment programmes on hotels, restaurants and other capital assets as set out in the group accounting policies, as well as to cover certain expenditure relating to the new gaming dispensation in South Africa.

Balance at the beginning of the year (137917) (114098) Net movement for the year (31 535) (23819)

Balance at the end of the year (169452) (137917)


COMPANY GROUP

1995 1996 1996 1995


18. CASH FLOW INFORMATION

18.1 Cash generated/(absorbed) by operations

131 663 160086 Profit from operations 677 290 608354 Non-cash items and items dealt with separately:

Depreciation and amortisation 2311 2365 of fixed assets 124 851 133 108

17 Lossl(profit) on sale of fixed assets 3738 (817) Dividends received from subsidiaries

(142 180) (150223) and investments (374) Absorbed by discontinued operations (3 120)

4 Fixed assets written off 1 445 112 6967 Provision against investments 283

90 Other (2 033) (627)

Operating profit before working (1 132) 12 232 capital changes 805 291 736919

(46 766) (15221) Working capital changes 3565 (9938)

(1 398) Inventory (1 957) (2669) (23 368) (52 919) Accounts receivable (74 144) (29081) (23 398) 39096 Accounts payable 79666 21 812

(47898) (2 989) 808856 726981

18.2 Investment Income 4472 Dividends received - associates 6793 6759

- other investments 374 137708 91 157 - subsidiaries 3772 15845 Interest income 88988 53 181

145952 107002 95781 60314


FINANCIAL

CONTINUED

COMPANY GROUP

1995 1996 1996 1995


18. CASH FLOW INFOFUv1.ATJON (continued) 18.3 Taxation paid

(I 745) (I 759) Taxation liability at the beginning of the year (41 296) (49394) (14) (I 759) Current tax provided (note 3) (189411) (60 346)

Withholding and other taxes (note 3) (19534) (16 407) Translation difference (2 314) (270)

I 759 3518 Taxation liability at the end of the year 176693 41 296

(75862) (85121)

18.4 Dividends paid To shareholders

(67013) (74459) Dividend liability at the beginning of the year (74 459) (67013) (134 026) (152935) Dividends declared (152935) (134 026)

64830 Capitalisation award elected 64830 74459 86750 Dividend liability at the end of the year 86750 74459

(126 580) (75814) (75814) (126 580) To minorities in subsidiaries (124656) (187869)

(126 580) (75814) (200470) (314449)

18.5 Consideration on sale of joint venture The net assets of the Douglas Green Bellingham jolnt venture disposed of and net cash outflow was as follows: Fixed assets 15 318 Net working capital assets 20298 Investments and loans 2027 Borrowings (34857)

Net assets sold 2786 (12018) Loss on disposal (16 157)

(12018) Cash outflow (13371)

18.6 Purchase of subsidiaries and businesses Borrowings (275) Outside shareholders' interests 672

Net assets acquired 397 Goodwill on acquisition 979

1 Cash paid (I 376) ~ ,


FINANCIAL

COMPANY 1995

ROO~'s

44832 (2 011)

1996 ROOO's

20746 (662)

25625

42821 45709

18. CASH FLOW INFORMATION (continued) 18.7 (Decreasej/increase in borrowings

Term loans raised Term loans repaid (Decrease)lincrease in bank overdraft

19. CONTINGENT LIABILITIES Guarantees in respect of related companies Leases sold with recourse Other

20. FUTLIRC CAPITAL EXPCNDITLIRE Contracted Authorised by the directors but not contracted

To be spent in the forthcoming year To be spent in future years

Future capital expenditure will be financed out of existing cash resources, funds generated from operations and external borrowings.

21. RET1REMENT BENEFIT COMMlTMENTS Group companies operate pension and provident schemes which are available to all employees including the executive directors and are financed by company and employee contributions to separate trustee adrnlnlsrered funds.

Funds registered in South Africa are governed by the South African Pension Funds Act, 1956, in terms of which the funds must be actuarially valued every three years.

GROUP 1996

ROOO's

1995 ROO~'s

296298 187381 (604068) (296986) (36895) 68047

(344665) (41558)

I 500 2000 611 913

I 463 2207

3574 5 120

173423 91 328

155 843 181 266

329266 272 594

299658 240039 29608 32555

329266 272 594


FINANCIAL

CONTINUED

COMPANY

1995 ROOO's

210

1996

ROOO's

196

3772 843 185

4057 I 428 651

4800 6 136

5010 6332

21. RETIREMENT BENEFIT COMMITMENTS (continued) Contributions to these funds, which are charged against profits, are based upon actuarial advice following the periodic valuation of the funds. The latest valuation of the largest fund, the Sun International Pension Fund, was carried out as at I January 1994 by an independent firm of consulting actuaries, At this date, and at the dates of the latest valuations of the other group funds. the retirement schemes were fully funded.

