FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) 2013 AR_final .pdf · FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2013 05 T he year under review has been a very busy

FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA)

Annual Report for

the year ending

31 March 2013

Introduction and Mandate

Editor’s Note

Chairman’s Statement

CEO’s Highlights of Main FSRA Operations

Finance and Corporate Services

Human Resources

Insurance and Retirement Funds Division Report

Credit and Savings Institutions (CSI) Division Report

Capital Markets Division Report

Swaziland Stock Exchange Report

Annual Financial Statements

Appendices

CONTENTS

1

2 - 3

4 - 5

6 - 9

10 - 12

13 - 15

16 - 47

48 - 50

51- 54

55 - 60

61 - 83

84 - 92

1. INTRODUCTION

FSRA MANDATE

The FSRA hereby submits its first Annual Report covering the year 1 April 2012 to

31 March 2013. The structure of this report presents a consolidated position, incorporating

all four FSRA divisions as follows:

• DIVISION 1 – CEO’s office

• DIVISION 2 – Finance and Corporate Services.

• DIVISION 3 – Insurance And Retirement Funds (IRF)

• DIVISION 4 – Capital Markets (CM) incorporating Swaziland Stock Exchange (SSX)

• DIVISION 5 – Credit and Savings Institutions (CSI).

The principal objects of the Authority are to foster, through regulation and prudential

supervision of financial services providers;

a) the stability of the Swaziland financial system

b) the safety and soundness of financial service providers

c) the highest standards of conduct of business by financial service providers

d) the promotion of fair competition between different financial service providers for the

benefit of stakeholders

e) the fairness, efficiency and ordeliness of the Swaziland nonbank financial sector, and

f) the protection of the stakeholders.

FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2013 01

02 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2013

The much awaited integrated financial services regu-latory authority is finally here. The Financial Services Regulatory Authority (FSRA) Act of 2010 was promul-gated and gazetted into law on 1 June 2010. Effec-

tive 1 December 2010, the Minister of Finance appointed the Board of Directors of the FSRA. The Chief Executive Officer was recruited in November 2011 and assumed duties on 1 January 2012. This then led to the establishment of the FSRA which is responsible for the regulation and supervision of all non-bank financial institutions.

Where it all beganIn the 1990s many SADC (Southern African Development Com-munity) countries liberalised their financial services sectors as part of the economic structural adjustments programmes prescribed by the International Monetary Fund and the World

Bank. These reforms included the removal of barriers that hin-dered competition from new financial service providers. In a region characterised by small economies and markets, it is generally acknowledged that in order to deepen the gains from these markets reforms, regional economic integration is a de-sirable development strategy.

Swaziland is a member of the SADC region, and hence FSRA is a member of the CISNA (the SADC Committee of Insurance, Securities and Non-Banking Financial Authorities). CISNA forms part of the Trade, Industry, Finance and Investment Di-rectorate within the SADC and reports to the SADC Commit-tee of Ministers of Finance and Investment through the Com-mittee for Senior Treasury Officials. CISNA was established in 1998. Membership of CISNA consists of the non-bank financial services regulatory authorities supervising activities such as,

2. EDITOR’S NOTE


capital markets, collective investment schemes, insurance companies, retirement funds, credit and savings institutions and thier intermediaries in the SADC.

CISNA’s Vision is to facilitate the development and imple-mentation of a harmonised, risk based regulatory framework for member states in SADC that enables market growth and development, reduces the potential for systemic risk, informs and protects consumers, mobilises capital flows and contrib-utes to prosperity in the region. FSRA is therefore aligned to the CISNA’s vision.

Why the FSRA?

Previously the activities of the Insurance and Retirement Funds Industries were supervised by RIRF, the Capital Market activities by the Central Bank of Swaziland, and the Savings and Credit Cooperatives were supervised by the Commissioner of Cooperatives Develepment.

The establishment of the FSRA completes the mandate of integrating the Non-Bank Financial Services Regulation in Swaziland. It consolidates the mandate, such that the Central Bank of Swaziland concentrates on Banking Supervision and Monetary Policy, meanwhile the FSRA concentrates on supervision of all Non-Banking financial services activities in Swaziland.

In this very first issue of the Annual Report published under the FSRA, the following are the highlights of activities that took place during the year under review.

In the Chairman’s Statement, he highlights the activities that have kept our Board of Directors busy during the year under review.

The CEO then takes us through the journey of the activities that have taken place in the establishment phase of the authority including its funding, financial resources of the authority, the physical set-up of the divisions, the logo and

corporate image, the organisational structure, the rationale behind this setup as well as the transfer of staff from the Office of the Registrar of Insurance and Retirement Funds and the Central Bank of Swaziland into the legal employment of the FSRA.

The report further highlights the following:

The role of the Finance and Corporate Services Division incorporating the Human Resources.

The major activities that have kept Insurance and Retirement Funds Division busy during the year. This includes a review of the Industry Financial performance, analysing the players’ markets shares as well as level of compliance with the 30% local investment requirement.

A snap shot of the activities of the newly established Credit and Savings (CSI) division. Most of the institutions supervised by this division, namely, Credit Institutions, Savings and Credit Cooperatives were not previously regulated hence this division seeks to roll out a coordinated regulatory framework dedicated to the safe, orderly and sound position of regulated entities, without losing sight of the different specialised nature of their operations.

An analysis of the activities of the Capital Markets Division which has been transferred from the Central Bank of Swaziland. The Capital Markets has been transferred from the CBS together with the Swaziland Stock Exchange (SSX).

Enjoy reading this issue. We look forward to hearing from you with feedback on the items you would like us to include in future issues. Should you wish to send us feedback, please feel free to email the editor on [email protected] and [email protected].

Gugu MakhanyaEditor


3. CHAIRMAN’S STATEMENT

I wish to thank my fellow Board Members for the dedication with which they conti-nue to fulfil their fiduciary duties, and guidance they provide as we establish this Authority of national importance in the improvement of the Swaziland economy.

“

“


The year under review has been a very busy year for the Board of Directors of the FSRA. The establishment and mandate of the Board is set out in sections (7-13) of the FSRA Act 2010 which

empowers the Board to have the overall responsibility for the oversight of the Authority. The Board performs its duties through the CEO, who is responsible for the day to day management of the activities of the Authority including the implementation of policies and directives as approved by the Board. Section 12 of the FSRA Act requires the Board to meet at least once every two months. During the year under review, the Board has been meeting more frequently than this requirement due to the volume of work required to be considered during the formative phase of the Authority.

THe under review was categorised by the setting up of the FSRA operational infrastructure. The Board, in a nutshell dealt with a number of issues, amongst others: the recruitment of the FSRA CEO; who assumed duties on 1 January 2012; collaboration with other supervisory authorities with a view to giving effect to FSRA’s mandate; organisational structure; funding of the Authority; establishment of the various board sub-committees and recruitment of other executives.

Work in Progress Board deliberations

As the Board continues to work, the following are matters that are pending and are work in progress for the Board: the FSRA Strategic direction, vision and mission; Strategy for the long term capitalisation or funding of the FSRA; the appointment of the Financial Services Ombudsman in line

with Section 74 of the FSRA Act; the appointment of the Appeals Tribunal in accordance with Section 79 of the FSRA Act; the Operationalisation of the Swaziland Stock Exchange as an autonomous entity; the promulgation into law of the Capital Markets regulations that have been submitted to the Ministry of Finance for the legislative process to commence; and the drafting of pending laws and regulations required to complete the regulatory framework of theFSRA.

Words of appreciation

I wish to thank my fellow Board Members for the dedication with which they continue to fulfil their fiduciary duties, and guidance they provide as we establish this Authority of na-tional importance in the improvement of the Swaziland econ-omy. A word of appreciation goes to Mr Bongani Nxumalo, the CEO of FSRA, who provided leadership and made it pos-sible for us to achieve these milestones. Mr Nxumalo subse-quently resigned at the end of April 2013.

On behalf of the Board, management and staff, I would like to express our appreciation to the Honourable Minister of Finance Mr Majozi Sithole and his team for trusting us to lead such an organisation, as well as providing the necessary guidance.

Mr. Muhawu I. Maziya


4. CEO’s HIGHLIGHTS OF MAIN FSRA OPERATIONS

The main highlights of the year to 31 March 2013 are as follows:

Organisational Structure overview

At this stage of the development of Swaziland Non-Bank Financial Institutions (NBFIs), we felt there was a strong case to proceed conservatively with a more conventional, industry-based supervisory structure for the following reasons:

• The focus in these early years for staff will be to continue building on their skills in supervision and regulatory philosophy and this is likely to occur more quickly in groups specialising in particular industries than in a structure focused on cross-industry skilling;

• Regulation is new to some NBFIs such as SACCOs and they must be given time to “acclamatise” to the new regime. Industry focused supervision is more likely to garner support for the reforms than a “one size fits all” approach.

It is for the foregoing reason our resultant preliminary organisational structure is sectorial with each division dedicated to supervising specific industries.

BRIEF OUTLINE OF ROLES AND RESPONSIBILITIES OF DIVISIONSInsurance and Retirement Funds (RIRF)

This division is responsible for the following broad functions:• Regulation and supervision of insurance and retirement

funds industries; • Administration of the Retirement Funds Act, 2005, and

its subsidiary legislations;• Administration of the Insurance Act, 2005, and its

subsidiary legislations;• On-site and off-site monitoring and analysis of entities

falling under their supervision; • Ensuring sound risk management and operating

policies by supervised institutions; and• Ensuring compliance with regulations and prudential

standards by supervised institutions.


Capital Markets (CM)

This division is responsible for the following broad functions:• Administration of the Securities Act, 2010, and its

subsidiary legislation;• Regulation and supervision of capital market industry;• Overseeing market conduct by capital market

participants;• On-site and off-site monitoring and analysis of entities

falling under their supervision;• Ensuring sound risk management and operating



Credit and Savings Institutions (CSI)

This division is responsible for the following broad functions:• Administration of the following legislations and their

subsidiary legislations;• Swaziland Building Societies Act, 1962;• Money Lending and Credit Financial Act, 1991;• Pawn Broking Act, 1894;• Higher Purchase Act, 1969; and• Lotteries Act, 1963.

• Regulation and supervision of SACCOs; • Regulation and supervision of credit providers• On-site and off-site monitoring and analysis of entities

falling under their supervision;• Ensuring sound risk management and operating



REGISTRAR OFINSURANCE AND

RETIREMENT FUNDS

Long term Insurers

Short term Insurers

Insurance Brokers

Insurance Agents

Medical Aid Funds

Retirement Funds

Fund Administrators

Securities Exchanges

Dealers

Central Securities Depositories

Collective Investment Schemes Managers

Investment Advisors

Nominees

Investment AdvisorsRepresentatives

Dealer Representatives

Trustees

Building Societies

SACCOs

Money Lenders

Credit Bureaus

Pawn Brokers

Higher Purchase Institutions

Lotteries

Credit Providers

Finance

Human Resources

ICT

Corporate Services

REGISTRAR OF CAPITAL MARKETS

REGISTRAR OF CREDIT AND SAVINGS

INSTITUTIONS

CHIEFEXECUTIVE

OFFICER

FINANCEAND CORPORATE

SERVICES

The Graph below depicts the different divisions within the FSRA


CEO’s Highlights of Main FSRA Operations - continued

Funds of the Authority

The FSRA is financed in terms of Section 20 of the FSRA Act by: Monies appropriated by Parliament for the purpose; fees or other charges, as prescribed by the authority; supervisory levies imposed under section 21; Grants and donations made to the authority; and such sums of money or such other assets as may accrue to or vest in the authority from time to time, whether in the course of the exercise of its functions or otherwise.

Levies

Actual levies raised from regulated entities as at the end of 31 March 2013 totalled E15.5million (2012: E16.7million). The breakdown of levies charged to the industry is as shown in the table above.

The collection of industry levies is in line with the requirements of the legislations, as well as in compliance with the requirements of the International best practice to achievie financial autonomy and independence from Government.

Subvention Income

The Authority has been allocated E4.95 million Government Subvention for the year to 31 March 2013. However, since this is the first year we are compiling the financial statements for the FSRA, we have also recognised subvention allocated in the previous year as income for the year under review. Hence the Financial Statements show Government subvention as E12.6 million.

The FSRA Operational Budget and funding sustainability

In November 2012, management presented to the Board the Authority’s Financial Projections for the year to 31 March 2014. According to the presentation, the Authority needs a minimum of E17 million in Government Subvention in order to break even in the 2014 financial year. Government has confirmed an allocation of E12 million, with a deficit of E5 million.

Transfer of Staff in accordance with Section 15 of the FSRA Act

Section 15 of the FSRA Act stipulates that the staff from the Office of Registrar of Insurance and Retirement Funds and from the Central Bank of Swaziland’s Capital Markets Development Unit are entitled to be transferred to the Authority, on such terms and conditions which are not less favourable than those applicable to such persons before the transfer.

With effect from 1 October 2012, the employees from the RIRF were formally transferred to the FSRA.

However, the process of transferring the Central Bank of Swaziland Capital Markets Development Unit staff has been handled differently. CMDU staff have been seconded to the Authority for a period of two years.

Words of appreciation

I wish to thank the Chairman of the Board and the entire Board of Directors for the guidance they have given me as we were setting up the FSRA.

Special thanks also goes to the Management and staff of the FSRA who have made it possible to achieve the milestones we have achieved so far. May I urge everyone to continue working as a member of one FSRA team, working towards contributing to the improvement of the entire Swaziland economy.

I would like to express my special appreciation to the Honourable Minister of Finance Mr Majozi Sithole and his team for providing the necessary policy guidance throughout the year.

Mr. Bongani NxumaloC.E.O.

Regulated Entity Calculation basis per legislation 2013 2012

Retirement Funds 0.07% of Total Balance Sheet Assets 9,900,784 9,978,210

Long Term Insurers 0.07% of Total Balance Sheet Assets 871,017 930,052

Short Term Insurers 1.25% of Net Premiums 3,484,069 3,720,206

Insurance Brokers 1.25% of Commission 540,239 990,479

Insurance Agents 1.25% of Commission 88,004 125,450

Fund Administrators 1.25% of Fee Income 298,180 258,785

Investment Managers 1.25% of Fee Income 361,795 733,726

Total 15,544,088 16,736,908


5. FINANCE AND CORPORATE SERVICES



The year under review has been the busiest year for the Finance and Corporate Services Division. As an internal services department, this division has been in the centre of the establishment of the FSRA,

expanding from the one Division RIRF, to the four Divisions of FSRA.

The division is anticipating more increase in the workload as the newer divisions recruit more manpower to beef up their capacity.

Major Functions and Activities

The Finance and Corporate Services is responsible for managing the FSRA’s financial and administrative matters which include the following: Financial and management Accounting, Human Resources, Information and Communications Technologies, as well as all administrative/Corporate Services support activities.

a. Accounting

The division administers the General Ledger, ensuring that assets are safeguarded, that financial statements are in conformity with generally accepted accounting principles, and that cash resources are managed with responsible stewardship. All personnel with a role in the management of the FSRA fiscal operations are expected to uphold the policies laid out in our Accounting Manual, which is our commitment to proper and accurate financial management and reporting. Using the off-the shelf Accounting Software, Pastel Accounting, the department is responsible for the following accounting activities:• maintaining the revenue and receivables cycles –

coordinates the billing of levies and all other fees, and the collection of receivables that are due.

• maintaining the procurement and payables cycles – a process which takes you through each phase of the procurement process as follows: requisitioning of the goods and services, sourcing of suppliers, procurement methods, solicitation and evaluation of suppliers’ offers, award of contract or placing of an order and up to payment for received goods and services.

• Fixed Assets cycles – responsible for recording, reporting, tracking and retiring or disposal of capital items.

• Treasury – responsible for anticipating the daily cash flow requirements for FSRA, through cashflow forecasts or projections, and ensuring that cash not immediately required is invested accordingly.

• Budget – coordinates the preparation of the Authority’s annual budget, responsible for the preparation of revenue and expenditure estimates and budget instructions for all the FSRA Divisions. This department ensures that expenditures are within approved allocations.

• Audit – coordinates the audits with the Authority’s auditors, providing accounts analyses, reconciliations, and audit schedules to expedite the audit process and reduce the time needed to complete the comprehensive annual financial report.

• Reporting – coordinates the preparation of quarterly and annual reports to the Board and Ministry of Finance, ensuring their accuracy and timeliness. The department is responsible for compiling and publication of the Annual Report. Additionally, responsible for compiling and distributing monthly/quarterly/annual cost centre spending analysis to Division Heads.

• Administrative Support – provides administrative support to the entire FSRA across all four divisions.

b. Human Resources Function

This function falls within the Finance and Corporate Services Division. Refer to the HR section for detailed information.

c. Information and Communication Technology

This function falls under the Finance and Corporate Services Division. The ICT infrastructure at FSRA assists the organization in running efficiently. These services are essential to the everyday mechanics of an organisation and integral to effective service delivery. These technologies include hardware, software, networking, internet, email and implementation.


FSRA FINANCE AND CORPORATE SERVICES - continued

i. Technologies – With the coming into force of the office of the FSRA, it is envisaged that the technology needs will expand significantly. There is now a need to establish a fully-fledged ICT support service.

ii. Hardware – at the FSRA, our hardware comprise of the Windows Server, desktop PCs, Laptops, photocopiers and printers.

iii. Software – At the FSRA, the following softwares are widely used:

• Microsoft Windows - is the systems software that is widely used for the following applications: word processing, excel spreadsheets, power

point presentations, web browser, etc.• Pastel Accounting – is used for financial

accounting and reporting.• D-BitPayroll– is used for processing all our

payroll records and leave management.

We are still exploring the acquisition of a supervisory system that can be used by all Regulatory Divisions in carrying out their regulatory function, for licensing, on-site and off-site monitoring.

iv. Computer networking – Our networking is a complete network encompassing a mix of cabled and wireless access points, multiple printers and high speed internet connection via a purpose-built server. The cabled access points were introduced during the year under review when it was discovered that the wireless access points could no longer handle the increase in volume of users. Internet speed.

v. Email Communication - the email server is outsourced. FSRA and RIRF email addresses are running parallel, and will run like that until we are sure that all our stakeholders and our contacts have now received our FSRA email addresses.

F. Planned activities in the coming year The following are planned activities for the upcoming year:

i. Recruitment of additional staff for the division;ii. The establishment of the ICT department

inhouse;iii. Implementation of divisional management

accounting system;iv. To improve on meeting reporting deadlines

stipulated in the FSRA act.

6. HUMAN RESOURCES


Human Resources - continued

a. Introduction

This report is a snapshot of the human resources activities for fiscal year 2012-2013. The main activities taking place in the human resources function are as follows: recruitment and placing of staff, benefits

administration, training and development, payroll, policies, and employee relations.

The human resources department was engaged in various projects/activities this financial year; the first one was to assist the CEO ensure the smooth transfer of RIRF and Central Bank Capital Markets employees to the FSRA as per section 15 of the FSRA Act.

b. Employment

Staff compliment

The FSRA had a staff compliment of 39 as at 31 March 2013. These were made up as follows:• CEO’s Office - 2• Finance and Corporate Services Division - 6• IRF Division - 22• Capital Markets Division - 6 (including 3 staff seconded

from the Central Bank of Swaziland) • Credit and Savings Institutions Division - 4

The table below shows a breakdown of the FSRA Staff compliment;

Terminations

The following terminations took place during the year:

Number of Employees

Transfers from RIRF 22Seconded employees from CBS 3Newly recruited into the FSRA 14

Total Staff Compliment 39

Number of Employees

Resignations 3Dismissals 1

Recruitment

Vacant positions became available under the newly established divisions such as the Credit & Savings Insti-tutions and Capital Markets Divisions. Under the RIRF Division, vacancies were created when some staff members were promoted to the newly established divisions, some employees resigned and also because of the dismissal.

The recruitment process for the available positions was outsourced to recruitment consultants. Advertisements for the positions were posted in our local newspapers. Interviews were done and the incumbents identified were appointed.

Earlier it was mentioned that some employees were

promoted within the organisation so we had to replace those

employ-ees who had moved from one division to another and

the resigned employees.

Executive and other appointments

As the new divisions were added, the Board approved the following appointments to fill in the vacant positions that were reflected by the organisational structure above:• Registrar - Capital Markets – (newly recruited);• Registrar – Credit and Savings Institutions – (newly

recruited);• Manager – Licensing and Inspections – Credit and

Savings Institutions Division (incumbent was promoted from RIRF);

• Manager – Legal, Policy and Intervention – Credit and Savings Institutions Division (incumbent was promoted from RIRF);

• Manager – Legal, Policy and Intervention Capital Markets – (newly recruited).

• Business / Financial Analyst – Credit and Savings Institutions Division – (newly recruited).

• Business / Financial Analyst – Capital Markets – (incumbent was promoted from RIRF division).



Secondments form Central Bank of Swaziland

Additionally, the individuals holding the following incumbents were seconded from the CBS;• Manager – Licensing and Inspections – Capital Markets;• Manager – Market Regulation; who is also responsible for

managing the Stock Exchange.• Research and Development Officer – Capital Markets.

c. Compensation Administration

Payroll Administration

The Human Resources Officer is responsible for the administration of employees’ pay. This function is administered using the D-Bit payroll system. This system was implemented in order to ensure timely processing of salaries, third party payments and tax year end reconciliations.

Benefits Administration

As a department, we strived to ensure that we remain current with employee benefits and compliance issues.

With regards to the employees who have resigned we ensure that they are paid their benefits timely with adherence to the stipulated timelines.

d. Employee Relations

The year under review has been a favourable one, considering the fact that there were no disciplinary cases initiated, except for the one that was initiated in 2011 and resulted in the dismissal of the employee during the year under review.

e. Performance Management

The FSRA’s Policy on performance is one that maximises staff potential on the job. Staff members are given the opportunity to perform in such a way that they add value and help attain the goals of the Authority and Divisions in which they work.

The key to successful performance management lies in honest two-way communication between managers and employees. This communication aims at clarifying: • The goals to be achieved; • How individual staff members are contributing; and • What skills or behaviours need to be developed to

maximise contributions.

Following through from the RIRF Policy which links performance with salary increase reward, the FSRA is still in the process of finalising an FSRA remuneration policy that rewards for performance based on market-related, merit-based, equitable, and based upon an agreed and acceptable performance evaluation system.

f. HR Strategy

The FSRA is still to develop an HR strategy that will be aligned with overall FSRA strategy, a strategy that will give direction and make us achieve the FSRA mandate.

7. INSURANCE AND RETIREMENT FUNDS


KEY INDUSTRY HIGHLIGHTS

1. Total assets under the supervision of the Insurance and Retirement Funds Division as at 31 March 2013 increased to E 20.4 Billion, increasing from E17.0 Billion in 2012. This represents a 17% increase.