The group companies contributed R51 ,0 million (1995: R42,2 million) to these schemes.

22. DIRECTORS' EMOLUMENTS Non-executive directors

Fees

Executive directors Remuneration Retirement, medical, accident and death benefits Other

23. LOANS TO DIRECTORS

Housing loans have been made to directors of the company in accordance with the terms and conditions specified in the group's executive housing loan scheme. In terms of this scheme, housing loans bear interest at 6% per annum and are repayable on termination of employment.

Balance at the beginning of the year Advances made during the year Repaid during the year

Balance at the end of the year

1996

ROOO's

I 503 197

GROUP 1 1995

ROOO's

1014 1 503 (I 014)

1700 1503


COMPANY

1995 ROOO's

1996 ROOO's

24. INTEREST IN JOINT VENTLIRES The group has a 50% interest in Satbel Investment Holdings (Proprietary) Limited, the holding company of the Interleisure group, which is jointly controlled by Kersaf and Servgro International Limited. The 50% interest in Douglas Green Bellingham was disposed of effective 26 April 1996.

The figures presented below are the group's proportionate share of the results of operations, assets, liabilities and cash flows of the joint ventures, which are combined on a line by line basis with similar items in the consolidated annual financial statements, The group's proportionate share of the results of operations of joint ventures is as follows:

Revenue

Profit from operations Interest income Exceptional items

Operating profit Interest paid

Profit before taxation Taxation

Profit after taxation Earnings attributable to outside shareholders

Earnings attributable to Kersaf

The group's proportionate share of assets and liabilities of joint ventures is as follows:

Operating assets Investments and loans Current assets

Total assets

Current liabilities Deferred liabilities Short term borrowings

Total liabilities Outside shareholders' interests

Total funding

GROUP

1996 ROOO's

1995 ROOO's

337645 326884

44212 38330 1 567 2398

(1 169) (8 768)

44610 31960 (6 780) (6 768)

37830 25 192 (12763) (10649)

25067 14543 (6430) (5 104)

18637 9439

69060 87983 17430 23966 60344 90072

146834 202021

(61 360) (67 ISS) (4 542) (4346)

(15061) (55937)

(80963) (127 438) (22 769) (20 797)

(103 732) (148235)


CONTINUED

GROUP

1995

ROO~'s

COMPANY

1996

ROOO's

24. INTEREST IN 10lNT VENTURES (continued) The group's proportionate share of the cash flows of joint ventures is as follows:

Cash retained from operating activities Cash utilised in investment activities

Cash effects of financing activities

The group's proportionate share of contingent liabilities of joint ventures is R2 286000 (1995: R2 913 000).

The group's proportionate share of future capital expenditures of joint ventures is as follows:

Contracted Authorised but not contracted

25. FORJ:IGN CURRENCY INFORMATION The group has entered into the following forward exchange contracts to cover the purchase of foreign currencies, and they accordingly do not relate to specific items in the balance sheet:

Foreign Rand currency equivalent

(at forward cover rate)

ODD's OOO's

US Dollars 400 I 760

The following foreign currency assets and liabilities of the group, recognised in the balance sheet, are not covered by foreign exchange contracts:

Foreign currency

ODD's

Rand equivalent

OOO's

Assets US Dollars Liabilities US Dollars

54 701 236 718

1 182 5 142

26. COMPARATIVE FIGURES Certain comparative figures have been restated where necessary to comply with the group's accounting policies and conventions,

1996

ROOO's

43 119 (9288)

1995

ROO~'s

13 189 (23401)

(10212) 33831

27687 16443

29588 17856

47444 44130

INTEREST JOINT

IN PRINCIPAL VENTURES AND

SUBSIDIARIES, ASSOCIATES

AMOUNT OF [SSUED EFFECTJVE INTEREST OF HOLDrNG COMPANY

CAPITAL HOLDING' SHARES INDEBTEDNESS 1996 1995 1996 1995 1996 1995

ROOO's % % ROOO's ROOO's ROOO's ROOO's

SUBSIDIARIES •• CasinolHotel resorts Riviera International (Pty) Ltd (I) 54 80 80 Royale Resorts Holdings Ltd (7) 737 59 59 Sands Hotels Holdings Namibia (Pty) Ltd (5) 40 40 Sun International (South Africa) Ltd (9) 23743 33 32 Sun International (Botswana) (Pty) Ltd (2) 500 64 64 Sun International (Ciskei) Ltd (9) 3750 33 27 Sun International Inc (6) I 326 80 80 425625 706082 Sun International Management Ltd (7) 8 59 53 Swazispa Holdings Ltd (3) 3497 40 40 Transkei Sun International Ltd (9) 14495 33 43 Venda Sun Ltd (9) 500 33 40