2. In order to improve the ease of premium collection, the IRF engaged the utility and telecommunications entities to encourage them to become alternative premium collection agencies, because to their wide network coverage.

3. Following a diagnostic study done during 2011 on the feasibility of introducing Micro Insurance for the low income earners and the uninsured, the IRF with the assistance of Fin-Mark Trust formulated a strategic action plan to help promote the development of microc insurance.

4. The division successfully organised the ‘2012 Industry Day’ to provide regulated entities with an opportunity to interact with members of the public to educate them about their services and products. The event proved quite useful in view of the large numbers of people who attended the one day event at Mavuso Trade Centre. There are plans to make the industry day an annual event. The Division is also considering staging the event at different venues across the country making it accessible to people residing in remote areas.

5. During the course of the year amendments to the Insurance Act 2005 were finalised and a Bill on the reforms of the Insurance Act is currently with the Ministry of Finance for onward tabling at Parliament.

6. The division intensified the supervision of regulated entities which included amongst others, summoning regulated entities to give reason why regulatory action in the form of sanctions should not be taken against entities found transgressing.

7. The IRF assisted by the Financial Intelligence Unit added anti money laundering (AML) and combating terrorist financing (CFT) requirements in its regulatory framework. Currently, AML/CFT is monitored through off-site surveillance and as from the next financial year on-site inspections are to be carried out. Supervisory staff and compliance officers from regulated entities received intensive training to increase their capacity to handle AML/CFT issues.

8. During the year under review there was a lot of activity on staff development involving sharpening and upgrading regulatory skills of supervisory staff. A highlight of staff development is the up-skilling of two actuarial staff towards becoming qualified actuaries.

9. The IRF entered into memorandum of understanding with the Central Bank of Swaziland and the Central Bank of Lesotho for mutual co-operation and sharing of information. The co-operation is aimed at combining efforts to combat financial crime.

10. The IRF participated in regional supervisory forums, CISNA as well as international forums such as the International Association of Insurance Supervisors (IAIS) and Inter-national Organisation of Pension Supervisors (IOPS).

11. The division deployed three of its senior managers to work in the steering committee responsible for the establishment of the National Social Security Fund (NSSF) under the leadership of the Ministry of Labour and Social Security. The NSSF is to be supervised by the RIRF division of the Financial Services Regulatory Authority.

12. The IRF withdrew the licence of one insurer due to failure to maintain sufficient regulatory capital.

LICENSING AND INSPECTIONS

The existence of sound insurance and retirement funds sector is an important condition for the welfare and sustainable economic growth of a country. In Swaziland, though the insurance and retirement funds industries are still at their developmental stage, and are faced with several challenges, there has been a notable increase in the number of regulated entities and total assets held by the regulated entities. In the period under review there were 569 regulated entities increasing from 366 in the 2011/2012 financial year, resulting in an overall increase in regulated entities of 55% (see table on the next page).

Insurers:In the period under review, one insurer was liquidated, namely; PFM Swaziland, mainly due to solvency problems. Existing policyholders at the time were successfully transferred to other insurers and the payment of all outstanding claims is being finalised.



7. Insurance and Retirement Funds - continued

On-site InspectionsAs part of the supervisory mandate, on-site inspections on the following entities were carried out during the 2012/2013 financial year.

On competion of these inspections, reports to the relevant entities and corrective measures to be taken were communicated to the relevant entities.

Corporate Insurance Agents:Corporate agents were 26 increasing from 23 in the previous year and these comprise of all registered commercial banks which demonstrate an active banc-assurance market in the country.

Retirement funds:There were 73 local retirement funds registered in the period under review. Out of the 73 locally registered retirement funds, 10 of them are Umbrella funds with 122 participating employers. There were 40 registered foreign retirement funds at the end of the period under review.

Retirement Fund Administrators:The number of registered retirement fund administrators remained unchanged in the period under review. These registered retirement fund administrators exclude three life insurers who are also approved to act as fund administrators.

Two beneficiary trust funds were also registered in the period under review.

Supervisory challenges:The following are some of the compliance issues experienced;

a. Failure to submit statutory returns: This is mainly prevalent with retirement funds and

small insurance broker operations. The cause has been identified as over-reliance on fund administrators by trustees of retirement funds and the lack of financial reporting skills where small broker operations are concerned. The Insurance and Retirement Funds Division has in the past provided training to both industries regarding the filing of returns.

b. Failuretosubmitauditedfinancialstatements: Audited financial statements are not submitted to the

Regulator in terms of the prescribed time frame in legislation. The reasons which add to the problem, amongst others, is the shortage in the number of locally registered audit firms.

c. Transfer of funds: The delays in effecting transfers by retirement funds

is of great concern. These delays in transferring member funds from one fund to another violates the procedure set out in the legislation regarding transfers. The processing of claims is also delayed resulting in members’ benefits being held under the custody of more than one fund administrator and this prejudices members and their beneficiaries.

Registered entities at the close of the 2012/2013 Financial Year stood as follows:

Category of Entity Registered as at 31st March 2012

Registered as at 31st March 2013

Movement

Insurers 10 9 (1)

Insurance Brokers 32 36 4

Corporate Agents 23 26 3

Individual Agents 87 245 158

Local Retirement funds 70 73 3

Foreign Retirement Funds 36 40 4

Funds administered under umbrella funds 94 122 28

Asset Managers/Investment managers 9 11 2

Fund Administrators 5 5 0

Beneficiary fund administrators 0 2 2

Total 366 569 203

Type of Entity Number of InspectionsInsurance Companies 2

Insurance Brokers 11

Retirement Funds 1

Total 366

Some of these retirement funds that are facing this problem were administered by foreign fund administrators prior to coming into effect of the Retirement Funds Act 2005. The division continues to offer assistance where possible, however, where the fund administrator is outside the Authority’s jurisdiction the extent to which the Authoritty can assist becomes limited.

d. Misappropriation of premiums: It was noted that there was an increase in the

misappropriation of premiums by brokers. These arises as a result ot the misuse to premiums held in brokers’ trust accounts. As a result, three brokers have been closed down and the affected insurers are taking legal action to recover the misappropriated premiums.

Training and Meetings

In an endeavour to sharpen the skills of technical staff members the Funds Division has facilitated attendance at the following training:

• Toronto Centre International Program for Insurance and Pension Supervisors on risk based supervision. The program looked at issues affecting stakeholder interests in the regulated industries and examined risk based supervisory methodologies that can assist supervisors in the identification and effective resolution of problems in the regulated environment.

• The Committee of Insurance, Securities and Non-Banking Financial Authorities (CISNA). CISNA is a sub-committee of SADC that is tasked with looking at supervisory issues that affect non-banking financial institutions in SADC member states and is divided into two sub-committees that deal with matters relating to Capital Markets and Insurance and retirement funds. CISNA’s vision is “to promote and maintain financial stability and growth in SADC through a sound, harmonised regulatory framework and effective supervision of Non-bank Financial Institutions (NBFIs)”.

• Consumer Financial Education Familiarisation Programme offered by the Financial Services Board in South Africa. Participants from this division to this program mainly consisted of employees who have recently joined the organisation, so as to familiarise

them with consumer education programs and activities taking place in other jurisdictions.

• Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) Task Force of Senior Officials Meetings held in Tanzania and Mozambique. The aim of the meetings is bringing together member countries and observers to discuss anti-money laundering and countering the financing of terrorism (AML/CFT) trends, country mutual evaluation reports and post evaluation implementation plans and typologies.

LEGAL, POLICY AND INTERVENTION

Update on Intervention

The Authority is empowered to take corrective and enforcement action and may impose administrative sanctions against non-complying entities and during the year under review the following decisions were taken:

a. Retirement Fund Administrator suspended The license of Akani Retirement Fund Administrators

(Pty) Ltd (Akani) was suspended following a routine on-site inspection commissioned in terms of section 35 of the Retirement Funds Act. This inspection triggered an investigation by an external forensic investigator whose findings revealed an allegation of misappropriation of member funds. Following the suspension of the license, an interim fund administrator was appointed in terms of section 38 of the Act to protect the interests of fund members that were previously administered by Akani.

b. Surplus apportionment scheme approved The Swaziland Water Services Corporation Pension Fund

applied to the Authority for the approval of its surplus apportionment scheme. The Authority considered the distribution method and actuarial advice on the matter and approved the proposed scheme.

c. Insurerplacedunderfinalliquidation The court granted an order for the final liquidation of PFM

Swaziland Limited following its failure to meet minimum statutory capital and solvency requirements. The court also granted an order that policyholders be ranked as preferred creditors for purposes of distribution. The Authority has ensured that the existing insurance book is transferred to a registered insurer.




d. TrusteeandPrincipalOfficerRemoved A trustee and a Principal Officer were removed from their

positions due to acting in conflict with their fiduciary duties by colluding with a service provider to the detriment of the funds in which they were serving. Authority, after due process found them unfit to continue holding their respective positions in the retirement funds industry.

e. Auditorgivenafinalwarning A first and final written warning was issued against a firm

of Chartered Accountants which is approved as an auditor for regulated entities under section 47(1) of the Insurance Act and section 21(1) of the Retirement Funds Act. The warning was issued on account of misrepresenting the financial position of a regulated entity. The warning was issued with a condition that should the auditor be found to have committed a similar offence bordering on lack of professionalism and improper business conduct within two years, the company will be debarred from offering accounting and auditing services to entities regulated in terms of the Insurance Act and the Retirement Funds Act.

Administrative penalties imposed

• An insurer was fined an administrative penalty of E200,000 (two hundred thousand Emalangeni) for violating the provisions of the Insurance Act and the Financial Services Regulatory Authority Act, 2010.

• An insurance broker was fined an administrative

penalty of E60,000 (sixty thousand Emalangeni) for transacting without a license, operating without professional indemnity and fidelity guarantee insurance covers, failure to remit premiums to insurers within 60 days of receipt which resulted in the misuse of policyholder premiums.

• An insurance broker was fined an administrative penalty of E25,000 for misleading the regulator by submitting fraudulent documents for the registration of their insurance agents.

• An insurance broker was fined an administrative penalty of E20,000 (twenty thousand Emalangeni) for transacting in insurance business with unregistered agents in breach of section 19(3) of the Act, transacting with a foreign insurer in breach of section 5 of the Act and failure to conduct business in the best interests of policyholders in breach of the Brokers Code of Conduct.

• An insurance broker was fined an administrative penalty of E10,000 (ten thousand Emalangeni) for

transacting in insurance business without a license, self-insuring and failure to pay insurance claims when they fell due. In issuing the sanction, the Registrar further declared the directors of the company as undesirable persons who are not fit to transact in the insurance and retirement funds industries for a period of five years from the date of the decision or until the directors are rehabilitated, whichever comes first. The directors of the company were further directed to pay outstanding claims.

• An insurance agent was fined an administrative penalty of E5,000 (five thousand Emalangeni) for violating the Insurance Act by transacting without a license. The insurer with whom the insurance agent was transacting was given a first and final warning.

• Two insurance agents were fined an administrative penalty of E2,000 each for submitting fraudulent academic credentials. Their conduct violated the provisions of section 115 of the Insurance Act which prohibits the submission of false documentation and further attaches a criminal sanction to it. Both insurance agents were debarred from participating in the insurance industry for a period of two years.

Update on Legislative Reform

Legislative reviewThe amendment of the Insurance Act incorporating industry input has been finalised and submitted to the Ministry of Finance for the legislative process to commence. Some of the highlights of the proposed amendments are:

• the increase in minimum share capital for insurers, • the licensing and regulation of micro insurers and

micro insurance intermediaries, • supervision of conglomerates, supplemental

insurance providers such as loss adjusters, • personal liability of key functionaries; and • enhanced provisions on the imposition of

administrative penalties.

Circulars Issues

a. Circular no: 1/2012 - Prohibition on the application of Vesting Scales on Retirement Fund benefit

The purpose of this circular is to reaffirm to trustees of retirement funds that the Retirement Funds Act prohibits the application of vesting scales on retirement fund benefits. The circular also warns all those funds that continue to apply vesting scales on retirement benefits that they are violating the provisions section 31 and 32 of the Retirement Funds Act.

b. Circular 2 / 2013 – Prohibition of payment of death benefits and funeral insurance benefits to any other name

The objective of the circular is to declare as undesirable, the on-going industry practice of making payments in relation to death benefits and funeral insurance benefits in the name of insurance brokers, fund administrators and other intermediaries. The circular further directs that with effect from 1 March 2013, all payments issued in relation to death benefits and funeral insurance benefits must either be in the name of the insured, a dependant or a nominated and/or duly appointed beneficiary.

c. Circular No: 3/2012 – Paying of commission in advance an undesirable practice

The purpose is to declare the on-going industry practice of paying commission in advance as an undesirable business practice. The practice is undesirable because it results in unmanageable claw backs in the event of policy lapses. The circular further directs that commission should only be paid once premium has been paid to the underwriter.

Update on AML/CFT issues

a. AML/CFT Enforcement of Compliance Guideline, 2013 The AML/CFT Enforcement of Compliance Guideline,

2013, has been developed in terms of section 35 of the Money Laundering and Financing of Terrorism (Prevention) Act, 2011 (Money Laundering Act).

The Guideline is intended to; • support compliance with the Money Laundering

Act and its purpose is to require accountable institutions to establish and maintain policies and procedures to guard against the use of the financial system for the purpose of money laundering and the financing of terrorism,

• enable accountable institutions to recognize suspicious transactions and to keep the records of transactions,

• require accountable institutions to report suspicious transactions to the Financial Intelligence Unit, and

• develop systems to deter and detect money laundering and the financing of terrorism activities which shall include:

o strategies, policies and procedures, processes and internal controls including the designation of compliance officers at management level,

o verification of the identity of customers and transactions, maintenance of records, monitoring of complex and unusual or large transactions, recognition and reporting of suspicious transactions and education and training of relevant employees.

The Guideline has been submitted to the Ministry of Finance for the legislative process to commence.

Update on Consumer Protection and Education activities

a. Industry Day: The Authority hosted its second industry day at the

Mavuso Trade Centre. The aim of the event was to provide a platform for educating consumers about the various insurance and retirement fund products and services that are available in the Swaziland market and to bring the industry closer to the consumers. There were more than twenty-five (25) exhibitors ranging from insurance companies, retirement funds, asset managers, fund administrators, banks, intermediaries and utility companies.

b. Trade shows The Authority participated in the annual Swaziland

International Trade Fair (SITF) exhibition that takes place in August every year with the aim of providing information to consumers and the general public. During this event, Authority distributed educational material to the public. This has been found to be an effective learning catalyst for consumers.

c. Consumer education and protection material In its quest to safeguard the interests of consumers and to

ensure proper compliance and orderly business activities of supervised entities, the Authority continuously carry out consumer education and protection initiatives. During the reporting period, the Authority developed an additional set of information brochures which have information on consumer rights and responsibilities, questions to ask before buying funeral insurance and responsibilities of trustees and the principal officer.

d. Radio Programme An educational program is aired weekly in the national

radio station. A new approach has been adopted which discusses problems that consumers encounter and offering guidance. There is a growing concern that members of the public continue to deal with unregistered entities resulting in some of them losing their money through scams and illegal investment vehicles. Hence the programs during the reporting period were focused on sensitizing the public against unscrupulous financial




schemes including pyramid schemes and unregistered financial services providers, procedure for lodging complaints, understanding the dynamics of funeral insurance policies.

e. Complaints Handling The Authority continued to handle complaints from

the public and the nature of the complaints received in the period under review relate to the discretion exercised by trustees in distributing death benefits, anomalies relating to non-disclosure of information to participating employers by the umbrella fund sponsors, non-compliance with the provisions of the law, lack of transparency in the governance of umbrella funds, late payment of death benefits to beneficiaries and the unlawful application of vesting scales.

Challenges and Planned ActivitiesThe division is planning the following activities for the next financial year to;1) conduct AML/CFT on-site inspections separately from

the normal prudential inspections in order to give them the level of attention they require.

2) develop regulations for the supervision of micro insurance.

3) establish supervisory colleges with other regulatory authorities to improve the supervision of entities operating across borders.

4) continue participating in the SADC project aimed at introducing the “yellow card” insurance system to facilitate entry of motor vehicles registered in Swaziland in other COMESA countries.

5) lobby for the amendment of the 30% local investment regulation such that these assets are to be invested in non-cash investment portfolios.

6) increase the minimum statutory capital from E 2 Million to E 12 Million to be in line with other jurisdictions in the region. The increase is not aimed at discouraging the entry of new insurance players into the Swaziland market but to ensure that the insurers have sufficient capital to fund their operations.

7) introduce capital adequecy and solvency requirements regulations in order to enhance the protection of policy holders and ensure the sustainability of insurers.

8) set requirements for insurance brokers to maintain minimum capital pegged to the amount of premium they handle to combat the abuse of insurance premium by intermediaries.

9) conduct an AML/CFT industry risk assessment as a contribution towards a country wide risk assessment in fulfillment of an international requirement by FATF that countries must conduct risk assessments at the national level.

8. INSURANCE AND RETIREMENT FUNDS

INDUSTRY FINANCIAL PERFORMANCE



Introduction

This section reviews the financial performance of both the Insurance and Retirement Funds industries, and also analyses the trends since 2009.

8.1 LONG TERM INSURANCE BUSINESS – FINANCIAL PERFORMANCE

As at 31 March 2013, there were six long term insurers operating in Swaziland, namely:

• Liberty Life Swaziland;• Metropolitan Life Swaziland;• Momentum Life Swaziland;• Old Mutual Swaziland

• SAFRICAN; and • Swaziland Royal Insurance Corporation (SRIC).

This section outlines the performance of the Long Term Insurance industry during the period under review. Comparative data for the year 2012 and 2013 is analysed and trends since 2009 are reviewed.

The following data was captured from the latest audited financial statements of the insurance companies and have their financial year ends as either 30 June or 31 December of the previous year. However, for purposes of this report, these figures have been used as best estimates of the industry as at 31 March 2013.

LONG TERM INSURANCE - INDUSTRY AGGREGATE DATAINCOME STATEMENT

Year end

Notes 31-Mar-2013 31-Mar-2012 31-Mar-2011 31-Mar-2010 31-Mar-2009

Premiums received

Insurance premiums revenue 1 365 816 753 288 523 355 283 736 763 240 662 041 150 323 166

Less: (Insurance Premiums ceded to reinsurers)

1 (28 049 794) (17 172 163) (22 913 931) (14 019 844) (16 113 278)

Net Insurance premiums revenue 337 766 959 271 351 192 260 822 832 226 642 197 134 209 888

Fee Income 2 10 219 166 9 850 204 7 276 763 8 775 064 7 634 800

Investment Income 3 218 698 239 89 448 116 132 252 534 95 303 608 (8 070 255)

Net Income (A) 566 684 364 370 649 512 400 352 129 330 720 869 133 774 433

Net Insurance Benefits and Claims 4 (391 795 390) (262 381 065) (314 591 369) (261 199 601) (132 997 251)

Expenses for the acquisition of insurance and investments contracts (Commission)

5 (19 607 987) (14 559 093) (14 002 679) (16 768 473) (11 758 391)

Expenses for marketing and administration 5 (2 736 000) (1 024 000) (426 000) (296 000) (186 000)

Other operating expenses 6 (71 670 787) (54 306 630) (62 404 020) (33 403 905) (28 119 618)

Total expenses (B) (485 810 164) (332 270 788) (391 424 068) (311 667 979) (173 061 260)

(Loss)/Profit before tax (A - B) 80 874 200 38 378 724 8 928 061 19 052 890 (39 286 827)

Taxation (24 262 260) (11 513 617) (2 678 418) (5 715 867) -

NetProfitfortheyear 56 611 940 26 865 107 6 249 643 13 337 023 (39 286 827)

8. INSURANCE AND RETIREMENT FUNDS – INDUSTRY FINANCIAL PERFORMANCE continued

The key highlight of the Industry Income Statement above is the fact that the industry remained profitable during the year, with a significant growth in net profit by 110%.


LONG TERM INSURANCE - BALANCE SHEET

Year end

31-Mar-2013 31-Mar-2012 31-Mar-2011 31-Mar-2010 31-Mar-2009

ASSETS

Property, Plant and Equipment 3 533 190 4 275 299 5 414 495 6 742 041 5 260 889

Intangible assets 217 486 119 349 124 824 (250 050) 437 531

Investments 1 698 178 858 1 208 084 730 1 053 866 276 821 084 392 620 184 716

Reinsurance assets 11 690 459 3 081 497 - - -

Loans and receivables 63 439 225 54 619 561 55 945 076 55 827 592 41 809 243

Technical assets 7 119 535 6 979 616 - - -

Deferred tax 303 978 584 000 538 000 - -

Total assets 1 784 482 731 1 277 744 052 1 115 888 671 883 904 075 667 692 379

CAPITAL AND RESERVES

Ordinary shares 46 362 000 45 462 000 45 362 000 33 220 000 12 000 200

Share premium and Shareholders' funding 81 886 352 76 986 352 75 785 370 71 265 370 19 999 800

Other reserves - - - - 45 698 420

Retained earnings 191 272 611 121 728 449 103 768 905 94 901 270 (33 939 576)

319 520 963 244 176 801 224 916 275 199 386 640 43 758 844

LIABILITIES

Insurance contracts/policy holders' liabilities

905 967 116 746 673 110 664 274 952 573 015 370 584 039 493

Investment contract liabilities 480 890 722 218 326 044 163 294 578 3 750 000 -

Derivative financial instruments - - - 48 044 000 -

Trade and other payables 76 368 930 68 140 097 63 402 866 59 708 065 39 894 042

Deferred income tax 136 000 - - - -

Taxation 1 599 000 428 000 - - -

Total liabilities 1 464 961 768 1 033 567 251 890 972 396 684 517 435 623 933 535

Totalequityandliabilities 1 784 482 731 1 277 744 052 1 115 888 671 883 904 075 667 692 379

A key highlight of the balance sheet is the fact that the trend analysis shows that the long term insurance sector saw an increase in total assets from year to year. This is also accompanied by an increase in Net Assets.

INDUSTRY PERFORMANCE ANALYSIS

Growth in Premium Income – The Long-Term insurance industry saw an increase in net premium income from

E271 million in 2012 to E338 million in 2013. This represents 24% growth. The premium growth was recorded by the majority of industry players, especially the newer entrants as they gained market share since opening local operations.

Long-term premium market share analysis – the table and pie charts that follow will analyse the market share of industry players for both 2012 and 2013.



LONG-TERM INSURANCE - PREMIUM MARKET SHARE

ENTITY % MARKET SHARE GROSS PREMIUMS % CHANGE

31-Mar-13 31-Mar-12 31-Mar-13 31-Mar-12

SRIC 36% 48% 132 742 064 140 829 216 -6%

Metropolitan 12% 6% 44 251 000 19 055 000 132%

Liberty Life 12% 12% 45 405 000 35 812 000 27%

Old Mutual 29% 24% 105 287 778 70 859 385 49%

Momentum 10% 10% 35 743 000 29 279 000 22%

SAFRICAN 1% 0% 2 387 911 52 792 4423%

Total Industry Premium 100% 100% 365 816 753 295 887 393 24%

2013 - LONG TERM INSURANCE GROSS PREMIUM MARKET SHARE

Liberty Life

Old Mutual

Momentum

SAfrican1%

10%

29%

12% 12%

36%

Metropolitan

SRIC

2012 - LONG TERM INSURANCE GROSS PREMIUM MARKET SHARE

Liberty Life

Old Mutual

Momentum SAfrican10%

24%

12%

6%

0%

48%

Metropolitan

SRIC

The table and pie chats above reflect the following shifts in market shares of the players as follows:• SRIC saw a decline in market share from 48% in 2012 to

36% in 2013.• Old mutual saw a market share increase from 24% in 2012

to 29% in 2013. • Metropolitan saw a market share increase from 6% in

2012 to 12% in 2013. • Momentum and Liberty maintained their market share

unchanged from 2012 to 2013.• SAFRICAN started gaining a 1% of the market share.

New players upsetting the status quo – The landscape of the long term insurance sector continues to shift from year to year, swinging back and forth between the players. Before the

Insurance Act came into force, SRIC was the only official provider of insurance. However, since registering local companies and producing local financial data, the players are increasingly fighting for a larger share of the pie.

Key industry ratios for long-term insurance – the ratios table below is divided into three categories, namely ratios measuring profitability, industry growth and financial prudence. The three ratio categories matter to the extent that they address the concerns of customers, investors and regulators. A profitable industry assures further investment from current and new investors. Good industry growth might signify that consumers consider insurance valuable, whereas solvency and liquidity are paramount concerns for FSRA, as a regulator.


LONG-TERM INSURANCE – KEY PERFORMANCE RATIOS

2013 2012 2011 2010 2009

PROFITABILITY RATIOS:

1. Incurred expense ratio = Incurred Expenses/Earned(net) Premiums 30% 27% 29% 33% 43%

2. Incurred Claims ratio = Incurred Claims / Earned (net) Premiums 45% 47% 46% 65% 55%

3. Combined ratio = Incurred Expenses ratio + Incurred Claim ratio 75% 74% 75% 98% 98%

4. Net Income ratio = Net Income / Earned (net) premium 21% 13% 3% 13% -25%

5. Return on equity = Net Income / Equity 22% 14% 4% 15% -78%

INDUSTRY GROWTH RATIO:

6. Premium growth ratio = percentage change in earned premiums between current year and previous year

27% 2% 18% 60% -

FINANCIAL PRUDENCE RATIOS:

7. Solvency Ratio = Admitted Assets / Total Liabilities 122% 124% 125% 128% 106%

8. Liquidity Ratio = Available cash / short term payables 2.4x 2.4x 2.8x 2.3x 1.9x

Analysis of profitability ratios

1. Incurred expense ratio – the trend for this ratio has been declining from 43% in 2009 to 27% in 2012. However, 2013 saw a slight increase in the ratio by 3%, from 27% in 2012 to 30% in 2013. In calculating this ratio, we have added commission “plus” expenses for marketing “plus” all other operating expenses, as a percentage of net premium income. Even though the ratio has increased slightly, the industry ratio shows that the industry is still cost effective in selling its products.

2. Incurred claims ratio – the trend for this claims ratio indicates that since 2011, the claims experience has been stable between 45% and 47%. In calculating this ratio, we used data from Note 4 using the formula, total insurance benefits and claims “less” increase policyholder liabilities, in order to arrive at actual claims expenses incurred during the year. The stability of the ratio from year to year indicates that industry players are consistent in delivering good customer value, because a significant portion of premiums are “paid back” to consumers in the form of claims.

3. Combined ratio – this is the sum of the two ratios above and should ideally be below 100% (or else the insurer can only make profit on investment income). The trend analysis above shows that in all cases the combined ratio was less that 100% of earned premium. Since 2011, the combined ratio declined from 98% to 75%, and the industry has maintained that since 2011 to 2013. This is a good indicator because; the industry can meet its expenses without relying on investment income.

4. Net Income ratio – the trend for this ratio reflects that after the decline in 2011, net income started improving in 2012 and even better in 2013. This increase from year to year is mainly attributable to significant investment gains; meanwhile the claims experience remained stable.

5. Return on equity (ROE) ratio – this is a measure of investor value. The trend of this ratio shows that the return to investors has been improving substantially from year to year. This is a great indication for investors because it means their businesses are getting more and more profitable from year to year.

Analysis of the industry growth ratio

6. Premium growth ratio – this ratio measures the level of industry growth from year to year. The trend analysis for this ratio shows that the level of premium growth has been up and down since 2009. The good news is that the industry has been seeing positive growth.

TheIndustryisfairlysolventandliquid

7. A great deal of the viability of an industry depends on the degree to which debts and payables can be settled, as insolvency and illiquidity might lead to an insurer failing to settle customer claims. The trend in the Solvency Ratio shows that the industry is above 100%, implying that the industry is well able to meet its future obligations, including insurance claims not yet accounted for. The trend in the liquidity ratio shows that the industry is well able to meet its short term payables more than two times on average.



LONG TERM INSURANCE - LOCAL INVESTMENTS


Swaziland Stock Exchange 5 058 620 4 926 120 7 115 420 4 673 847 4 673 847

Bonds 35 497 034 35 497 034 29 848 231 2 670 770 2 670 770

Property 117 274 001 89 313 471 72 454 400 57 000 000 40 000 000

Cash and money market instruments 187 714 161 160 178 244 175 445 921 136 442 902 74 011 351

Total Local Investments: 345 543 816 289 914 869 284 863 972 200 787 519 121 355 968

LONG TERM INSURANCE - FOREIGN INVESTMENTS


Johannesburg Stock Exchange 872 872 823 570 809 621 404 971 366 386 056 450 328 566 191

Cash and Money Market instruments 41 705 249 36 476 813 90 724 833 40 422 192 26 707 695

Bond exchange of South Africa 362 250 270 334 279 256 159 313 579 161 924 231 96 816 395

Offshore equities - - 23 758 526 18 128 887 33 384 619

Offshore bonds 75 648 700 56 094 171 90 234 000 13 765 113 13 535 848

Total Foreign Investments 1 352 477 042 997 659 861 769 002 304 620 296 873 499 010 748

2013 - Local Investments

Cash and money market instruments

Bonds

Property

54%34%

10%2%

SwazilandStock Exchange

Cash and money market instruments

SwazilandStock Exchange

Property

55%31%

12%2%

Bonds

2012 - Local Investments

LONG TERM INVESTMENTS - LOCAL Vs FOREIGN ASSETS


Total local investments 345 543 816 289 914 869 284 863 972 200 787 519 121 355 968

Total foreign investments 1 352 477 042 997 659 861 769 002 304 620 296 873 498 828 748

Total Investments (E) 1 698 020 858 1 287 574 730 1 053 866 276 821 084 392 620 184 716

% Local investments to total investments 20% 23% 27% 24% 20%

% Foreign investments to total investments 80% 77% 73% 76% 80%

Total Investments (%) 100% 100% 100% 100% 100%

LONG TERM INSURANCE BUSINESS – INVESTMENT MIX


JohannesburgStock

Exchange

BondExchange ofSouth Africa

Cash and Money Market

instruments

57%4%

33%

6%

OffshoreBonds

2012 - Local Investments2013 - Local Investments

JohannesburgStock

Exchange

BondExchange ofSouth Africa

64%3%

27%

6%

OffshoreBonds

Cash and Money Market

instruments

1 800 000 000

1 600 000 000

1 400 000 000

1 200 000 000

1 100 000 000

800 000 000

600 000 000

400 000 000

200 000 000

-2009

Local Foreign Total

Tota

l Inv

estm

ents

2010 2011 2012 2013

Long - Term Insurance Total Investments - Growth Curve



NOTE 1: PREMIUM REVENUE

Year end


Long term insurance contracts 349 485 468 254 128 094 278 929 923 220 900 827 99 385 974

Contributions from Pension and Retirement annuity schemes

16 331 285 34 395 261 4 806 840 19 761 214 50 937 192

Total Gross Premiums 365 816 753 288 523 355 283 736 763 240 662 041 150 323 166

Reinsurance Premiuns ceded to Reinsurers (28 049 794) (17 172 163) (22 913 931) (14 019 844) (16 113 278)

NOTE 2: FEE INCOME

Year end


Policy administration services:

Insurance contracts 397 000 410 560 - - -

Investment contracts 9 799 868 9 410 050 438 871 970 000 226 972

Commission Income 14 000 1 331 051 311 455

Administration fees 22 298 29 594 6 823 892 6 474 013 7 096 373

Other - specify - - - - -

Total fee income 10 219 166 9 850 204 7 276 763 8 775 064 7 634 800

NOTE 3: INVESTMENT INCOME

Year end


Dividend income 67 923 094 60 663 679 60 449 610 - -

Interest income 15 197 214 10 747 173 13 759 089 69 238 775 69 238 775

Net realised gains on Financial Assets - - 6 571 000 3 468 000 -

Net fair value gains through PL 135 577 931 18 037 264 51 472 835 22 596 833 ( 77 309 030)

Rental Income - -

Total investment income 218 698 239 89 448 116 132 252 534 95 303 608 (8 070 255)

NOTE 4: INSURANCE BENEFITS AND CLAIMS

Year end


InsuranceBenefitsandClaims

Death, maturity and surrender benefits (150 020 594) (124 636 108) (131 160 442) (126 862 750) (77 264 087)

Investment contracts (13 034 000) ( 6 805 000) - - -

Increase in policyholder liability (238 135 492) (135 622 404) (194 738 814) (84 399 924) (41 936 242)

Pension and Retirement claims (3 480 943) ( 5 672 434) (4 222 747) (57 364 421) (16 019 699)

Less: Reinsurance recoveries 12 875 639 10 354 881 15 530 634 7 427 494 2 222 777

(391 795 390) (262 381 065) (314 591 369) (261 199 601) (132 997 251)

LONG TERM INSURANCE BUSINESS - NOTES TO THE FINANCIAL STATEMENTS


NOTE 5: COMMISSION AND MARKETING EXPENSES

Year end


a) Expenses for the acquisition of insurance contract (Commission paid):

Costs incurred and expensed in the year (21 727 799) (16 382 372) (15 811 952) (16 768 473) (11 758 391)

Less: (Commission earned from reinsurance contracts) 2 119 812 1 823 279 1 809 273 - -

Totalexpensesfortheacquisitionofinsurancecontracts

(19 607 987) (14 559 093) (14 002 679) (16 768 473) (11 758 391)

b) Marketing expenses

Marketing expenses ( 965 000) ( 111 000) (426 000) (296 000) (186 000)

Bancassurance (1 771 000) ( 913 000) - - -

(2 736 000) (1 024 000) (426 000) (296 000) (186 000)

Total Commission and Marketing expenses (22 343 987) (15 583 093) (14 428 679) (17 064 473) (11 944 391)

NOTE 6: OTHER EXPENSES

Year end


Auditors remuneration (2 009 501) (1 175 343) (659 688) - -

Depreciation (3 995 990) (2 740 210) (1 605 565) (436 371) (593 553)

Employee Costs (25 841 827) (23 207 473) (20 251 436) (13 728 373) (12 308 528)

Interest expense (1 357 779) (1 431 081) (2 181) - -

Purchases of goods and services (15 044 499) (10 578 684) (15 183 219) (8 221 733) (7 029 143)

IT costs (4 885 007) ( 3 321 307) (3 633 742) (3 081 198) (2 381 083)

Management Fees (14 749 858) (8 658 662) (15 117 824) (1 123 895) (2 782 915)

RIRF levy fees (1 181 356) (526 649) (563 640) (584 365) (407 735)

Directors fees and travel (1 297 695) (1 431 345) (3 444 464) (5 745 599) (2 178 142)

Operating lease rentals (1 307 275) (1 235 876) (1 942 261) (482 371) (438 519)

Total other expenses (71 670 787) (54 306 630) (62 404 020) (33 403 905) (28 119 618)



SHORT TERM INSURANCE - INDUSTRY SUMMARY

INCOME STATEMENT

Year end


Premiums received

Insurance premiums revenue 1 380 122 962 363 563 982 332 276 038 333 377 229 300 938 941

Less: (Insurance Premiums ceded to reinsurers) 1 (128 396 090) (123 225 755) (105 594 463) (117 097 280) (97 975 274)

Net Insurance premiums revenue 251 726 872 240 338 227 226 681 575 216 279 949 202 963 667

Fee Income 2 10 622 053 5 912 874 4 248 818 3 885 553 5 141 415

Investment Income 3 45 626 909 23 942 936 45 465 438 55 872 373 (17 346 834)

Net Income (A) 307 975 834 270 194 037 276 395 831 276 037 875 190 758 248

Insurance claims and loss adjustment expenses 4 140 031 728 122 328 752 122 274 408 140 545 078 136 056 048

Less: (Insurance claims and loss adjustment expenses recovered from reinsurers)

4 (38 404 385) (23 519 662) (4 428 063) (12 125 735) (14 228 244)

Net insurance claims 101 627 343 98 809 090 117 846 345 128 419 343 121 827 804

Expenses for the acquisition of insurance contracts (Commission)

5 21 557 410 19 671 365 14 163 464 17 091 327 12 505 771

Expenses for marketing 5 1 258 817 814 228 421 721 1 024 892 -

Other operating expenses 6 62 431 667 51 781 221 46 720 953 41 617 457 37 342 301

Total expenses (B) 186 875 237 171 075 904 179 152 483 188 153 019 171 675 876

Results from Operating activities (A - B) 121 100 597 99 118 133 97 243 348 87 884 856 19 082 372

Less: Finance Costs - - (81 829) - -

Profit/(Loss) before tax 121 100 597 99 118 133 97 161 519 87 884 856 19 082 372

Less: (Income tax expense) (33 892 668) (26 552 706) (33 517 153) (26 514 762) (5 978 216)

NetProfitfortheyear 87 207 929 72 565 427 63 644 366 61 370 094 13 104 156

8.2 SHORT TERM INSURANCE BUSINESS – FINANCIAL PERFORMANCE

As at 31 March 2013, there were four short term insurers in Swaziland, namely:

• Swaziland Royal Insurance Corporation (SRIC)• Lidwala Insurance Company• Orchard Insurance• Getmed SwazilandThe following sections outline how the short term industry performed during the year to 31 March 2013. Comparative data for the year 2012 is also analysed in comparison to 2013.

We will also track the trends since 2009 when we prepared the first annual report.

Once again, worth mentioning for the benefit of the reader is the fact that the following data was captured from the latest audited financial statements of the companies, and most of them have their financial year ends as either 30 June or 31 December of the previous year. However, for purposes of this report, these figures have been used as best estimates of the industry as at 31 March 2013.


SHORT TERM INSURANCE - BALANCE SHEET

Year end


ASSETS

Property, Plant and Equipment 36 541 737 34 901 495 29 432 447 27 927 178 26 995 722

Intangible assets 1 098 683 800 284 399 575 450 162 333 350

Deferred acquisition costs 888 788 534 805 - - -

Deferred income tax assets 3 545 094 2 741 371 2 370 154 540 702 820 642

Financial Assets 434 912 861 536 349 588 430 326 136 364 706 364 280 643 479

Reinsurance Contracts 15 031 686 14 483 163 - - -

Loans and receivables 69 634 724 60 625 767 62 255 210 53 538 052 71 487 350

Technical Assets 80 735 930 72 172 137 65 991 763 84 666 832 73 198 304

Total assets 642 389 503 722 608 610 590 775 285 531 829 290 453 478 847

CAPITAL AND RESERVES

Ordinary shares 6 867 805 6 526 400 5 950 000 6 464 969 2 000 000

Share premium 8 363 420 5 668 130 2 929 420 - -

Other reserves 25 946 987 22 946 987 16 465 477 14 425 477 13 803 255

Retained earnings 241 981 117 311 560 054 290 201 507 236 588 660 197 709 516

Total Capital and Reserves 283 159 329 346 701 571 315 546 404 257 479 106 213 512 771

LIABILITIES

Insurance contracts/policy holders’ liabilities 306 259 125 323 821 736 214 807 870 233 449 010 208 071 342

Amounts owing to related parties 89 547 457 736 3 341 371 3 341 371 19 175

Reinsurance liabilities 690 948 4 567 434 690 948 4 567 434 3 322 196

Borrowings 175 010 238 117 595 953 595 953 -

Trade and other payables 50 829 954 46 175 441 55 611 323 32 215 000 28 549 379

Provision for other liabilities and charges 1 116 211 605 821 177 432 177 432 -

Current tax payable 69 379 40 754 3 984 3 984 3 984

Total liabilities 359 230 174 375 907 039 275 228 881 274 350 184 239 966 076

Totalequityandliabilities 642 389 503 722 608 610 590 775 285 531 829 290 453 478 847

INDUSTRY PERFORMANCE ANALYSIS

Growth in Premium Income – the short term industry saw a slight increase in net premium income from E233 million in 2012 to E247 million in 2013. This represents 6% growth.

Short-term premium market share analysis – the table below analyses the market share of industry players for both 2012 and 2013.

SHORT-TERM INSURANCE - PREMIUM MARKET SHARE

ENTITY % MARKET SHARE GROSS PREMIUMS % CHANGE

31-Mar-13 31-Mar-12 31-Mar-13 31-Mar-12

SRIC 84% 90% 321 093 678 324 969 066 (1%)

Lidwala Insurance 11% 7% 42 070 371 24 983 878 68%

Orchard Insurance 4% 2% 12 729 584 5 967 376 113%

GETMED 1% 1% 4 985 019 3 370 490 48%

Total Industry Premium 100% 100% 380 878 652 359 290 810 6%



Even though there were four registered short term insurers, the data represents three insurers. The fourth one had not yet submitted their audited financial statements at the time of compiling this report. From quarterly returns received from this insurer, we can safely assume that their business is still very low, and these three players shown above form a representative size of the industry.

The table above shows that even though SRIC is still enjoying a lion’s share of the market, their market share gradually decreasing as the other players are growing. As at 31 March 2013, SRIC lost 6% market share, meanwhile Lidwala Insurance gained 4%, and Orchard gained 2%.

Key industry ratios for short-term insurance – the ratios table below is divided into three categories, namely ratios measuring profitability, industry growth and financial prudence. As already highlighted under the long term section, the three ratio categories matter to the extent that they address the concerns of customers, investors and regulators. A profitable industry assures further investment from current and new investors. Good industry growth might signify that consumers consider insurance valuable, whereas solvency and liquidity are paramount concerns for the FSRA, as the regulator.

SHORT-TERM INSURANCE – KEY PERFORMANCE RATIOS

2013 2012 2011 2010 2009

PROFITABILITY RATIOS:

1. Incurred expense ratio = Incurred Expenses/Earned (net) Premiums 34% 31% 27% 28% 25%

2. Incurred Claims ratio = Incurred Claims / Earned (net) Premiums 41% 42% 52% 59% 60%

3. Combined ratio = Incurred Expenses ratio + Incurred Claim ratio 75% 73% 79% 87% 85%

4. Net Income ratio = Net Income / Earned (net) premium 34% 28% 43% 41% 9%

5.Returnonequity = Net Income / Equity 29% 19% 31% 34% 9%

INDUSTRY GROWTH RATIO:

6. Premium growth ratio = percentage change in earned premiums

between current year and previous year 6% 7% 5% 7% -

FINANCIAL PRUDENCE RATIOS:

7. Solvency Ratio = Admitted Assets / Total Liabilities 121% 143% 156% 133% 117%

8.LiquidityRatio = Available cash / short term payables 1.4x 1.6x 2.1x 3.1x 3.3x

Analysis of profitability ratios

1. Incurred expense ratio – this ratio for 2013 increased to 34%, compared to the 31% in 2012. Looking at the trend since 2009, the incurred expense ratio has increased from an average of 26% to an average of 32% between 2012 and 2013. In calculating this ratio, we have added commission “plus” expenses for marketing “plus” all other operating expenses, as a percentage of net premiums. The increase in the incurred expense ratio reflects that the insurers are incurring more selling and operating expenses. This is expected for the insurers who are still new in the market in order to make their presence visible.

2. Incurred Claims ratio – looking at the trend for this ratio it has been declining steadily since 2009, from 60% in 2009 to 41% in 2013. The lower the loss ratio the better

for the insurers, because it means their risk management policies are effective. However, from a regulator’s point of view, there is a need to monitor this trend to make sure that policyholders’ claims are not declined unfairly.

3. Combined Ratio – is the sum of the two ratios above and should ideally be below 100% (or else the insurers can only make profit on investment income). The trend analysis above shows that in all cases the combined ratio was less than 100% of earned premium, representing a measure of profitability and the efficiency of the insurance industry’s underwriting efficiency. The trend analysis shows that this ratio improved from 85% in 2009 to 75% in 2013, staying between 79% and 73% in the last three years. Ratios above 100% denote a failure to earn sufficient premiums to cover expected claims. Higher ratios can usually occur either because of underpricing and/or because of unexpected high claims.


4. Net Income Ratio – grew from 28% in 2012 to 34% in 2013. This increase is attributable to the increase in fee income and investment income, combined with the stable combined ratio.

5. Return on Equity (RoE) Ratio – is a measure of investor value. This figure shows the net profits that are returned to shareholders. The higher the return on equity, the more profitable the company has become and the possibility of enhanced dividends to shareholders. The industry RoE increased from 19% in 2012 to 29% in 2013. This is an attractive return for investors considering that that the return on alternative investments such as bonds are far lower.

Analysis of Industry growth ratio

6. Premium Growth Ratio – is a measure of industry growth. The trend in this ratio seems to be modest ranging from 5% to 7%. The small ratio might imply that either the short term industry is mature or that it is struggling to attract new customers.

The Industry is fairly solvent and liquid

7. A great deal of the viability of an industry depends on the degree to which debts and payables can be settled, as insolvency and illiquidity might lead to an insurer failing to settle customer claims. The trend in both the solvency and liquidity ratios show that the industry is above 100%, implying that the industry is well able to meet its future obligations, including insurance claims not yet accounted for.