JOINT VENTURES AND UNDERLYING SUBSIDIARIES Films, entertainment and food Cinemark (Pty) Ltd (I) 4 37 37 Computicket (Pty) Ltd (I) 100 37 37 Independent Film Centre SA (Pty) Ltd (I) 145 37 37 lnterleisure Limited (I) I 898 37 37 Maxi-Movies Franchising (Pry) Ltd (I) 4 22 Satbel Investment Holdings (Pty) Ltd (I) 50 50 24952 34428 14 119 14 119 Ster-Klnekor Films (Pty) Ltd (I) 37 37 Ster-Kinekor Home Entertainment (Pty) Ltd (I) 32 31 Toron International (Pty) Ltd (I) 37 37

Liquor Douglas Green Bellingham (I) 50

AsSOCIATES Listed City Lodge Hotels Ltd - Ordinary shares (I) 2671 43 44 120733 115265 - Convertible debentures (I) 75000 19 37 26574 52448 Sun International Hotels Limited (8) 126 II 15 Unlisted Lesotho Sun (Pty) Ltd (4) 39 39 Sun International of Lesotho (Pty) Ltd (4) 37 37

-All interests in subsidiaries and associates ate held indireclly except {or Sun International Inc, Satbel Investment Holdings (Ply) Ltd and City Lodge Hotels Ltd . • "Country of incorporation (1) South Africa (2) Botswana (3) SwaZiland (4) Lesotho (5) Namibia (6) Panama (7) Bennuda (8) Bahamas (9) Awaiting integration to South Africa in tenns of The Integration of Corporate Laws Act

NOTICE OF ANNUAL GENERAL MEETING

KERSAF INVESTMENTS LIMITED ("the company")

Notice is hereby given that the twellth annual general meeting 01 members 01 the company will be held in the board room, 6th Floor, 3 Sandown Valley Crescent, Sandown, Sandton, Gauteng, on Monday, 18 November 1996 at 14:00 lor the lollowing purposes, namely:

I. To receive and consider the financial statements for the year ended 30 June 1996.

2. To re-elect Messrs P D Bacon, W F de la H Beck, DC Coutts-Trotter, F W J Kilbourn and I N Matthews as directors who retire from office in accordance with the provisions of the company's articles of association.

3. To approve fees payable to the non-executive directors in respect 01 the year ended 30 June 1996: 3.1 for their services as directors, RlO 000 each; 3.2 to the chairman 01 the audit committee, RIO 000; and 3.3 to the other members of the audit committee,

RS 000 each.

4. To place the unissued shares for the time being in the capital 01 the company, but excluding any shares for the issue of which specilic authority has been granted to the directors, under the control of the directors, who shall be authorised to allot such shares at such prices, on such terms and conditions and at such times as they deem fit, subject to the provisions of the Companies Act, and the rules and requirements of the Johannesburg Stock Exchange.

5. Special business

To consider and, if deemed fit, to pass, with or without modification, the following resolution, which will be proposed as a special resolution:

Special resolution

"RESOLVED that, subject to the confirmation of the Supreme Court of South Africa (Witwatersrand Local Division) and in accordance with the provisions of section 84 of the Companies Act, 1973 (Act 61 01 1973), as amended, and article 13 of the company's articles of association and with effect from the date of passing of this resolution, the company's share premium account be and it is hereby reduced by the sum 01 Rill 462 000 (one hundred and eleven million four hundred and sixty two thousand rand) from RS62 792924,14 (five

hundred and sixty two million seven hundred and ninety two thousand nine hundred and twenty four rand and fourteen cents) to R4S1 330 924,14 (lour hundred and filty one million three hundred and thirty thousand nine hundred and twenty-lour rand and fourteen cents), which reduction in share premium shall be eflected by writing all an amount of Rill 462 000 (one hundred and eleven million four hundred and sixty two thousand rand), such amount representing goodwill on the acquisition of Sun International Inc and Satbel Investment Holdings .(Proprietary) Limited."