SHORT TERM INSURANCE BUSINESS – INVESTMENT MIX

SHORT TERM INVESTMENTS - LOCAL Vs FOREIGN ASSETS


Total local investments 168 636 124 167 631 558 196 190 167 193 319 692 164 403 998

Total foreign investments 266 276 737 368 718 030 365 738 042 305 494 080 266 871 784

Total Investments (E) 434 912 861 536 349 588 561 928 209 498 813 772 431 275 782

% Local investments to total investments 39% 31% 35% 39% 38%

% Foreign investments to total investments 61% 69% 65% 61% 62%

Total Investments (%) 100% 100% 100% 100% 100%

LOCAL INVESTMENTS, CASH AND CASH EQUIVALENTS

TYPE OF INVESTMENT 31-Mar-2013 31-Mar-2012 31-Mar-2011 31-Mar-2010 31-Mar-2009

Swaziland Stock Exchange 4 126 120 4 338 620 1 330 000 1 330 000 1 330 000

Bonds - - - - -

Property 34 654 421 32 437 620 29 420 001 28 400 000 25 000 000

Cash and money market instruments 129 855 583 130 855 318 165 440 166 163 589 692 138 073 998

Total Local Investments 168 636 124 167 631 558 196 190 167 193 319 692 164 403 998

FOREIGN INVESTMENTS, CASH AND CASH EQUIVALENTS


Johannesburg Stock Exchange 72 282 931 117 691 546 199 350 714 169 716 842 166 771 585

Offshore equities 64 671 826 72 506 365 21 499 682 18 303 712 13 446 623

Bond exchange of South Africa 23 166 564 25 530 058 68 126 488 57 999 353 42 608 593

Offshore bonds - - 8 464 564 1 330 000 1 330 000

Cash and Money Market instruments 106 155 416 152 990 061 68 296 594 58 144 173 42 714 983

Total Foreign Investments 266 276 737 368 718 030 365 738 042 305 494 080 266 871 784

Total Investments 434 912 861 536 349 588 561 928 209 498 813 772 431 275 782



SHORT-TERM INSURANCE BUSINESS – NOTES TO THE FINANCIAL STATEMENTS

NOTE 1: PREMIUM REVENUE

Year end


Short-term insurance contracts:

Premium receivable 380 878 652 359 290 810 330 870 627 332 745 827 293 240 926

Change in unearned premium provision (755 690) 4 273 172 1 405 411 631 402 7 698 015

Premium revenue arising from insurance contracts 380 122 962 363 563 982 332 276 038 333 377 229 300 938 941

Less: Premiums ceded to short term reinsurers (128 396 090) (123 225 755) (105 594 463) (117 097 280) ( 97 975 274)

Net insurance premium revenue 251 726 872 240 338 227 226 681 575 216 279 949 202 963 667

NOTE 2: FEE INCOME

Year end


Policy administration services:

Insurance policy administration fees 7 007 405 5 219 650 4 248 818 3 885 553 5 141 415

Commission income 3 614 648 693 224 - - -

Total fee income 10 622 053 5 912 874 4 248 818 3 885 553 5 141 415

NOTE 3: INVESTMENT INCOME

Year end


Dividend and Interest income 40 660 441 46 532 021 40 633 590 17 299 318 21 796 103

Net fair value gains on financial assets at fair value through Income Statement

4 966 468 (22 589 085) 4 831 848 38 553 055 (39 663 354)

Other operating income - - - 20 000 520 417

Total investment income 45 626 909 23 942 936 45 465 438 55 872 373 (17 346 834)

NOTE 4: INSURANCE CLAIMS

Year end


Claims and loss adjustment expenses

Gross insurance claims 135 026 093 110 909 095 116 046 348 121 132 711 143 553 747

Change in the provision for claims 5 005 635 11 419 657 6 228 060 19 412 367 (7 497 699)

140 031 728 122 328 752 122 274 408 140 545 078 136 056 048

Reinsurance Recoveries

Gross reinsurance recoveries (51 483 289) (13 332 674) (12 224 192) (10 503 379) (19 948 865)

Less: change in provision for reinsurance recoveries 13 078 904 (10 186 988) 7 796 129 (1 622 356) 5 720 621

(38 404 385) (23 519 662) (4 428 063) (12 125 735) (14 228 244)

Net insurance claims 101 627 343 98 809 090 117 846 345 128 419 343 121 827 804


NOTE 5: COMMISSION AND MARKETING EXPENSES

Year end


a)Expensesfortheacquisitionofinsurancecontract(Commission paid):

Costs incurred for the acquisition of insurance contracts expensed in the year

46 726 032 45 522 799 42 672 594 40 705 918 34 132 879

Less: (Commission earned from reinsurance contracts) (25 168 622) (25 851 434) (28 509 130) (23 614 591) (21 627 108)

Totalexpensesfortheacquisitionofinsurancecontracts 21 557 410 19 671 365 14 163 464 17 091 327 12 505 771

b) Marketing expenses

Marketing expenses 1 258 817 814 228 421 721 1 024 892 -

1 258 817 814 228 421 721 1 024 892 -

Total marketing and administrative expenses 22 816 227 20 485 593 14 585 185 18 116 219 12 505 771

NOTE 6: OTHER EXPENSES

Year end


Audit fees 1 984 227 1 358 356 1 382 986 1 307 566 1 522 443

Actuarial fees 1 624 940 1 386 935 1 386 935 1 564 765 449 185

Amortisation of intangible assets 3 897 334 978 047 783 689 505 642 416 625

Asset management fees 4 056 054 4 917 480 4 941 216 2 756 219 2 831 918

Directors fees 897 038 946 414 595 352 619 075 688 350

Depreciation 1 723 195 1 600 604 1 519 404 1 381 726 1 397 234

Employee costs and benefits 29 716 361 21 630 598 19 766 091 17 801 305 17 171 212

Regulatory levy fees 3 767 938 3 178 359 3 178 359 3 850 444 3 554 500

Legal fees 4 439 134 580 134 580 17 649 164 533

Management fees 1 641 059 2 445 147 1 689 330 - -

Operating expenses 3 809 233 2 895 734 1 050 430 - -

Professional fees 500 115 500 447 494 387 592 807 445 801

Repairs and maintenance 2 793 152 2 470 031 2 464 160 2 169 642 1 899 804

Total other expenses 56 415 085 44 442 732 39 386 919 32 566 840 30 541 605

8.3 RETIREMENT FUNDS INDUSTRY – FINANCIAL PERFORMANCE

The registration of new funds as well renewal of registered funds continued during the year under review. However, the collection of financial data through quarterly returns continued to lag behind due to slow submissions a well as the need to revamp our returns form to ensure collection of comprehensive data. In an attempt to obtain meaningful and

current financial data on retirement funds, the latest sets of audited financial statements were used to aggregate industry financial data.

The following sections outline how the retirement funds industry performed during the year to 31 March 2013. Comparative data for the year 2012 is also analysed in comparison to 2013. We will also track the trends since 2009 when we prepared the first annual report.



RETIREMENT FUNDS - INDUSTRY SUMMARYINCOME STATEMENT

Year end

Income/Expense

ratios


INCOME

Contributions 31% 1 1 214 368 273 1 125 738 371 921 698 024 933 427 945 919 998 110

Investment Income (Losses)

67% 2 2 611 709 788 1 325 591 505 1 607 380 783 1 442 506 076 (445 373 902

Other Income 2% 3 80 005 600 60 481 004 60 717 147 56 433 634 48 236 259

Total income 100% 3 906 083 661 2 511 810 880 2 589 795 954 2 432 367 655 522 860 467

EXPENSES

Premuims paid -1% 5 ( 49 714 016) ( 44 671 040) ( 41 502 538) (37 348 066) (33 745 011)

Professional fees paid -2% 6 (90 066 844) (68 291 811) (69 810 201) (54 834 960) (52 812 454)

Provision for impairment 3% 117 504 466 (383 252 942) (452 940 666) - -

Regulatory levies and service fees -0,3% (11 205 269) ( 9 536 673) (7 012 793) (7 607 573) (6 593 065)

Administration expenses -3% 7 (103 691 353) (89 501 544) (83 927 144) (84 163 245) (73 832 483)

Total expenses -4% (137 173 016) (595 254 010) (655 193 342) (183 953 844) (166 983 013)

Net Income for the period 96% 3 768 910 645 1 916 556 870 1 934 602 612 2 248 413 811 355 877 454

ACCUMULATED FUNDS

At the beginning of the period 15 197 108 830 13 901 537 444 12 810 067 182 11 205 430 075 11 493 453 158

Net Income for the period 3 768 910 645 1 916 556 870 1 934 602 612 2 248 413 811 355 877 454

Net accumulated Fund before benefits 18 966 019 475 15 818 094 314 14 744 669 794 13 453 843 886 11 849 330 612

Benefits paid 4 (905 567 250) (620 985 484) (843 132 350) (643 776 704) ( 643 900 537)

Accumulated funds at the end of the period 18 060 452 225 15 197 108 830 13 901 537 444 12 810 067 182 11 205 430 075

STATEMENT OF FUNDS AND NET ASSETS

Year end


ASSETS

Fixed Assets 265 250 084 262 927 058 123 463 806 123 629 693 111 499 810

Investments 8 17 962 047 512 15 098 460 825 13 490 704 587 12 800 606 679 11 182 907 510

Current assets

Account receivable 9 34 029 781 22 784 041 27 730 255 39 288 095 34 031 538

Arrear contributions 10 102 897 023 48 687 058 497 085 542 79 394 676 84 761 121

Total assets 18 364 224 400 15 432 858 982 14 138 984 190 13 042 919 143 11 413 199 979

FUNDS

Accumulated funds/Liability for future benefits & surpluses

18 060 452 225 15 197 108 830 13 901 537 444 12 810 067 182 11 205 430 075

Current liabilities

Benefits payable 11 247 144 084 193 052 615 187 784 736 178 075 370 160 329 533

Accounts payable 12 56 628 091 42 697 537 49 662 010 54 776 591 47 440 371

Total funds and liabilities 18 364 224 400 15 432 858 982 14 138 984 190 13 042 919 143 11 413 199 979


RETIREMENT FUNDS - LOCAL VS FOREIGN ASSETS

Year end


Total Local Investments 5 223 198 949 4 301 219 033 3 618 499 127 3 657 486 061 1 746 872 527

Total Foreign Investments 12 738 848 563 10 797 241 792 9 872 205 460 9 143 120 618 9 436 034 983

Total Investments 17 962 047 512 15 098 460 825 13 490 704 587 12 800 606 679 11 182 907 510

% Local Investments to Total Investments 29% 28% 27% 29% 16%

% Foreign Investments to Total Investments 71% 72% 73% 71% 84%

Total Investments 100% 100% 100% 100% 100%

INVESTMENTS - BY ASSET CLASS

Year end


TOTAL LOCAL INVESTMENTS: 5 223 198 949 4 301 219 033 3 618 499 127 3 657 486 061 1 746 872 527

Swaziland Stock Exchange: equities 449 178 626 387 803 971 318 753 122 286 069 754 212 944 287

Private Equity - Unlisted Shares 350 776 974 282 483 532 74 003 570 186 718 907 25 683 511

Bonds 924 643 609 924 345 792 487 089 076 586 324 360 49 444 577

Property 1 388 439 895 1 161 586 001 345 484 632 317 282 072 317 525 125

Loans and Advances 40 745 339 41 796 052 - - -

Insured Funds 215 220 045 108 971 078 79 672 006 73 895 022 3 374 065

Cash and money market instruments: 1 854 194 461 1 394 232 607 2 313 496 721 2 207 195 946 1 137 900 962

TOTAL FOREIGN INVESTMENTS 12 738 848 563 10 797 241 792 9 872 205 460 9 143 120 618 9 436 034 983

Johannesburg Stock Exchange Equities 7 771 128 417 6 638 683 107 5 922 188 581 5 150 942 809 5 532 215 884

Offshore equities 2 073 874 355 1 756 635 129 1 496 886 689 738 090 125 128 599 048

Bond exchange of South Africa 1 459 101 832 1 088 018 959 1 088 018 959 1 178 632 193 929 793 035

Offshore bonds 83 647 644 69 150 730 160 369 950 151 733 106 9 528 797

Cash and Money Market instruments 1 158 550 817 1 081 988 887 1 006 129 479 1 562 559 709 1 219 867 958

Offshore Cash 36 784 248 29 627 345 26 524 191 23 143 243 -

Orbis Mutual Funds - - 13 834 542 410 102 779 1 258 899 774

Commodities 16 739 796 15 217 996 - 113 974 590 357 130 487

Equity Linked Derivatives ( 59 366 087) (59 646 244) - (186 057 936) -

Property 198 387 541 177 565 883 158 253 069 - -

TOTAL INVESTMENTS 17 962 047 512 15 098 460 825 13 490 704 587 12 800 606 679 11 182 907 510

COMMENTARY ON FINANCIAL RESULTS

Income Statement

The industry income statement above highlights that overall, the net income for the period increased by 29% from E1.9 million in 2012 to E2.5 million in 2013.The main reason for the increase is evident in the expense line called provision for impairment which was posted by one of the major funds, representing a reversal or recovery of the doubtful contributions receivable from the employer. This has resulted in a significant decrease in the overall expense ratio from 24%

in 2012 to 5% in 2013. This is a very favourable ratio because it reflects that funds are saving more into their pension, than covering expenses.

Balance Sheet

The Statement of Funds and Net Assets above shows that as at 31 March 2013, the retirement funds’ assets totalled E18.3 billion (2012: E15.3 billion). This represents 20% growth from prior year. This growth is also consistent with the increase in accumulated funds.



Analysis of Investments

a. Local vs Foreign Assets The Retirement Funds legislations requires that 30% of

assets must be invested in Swaziland. The purpose of tracking this local and foreign investment ratio is to check how compliant the industry is with this legislation.

The trend analysis above reflects that the industry is very close to meeting this requirement, having achieved 29% in 2013 and 28% in 2012. The trend shows that the compliance level has been increasing from year to year.

b. Investments by Asset Class - Local Investments – by asset class

LOCAL INVESTMENTS - BY ASSET CLASS

Year end


LOCAL INVESTMENTS:

Swaziland Stock Exchange: equities 449 178 626 387 803 971 318 753 122 286 069 754 212 944 287

Private Equity - Unlisted Shares 350 776 974 282 483 532 74 003 570 186 718 907 25 683 511

Bonds 924 643 609 924 345 792 487 089 076 586 324 360 49 444 577

Property 1 388 439 895 1 161 586 001 345 484 632 317 282 072 317 525 125

Loans and Advances 40 745 339 41 796 052 - - -

Insured Funds 215 220 045 108 971 078 79 672 006 73 895 022 3 374 065


TOTAL 5 223 198 949 4 301 219 033 3 618 499 127 3 657 486 061 1 746 872 527

% INCREASE 21% 19% (1%) 109% -

RETIREMENT FUNDS - LOCAL VS FOREIGN ASSETS

1 800 000 000

1 600 000 000

1 400 000 000

1 200 000 000

1 100 000 000

800 000 000

600 000 000

400 000 000

200 000 000

-

Local Investments

Foreign Investments

Totals

31 Mar 2011 31 Mar 2012 31 Mar 2013Year Ended

Tota

l Ass

ets


SSX - Worth noting when looking at the trends of the local asset classes, we can see that there is no improvement in the proportion invested in the Swaziland Stock Exchange. The FSRA has embarked on a strategic action plan for making the SSX more visible to our regulated industries so that we can see a shift in this trend.

Unlisted Shares – this asset class saw a 24% growth from 2012 to 2013.

Bonds – this asset class decreased slightly from 21% to 18%.

Property – looking at this trend from 2009 to 2013, there has been a significant growth in property investments. The significant growth was seen between 2011 and 2012 when property investments increased by 236%. Between 2012 and 2013, the investments grew by 20%. The two major funds in the country have embarked on property investments as part of their drive to meet the 30% local investment requirement.

Loans and advances - The other notable trend is the fact that since 2012, we see retirement funds issuing loans and advances in their bid to invest locally. However, this is a very insignificant portion making 1% of the total local investments.

Insured funds – this class forms an insignificant 4% (2012: 3%) of the total local assets.

Cash and Money market instruments - with the increase in Property Investments, we can see that the cash proportion of the local investments has decreased by 40% from 2011 to 2012. However, between 2012 and 2013, cash increased again by 33%. The proportion of cash to total local investments remained constant between 2012 and 2013 only decreasing from 27% to 26%.

2013 Local Assets

35%

9%7%

18%

1% 4%

26%

Swaziland Stock Exchange 9%

PrivateEquityandUnlistedShares 7%

Bonds 18%

Property 26%

Loans and Advances 1%

Insured Funds 4%

Cash and Mone Market Instruments 35%

2012 Local Assets

32%

9%7%

21%

1% 3%

27%

Swaziland Stock Exchange 9%

PrivateEquityandUnlistedShares 7%

Bonds 21%

Property 27%

Loans and Advances 1%

Insured Funds 3%




Foreign Investments – by asset class

FOREIGN INVESTMENTS – BY ASSET CLASS

Year end


Johannesburg Stock Exchange Equities 7 771 128 417 6 638 683 107 5 922 188 581 5 150 942 809 5 532 215 884

Offshore Equities 2 073 874 355 1 756 635 129 1 496 886 689 738 090 125 128 599 048

Bond exchange of South Africa 1 459 101 832 1 088 018 959 1 088 018 959 1 178 632 193 929 793 035

Offshore bonds 83 647 644 69 150 730 160 369 950 151 733 106 9 528 797

Cash and Money Market instruments 1 158 550 817 1 081 988 887 1 006 129 479 1 562 559 709 1 219 867 958

Offshore Cash 36 784 248 29 627 345 26 524 191 23 143 243 -

Orbis Mutual Funds - - 13 834 542 410 102 779 1 258 899 774

Commodities 16 739 796 15 217 996 - 113 974 590 357 130 487

Equity Linked Derivatives (59 366 087) (59 646 244) - (186 057 936) -

Property 198 387 541 177 565 883 158 253 069 - -

Total 12 738 848 563 10 797 241 792 9 872 205 460 9 143 120 618 9 436 034 983

% Movement 17% 9% 7% (3%) -

2013 - FOREIGN INVESTMENT BY ASSET CLASS

JohannesburgStockExchangeEquities 60%

OffshoreEquities 16%

Bond Exchange of South Africa 11%

Offshore Bonds 1%


Offshore Cash 0,3%

Commodities 0,1%

EquityLinkedDerivatives 0,5%

Property 2%

60%16%

9% 2%1%0%

0%

11%

1%

2012 - FOREIGN INVESTMENT BY ASSET CLASS

61%16%

1% 10%

2%0%0% -2%

10%

JohannesburgStockExchangeEquities 61%

OffshoreEquities 16%

Bond Exchange of South Africa 10%

Offshore Bonds 1%


Offshore Cash 0,3%

Commodities 0,1%

EquityLinkedDerivatives (2%)

Property 2%

The pie charts above shows that the pattern of asset allocation almost remained the same when looking at 2012 and 2013. As usual the JSE Equities took the bigger pie of 60% (2012: 61%). Followed by investments in offshore equities which took the pie of 16% (2012: 16%). The next

significant pie was invested in both South African Bonds at 11% (2012: 10%) as well as South African Cash and Money Market which took 9% (2012: 10%) of the pie. Overall, assets invested outside Swaziland increased by 17% (2012: 9%).


INVESTMENTS BY ASSET MANAGER

INVESTMENTS BY ASSET MANAGER

Year end


Allan Gray 4 789 314 502 4 052 475 134 3 721 496 778 3 365 726 072 3 365 551 456

Coronation 3 095 700 018 2 494 742 890 2 233 444 885 1 948 755 157 1 683 773 595

RMB and Momentum Asset Managers 1 207 993 745 1 042 884 190 1 271 992 561 1 154 418 218 917 535 006

Foord 1 404 924 906 1 137 326 406 969 577 041 939 818 805 744 715 953

African Alliance 1 525 838 900 1 274 733 145 1 127 656 564 1 046 877 193 1 008 546 959

Investec 352 890 764 324 595 628 290 629 770 308 960 638 271 784 238

Stanlib 1 372 228 710 1 324 776 097 1 566 074 997 1 488 617 690 1 240 341 833

Old Mutual Investment Management Company 112 327 410 132 449 065 99 902 121 113 900 420 103 240 368

Ten 50 Six Life Limited - - - 34 793 668 27 520 976

Advantage Asset Managers - 1 262 965 1 262 965 5 592 165 5 220 585

Interneuron 107 840 644 107 550 808 60 469 478 55 469 478 12 972 146

Insured Funds 215 220 045 108 971 078 79 672 006 73 895 022 3 374 065

Ovation Voluntary Investment Plan - - 3 972 013 2 972 014 3 683 005

Mergence Africa 25 713 258 25 713 258 - - -

Other self administered assets 3 752 054 610 3 070 980 161 2 064 553 407 2 260 810 139 1 794 647 325

17 962 047 512 15 098 460 825 13 490 704 586 12 800 606 679 11 182 907 510

2013 - INVESTMENTS BY ASSET MANAGER

29%

19%7%8%

6%

1%1%1% 0%

2%4%

22%

Alan Gray 29%

Coronation 19%

RMB and Momentum Asset Managers 7%

Foord 8%

African Alliance 6%

Investec 2%

Stanlib 4%

Old Mutual Investment Management Co 1%

Interneuron 1%

Insured Funds 1%

Mergence Africa 0,2%

Other Self Administered Assets 22%

RETIREMENT FUNDS INDUSTRY – NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - CONTRIBUTIONS

Year End


Contributions

Member contributions - regular 365 700 528 358 680 796 306 617 185 304 196 897 274 248 419

Employer contributions 722 436 391 690 489 933 598 529 682 616 258 797 634 838 711

Employer Ex Gratia Contributions 561 000 - 2 293 667 6 193 360 7 649 066

Member additional voluntary contributions 125 482 207 71 670 542 11 827 9 299 -

Transfers-In 188 147 4 897 100 14 245 663 6 769 592 3 261 914

Total 1 214 368 273 1 125 738 371 921 698 024 933 427 945 919 998 110



NOTE 3 - OTHER INCOME

Year End


Other income

Rent 56 107 884 42 545 499 30 367 301 30 292 334 25 250 609

Sundry Income 4 476 007 2 559 749 7 734 749 7 674 311 3 565 427

GLA recoveries proceeds 19 421 709 15 375 756 22 615 097 18 466 989 -

Total 80 005 600 60 481 004 60 717 147 56 433 634 28 816 036

NOTE 2 - INVESTMENT INCOME

Year End


Investment Income

Dividends 77 076 311 81 880 029 54 272 438 43 651 777 47 494 898

Interest 224 410 848 212 447 483 234 183 937 205 641 161 147 516 042

Net realised gains/losses on financial assets 58 813 849 50 723 658 844 464 815 177 485 310 870 833 859

Fair value adjustments through Profit & Loss 2 251 408 780 980 540 335 474 459 593 1 015 727 828 (1 511 218 701)

Total 2 611 709 788 1 325 591 505 1 607 380 783 1 442 506 076 (445 373 902)

NOTE 4 - BENEFITS PAID

Year End


Retirement benefit paid (Pension/annuity) (420 191 313) (198 930 827) (405 943 699) (311 489 925) (280 894 675)

Periodic Payments to beneficiaries (9 010 758) (7 783 890) (7 248 948) (5 275 724) (45 704 166)

Lump sum benefit paid:

On death and disability (82 857 337) (80 607 542) (86 882 426) ( 91 292 335) (93 050 184)

On retirement (269 796 275) (209 722 367) (280 967 552) (187 897 196) (172 269 892)

On withdrawal (102 207 861) (75 941 286) (55 288 908) (44 841 283) (46 179 350)

Transfers to other funds (7 402 877) (3 303 456) (2 324 564) (2 980 241) (5 802 270)

Retrenchments/Voluntary Early Retirement (14 100 829) (14 100 828) (4 476 253) - -

Other - USDF Past service contributions refund - (30 595 288) - - -

Total (905 567 250) (620 985 484) (843 132 350) (643 776 704) (643 900 537)

NOTE 5 - PREMIUMS PAID

Year End 31-Mar-2013 31-Mar-2012 31-Mar-2011 31-Mar-2010 31-Mar-2009

Group life and funeral premiums ( 46 958 180) (42 004 769) (39 591 531) (35 993 654) (32 446 034)

Permanent Health Insurance (PHI) premium (2 517 580) (2 428 146) (1 911 007) (1 354 412) ( 1 298 977)

Purchase of annuities (238 256) (238 125) - - -

Total (49 714 016) (44 671 040) ( 41 502 538) (37 348 066) (33 745 011)


NOTE 6 - PROFESSIONAL FEES PAID

Year End


Professional Fees:

Actuarial fees ( 1 733 210) (980 388) (1 005 429) (665 504) (823 059)

Audit fees (2 417 975) (2 173 847) ( 2 151 929) (1 826 046) (1 659 025)

Fund administration fees (16 864 234) ( 16 477 301) (14 196 489) (12 065 646) (11 058 663)

Investment management fees (65 563 162) (45 675 366) ( 50 169 296) (38 374 648) (36 514 948)

Legal fees (1 569 299) (888 985) (798 592) (890 761) (1 138 745)

Consultants fees (1 918 964) (2 095 924) ( 1 488 466) (1 012 355) (1 401 367)

Total (90 066 844) ( 68 291 811) (69 810 201) (54 834 960) ( 52 595 807)

NOTE 7 - ADMINISTRATION EXPENSES

Year End


Advertising and Communication to members (2 458 120) (2 499 208) (1 482 505) (1 926 989) (1 757 097)

Bank charges (2 300 362) (2 045 745) (1 979 945) (1 951 514) (1 725 756)

Board expenses (3 568 680) (3 390 175) (2 424 688) (2 972 077) (2 835 084)

Computer expenses (904 367) (899 518) (932 199) (885 356) (426 518)

Depreciation (4 045 126) ( 4 459 045) (4 719 348) (4 959 026) ( 4 993 479)

General expenses (1 171 276) (871 994) (1 410 354) ( 1 519 296) ( 3 886 487)

Licenses (2 545 146) ( 2 026 508) (1 724 203) (1 808 682) (1 557 991)

Insurance ( 445 573) (686 759) (770 620) (720 370) ( 619 894)

Motor vehicle expenses (573 460) ( 392 555) (138 409) (120 627) (190 754)

Postage and telephone (2 713 099) ( 1 872 907) (687 606) (632 510) (633 517)

Printing and stationery (1 148 179) (850 740) (2 697 418) (3 081 497) (5 425 955)

Rent, property and office expenses (28 609 980 ) (20 328 517) (15 849 653) (15 427 501) (12 662 157)

Repairs and maintenance (807 350) (764 139) (969 407) (997 537) (719 759)

Salaries, wages and allowances (49 417 953) (46 151 211) (46 641 879 (43 325 332) (34 794 783)

Social Investments (197 870) ( 154 131) (934 069) (1 249 635) (1 108 852)

Travel and entertainment (1 608 442) (1 402 174) (333 278) (211 555) ( 212 465)

Public Functions (378 500) (83 010) - (2 185 199) -

Training expenses (797 870) ( 623 208) ( 231 563) (408 325) (394 024)

Total (103 691 353 ) (89 501 544) (83 927 144 ) (84 383 028) ( 73 944 572)

NOTE 8 - LOCAL INVESTMENTS, CASH AND CASH EQUIVALENTS

Year End


Swaziland Stock Exchange: 449 178 626 387 803 971 318 753 122 286 069 754 212 944 287

SWAPROP 35 133 809 22 360 875 18 937 795 19 826 660 15 786 110

SEL 304 073 700 297 557 835 281 771 647 210 050 414 151 594 718

RSSC 2 473 742 3 018 096 1 303 680 2 152 680 2 048 726

Managed Unit Trust 45 159 000 13 442 250 3 000 000 50 300 000 39 842 233

Swaziland Stock Brokers 2 949 000 1 880 000 1 760 000 1 760 000 1 760 000

Nedbank Share 9 931 000 3 293 309 1 980 000 1 980 000 1 912 500

Newera Partners 13 403 055 13 000 000 10 000 000 - -

Greyston Partners 36 055 320 33 251 606 - - -



Year End

TYPE OF INVESTMENT AND COUNTERPARTY 31-Mar-2013 31-Mar-2012 31-Mar-2011 31-Mar-2010 31-Mar-2009

Unlisted Shares 350 776 974 282 483 532 74 003 570 186 718 907 25 683 511

Old Mutual Swaziland Shares 19 623 272 18 823 272 2 703 570 115 418 907

SBS - permanent shares 149 367 429 123 373 987 - - -

SIDC Shares 124 000 000 82 500 000 71 300 000 71 300 000 25 683 511

Happy Valley Enterprises 21 303 136 21 303 136 - - -

Motel Enterprises 36 483 137 36 483 137 - - -

Bonds 924 643 609 924 345 792 487 089 076 586 324 360 49 444 577

Swaziland Sugar Association 287 473 218 283 443 313 249 372 027 457 668 703

Swaziland Electricity Company 158 552 121 136 250 000 150 000 000 75 000 000

Swazi Bank 172 845 754 203 287 672 - - -

Central Bank of Swaziland - 3 year note 202 620 109 202 838 400 - - -

Swazi FD - - - 10 718 986 10 392 214

STD Swazi 32 503 000 32 503 000 5 964 642 42 936 671 39 052 363

Newera Bond - - 18 000 000 - -

Inyatsi Bond 15 000 000 15 000 000 15 000 000 - -

Swaziland 0 - 3 years 11 485 649 6 859 649 6 859 649 - -

Swaziland 3 - 5 years 35 805 503 35 805 503 35 805 503 - -

Swaziland 5 - 7 years 6 087 255 6 087 255 6 087 255 - -

Swaziland Government Bond 2 271 000 2 271 000 - - -

Loans and Advances 40 745 339 41 796 052 15 039 199 - -

The New Mall Loan 6 942 275 6 942 275 - - -

Roots Construction 10 000 000 - - - -

C&M Sales (Pty) Ltd 1 815 441 1 815 441 - - -

FINCORP 8 671 230 11 226 765 15 039 199

Manzini City Council 12 833 595 19 987 978 - - -

Members’ loans 2 298 239 3 639 034 - - -

Less: Impairments (1 815 441) (1 815 441) - - -

- - -

Property 1 388 439 895 1 161 586 001 345 484 632 317 282 072 317 525 125

Investment Property 741 301 720 455 171 826 345 484 632 317 282 072 317 525 125

Equity to property developers 309 167 000 376 160 000 - - -

Loans to property developers 337 971 175 330 254 175 - - -

Year End

TYPE OF INVESTMENT AND COUNTERPARTY 31-Mar-2013 31-Mar-2012 31-Mar-2011 31-Mar-2010 31-Mar-2009


STANLIB Money Market 688 857 141 779 253 318 1 073 697 840 1 001 312 434 808 703 486

African Alliance Money Market 567 067 155 342 014 476 400 575 872 323 866 180 283 903 108

Swaziland Building Society 53 925 447 51 785 690 113 204 082 114 723 648 45 294 368

First National Bank 178 726 903 86 144 347 307 248 322 293 287 156 -

Nedbank Swaziland 40 780 598 37 553 993 73 737 192 22 798 536 -

Standard Bank Swaziland 111 420 116 86 641 210 95 880 148 236 427 269 -

Swazi Bank 209 394 000 7 008 048 245 993 897 214 780 723 -

Central Bank of Swaziland deposits 4 023 101 3 831 525 3 159 369 - -

Insured assets 215 220 045 108 971 078 79 672 006 73 895 022 3 374 065

Total Local Investments 5 223 198 949 4 301 219 033 3 618 499 127 3 657 486 061 1 746 872 527


NOTE 9 - ACCOUNTS RECEIVABLE

Year End


Prepayments 1 070 085 1 303 851 1 134 716 (3 159 486) 1 804 946

Staff receivables 2 514 278 3 155 246 4 248 622 4 101 961 3 225 308

Sundry receivables 1 308 185 765 458 1 504 064 4 365 536 3 754 339

Interest receivable 328 479 3 005 291 5 444 774 20 011 083 3 526 804

Transfers from other funds 20 797 672 7 078 504 12 362 392 10 133 607 10 308 807

Proceeds from GLA policies 6 001 389 5 412 447 2 442 344 3 242 051 2 898 376

Rent receivables 2 009 693 2 063 244 593 343 593 343 703 280

Total 34 029 781 22 784 041 27 730 255 39 288 095 34 031 538

NOTE 10 - ARREAR CONTRIBUTIONS

Year End


Receivables from employers 821 586 165 884 880 666 497 085 542 79 394 676 84 761 121

Less: Provision for impairment (718 689 142) (836 193 608)

Receivables from employees

Total 102 897 023 48 687 058 497 085 542 79 394 676 84 761 121

NOTE 12 - ACCOUNTS PAYABLE

Year End


Accrued Expenses 30 857 708 31 970 268 21 278 913 21 499 504 19 654 042

Uncollected benefit claims 113 828 115 014 897 889 1 028 678 1 246 027

Other Payables 23 110 085 6 954 524 9 466 261 2 857 888 2 123 005

Retention 908 879 908 879 1 585 998 1 585 998 1 585 998

Provision for Foreign Tax 1 175 224 1 175 224 16 023 266 22 841 354 18 319 327

GLA premium payable 462 370 1 573 628 409 683 4 963 169 4 511 972

Total 56 628 091 42 697 537 49 662 010 54 776 591 47 440 371

NOTE 11 - BENEFITS PAYABLE

Year End


Accrued benefits due 188 571 355 134 475 014 128 971 510 84 096 581 79 380 088

Pensioners on hold - - - 62 961 34 807

Pensioners suspended 53 904 709 53 909 579 54 145 204 49 226 610 36 187 759

Exgratia benefit accrual 4 668 021 4 668 022 4 668 022 44 689 218 44 726 879

Total 247 144 085 193 052 615 187 784 736 178 075 370 160 329 533

9. CREDIT AND SAVINGS INSTITUTIONS (CSI)


Introduction

Ehe Credit and Savings Institutions Division (CSI) is a newly established division of the FSRA entrusted with regulatory and supervisory oversight of Savings and Credit Cooperative Societies (SACCOs), Building

Societies, Money lenders, and Development Finance Institutions (DFIs), Lotteries, Hire Purchase institutions, Pawn Borokers, institutions engaged in credit business and other deposit taking non-bank institutions. Established in September 2012, the division has achieved a few milestones in as far as setting up a legal and institutional framework for credit and savings institutions is concerned.

The CSI Division, seeks to roll out a coordinated regulatory framework dedicated to the safe, orderly and sound position of regulated entities, without losing sight of the different and specialised nature of their operations. The regulatory approach takes into account the principal operations of the respective regulated entities and their relevance to the financial system as a whole.


Licensed or Registered Entities

During the year under review the office did not register or license any entity under its supervision as regulations were still being developed. Regulations relating to savings and credit cooperatives societies (SACCOs) were finalised and submitted to the Ministry of Finance. Statistics obtained from the Commissioner of Cooperatives Development (CCD) indicates that there were 67 registered SACCOs in Swaziland as at 31 March 2013.

Credit Institutions

There were no credit institutions that were licensed by the Credit and Savings Institutions (CSI) Division of the Financial Services Regulatory Authority (Authority) in the year under review. Discussions are ongoing with the Central Bank of Swaziland with respect to the transfer of regulatory oversight for some of the credit institutions that were licensed under the Financial Institutions Act, 2005. Therefore financial statistics were not available for review by the CSI Division.

Savings and Credit Cooperative Societies

In collaboration with the Commissioner of Cooperatives Development, the Authority has, obtained audited financial statements for the year ended 31 March 2013 and a summary is presented below:

Source:ExtractfromSACCO’sauditedfinancialstatements.

LEGAL, POLICY AND INTERVENTION

Update on Acts Amendments, Regulations and issued Circulars

a. SACCOs Regulations

In September 2012 the CSI division developed SACCO’s Regulations to regulate and supervise

SACCO’s business conduct pending the promulgation of a SACCO’s principal legislation. This set of Regulations derives its legal force from the Financial Services Regulatory Authority Act, 2010.

The SACCO’s draft Regulations were shared with stakeholders for consultation in February 2013 and thereafter submitted to the Ministry of Finance in April 2013 for the legislative process to commence.

INCOME STATEMENTS 31 March 2013

Income from Loans 69,872,297

Other Income 10,648,522

Total Income 80,520,819

Financial Costs 47,797,120

Operating Expenses 21,158,543

Total Expenses 68,955,663

NET SURPLUS 11,565,156

STATEMENT OF POSITION

Total Earning Assets 613,182,120

Fixed Assets 80,430,271

Total Assets 693,612,391

Liabilities 604,160,286

Capital 89,452,105

Total liabilities and Capital 693,612,391



9. CREDIT AND SAVINGS INSTITUTIONS (CSI) – continued

b. Building Societies

Building Societies are currently governed by the Building Society’s Act, 1962, a piece of legislation formerly administered by the Central Bank of Swaziland. The CSI division has, during the year under review, engaged the Central Bank of Swaziland on the transfer of the regulation and supervision of the Swaziland Building Society to the Authority.

c. Money lenders and other credit institutions

In September 2012, the CSI was invited by the Ministry to form part of a Technical Committee to develop the Consumer Credit Bill and its Regulations. Once enacted into law, the Bill will facilitate the licensing, registration and ongoing monitoring of credit providers in Swaziland. The Bill has since been submitted to stakeholders for consultation and it awaits submission to Cabinet and Parliament.

d. Update on Interventions The CSI has taken interventions steps against three

(3) SACCOs whose financial stability is of concern to the Regulator. The Authority has adopted a consultative approach in addressing non-compliance matters.

Planned activities

The division is planning the following activities for the next financial year:

a. Development of Building Societies Regulations;

b. Development of Credit institutions Regulations;

c. Development of guidelines and standards for market conduct for the regulated entities;

d. Issuance of licensing requirements for SACCOs and Credit Institutions; and

e. Participate in the development and consolidation of Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) practices for regulated entities.

10. CAPITAL MARKETS



10. CAPITAL MARKETS (CM)


Managers authorised to operate Collective Investment Schemes

For the period ending 31 March 2013, the following Collective Investment Scheme managers were authorised to operate Collective Investment Schemes in Swaziland. The licensed entities are namely:

1. African Alliance Swaziland Management Company Limited, 2. Old Mutual Swaziland Unit Trusts Company, 3. Stanlib Swaziland (Proprietary) Limited, 4. JM Busha Capital Swaziland (new entrant),5. Sanlam Investment Management Swaziland Limited.

Collectively, the fund managers are responsible for twelve investment schemes with a total of SZL 5,127,971,164 under their management (as at 31 March 2013). The list of fund managers and their respective funds are shown in the table below:

MANAGEMENT COMPANIES UNDERLYING FUNDS ASSETS UNDER MANAGEMENT AS AT 31 MARCH 2013

1. African Alliance Swaziland • Offshore Fund• Portfolio Fund• Target Fund• Ligcebesha Fund• Managed Fund• High Income Fund• Lilangeni Fund

E3,143,056,786

1. STANLIB Swaziland • Managed Unit Trust Fund• Money Market Fund

E1,622,914,266

2. Old Mutual Swaziland • Enhanced Money Market Fund• Balanced Fund

E357,677,181

4. J M Busha Capital Swaziland • Real Return Fund E4,322,931

5. Sanlam Investment

Management Swaziland Limited

• Balanced Mandate Fund• Absolute Return Fund• Money Market Fund• Yekucala Infrastructure Fund

E10,757,000

TOTAL ASSETS E5,138,728,164

The following capital markets participants were licensed for the peoriod ending 31 March 2013:

Dealers • Swaziland Stockbrokers Limited (SSL); and• African Alliance Swaziland Securities Limited

(AASSL)

Trustees• Nedbank (Swaziland);• Standard Bank (Swaziland); and• Orchard Insurance Group.

Investment Advisors• STANLIB Swaziland (Pty) Ltd;• Sanlam Investment Management Swaziland;• Momentum Asset Management Swaziland;• Allan Gray Swaziland (Pty) Ltd;• African Alliance Swaziland Ltd;• Coronation Fund Managers;• NBC Swaziland;• Inhlonhla (Pty ) Ltd; and• Imbewu Yesive Investments.

Source:LicensingandInspectionsCMDU,2012


Legislation

There are currently two pieces of legislation that govern the operations of the Capital Markets, and these are:• Financial Services Regulatory Authority (FRSA) Act,

2010 – is responsible for the establishment of an integrated regulatory regime for non-bank financial services industry including insurance, retirement funds, savings and co-operatives, building societies, capital markets and any other non-bank financial services providers.

• Securities Act, 2010 – aims to promote and facilitate the development of an orderly, fair and efficient capital market in Swaziland and matters incidental thereto.

Rules and Regulations

The CMD commenced on a project to draft the rules and regulations for the capital markets industry. Progress to date was as follows:• A local consultant was hired to produce the first drafts;• The drafts were vetted by an IMF consultant, and inputs

incorporated;• Industry was engaged and their inputs were

incorporated;• Draft rules were submitted to the Ministry of Finance

(MoF);• It is envisioned that after endorsement by the MoF,

the draft rules will be presented to Parliament wherein after they will be enacted into law.

List of draft rules and regulations completed

• Collective Investments Scheme (CIS) Rules• CIS Accounts and Reports Rules• CIS Investment and Borrowing Powers Rules• CIS Prospectus Requirements Rules• Conduct of Business Rules• Capital Adequacy Standards Rules• Securities Exchanges Regulations• Licensing Rules for Dealers, Investment Advisors and

Exempt Dealers• Guidelines on the fit and proper test for licensed

persons• Central securities depository rules

Update on Interventions

The following interventions were made in the capital markets space in the year ended 31 March 2013:• A licensed entity was fined for non-compliance for failure

to appoint a trustee and an administrative penalty was paid by the entity.

International and regional affiliations

Swaziland is a member of the Southern African Develop-ment community (SADC) and as such, the CMD is affiliated to the following regional formations (including recent developments):• Committee of Insurance, Securities and Non-Banking

Financial Authorities of Southern Africa (CISNA).• The CMD has signed various memorandum of under-

standing with the following entities;• Financial Services Board (FSB)• Capital Markets Authority of Uganda• Securities Commission of Zambia

Committee for Insurance Securities and Non-Bank Financial Authorities (CISNA)

CISNA Angola Meeting

With the exception of the Micro-finance and Financial Cooperatives Sub-committee and the Insurance and Retire-ment Funds Market Development Technical Committee, CISNA Committees met at Victoria Garden Hotel in Luanda, Angola from 17 to 20 April 2012. • Pre-Plenary Meeting - CISNA EXCO had a combined meeting

with the CISNA Strategic Planning and Performance Review Committee (SPPRC), previously Strategic Plan Task Team, during the morning of 18 April 2012 to finalise action plans for the implementation of CISNA Strategic Plan 2011-2015. The key focus of the meeting was on the presentations by the SPPRC, on the SPPRC’s Terms of Reference (TOR), CISNA action plans and the proposal for the establishment of a permanent Secretariat for CISNA.

Main Decisions

The following were the main decisions:• CISNA EXCO to present the revised strategy to SADC

Secretariat and to engage the SADC Secretariat on


10. CAPITAL MARKETS (CM) – continued

the issue of CISNA funding and the establishment of a Council for Financial Regulators ahead of the next meeting of the SADC Senior Treasury Officials ;

• CISNA EXCO to extend an invitation to the most senior officials of CISNA members (i.e. chief executive officers) to attend the meeting of CISNA senior officials to be held in Mauritius during October 2012; and

• Recommendation for the Plenary to approve the short-term proposal for the CISNA Secretariat

CISNA Mauritius Meeting

The Financial Services Commission (FSC) for the third time hosted the bi-annual Committee of Insurance, Securities and Non-Banking Financial Authorities (CISNA) meeting in Mauritius from 2 to 5 October 2012 at Long Beach, Belle Mare. Highlights of the meeting were;• CISNA’s Vision to facilitate the development and

implementation of a harmonized risk-based regulatory framework;

• Draft Terms of References for CISNA initiatives;• A proposal for the establishment of a permanent

secretariat and a proposed organizational structure, the rules and procedures for implementation process were discussed;

• A monitoring and evaluation framework using the traffic light system was adopted to help quickly identify problem areas and measure progress;

• A representative of the Committee of SADC Stock Exchanges (COSSE), which reports to CISNA gave a report on COSSE activities;

• The report on the diagnostic study on Micro insurance was presented by FinMark Trust;

• The CISNA Technical and Subcommittees presented various harmonization projects (on-going exercise);and

• The newly established Technical Committees which include, Consumer Financial Education, Training and Anti-Money Laundering/Combating of Financing of Terrorism, are working on their terms of reference, identifying training needs which should be developed into certification programs for regulators and conducting surveys to gauge the current status for implementing policies and strategies for financial education.

Planned activitiesThe following are planned activities for the division:• Risk based supervision framework.• Demutualisation of the Stock Exchange.• Introduction of a levy structure.

11. SWAZILAND STOCK EXCHANGE



11. SWAZILAND STOCK EXCHANGE (SSX)

The Report herein includes developments on the SSX for the 2012 calendar year and first quarter of 2013:

Legal and Policy developments

Since its inception in 1990, the Swaziland Stock Exchange (SSX) has been housed at the Central Bank of Swaziland (CBS) as a Unit that was to be directly supervised, monitored and regulated by the Capital Market Development Unit (CMDU). The SSX was set up as a Unit within the CMDU at the CBS, but it has since been transferred to the FSRA effective 01 January 2013.