The reasons for the special resolution are that the directors consider it advisable for goodwill that arose in past years on the issue of shares by the company on the acquisition of its interest in Sun International Inc and Satbel Investment Holdings (Proprietary) Limited, to be written all against the share premium applicable to the acquisitions without the need for any distribution of cash or assets to members. The amount of the proposed reduction of the share premium of Rill 462 000 thus represents the excess cost of the shares in these companies over the value of their net assets at the dates of the acquisitions. The elfect thereol is that the company's share premium account will be reduced by Rill 462 000 Irom RS62 792 924,14 to R4S1 330 924,14.

Any member entitled to attend and vote is entitled to appoint a proxy or proxies to attend, speak and vote at the meeting in his stead, and the proxy so appointed need not be a member 01 the company. A proxy lorm is enclosed for this purpose. Proxy forms should be forwarded to reach the registered ollice 01 the company not less than 24 hours belore the time appointed lor the holding of the meeting.

By order o( the board

S A Bailes Group secretary

30 September 1996

Postal address PO Box 782121, Sandton, 2146, Gauteng

Delivery address 3 Sandown Valley Crescent, Sandown, Sandton, Gauteng

•

FORM OF PROXY

K£RSAF INVESTMENTS LIMITED ("THE COMPANY")

For use at the twelfth annual general meeting of members to be held in the board room, 6th Floor, 3 Sandown Valley Crescent,

Sandown, Sandton, Gauteng, on Monday, 18 November 1996 at 14:00 ("the annual general meeting").

J/We

(please print)

being the holder/s of ordinary shares in the company, appoint (see note 2)

I or failing him

2 or failing him

3 the chairman of the annual general meeting

as my/our proxy to act for me/us and on my/our behalf at the annual general meeting, which will be held for the purpose of

considering, and if deemed fit. passing, with or without modification, the resolutions to be proposed thereat and at any adjournment thereof; and to vote for andlor against the resolutions and/or abstain from voting in respect of the ordinary shares registered in my/our name!s in accordance with the following instructions (see note 3):

Note: On a poll a member is entitled to one vote for each share held.

FOR AGAINST ABSTAIN

Show of Number of Show of Number of Show of Number of

hands votes poll hands votes poll hands votes poll

Resolution No 1

Resolution No 2

Resolution No 3

Resolution No 4

Special resolution

Signed at on 1996

Signature Assisted by me (where applicable)

Please see notes overleaf

INSTRUCTIONS FOR

LODGING THIS COMPLETING AND PROXY FORM

NOTES

1. Any member entitled to attend and vote is entitled to appoint a proxy or proxies to attend, speak and vote at the annual

general meeting in his stead, and the proxy so appointed need not be a member of the company.

2. A member may insert the name of a proxy or the names of two alternative proxies of his choice in the space provided. with or without deleting "the chairman of the annual general meeting". The person whose name 'Stands 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,

3. A member's instructions to the proxy must be indicated, vis-a-vis on a show of hands, by the insertion of a cross, and vis-a vis a poll, by insertion of the relevant number of votes exercisable by him and which he desires to be exercised, in the appropriate box/es provided. On a poll, a member is not obliged to use all the votes exercisable by that member, or to cast

all those votes exercised, in the same \vay, but the total of the votes cast in respect whereof abstention is recorded may not exceed the total of the votes exercisable by the member. Failure to comply with the above will be deemed to authorise the chairman of the annual general meeting, if he is the authorised proxy, to vote in favour of the resolutions at the annual general meeting. or any other proxy to vote or to abstain from voting at the annual general meeting as he deems fit. in respect of the resolutions. with or without modification, in respect of all or any of the member's votes exercisable thereat.

4. To be valid, forms of proxy must be lodged at the registered office of the company, 3 Sandown Valley Crescent, Sandown,

Sandton, Gauteng (or posted to the company at PO Box 782121, Sandton, 2146, Gauteng) to be received no less than 24 hours before the time appointed for the holding of the annual general meeting.

5. The completion and lodging of this form of proxy will not preclude the relevant member from attending the annual general

meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof. should such member wish to do so.

--_- -_- ~-----

SHAREHOLDERS'

ANNUAL GENERAL MEETING

REpORTS

Interim for half year 10 December Announcement of annual results

Annual financial statements

DIVIDENDS

Interim Final Interim

Final

declared

declared paid

payable on or about

FINANCIAL YEAR END

DIARY

GRAPHICOR 1 2993

18 November 1996

February

August September

20 February 1996

19 August 1996 2 May 1996

30 September 1996

30lune

Tsogo Sun Heritage

Documents

Transcript of Tsogo Sun Heritage