In therms of the Securities Act, 2010, A Securities Excahge is required to make listing rules and exchange rules which will govern the operations of the exchange. The Swaziland Stock Exchange has the following set of rules and listing requirements:

SSX Rule Book

These are a set of rules set by the SSX as may be amended from time to time. These rules are binding upon all members of the SSX and when reference is made to the Act, it means the Securities Act, 2010 and any amendments thereto or any regulations or notices which may be issued.

SSXListingRequirements

These are a set of requirements approved by the SSX Committee and apply to both applicants for listing and presently listed companies. The Listing Requirements reflect, inter alia, the rules and procedures governing new applications, proposed marketing of securities and the continuing obligations of issuers, and are aimed at ensuring that the business of the SSX is conducted with due regard to public interest.

Internationalandregionalaffiliations

Swaziland is a member of the Southern African Development community (SADC) and as such, the SSX is affiliated to the following regional formations. Brief hereunder covers activities in 2012:

Committee of SADC Stock Exchanges

CoSSE, with the support of Finmark Trust, formulated, finalised and adopted its Strategic Plan, 2012-2016 during a special meeting held in Gaborone, Botswana on June 25 to 26, 2012. The Strategic Plan is a culmination of mostly the various projects that CoSSE has been pursuing over the years. These were consolidated formally in the form of Strategic Initiatives that could also be used to solicit donor funding towards their implementation.

CoSSE then proceeded to establish three (3) Working Committees namely, the Legal and Secretariat Working Committee, the Market Development Working Committee and the Capacity Building and Visibility Working Committee to implement the Business Plans, prioritised out of initiatives identified in the Strategic Plan, 2012-2016.

The five Strategic Initiatives for CoSSE over the next five years are:a. Improved engagement with SADC structures;b. Mobilising resources and reforming institutional

structures;c. Increased visibility for CoSSE and member exchanges;d. Market development and improving the efficiency of

member exchanges; ande. Regional capital market integration and harmonisation.

The SSX together with the JSE, Malawi Stock Exchange, Mozambique Stock Exchange, Lusaka Stock Exchange, Zimbabwe Stock Exchange constitute the Capacity Building and Visibility Working Committee, with the DRC as an observer.

The activities and related progress reports of the various CoSSE Working Committees are standing agenda items in periodic CoSSE meetings.

Association of National Numbering Agencies (ANNA)

The SSX is also affiliated to the ANNA for the allocation of International Securities Identification Numbers (ISIN) in accordance with the International Standards Organisation (ISO) prescription.

SSX Public Awareness projects

The SSX embarked on the following awareness projects in the period under review:a. Career fair The SSX participated in the Waterford Kamhlaba

fourth Swaziland Careers Fair held at the Royal Swazi Convention Centre on 27 July 2012. The Fair was a success with an impressive number of students from different high schools around the country in attendance. The SSX distributed information brochures, explained its operation and the benefits and disadvantages of investing through it.


b. Swaziland International Trade Fair (SITF) The SSX participated in the 2012 SITF under the

broader Central Bank banner, the Fair was held from 31 August 2012 to 10 September 2012. The theme for this year was, ‘Competitiveness, Our Promise, Our Future’.

c. Educational Workshops The SSX continued to conduct educational workshops

for pupils from various high schools who visit the Bank during educational tours.

d. Media publications The SSX continued to maintain a healthy relationship

with various media houses especially the two local English language daily newspapers and the Swaziland Television Authority. The media is primarily used to:

• Publish daily closing prices and related SSX indices

• Coverage of corporate news of listed entities

Market Performance

Below is an overview of the SSX Main Board performance for both listed equity and bonds in the 2012/13 financial year.

SSX Main Board – Equity

Listed Companies

There were no new equity listings in the period under review. The number of listed equity companies remained at six (6). These listed companies and their respective share prices (cents per share) are outlined in the table below:

Period Share Price Dec 11 Share Price Mar 13 (%) Gains Market Capitalisation (E) – 31 Mar 13

1. 500 590 18.00% 140,780,537

2. 1225 1290 5.31% 1,242,867,528

3. 2055 2100 2.19% 388,500,000

4. 320 540 68.75% 125,550,000

5. 830 600 -27.71% 41,966,964

6. 130 135 3.85% 114,750,000

Total 2,054,415,029

Table is presented graphically in figure below:

Counters with the highest capital growth were Swaprop (68.75%), Nedbank (18%), RSSC (5.31%), Greystone (3.85%) and SEL (2.19%) A counter that saw a drop in share price was Swazispa (-27.71%)

Share Price Dec 11

Share Price Mar 13

Ned

500

500

1225

1290

2055

2100

320

3540

830

600

130

135

RSSC SEL Swaprop

SwaziSpa

Grey-stone

SHARE PRICE COMPARISON DEC 11/ MAR 13

Shar

e Pr

ices

(Cen

ts)

4000

3500

3000

2500

2000

1500

1000

500

0



SSX Trading Statistics

The statistics below shows the following data: (1) Number of shares traded; and(2) The value of shares traded and (3) number of trades in

2012/13.

Turn Over Trend – 2012/13

The equity turnover for the year ended 31 March 2013 was 169% higher than trades in 2011. A total turnover of E2,794,944 was recorded from 416,866 shares which were traded in 19 (nineteen) deals compared to the previous period’s turnover of E1,038,996 from 489,559 shares traded in 19 (nineteen) deals. Below is a trend of the number of shares traded and share turnover for the 2012 financial year and first quarter of 2013:

PERIOD VALUE TRADED 12/13 NUMBER OF SHARES NUMBER OF DEALS

Jan-12 E783 868 136 240 5

Feb-12 E0.00 - 0

Mar-12 E64 175 3 500 2

April-12 E0.00 - 0

May-12 E267 990 27 400 2

Jun-12 E57 825 21 500 2

Jul-12 E223 740 40 600 2

Aug-12 E0.00 0 0

Sep-12 E0.00 0 0

Oct-12 E0.00 0 0

Nov-12 E1 251 840 163 350 3

Dec-12 E145 556 24 276 3

Jan-13 E0.00 0 0

Feb-13 E0.00 0 0

Mar-13 E0.00 0 0

TOTAL 12/13 E2 794 994 416 866 19

TOTAL 11 E1 038 995 489 599 19

% CHANGE 169% -15% 0%

RSSC had the highest market capitalisation figure, with a 61% contribution to the total SSX Market Capitalisation. RSSC business is that of processing sugar and ethanol products located in the north-eastern lowveld. RSSC has two mills in Simunye and Mhlume as well as an ethanol plant. Other counters are:• Greystone (6%) – Private Equity• SwaziSpa (2%) – Hospitality• Swaprop (6%) – Real Estate• SEL (19%) - Private Equity• Nedbank (7%) - Banking

RSSC60%

SEL19%

Swaprop6%

Ned 7%

Greystone6%SwaziSpa

2%

Market Capitalisation by Counter


Market Indeces

The following indices show the performance of the SSX in 2012/13, namely the SSX All Share Index and the SSX Market Capitalisation.

SSX All Share – 2012/13

The SSX All-Share Price Index continued to grow and closed at 286.84 points as at the end of March 2013; against 268.44 points recorded at the end of December 2011. Below is the trend of the SSX All-Share Index:

286,84M

ar-13

Feb-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-13

Jul-12

Jun-12

May-12

Apr-12

Mar-12

Feb-12

Jan-12

Dec-11

286,84

286,84

285,67

284,32

284,32

284,32

284,32

284,32

284,32

284,32

282,63276,45

277,72

277,72

268,44

SSX ALL SHARE INDEX: DEC 11 - MAR 13

Ssx All Share Index

SSX Market Capitalisation 2012/13

The SSX Market Capitalisation continued to grow in sync with the SSX All Share Index, and closed at E2,054,415,029 as at the end of March 2013; against E1,922,677,260 recorded at the end of December 2011. Opposite is the trend of the SSX Market Capitalisation:

Government Debt

During the period under review, Government through the Central Bank of Swaziland, maintained a number of bonds with different maturities, ranging from 3, 5 and 7 years. The total outstanding bonds as at 31 March 2013 are as outlined in the table below:

SSX MARKET CAPITILISATION 12/13

2 080 000 000

2 060 000 000

2 040 000 000

2 020 000 000

2 000 000 000

1 980 000 000

1 960 000 000

1 940 000 000

1 920 000 000

1 900 000 000

Sep 11 Dec 11 Apr 12 Jul 12 Oct 12 Jan 13 May 13



Corporate BondTwo (2) companies maintained the bonds they have listed on the SSX Main Board during the reporting period. The table below shows the listed bonds as at 31 March 2013.

Matured/Redeemed Corporate BondsTwo (2) companies maintained the bonds they have listed on the SSX Main Board during the reporting period. The table below shows the listed bonds as at 31 March 2013.

²NWR103isazerocouponnotewithanaccrualyieldof9%p.a.compoundedsemi-annuallyanditsreferencepriceis76.77%ofFinalRedemptionAmount

Bond Tenor Coupon Redemption Date Nominal Value (E)

SG008 3 years 8.00% 31 – Aug – 2013 250, 000, 000

SG009 5 years 7.00% 30 - Nov – 2015 219, 384, 000

SG011 7 years 8.25% 31 – Jan – 2018 146, 330, 000

SG012 3 years 8.25% 31 – Mar – 2014 169, 000, 000

SG013 5 years 8.50% 20 – Jun – 2016 78, 855, 000

SG014 3 years 8.5% 25 – Nov – 2014 50, 000,000

Total 913, 569, 000

Issuer COUPON Maturity Date Nominal Value (E)

Newera NWR102 9.50% 30-Nov-13 20,000,000

Newera NWR103 0.00%² 23-Feb-14 31,640,000

Newera NWR 201 8.30% 03-Nov-14 12,000,000

Newera NWR105 8.25% 18-Nov-14 5,000,000

Standard Bank (STDSZ 01) 8.70% 14-Dec-19 30,000,000

Standard Bank (STDSZ 02) 8.10% 14-Oct-20 50,000,000

Total 148, 640, 000

Issuer Coupon Maturity Date Nominal Value (E)

Inyatsi Construction Ltd ICL04 9.00% 18-Oct-12 5,000,000

Inyatsi Construction Ltd ICL05 9.00% 12-Dec-12 10,350,000

Total 15,350,000

Table X: Swaziland Government bonds as at 31 March 2013

12. ANNUAL FINANCIAL STATEMENTS

Country of Incorporation and Domicile Swaziland

Nature of Business and Principal Activities Regulator of non-bank financial services providers in accordance with the FSRA Act, 2010.

Business Address 2nd Floor Public Service Pension Fund (Ingcamu) Building Mhlambanyatsi Road Mbabane H100

Contact Details P. O. Box 3365 Mbabane, H100 Swaziland P. O. Box 3365

Tel: +268 2406 8000 Fax: +268 2404 7930

Bankers Standard Bank (Swaziland) Limited First National Bank (Swaziland) Limited Nedbank (Swaziland) Limited

Auditors Kobla Quashie and Associates Chartered Accountants (Swaziland) Manzini

Website: www.fsra.co.sz

E-mail: [email protected]

for the year ended 31 March 2013

General Information


Contents Page

Report of the Independent Auditors 63

Board’s Responsibility for Financial Reporting 64

Report of the Board 65

Statement of Financial Position 66

Statement of Surplus or Deficit 67

Statement of Changes in Equity 68

Statement of Cash Flow 69

Accounting Policies 70 - 79

Notes to the Annual Financial Statements 80 - 82

Detailed Income statement 83

Contents



Report of the Independent Auditors

To the Board of Directors of Financial Services Regulatory Authority (FSRA)

We have audited the accompanying annual financial statements of the Financial Services Regulatory Authority (FSRA), which com-prise the statement of financial position as at 31 March 2013, the comprehensive income statement, the statement of changes in equity and cash flow statement for the year then ended, a summary of significant accounting policies and other explanatory notes, as set out on pages 70 to 79.

Directors’ Responsibility for the Financial Statements The Board of Directors is responsible for the preparation and fair presentation of these annual financial statements in accordance with International Financial Reporting Standards, and in the manner required by the Financial Services Regulatory Authority Act, 2010. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of annual financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility Our responsibility is to express an opinion on these annual financial statements based on our audit. We conducted our audit in ac-cordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the annual financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the annual financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the annual financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by board, as well as evaluating the overall presentation of the annual financial statements.

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

Opinion In our opinion, the annual financial statements present fairly, in all material respects, the financial position of Financial Services Regulatory Authority (FSRA) as at 31 March 2013, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards, and in the manner required by the Financial Services Regulatory Authority Act, 2010.

Kobla Quashie and Associates 11 July 2013Chartered Accountants (Swaziland) Manzini Daniel Bediako


The Board is required by the Financial Services Regulatory Authority Act, 2010, to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of FSRA as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards. The external auditors are engaged to express an independent opinion on the annual financial statements.

The annual financial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates. The Board acknowledges its ultimate responsibility for the system of internal financial control established by FSRA and place considerable importance on maintaining a strong control environment. To enable FSRA to meet these responsibilities, the Board sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout FSRA and all employees are required to maintain the highest ethical standards in ensuring FSRA’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in FSRA is on identifying, assessing, managing and monitoring all known forms of risk across FSRA. While operating risk cannot be fully eliminated, FSRA endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The Board is of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The Board has reviewed FSRA’s cash flow forecast for the year to 31 March 2014 and, in light of this review and the current financial position, they are satisfied that FSRA has or has access to adequate resources to continue in operational existence for the foreseeable future.

The external auditors are responsible for independently reviewing and reporting on FSRA’s annual financial statements. The annual financial statements have been examined by FSRA’s external auditors and their report is presented on page70.

Board’sapprovaloftheannualfinancialstatementsThe annual financial statements set out on pages 63 to 81, which have been prepared on the going concern basis, were approved by the Board on 11 July 2013 and were signed on its behalf by:

M. Maziya T. MasonBoardChairman Chairman:Finance,AuditandRiskCommittee

Date Date

Board’s Responsibility for Financial Reporting


The Board of the Authority has pleasure in presenting their report on the activities of the Financial Services Regulatory Authority (FSRA) for the year ended 31 March 2013.

1. General reviewThe FSRA was established by the Government of Swaziland in terms of the FSRA Act, 2010. The FSRA was established to foster, through the regulation and prudential supervision of financial services providers:

* The stability of the Swaziland financial system; * The safety and soundness of financial services providers; * The highest standards of conduct of business by financial services providers; * The promotion of fair competition between different financial services providers for the benefit of stakeholders; * The fairness, efficiency and orderliness of the Swaziland non-bank financial sector; and * The protection of stakeholders

2. Financial year endThe financial year end of the FSRA is defined in the Act as 31 March of every year, to coincide with the financial year of Government.

3. SubsequenteventsThe Board Secretary and CEO of the FSRA, Mr Bongani Nxumalo resigned from the Authority effective 1 May 2013.The Board is in the process of appointing a replacement for Mr Nxumalo.

4. The BoardThe following persons served as board members during the period:

Mr Muhawu Maziya ChairmanMr Nathi Maseko DeputyChairmanMr Walter Matsebula MemberMr Theo Mason MemberMs Dumisile Magagula MemberMs Gigi Reid MemberMr Modern Samketi MemberMr Bongani Nxumalo CEO/Secretary

5. AuditorsAuditors for the Authority for the year under review are Kobla Quashie & Associates, P.O. Box 710 Manzini.

Report of the Board


Statement of Financial Position

Figures in Emalangeni Note(s) 2013 2012

Assets

Non-Current AssetsProperty, plant and equipment 3 3,744,896 1,909,494Financial Assets 4 7,481,617 9,791,455 11,226,513 11,700,949

Current AssetsTrade and other receivables 5 5,087,876 8,430,711Cash and cash equivalents 6 20,921,929 10,970,681 26,009,805 19,401,392Total Assets 37,236,318 31,102,341

EquityandFundbalancesTrust/Guarantee fund 7 2,093,891 2,226,569Retained income 33,682,383 28,386,316 35,776,274 30,612,885

Liabilities

Current LiabilitiesTrade and other payables 8 1,460,044 489,456

TotalEquityandLiabilities 37,236,318 31,102,341


StatementofSurplusorDeficit

Figures in Emalangeni 2013 2012

Income 29,973,240 19,011,458Operating expenses (24,677,173) (18,522,193)Operating surplus 5,296,067 489,265Surplus for the year 5,296,067 489,265


StatementofChangesinEquity

Figures in Emalangeni GuaranteedFund RetainedIncome TotalEquity Balance at 01 April 2011 21,578 27,897,051 27,918,629Changes in equitySurplus for the year 489,265 489,265Transfer to guaranteed fund 2,204,991 2,204,991

Total changes 2,204,991 489,265 2,694,256

Balance at 01 April 2012 2,226,569 28,386,316 30,612,885Changes in equitySurplus for the year 5,296,067 5,296,067Net movement in fund (132,678) (132,678)

Total changes (132,678) 5,296,067 5,163,389

Balance at 31 March 2013 2,093,891 33,682,383 35,776,274


Statement of Cash Flow


Cashflowsfromoperatingactivities

Cash generated from (used in) operations 11 10,048,374 (5,921,284)

Cashflowsfrominvestingactivities

Purchase of property, plant and equipment 3 (2,274,286) (320,545)Sale of financial assets 2,309,838 8,872,417Net cash from investing activities 35,552 8,551,872

Cashflowsfromfinancingactivities

Net movement on guranteed fund 7 - 2,204,992Reduction - trust/guarantee fund 7 (132,678) -Netcashfromfinancingactivities (132,678) 2,204,992

Total cash movement for the year 9,951,248 4,835,580Cash at the beginning of the year 10,970,681 6,135,101Total cash at end of the year 6 20,921,929 10,970,681


Accounting Policies

1. Presentation of Annual Financial Statements

Background Information

The Financial Services Regulatory Authority (FSRA) is a body corporate established by the Financial Services Regulatory Act, 2010. FSRA is a regulatory and supervisory body established to regulate and supervise the providers of non-bank financial services in the Kingdom of Swaziland with the aim of bringing stability, safety and soundness of the Swaziland financial system and its providers as well as protecting the average Swazi from exploitation by the industry players.

The FSRA office is a parent of the former Office of the Registrar of Insurance and Retiremenbt Funds (RIRF) and currently holds the following divisions: RIRF Division; Capital Markets (CM) Division; and Credit and Savings Institutions (CSI) Division.

The Board of Directors was appointed in 2010 by the Minister of Finance and the board has since appointed a Chief Executive Officer into office effective 1st January 2012.

The Consolidated Financial Statements incorporate the following:

The Levies Account of the Authority as per Sections 21 and 22 of the FSRA Act, 2010;The Registrar’s Guarantee Account as per Sections 41 and 42 of the Insurance Act 7/2005The Insurance and Retirement Trust Fund as per Sections 43 and 44 of the Insurance Act 7/2005.The following are the principal accounting policies adopted in the preparation of these financial statements as set out below. These policies have been consistently applied in all material respects with those of the previous year, unless otherwise stated.

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets, financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying FSRA accounting policies. Although these estimates are based on management best knowledge of current events and actions, actual results ultimately may differ from those estimates. In the current year, the board has noted a number of new and revised IFRSs issued by the International Accounting Standards Board (IASB) that are mandatorily effective for an accounting period that begins on or after 1 January 2013.

Amendments to IFRS 7 Disclosures — Offsetting Financial Assets and Financial Liabilities

The amendments to IFRS 7 require entities to disclose information about rights of offset and related arrangements (such as collateral posting requirements) for financial instruments under an enforceable master netting agreement or similar arrangement.

As the board does not have any offsetting arrangements in place, the application of the amendments has had no material impact on the disclosures or on the amounts recognised in the financial statements.

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of IFRS 13 is broad; the fair value measurement requirements of IFRS 13 apply to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).


1. Presentation of Annual Financial Statements (continued)

IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, IFRS 13 includes extensive disclosure requirements.

IFRS 13 requires prospective application from 1 January 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the initial application of the Standard. In accordance with these transitional provisions, the institute has not made any new disclosures required by IFRS 13 for the 2012 comparative period. Other than the additional disclosures, the application of IFRS 13 has not had any material impact on the amounts recognised in the financial statements.

Amendments to IAS 1 Presentation of Items of Other Comprehensive Income

The amendments introduce new terminology, whose use is not mandatory, for the statement of comprehensive income and income statement. Under the amendments to IAS 1, the ‘statement of comprehensive income’ is renamed as the ‘statement of profit or loss and other comprehensive income’ [and the ‘income statement’ is renamed as the ‘statement of profit or loss’]. The amendments to IAS 1 retain the option to present profit or loss and other comprehensive income in either a single statement or in two separate but consecutive statements.

The application of the amendments to IAS 1 does not result in any impact on profit or loss, other comprehensive income and total comprehensive income.

Employee Benefits (as revised in 2011)

IAS 19 Employee Benefits (as revised in 2011) changes the accounting for defined benefit plans and termination benefits. The most significant change relates to the accounting for changes in defined benefit obligations and plan assets. The amendments require the recognition of changes in defined benefit obligations and in the fair value of plan assets when they occur, and hence eliminate the ‘corridor approach’ permitted under the previous version of IAS 19 and accelerate the recognition of past service costs. All actuarial gains and losses are recognised immediately through other comprehensive income in order for the net pension asset or liability recognised in the consolidated statement of financial position to reflect the full value of the plan deficit or surplus. Furthermore, the interest cost and expected return on plan assets used in the previous version of IAS 19 are replaced with a ‘net interest’ amount under IAS 19 (as revised in 2011), which is calculated by applying the discount rate to the net defined benefit liability or asset. In addition, IAS 19 (as revised in 2011) introduces certain changes in the presentation of the defined benefit cost including more extensive disclosures.

As the Board does not operate a defined benefit plan, the application of the amendments has had no material impact on the disclosures or on the amounts recognised in the financial statements.

IFRS 9 Financial Instruments

IFRS 9, issued in November 2009, introduced new requirements for the classification and measurement of financial assets. IFRS 9 was amended in October 2010 to include requirements for the classification and measurement of financial liabilities and for derecognition.

Key requirements of IFRS 9:

• All recognised financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortised cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that


Accounting Policies - continued


Key requirements of IFRS 9: (continued)

are solely payments of principal and interest on the principal outstanding are generally measured at amortised cost at the end of subsequent accounting periods. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods. In addition, under IFRS 9, entities may make an irrevocable election to present subsequent changes in the fair value of an equity investment (that is not held for trading) in other comprehensive income, with only dividend income generally recognised in profit or loss.

• With regard to the measurement of financial liabilities designated as at fair value through profit or loss, IFRS 9 requires that the amount of change in the fair value of the financial liability that is attributable to changes in the credit risk of that liability is presented in other comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive income would create or enlarge an accounting mismatch in profit or loss. Changes in fair value attributable to a financial liability’s credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the entire amount of the change in the fair value of the financial liability designated as fair value through profit or loss is presented in profit or loss.

Amendments to IAS 32 Offsetting Financial Assets and Financial Liabilities

The amendments to IAS 32 clarify the requirements relating to the offset of financial assets and financial liabilities. Specifically, the amendments clarify the meaning of ‘currently has a legally enforceable right of set-off’ and ‘simultaneous realisation and settlement’.

The Authority does not anticipate that the application of these amendments to IAS 32 will have a significant impact on the institute’s financial statements as the institute does not have any financial assets and financial liabilities that qualify for offset.

1.1 Property,plantandequipment

The cost of an item of property, plant and equipment is recognised as an asset when:• it is probable that future economic benefits associated with the item will flow to FSRA; and• the cost of the item can be measured reliably.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment.

Item RateFurniture and fixtures 10%Motor vehicles 20%Office equipment 10%IT equipment 33.33%

The residual value and the useful life of each asset are reviewed at each financial period-end. Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item shall be depreciated separately.

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset. The gain or loss arising from the derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.



1.2 Revenue recognition

Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to FSRA and the amounts of revenue can be reliably measured.

Levies

All registered entities are required to pay annual levies to maintan their licences in terms of the FSRA Act, 2010. Levies are raised in terms of the regulations published in the Government Gazette and are recognised for on an accrual basis.

The regulated entities are invoiced based on the following: .

RIRF Division: - Short Term insurer - 1.25% of gross written premium less commission.

- Long Term Insurer - 0.07% of the insurer’s total assets.

- Retirement Funds - 0.07% of total assets.

- Brokers - 1.25% of total commission received during the financial year.

- Agents - 1.25% of total commission received during the financial year.

- Fund Administrattors - 1.25% of fee income received during the year

- Investment Managers - 1.25% of the income derived from insurance and retirement fund’s clients

CM and CSI Divisions

No levies was received by the Capital Market and Credit and Savings Institutions Divisions during the year under review.

Registrationandrenewalfees

Revenue arising from registration and renewal fees are raised in terms of the regulations published in the Government Gazette and are recognised on a cash basis.

Interestincome

Interest income is recognised on a time-proportion basis using the effective interest rate method. When a receivable is impaired, FSRA reduces the carrying amount to its recoverable amount, being the estimated future cashflow discounted at original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised either as cash if collected or on a cost—recovery basis as conditions warrant.

Finesandpenalties

Fines and penalties raised for late submission of returns are recognised on an accrual basis less imparment. The income from fines and penalties is credited to the statement of financial performance and is considered to form part of the normal operating activities of the FSRA, and are classified under sundry income.

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




1.4 Financial instruments

Initial recognition

Financial assets and financial liabilities are recognised on the balance sheet when FSRA has become party to the contractual provisions of the instruments.

Financial instruments recognised in the balance sheet include: - Cash and cash equivalents - Accounts receivable - Accounts payable - Investments - Borrowings

Measurement

Financial instruments are initially measured at cost, which includes transaction costs. Subsequent to initial recognition these instruments are measured as set out below:

Investments

FSRA classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at every reporting date.

(a) Financial assets at fair value through profit or loss This category has two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realised within 12 months of the balance sheet date.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when FSRA provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance sheet date. These are classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet.

(c) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that FSRA’s board has the positive intention and ability to hold to maturity. Gains and losses on held to maturity investments are recognized in equity.

(d) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Purchases and sales of investments are recognised on trade-date — the date on which FSRA commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognised when the rights to receive cash flows from the investments have expired


1.4 Financial instruments (continued)

or have been transferred and FSRA has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognised in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the income statement as gains and losses from investments securities.

The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), FSRA establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cashflow analysis, and the option pricing models refined to reflect the issuer’s specific circumstances.

FSRA assesses at each balance sheet date whether there is objective evidence that a financial asset or a company of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss — measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss — is removed from equity and recognised in the income statement. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement.

Cashandcashequivalents

Cash and cash equivalents comprise cash at bank and on hand, and instruments which are readily convertible to known amounts of cash and are subject to insignificant risk of change in value.

For purposes of the cashflow statement, cash includes cash and cash equivalents as defined above, net of bank overdrafts, all of which are available for use by FSRA unless otherwise stated.

Trade and other receivables

Accounts receivable are carried at anticipated realisable value. An estimate is made for doubtful receivables based on a review of all outstanding amounts at the year end. Bad debts are written off during the year in which they are identified.

Accounts payable

Accounts payable comprise trade accounts payable and accruals. These are measured at fair cost.

Liabilities and provisions

FSRA recognises liabilities, including provisions, when:

- it has a present legal or constructive obligation as a result of past events, and

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

- a reliable estimate of the amount of the obligation can be made.



1.4 Financial instruments (continued)

Contingent liabilities

FSRA discloses a contingent liability where:

- it has a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non occurence of one or more uncertain future events not wholly within the control of FSRA, or

- it is not probable that an outflow of resources will be required to settle an obligation,or - the amount of the obligation cannot be measured with sufficient reliability.

Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Borrowings are classified as current liabilities unless FSRA has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

Offset

Where a legally enforceable right of offset exists for recognised financial assets and financial liabilities, and there is an intention to settle the liability and realise the asset simultaneously, all related financial effects are offset.

1.5 TaxCurrent tax assets and liabilities FSRA is exempt from income taxes as it falls within the ambit of the definition of an ‘Exempt organisation’ as stipulated in Section 2 of the Income Tax Order 1975 as amended.

1.6 Government grants Capital based government grants are included within deferred income in the balance sheet and credited to profit over the estimated useful economic lives of the assets to which they relate. Revenue based government grants are credited to profit in the period in which the expenditure to which they relate is incurred. No capital was received during the year under review.

1.7 LeasesWhere FSRA enters into a lease which entails taking substantially all the risks and rewards of ownership of an asset, the lease is treated as a ‘finance lease’. The asset is recorded in the balance sheet as a tangible fixed asset and is depreciated over its estimated useful life or the term of lease, which ever is shorter. Future instalments under such leases, net of finance charges, are included within creditors. Rentals payable are apportioned between the finance element, which is charged to the profit and loss account, and the capital element which reduces the outstanding obligation for future instalment. All other leases are accounted for as ‘operating leases’ and the rental charges are charged to the profit and loss account on a straight line basis over the life of the lease.

1.8 Financial risk management

Financial risk factors

FSRAs overall risk management programme focuses on the unpredictability of the financial markets and seeks to minimise potential adverse effects on the financial performance of the entity.


1.8 Financial risk management (continued)

Risk management is carried out under policies approved by the board. The board identifies, evaluates and hedges financial risks in cooperation with the office’s operations. The registrar provides written principles for overall risks management, as well as for specific areas such as interest rate risk, credit risk,and investing excess liquidity.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient liquid resources cash and marketable securities, the availability of funding from an adequate amount of committed credit facilities and the ability to settle debts as they become due and ability to close out market positions. The FSRA remains confident that the available cash resources will be sufficient to meet its funding requirements. FSRA liquid resources consist of cash and cash equivalents. The FSRA maintains adequate resources by monitoring rolling cash flow forecasts of the cash and cash equivalents on the basis of expected cash flow.

Liquidity reserve as at 31 March 2013 is as follows: E

Opening balance for the period 18 762 136Operating cash flows 10 048 374Cash flows from investing activities (2 274 286)Cash outflow for third party assets (132 678)

Closing balance for the period 26 403 546

The table below analyses all cash flows from financial liabilities into the bucket in which they are contractually due to be paid:

Less than More than More than More than More than Total 3 months 3 months 6 months 9 months 1 year or on but not but not but not demand exceeding exceeding exceeding 6 months 9 months 1 year

2013

Trade and other payables 1 460 645 - - - - 1 460 645

2012

Trade and other payables 489 455 - - - - 489 455

Credit risk Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to corporate, government and individual customers, including outstanding receivables and committed transactions.

Cash flow and fair value interest rate risk FSRA’s income and operating cash flows are affected, but not to a significant extent, by changes in the market interest rates.

Expense risk

There is a risk that FSRA may experience a loss due to actual expense being higher than those assumed in its budgets. This may be due to inefficiences, higher than expected inflation, etc. FSRA performs expense investigation on a monthly basis and sets its forecasts to be in line with actual expenses, with allowance for inflation.



1.8 Financial risk management (continued)

Fair value estimationThe nominal value less impairment provision of trade payables and receivables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate receivable to FSRA for similar financial instruments.

1.9 Funds administered on behalf of third parties

In terms of section 41(3)(f) of the Insurance Act, 2005, any monies recovered as a result of a court proceeding or out of court settlement against an offending Insurer, broker or agent are transferred to a special trust account designated for this purpose, and such recoveries do not form part of the normal opearating activities of the FSRA.

The balance of the Swaziland Building Society Gold Account at the end of the year was E2 093 891 (2012: E2 226 569).

1.10 Related parties

All payments to the board of directors of the FSRA are classified as related party transactions.

1.11 Employeebenefits

Provident Fund Obligations FSRA Provident Fund is a defined contribution plan. For defined contribution plans FSRA pays contributions to the privately administered retirement fund on a mandatory, contractual, or voluntary basis. Once the contributions have been paid, FSRA has no further payment obligations. The regular contributions constitute net periodic costs for the year in which they are due, and as such are included in staff costs.

Terminal Benefits

Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. FSRA recognises termination benefits when it is demonstrably committed either to terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.

Defined contribution plans

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the FSRA’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan.

1.12 Financial intrument by category

The accounting policies for financial instruments have been applied to the line items below:

Description per the Amortised Carrying value statementoffinancial cost 2013 2012 position

Financial assets Trade and other receivables - 5 087 876 8 430 711 Cash and cash equivalent - 20 921 929 10 970 681 Investments - 7 481 617 9 791 455

Financial liabilities Trade and other payables - 1 460 045 489 455


1.12 Financial intrument by category (continued)

Creditqualityoffinancialassets

The table below analyses all undiscounted cash flows from financial assets into time bucket when they are contractually due to be received:

Less than More than More than More than More than Total 3 months 3 months 6 months 9 months 1 year or on but not but not but not demand exceeding exceeding exceeding 6 months 9 months 1 year

2013

Trade and other receivables 4 356 748 731 127 - - - 5 087 876

2012

Trade and other receivables 489 455 - - - - 489 455

1.13Comparativefigures

The comparative figures are audited financial statements for the year ended 31 March 2012 of the Office of the Registrar of Insurance and Retirement Funds (RIRF). The assets and liabilities from RIRF were transferred on 28 March 2012 in line with Section 90 (2) of the FSRA Act, 2010.

1.14 Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which FSRA operates (“the functional currency”). The financial statements are presented in Emalangeni (“E”), which is the functional and presentation currency of FSRA.

1.15 Segment reporting

Segment

The information available to us do not permit us to report according to the various segments of the authority.


Notes to the Annual Financial Statements


2. Operating surplus

Operating surplus for the year is stated after accounting for the following:

Auditors’ remuneration-Auditors fees 105,000 91,200

Operating lease chargesPremisesContractual amounts 1,962,754 745,806

Depreciation on property, plant and equipment 438,884 333,935Employee costs( Note 12) 14,165,730 11,108,742

3.Property,plantandequipment

2013 2012 Cost / Accumulated Carrying Cost / Accumulated Carrying Valuation depreciation value Valuation depreciation value

Furniture and fixtures 3,880,338 (1,114,873) 2,765,465 2,286,973 (823,118) 1,463,855Motor vehicles 173,417 (8,671) 164,746 - - -Office equipment 755,923 (227,389) 528,534 513,927 (172,763) 341,164IT equipment 889,170 (603,019) 286,151 623,660 (519,185) 104,475

Total 5,698,848 (1,953,952) 3,744,896 3,424,560 (1,515,066) 1,909,494

Reconciliationofproperty,plantandequipment-2013

Opening Additions Depreciation Total Balance

Furniture and fixtures 1,463,855 1,593,365 (291,755) 2,765,465Motor vehicles - 173,417 (8,671) 164,746Office equipment 341,164 241,995 (54,625) 528,534IT equipment 104,475 265,509 (83,833) 286,151

1,909,494 2,274,286 (438,884) 3,744,896

Reconciliationofproperty,plantandequipment-2012

Opening Additions Depreciation Total Balance

Furniture and fixtures 1,502,813 175,907 (214,865) 1,463,855Office equipment 279,668 108,852 (47,356) 341,164IT equipment 140,401 35,786 (71,712) 104,475

1,922,882 320,545 (333,933) 1,909,494

4. Financial Assets

This represents the following investment:

Swaziland Building Society - Permanent shares 2,000,000 2,000,000Stanlib/Liberty Life Swaziland - Money Market instruments 5,481,617 7,791,455

7,481,617 9,791,455



5. Trade and other receivables

Trade debtors & other receivables 4,651,648 8,306,849Prepayment 55,534 55,054Staff loans 363,980 68,808Other receivable 16,714 -

5,087,876 8,430,711

6.Cashandcashequivalents

Cashandcashequivalentsconsistof:

Cash on hand 2,000 2,000Bank balances 18,778,608 8,668,499Swaziland Building Society - Special Savings 47,430 73,612Registrar’s Guarantee Trust Account 2,093,891 2,226,570

20,921,929 10,970,681

Bank balances consist of the following:

Standard Bank Swaziland Limited 13,081,234 1,001,802First National Bank (Swaziland) Limited 5,587,133 5,666,697Nedbank (Swaziland) Limited 110,241 2,000,000

18,778,608 8,668,499

7. Trust/Guarantee fund

Trust/Guarantee fund 2,093,891 2,226,569

This represents funds in respect of amounts being held in accordance with section 41(3)(f) of the Insurance Act 7/2005.

8. Trade and other payables Trade payables 435,547 98,596Other payables 557,388 98,585Accrued audit fees 105,000 91,200Provision for gratuity 362,109 201,075

1,460,044 489,456

9. Commitments

FSRA has entered into an operating lease agreement with the Public Service Pension Fund. The current operating rentals amount to E160 189 per month with an annual fixed esclation rate of 10% in September of each year.


10. Employee costs

The average number of employees during the year was 30 (2012 - 28)

Salaries 14,165,730 11,108,742

11. Cash generated from (used in) operations

Surplus before taxation 5,296,067 489,265Adjustments for:Depreciation and amortisation 438,884 333,935Changes in working capital:Trade and other receivables 3,342,835 (6,323,575)Trade and other payables 970,588 (420,909)

10,048,374 (5,921,284)


Notes to the Annual Financial Statements - continued


Detailed Income Statement


RevenueGovernment subvention 12,614,588 -Registration and renewal fees 475,642 457,982Interest received 659,528 894,581Levies fee 15,544,088 16,736,908Sundry income 679,394 921,987

29,973,240 19,011,458

Operating expensesAdvertising 62,044 164,872Auditors remuneration 105,000 103,170Bank charges 83,709 68,503Cleaning 46,546 53,609Computer expenses 109,990 76,789Consulting and professional fees 704,577 675,843Consumer education expenses 625,349 640,713Depreciation, amortisation and impairments 438,884 333,935Employee costs 14,165,730 11,108,742Staff uniform 176,740 -Legal expenses 196,129 241,164Penalty and interest - 33,213Board fees and expenses 367,262 -Insurance 160,049 224,371Internet expenses 31,622 21,425Lease rentals on operating lease 1,962,754 745,806Office expenses 14,100 22,685Postage 11,363 15,044Printing and stationery 313,571 229,072Conferences 163,131 571,146Repairs and maintenance 179,493 26,288Staff welfare 134,758 113,661Subscriptions 309,771 255,039Telephone and fax 568,340 420,446Training 1,596,521 811,405Travel - local 175,788 45,051Travel - international 1,897,602 1,459,220Utilities 76,350 60,981

24,677,173 18,522,193

Surplus for the year 5,296,067 489,265


B. INSURANCE REGULATORY OFFICE INFORMATION AND INDUSTRY STRUCTURE

S/NO. ITEM DESCRIPTION 2013 20121 Year of Insurance Act in Use 2005 20052 Total Number of Insurance Regulatory Office Staff 28 283 Total Number of technical staff* 20 204 Number of licensed reinsurance companies 0 05 Number of licensed insurance companies 9 106 Number of licensed insurance Brokers 36 327 Number of licensed insurance agents 271 1108 Number of other licensed insurance players 0 09 Minimum capital requirement for reinsurers (US$) 0 0

10 Minimum capital requirement for Short-Term Insurers (US$) $216 685 $260 417

11 Minimum capital requirement for Long-Term Insurers (US$) $216 685 $260 417

12 Minimum capital requirement for Composite Insurers (US$) $216 685 $260 417

13 Insurance Density (Gross Premium Written per Capita) US$ $80 $84

14 Insurance penetration ratio (GWP contribution to GDP in %) 3% 2%

* Those directly responsible for regulation/supervision of insurance entities (inspection, licensing, analysis, legal issues, etc) excluding office supporting staff

APPENDIX 1 – SADC – COMMITTEE FOR INSURANCE, SECURITIES AND NON-BANKING FINANCIAL AUTHORITIES (CISNA) MEMBER COUNTRY INSURANCE INDUSTRY STATISTICAL INFORMATION

A. SWAZILAND ECONOMIC INDICATORS AS AT 31 MARCH 2013

S/NO. ITEM DESCRIPTION 2013 2012

13 Population size 1 000 000 1 000 000

14 Rate of Exchange (local units to US$) 9,23 7,68

15 GDP in local units $28 390 000 000 $28 333 333 333

16 GDP in US$ = (15)/(14) $3 075 839 653 $3 689 236 111

17 GDP per Capita in US$ = (16)/(13) 3 076 3 689

18 Inflation Rate (%) 6,60% 8,80%

19 Prime Lending Rate (%) 8,50% 9,00%

Source: Internet Desktop Research

13. APPENDICES


D. LONG-TERM INSURANCE SELECTED PERFORMANCE STATISTICS


37 Long Term Insurance Gross Writte Premium (US$) $39 633 451 $37 568 145

38 Long Term Outward Reinsurance Gross Premiums Ceded (US$) $3 038 981 $2 235 959

39 Long term Net Premiums Retained (US$) = (37)-(38) $36 594 470 $35 332 186

40 Long Term Insurance Net Premiums Earned (US$) $36 594 470 $35 332 186

41 Long Term Insurance Net Claims Incurred (US$) $16 647 876 $16 505 034

42 Long Term Insurance Net Commission Paid (US$) $2 124 376 $1 895 715

43 Long Term Insurance Management Expenses (US$) $8 061 407 $7 204 509

44 Long Term Insurance Net Expenses (US$) = (41)+(42)+(43) $26 833 659 $25 605 258

45 Long Term Insurance Combined Ratio (%) = (44)/(40) 73% 72%

46 Long Term Insurance Retention Ratio (%) = (39)/(37) 92% 94%

47 Long Term Insurance Capital and Reserves (US$) $34 617 656 $31 793 854

48 Long Term Investment Assets (US$) $183 984 708 $157 302 699

49 Long Term Insurance Other Assets (US$) $9 350 365 $9 070 224

50 Long Term Insurance Total Assets (US$) $193 335 074 $166 372 923

51 Long Term Insurance Total Liabilities (US$) $158 717 418 $134 579 069

52 Net Worth (US$) = (50)-(51) $34 617 656 $31 793 854

53 Net Worth CF (Reported) Capital and Reserves (US$) = (47)-(51) -$124 099 762 -$102 785 215

C. SHORT-TERM INSURANCE SELECTED PERFORMANCE STATISTICS


20 Short Term Insurance Gross Writte Premium (US$) $40 725 204 $46 343 792

21 Short Term Outward Reinsurance Gross Premiums Ceded (US$) $13 910 736 $16 045 020

22 Short term Net Premiums Retained (US$) = (20)-(21) $26 814 468 $30 298 771

23 Short Term Insurance Net Premiums Earned (US$) $26 814 468 $30 298 771

24 Short Term Insurance Net Claims Incurred (US$) $11 010 546 $12 865 767

25 Short Term Insurance Net Commission Paid (US$) $2 335 581 $2 561 376

26 Short Term Insurance Management Expenses (US$) $6 900 377 $6 848 366

27 Short Term Insurance Net Expenses (US$) = (24)+(25)+(26) $20 246 505 $22 275 508

28 Short Term Insurance Combined Ratio (%) = (27)/(23) 76% 74%

29 Short Term Insurance Retention Ratio (%) = (22)/(20) 66% 65%

30 Short Term Insurance Capital and Reserves (US$) $30 678 150 $45 143 434

31 Short Term Investment Assets (US$) $47 119 487 $69 837 186

32 Short Term Insurance Other Assets (US$) $22 478 509 $24 252 477

33 Short Term Insurance Total Assets (US$) $69 597 996 $94 089 663

34 Short Term Insurance Total Liabilities (US$) $38 919 846 $48 946 229

35 Net Worth (US$) = (33)-(34) $30 678 150 $45 143 434

36 Net Worth CF (Reported) Capital and Reserves (US$) = (30)-(35) -$8 241 695 -$3 802 795


13. APPENDICES - continued

E. RETIREMENT FUNDS SELECTED PERFORMANCE STATISTICS


1 Number of local retirement Funds 73 70

2 Number of foreign retirement funds 40 36

3 Number of Fund Administrators 5 5

4 Number of Provident Funds 42 42

5 Number of Defined Benefit Funds 8 8

6 Number of Defined Contributions Funds 31 28

7 Retirement Funds Total Contributions (US$) $131 567 527 $146 580 517

8 Retirement Funds Total Investment Income (US$) $282 958 807 $172 603 061

9 Retirement Funds Total Benefits Paid (US$) $98 111 295 $76 873 723

10 Retirement Funds Total Other Expenses (US$) $14 861 649 $77 507 033

11 Retirement Funds Total Assets (US$) $1 989 623 445 $2 009 486 847

12 Retirement Funds - Locally Invested Assets $565 893 711 $560 054 562

13 Retirement Funds - Foreign Invested Assets $1 380 156 941 $1 405 890 858


INSURANCE BROKERS Licence No. Postal Address Telephone

1 Eliz Corporate Consultants (Pty) Ltd IB/ 7002/ 07 P. O. Box 272, Eveni 2404-4195

2 Excorp Insurance (Pty) Ltd IB/ 7004/ 07 P. O. Box 363, Manzini 2505-4236

3 Fingroup Swaziland (Pty) Ltd IB/ 7005/07 P. O. Box 710, Manzini 2404-5257

4 Impilo Yami Insurance Brokers (Pty) Ltd IB/ 7006/ 07 P. O. Box 4497, Manzini 2505-4842

5 Eazy Grow International (Pty) Ltd IB/ 7007/ 07 P. O. Box 611, Manzini 2505-4988

6 Zanton Insurance Brokers (Pty) Ltd IB/ 7008/ 07 P. O. Box A269, Swazi Plaza 2404-3574

7 Surety Services (Pty) Ltd IB/ 7009/ 08 P. O. Box 2882, Mbabane 2404-0554

8 Piety Corporation (Pty) Ltd IB/ 7010/ 08 P. O. Box 3640, Mbabane 2404-4280

9 Dups Insurance Agencies (Pty) Ltd IB/ 7011/ 08 P. O. Box 114, Manzini 2505-2028

10 AON Swaziland (Pty) Ltd IB/ 7012/ 08 P. O. Box 222, Mbabane 2404-3226

11 Finsure Insurance Brokers (Pty) Ltd IB/ 7013/ 08 P. O. Box 284, Manzini 2505-4142

12 Glenrand MIB Swaziland (Pty) Ltd IB/ 7014/ 08 P. O. Box 4507, Manzini 2505-7850

13 Healthcare Insurance Brokers (Pty) Ltd IB/ 7017/ 08 P. O. Box A868, Swazi Plaza 2404-8552

14 Tibiyo Insurance Brokers (Pty) Ltd IB/ 7018/ 08 P. O. Box 1072, Mbabane 2404-8001/2010

15 Swaziland Employee Benefit Consultants (Pty) Ltd IB/ 7019/ 08 P. O. Box 3159, Mbabane 2404-3541/8001

16 Nico Insurance Brokers (Pty) Ltd IB/ 7020/ 08 P. O. Box 330, Manzini 2505-7144

17 Finroc Consult Financial Solutions (Pty) Ltd IB/ 7023/ 09 P. O. Box 1429, Manzini 2404-8850/2

18 B3 Group Swaziland (Pty) Ltd IB/ 7024/ 09 P. O. Box 1242, Mbabane 24044681

19 Coverite Insurance Brokers (Pty) Ltd IB/ 7025/ 09 P. O. Box 416, Manzini 2404-9124

20 Namaga Consultancy (Pty) Ltd IB/ 7026/ 09 P. O. Box 2038, Matsapha 505-2456

21 Sefika Insurance Brokers (Pty) Ltd IB/ 7028/ 09 P. O. Box 524, Mbabane 2404-5711

22 Sakhile Re-Insurance Brokers Limited IB/ 7029/ 10 P.O. Box 3983, Mbabane 2505-8825

23 Intermediary Insurance Brokers (Pty) Ltd IB/ 7031/ 10 P. O. Box 6932, Manzini 2518-7539

24 Maxi Group Alliance (Pty) Ltd IB/ 7032/ 11 P.O. Box 8143 Mbabane 2404-7896

25 Optimal Investment Solutions (Pty) Ltd IB/ 7033/ 11 P.O. Box 5144, Mbabane 2404-9559

26 Sekusile Insurance Brokers (Pty) Ltd IB/ 7034/ 11 P. O. Box C481, Hub Manzini 2504-1747/8

27 Client First Insurance Brokers (Pty) Ltd IB/ 7035/ 11 P. O. Box 843, Manzini 2504-0449

28 Light of Life Insurance Brokers (Pty) Ltd IB/ 7037/ 12 P. O. Box 941, Mbabane 2403-7898

29 Swaziland Association of Saving and Credit Cooperatives (SASCCO) IB/ 7038/ 13 P. O. Box A175, Swazi Plaza 2404-0278/1256

30 LG Financial Services and Consultancy (Pty) Ltd IB/ 7039/ 13 P. O. Box 2622, Mbabane -

31 Minx Insurance Brokers (Pty) Ltd IB/ 7040/ 12 P. O. Box 480, Matsapha 2518-7193

APPENDIX 2 – ENTITIES REGULATED UNDER THE INSURANCE ACT, 2005

INSURERS Licence No. Postal Address Telephone

1 Swaziland Royal Insurance Corporation CI/ 01/ 2007 P. O. Box 917, Mbabane 2404-3231

2 Metropolitan Life Swaziland Limited LT/ 01/ 2007 P. O. Box 45, Eveni 2409-0285

3 Old Mutual Life Assurance Company (SD) Ltd LT/ 02/ 2007 P. O. Box 95, Mbabane 2404-5488

4 Liberty Life Swaziland Limited LT/ 03/ 2007 P. O. Box A294, Swazi Plaza 2404-3444

5 Momentum Insurance (Swaziland) Limited LT/ 06/ 2008 P. O. Box 142, Eveni 2404-1369

6 Lidwala Insurance Company Limited ST/ 01/ 2009 P.O. Box 1552, Manzini 2505-9104

7 Getmed Swaziland (Pty) Ltd ST/ 02/ 2009 P. O. Box 2107, Manzini 2404-7676

8 Orchard Insurance Group ST/ 03/ 2010 P. O. Box 6913, Manzini 2404-8393

9 Safrican Swaziland Insurance Company Ltd LT/ 07/ 2011 P.O. Box C422 Hub Manzini 2505-8710



CORPORATE AGENTS Licence No. Postal Address Telephone

1 Swaziland Building Society CAG 01/ 2008/ CI 01 P. O. Box 300, Mbabane 2404-2107

2 Swaziland Development and Savings Bank CAG 02/ 2009/ CI 01 P. O. Box 336, Mbabane 2409-5000

3 Consolidated Insurance Brokers (Pty) Ltd - P. O. Box A598, Swazi Plaza 2404-4086

4 Nhlangano Funeral Parlour CAG 04/ 2009/ CI 01 P. O. Box 45, Nhlangano 2207-9490

5 Nedbank (Swaziland) Limited CAG 05/ 2009/ CI 01 P. O. Box 68, Mbabane 2408-1000

6 Bhuta's Estate Agents (Pty) Ltd CAG 06/ 2009/ CI 01 P. O. Box 5865, M 2404-9171

7 First National Bank (Swaziland) CAG 07/ 2009/ CI 01 P. O. Box 261, Eveni 2404-5401

8 Standard Bank Swaziland Limited CAG 08/ 2009/ CI 01 P. O. Box A294, Swazi Plaza 2404-1540

9 Taurus Investments (Pty) Ltd CAG 09/ 2009/ CI 01 P. O. Box 946, Hlathikulu 2217-6175

10 Marlett Investments (Pty) Ltd CAG 10/ 2009/ CI 01 P. O. Box 125, Mhlosheni 2207-8580

11 Santa Lucia Funeral Services (Pty) Ltd CAG 11/ 2009/ CI 01 P. O. Box 10, Motjane 2422-0204

12 Swaziland Association of Savings and Credit Cooperatives CAG 13/2010/ CI 01 P. O. Box A175, Swazi Plaza 2404-0278

13 Maq Alf (Pty) Ltd CAG 14/2010/CI 01 P. O. Box 4975, Manzini 2505-2456

14 Mbabane Burial Benefit Society CAG 15/2010/ CI 01 P. O. Box 477, Mbabane 2404-2888

15 Cutting Edge Management Consultants (Pty) Ltd CAG 17/2011/CI 01 P. O. Box 926, Ezulwini 2404-9369

16 NDZ Financial Services (Pty) Ltd CAG 01/ 2011/ IB 7011 P. O. Box 5419, Mbabane 2404-1429

17 JD Group (Swaziland) (Pty) Ltd CAG 18/ 2011/CI 01 P. O. Box 24, Mbabane 2404-2953

18 Buzzby Services (Pty) Ltd CAG 19/ 2011 / CI 01 P. O. Box 2104, Mbabane 2404-6275

19 Select Management Services CAG 01/ 2011/ ST 03 P. O. Box 2924, Manzini 2505-8506

20 Swaziland Board of Executors & Trust Company (Pty) Ltd CAG 20/ 2011/ CI 01 P. O. Box 226, Mbabane 2405-0822

21 Crucifix Funeral Directors and Coffin Manufacturers CAG 01/2011/LT 07 P. O. Box 4881, Mbabane 2422-1071

22 Relyant Retail Swaziland CAG 21/ 2013/ CI 01 P. O. Box 1685, Mbabane -

23 Swaziland Conference of Churches CAG 02/2013/LT 03 P. O. Box 1157, Manzini 2505-5253

24 Shoprite OK Bazaars Mbabane CAG 22/2014/CI 01 P. O. Box 1478, Mbabane 2505-5432

25 Sibonelo Savings and Credit Cooperative CAG 02/2013/LT 03 P. O. Box 4307, Manzini 2505-7249


LOCAL RETIREMENT FUNDS Postal Address Telephone

1 Public Service Pensions Fund P. O. Box 4469, Mbabane 2404-8740

2 Simunye Sugar Estate Provident Fund P. O. Box 1, Simunye 2313-4000

3 Swazi Observer Provident Fund P.O. Box A385, Swazi Plaza 2404-9600

4 Swaziland National Provident Fund P.O. Box 1857, Manzini 2508-2000

5 Swaziland Railway Provident Fund P.O. Box 475, Mbabane 2404-2486

6 Namboard Pension Fund P.O. Box 4261, Mbabane 2505-2646

7 Exams Council Pension Fund P.O. Box 1394, Mbabane 2416-2865/9

8 Manzini Municipality Staff Pension P.O. Box 418, Manzini 2505-2481/2/3

9 Swaziland Television Authority Pension Fund P.O. Box A146, Swazi Plaza 2404-3036

10 NedBank (Swaziland) Limited Pension Fund P. O. Box 68, Mbabane 2408-1000

11 Swaziland National Provident Fund Staff Pension Scheme P.O. Box 1857, Manzini 2508-2000

12 M.V.A Staff Pension Fund P.O. Box 4239, Mbabane 2404-5569

13 Public Service Pensions Fund (PSPF) Staff Pension Scheme P.O. Box 4469, Mbabane 2404-8740

14 University of Swaziland (UNISWA) Pension Fund Private Bag 4, Kwaluseni 2518-4011

15 SWAKI Pension Fund P.O. Box 1839, Manzini 2505-2693

16 Swaziland Building Society Pension Fund P.O. Box 300, Mbabane 2404-2107

17 Central Bank Of Swaziland Pension Fund P.O. Box 546, Mbabane 2408-2000

18 Swaziland Water Services Corporation Pension Fund P.O. Box 20, Mbabane 2416-9000

19 Swaziland United Bakeries Pension Fund P.O. Box 131, Manzini 2518-4044

20 Swaziland Royal Insurance Corporation (SRIC) Staff Pension Fund P.O. Box 917, Mbabane 2404-3231

21 Silulu Provident Fund P.O. Box 679, Matsapha 2518-6030

22 Members of Parliament and Designated Office Bearers Pension Fund P.O. Box 4639, Manzini 2505-8357

23 Mananga Provident Fund P.O. Box 1, Simunye 2313-4801

24 Swaziland Post & Telecommunications Corporation Pension P.O. Box 125, Mbabane 2405-2000

25 Tisuka TakaNgwane Provident Fund P.O. Box 1385, Mbabane 2518-4516

26 Royal Swaziland Sugar Coporation (RSSC) Retirement Fund P.O. Box 1, Simunye 2313-4801

27 Conco Limited (SD Branch) Provident Fund P.O. Box 2040, Manzini 2517-1000

28 Ubombo-Ingcamu Provident Fund P.O. Box 23, Big Bend 2363-8000

29 Sibaya Umbrella Provident Fund P.O. Box 3159, Mbabane 2404-8001

30 City Council of Mbabane Employee Pension Fund P.O. Box 1, Mbabane 2409-7000

31 Peak Timbers Provident Fund Private Bag, Piggs Peak 2437-1188

32 Standard Bank Swaziland Pension Fund P.O. Box A294, Swazi Plaza 2404-1540

33 World Vision Pension Fund P.O. Box 2870, Mbabane 2404-1102

34 Sibaya Umbrella Pension Fund P.O. Box 3159, Mbabane 2404-8001

35 Swaziland Electricity Company Pension Fund P.O. Box 258, Mbabane 2409-4000

REGULATED UNDER THE RETIREMENT FUNDS ACT. 2005



LOCAL RETIREMENT FUNDS Postal Address Telephone

36 First National Bank of Swaziland Pension Fund P.O. Box 261, Eveni 2404-5401

37 Swazi Bank Pension Fund P.O. Box 336, Mbabane 2409-5000

38 Mbabane Motors Provident Fund P.O. Box 12, Mbabane 2404-3501

39 City Council of Mbabane Pension and Group Life Assurance Scheme P.O. Box 1, Mbabane 2409-7000

40 Rainmaker Plus Provident Umbrella Fund Swaziland P.O. Box 45, Eveni 2409-0285

41 Inyatsi Provident Fund P.O. Box 147, Kwaluseni 2508-1000

42 Rainmaker Plus Pension Umbrella Fund Swaziland P.O. Box 45, Eveni 2409-0285

43 Webster Print Provident Fund P.O. Box 369, Eveni 2404-0048

44 Institute of Development Management Pension Fund Swd P.O. Box 917, Mbabane 2518-5743

45 Registrar of Insurance and Retirement Funds (RIRF) Staff Provident Fund P.O. Box 3365, Mbabane 2406-8000

46 Ubombo Sugar Pension Fund P.O. Box 23, Big Bend 2363-8000

47 Sivuno Provident Fund P.O. Box 100, Matsapha 2518-6033

48 AON Umbrella Retirement Fund P.O. Box 222, Mbabane 2404-3226

49 RSSC Provident Fund P.O. Box 1, Simunye 2313-4801

50 Swaziland Nazarene Health Institutions Staff Pension Fund P.O. Box 14 Manzini 2505-2211

51 Sifundzani School Provident Fund P.O. Box A286 Swazi Plaza 2404-2465

52 Lilunga Umbrella Pension Fund P.O. Box 917, Mbabane 2404-3231

53 SRIC Umbrella Provident Fund P.O. Box 917, Mbabane 2404-3231

54 Baphalali Swaziland Red Cross Society Pension Fund P.O. Box 377, Mbabane 2404-2532

55 Unitrans Swaziland Provident Fund P.O. Box 360 Manzini 2518-6122

56 Mananga Sugar Packers Provident Fund P.O. Box 1, Simunye 2313-4801

57 Lutheran Development Service Pension Fund P.O. Box 917, Mbabane 2404-3231

58 Mountain Inn Provident Fund P.O. Box 917, Mbabane 2404-3231

59 Swaziland Sugar Association Staff Provident Fund P.O. Box 1, Simunye 2313-4801

60 Swaziland Civil Aviation Authority Provident Fund P.O. Box D361, The Gables, Ezulwini 2404-6617

61 Ludziwo Umbrella Provident Fund P.O. Box 3640, Mbabane 2404-4280

62 Mister Bread Pension Fund P.O. Box 917, Mbabane 2404-3231

63 Non-Governmental Health Sector Pension Fund P. O. Box 341, Manzini 2404-3231

64 Tibiyo TakaNgwane Provident Fund P. O. Box 181. Manzini 2518-4390

65 Tibiyo TakaNgwane Pension Fund P. O. Box 181. Manzini 2518-4391

66 Swaziland Revenue Authority Provident Fund P. O. Box 5628, Mbabane 2406-4000

67 Swaziland Revenue Authority Pension Fund P. O. Box 5628, Mbabane 2406-4001

68 YKK Southern Africa Factory Pension Fund P. O Box 1425, Mbabane 2518-6188

69 Ubombo Sugar Provident Fund - Umzabalazo P. O. Box 23, Big Bend 2363-8000


FOREIGN RETIREMENT FUNDS Postal Address Telephone

1 Sun International Provident Private Bag 700, Sandton, 2146 (+27)11-768-5383

2 Distell Retirement Fund P.O. Box 501, Stellenbosch, 7599 (+27)21-809-8125

3 PricewaterhouseCoppers Directors Provident Fund Private Bag X36, Sunninghill, 2157 (+27)11-797-5365

4 PricewaterhouseCoppers Staff Provident Fund Private Bag X36, Sunninghill, 2157 (+27)11-797-5365

5 Sun International Pension Fund Private Bag 700, Sandton, 2146 (+27)11-768-5383

6 Cargo Carriers Retirement Fund P.O. Box 787240, Sandton, 2146 (27)11-878-8300

7 Mr Price Group Retirement Fund P.O. Box 782, Umhlanga Rocks, Durban, 4320 (+27)31-310-8011

8 DHL Provident Fund P.O. Box 72280, Parkview, 2122 (+27)11-771-2322

9 Aveng Provident Fund P.O. Box 1517, Kempton Park, 1620 (+27)11-578-6026

10 Aveng Pension Fund P.O. Box 1517, Kempton Park, 1620 (+27)11-578-6026

11 KPMG Provident Fund Private Bag 9, Parkview, 2122 (+27)11-647-7111

12 Old Mutual Super Fund Pension Fund P.O. Box 167, Cape Town, 8000 (+27)21-509-6594

13 Nampak Group Pension Fund P.O. Box 784324, Sandton, 2146 (+27)11-719-6321

14 Engen Retirement Fund P.O. Box 35, Cape Town, 8000 (+27)21-403-4593

15 The Provident Fund P.O. Box 786055, Sandton, 2146 (+27)11-269-1664

16 Afrox Provident Fund P.O. Box 5404, Johannesburg, 2000 (+27)11-490-0688

17 The Preservation Pension Fund P.O. Box 787240, Sandton, 2146 (+27)11-269-0807

18 FSN Southern Africa Pension Fund P.O. Box 652071, Benmore, 2010 (+27)12-431-4000

19 The Preservation Provident Fund P.O. Box 787240, Sandton, 2146 (+27)11-269-0807

20 Retail Retirement Fund P.O. Box 501, Stellenbosch, 7599 (+27)21-980-4303

21 Old Mutual Super Funds Provident Fund P.O. Box 167, Cape Town, 8000 (+27)21-509-6594

22 Investment Solutions Retirement Annuity P.O. Box 787240, Sandton, 2146 (+27)11-269-0807

23 Alexander Forbes Retirement Fund (Pension Section) P.O. Box 787240, Sandton, 2146 (+27)11-269-0807

24 Investment Solutions Executive Umbrella Provident Fund P.O. Box 787240, Sandton, 2146 (+27)11-269-0807

25 Alexander Forbes Retirement Fund (Provident Section) P.O. Box 787240, Sandton, 2146 (+27)11-269-0807

26 Chevron Provident Fund P.O. Box 714, Cape Town, 8000 (+27)21-403-7713

27 Boxer Superstores (Pty) Ltd Provident Fund P.O. Box 370. Westville, 3630 (27)31-275-7000

28 Engen Pension Fund P.O. Box 35, Cape Town, 8000 (+27)21-403-4593

29 The Aveng (Africa) Ltd-Infraset Provident Fund P.O. Box 1517, Kempton Park, 1620 (+27)11-578-6026

30 Aveng (Africa) Ltd-Infraset Pension Fund P.O. Box 1517, Kempton Park, 1620 (+27)11-578-6026

31 Knight Piesold Staff Pension Fund P. O. Box 221, Rivonia, (+27)11-643-4520

32 Lewis Stores Provident Fund P. O. Box 43, Woodstock, 7915 (+27)21-460-4660

33 Retail Provident Fund P.O. Box 501, Stellenbosch, 7599 (+27)21-980-4303

34 NMG Umbrella Provident Fund P. O. Box 1778, Randburg, 2125 (+27)11-509-3000

35 NMG Umbrella Provident Fund P. O. Box 1778, Randburg, 2126 (+27)11-509-3001

36 Clicks Group Retirement Fund P. O. Box 5142, Cape Town, 8000 (+27)21-460-1142



FUND ADMINISTRATORS Postal address Telephone

1 Swaziland Royal Insurance Corporation P.O. Box 917, Mbabane 2404-3231

2 AON Swaziland P.O. Box 222, Mbabane 2404-3226

3 Swaziland Employee Benefit Consultants P.O. Box 3159, Mbabane 2404-3541/8001

4 Negotiated Benefit Consultants Swaziland P.O. Box 3640, Mbabane 2404-4280

INVESTMENT MANAGERS Postal address Telephone

1 African Alliance P.O. Box 5727, Mbabane 2404-8394

2 Momentum Asset Management P.O. Box 142, Eveni 2404-1369

3 Old Mutual Investment Group (Swaziland) P. O. Box 95, Mbabane 2404-5447

4 Allan Gray Swaziland (Pty) Ltd P.O. Box 331, Mbabane (+27)21-415-4922

5 Stanlib (Swaziland) Unit Trust Mgt Co. (Pty) Ltd P. O. Box A1294, Swazi Plaza 2404-3444

6 Imbewu Yesive Investments (Pty) Limited P.O. Box 1638, Mbabane 2404-4519

7 CFM (Swaziland) (Pty) Ltd P.O. Box 44684, Claremont, 7735 (+27)21-680-2000

8 Inhlonhla Swaziland (Pty) Ltd P.O. Box 239 Mbabane 2404-1662

9 Sanlam Investment Management Swaziland Limited P.O. Box A972, Swazi Plaza 2404-1338

INVESTMENT MANAGERS Address Telephone

1 African Alliance 2404-2002

2 BLZI 2nd Floor, Mbabane House, Mahlokohla Street 7602 3147

3 CFM Swaziland 7th Floor, MontClare Place, Cnr Camp Ground & Mini Roads, Claremont +27 21 680 2065

4 Imbewu Yesive 2404 4519

5 Inhlonhla Development House, 2nd Floor, Office No.201, Swazi PlazaP.O. Box 239, Mbabane

2404 1314

6 JM Busha Unit G5, Ground Floor, Lilunga House, Somhlolo Rd, MbabaneP.O. Box 4447, Mbabane, Swaziland

2404 4553

7 Momentum Asset Management Momentum House, Lot 219, Somhlolo Rd, MbabaneP.O. Box 142, Eveni H103, Mbabane

2404 1369

8 Old Mutual 4th Floor, Ingcamu Building, Mhlambanyatsi Road, MbabaneP.O. Box 95, Mbabane, H100

2404 5447

9 Sanlam Investment Management Swaziland

1st Floor, Office Suite 101, New Mall, Dr. Sishayi Rd, MbabaneP.O. Box 8392, Mbabane, H100, Swaziland

2404 1338

10 Stanlib 1st Floor, Ingcamu Building, Mhlambanyatsi Rd, MbabaneP.O. Box A294, Swazi Plaza, Mbabane

2404 3444

11 Swaziland Stockbrokers Limited 5th Floor, SIDC Suite, Dlan’ubeka House, Mdada St, MbabaneP.O. Box 2818, Mbabane, H100, Swaziland

7612 1006

12 Efficient Select P.O. Box 9551, Mbabane, Swaziland 2404 4446

13 Allan Gray Swaziland 1 Silo Square, V&A Waterfront, Cape Town, 8001P.O. Box 51318, V&A Waterfront, Cape Town, 8002, South Africa

+27 21 415 4922

REGULATED UNDER SECURITIES ACT. 2010

Designed & Produced by Sibane Icons

+268-2404 6633

FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA)

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FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) 2013 AR_final .pdf · FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2013 05 T he year under review has been a very busy