FINANCIAL SERVICES REGULATORY AUTHORITY

31 March 2015
Annual Report
FSRA VISION AND CORE VALUES

VISION
The FSRA Vision is a picture of the desired future for the FSRA in 2017 and beyond, and it has been
agreed as follows:

To be recognised as the leading regulatory authority on Financial Services Regulation and

Development in the SADC Region

CORE VALUES
The FSRA core values are our guiding principles that dictate behavior and actions of our people.
They guide our decisions, assisting our people to know what is right from wrong; they help the
FSRA to determine if we are on the right path and fulfilling our business goals; and they create an
unwavering and unchanging guide. Our core values have been identified as follows:

INTEGRITY
a. We deliver on what we promise
b. We conform to professional standards
c. We follow laid down policies and procedures
d. We base all our decisions on moral and legal fairness
e. We honour our agreements with stakeholders

CONFIDENTIALITY
We maintain open, honest and direct relationships with our stakeholders,
ensuring we treat all non-public information at our disposal with utmost
confidentility. We take confidentiality oath in accordance with the FSRA Act, 2010.

TEAMWORK
All our jobs at FSRA are interconnected towards servicing all our stakeholders,
hence we work together towards achieving a common goal.
TEAMWORK

ACCOUNTABILITY
We have a collective obligation to account for our activities, accept our
responsibilities and to disclose the results in a transparent manner.

TRANSPARENCY
We demonstrate our transparency through disclosure to the public to indicate
that our organisation is managed well, functions in an ethical manner and
handles its finances with efficiency and responsibility.

CONSISTENCY
We are committed to decision making that is free of contradictions. Our decision
making is guided by our laws and regulations as well as internal policies and
procedures, ensuring that we make consistent decisions for like events.
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

TABLE OF CONTENTS

03 GENERAL OVERVIEW
2 Abbreviations
3 Introduction
4 The Ministry in charge of the FSRA
5 Background and History
5 FSRA Mandate
5 The FSRA Strategy: 2014 to 2017
6 Key Strategic Focus Areas
7 Corporate Governance
9 Facts and Figures FSRA Historic Financial data
10 Facts and Figures Regulated industries

12 BUSINESS OVERVIEW
12 Financial highlights of FSRA
15 Human Capital
21 FSRA Finance and Corporate Services
24 Insurance and Retirement Funds (IRF) - operational update
30 Legal, Policy and Intervention (LPI) - operational update
34 Capital Markets Development (CMD) operational update
40 Credit and Savings Institutions (CSI) operational update
44 Swaziland Stock Exchange (SSX) operational update

50 REGULATED INDUSTRIES FINANCIAL STATISTICS

51 Long term insurance Financial performance
63 Short term insurance Financial performance
73 Retirement Funds Financial Performance

90 FINANCIAL STATEMENTS

1
 ABBREVIATIONS

AML/CFT - Anti-Money Laundering / Combating the Financing of Terrorism

CIS - Collective Investment Schemes
CMD - Capital Markets Development Division
CMI - Capital Markets Institutions
CSI - Credit and Savings Instutions Division
CSD - Central Securities Depositories
CISNA - (SADC) Committee of Insurance, Securities and Non Banking
Financial Authorities
FIP - Finance and Investment Protocol (SADC)
FSB - Financial Services Board (South Africa)
FSPS - Financial Services Providers
FSRA - Financial Services Regulatory Authority
IAIS - International Association of Insurance Supervisors
IMF - International Monetary Fund
IOPS - International Organisation of Pensions Supervisors
IRF - Insurance and Retirement Funds Division
MOU - Memorandum of Understanding
NAMFISA - Namibia Financial Institution Supervisory Authority
NBFIS - Non-Banking Financial Institutions
NBFIRA - Non-Bank Financial Institutions Regulatory Authority (Botswana)
RIRF - Registrar of Insurance and Retirement Funds
SACCO - Savings and Credit Co-Operatives
SADC - Southern African Development Community
SSX - Swaziland Stock Exchange
OTC - Over the Counter

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

Mr. Sandile Dlamini - Chief Executive Officer

GENERAL OVERVIEW
INTRODUCTION

The FSRA hereby submits its third Annual report covering the year

1 April 2014 to 31 March 2015. This makes this report the third compilation

on our intention towards presenting an integrated annual report to our

stakeholders, namely; the Ministry in charge of the FSRA, our regulated

entities, consumers of financial services, business partners and the general

public.

3
GENERAL OVERVIEW

The
Ministry
of Finance

Hon. Minister for Finance - Senator Martin G. Dlamini

THE MINISTRY IN CHARGE OF THE FSRA

The Ministry of Finance is the Ministry responsible for FSRAs policy

guidance.

T
he Mission of the Ministry of Finance is to promote Macro-
economic stability in Swaziland by formulating and implementing
fiscal and financial policies that optimise economic growth and
improve the welfare of its citizens. One of the major components of the
Ministrys mission is to:
Provide a sound regulatory framework for the countrys financial
sector, hence the FSRA was established to fulfil this mandate.

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
BACKGROUND AND HISTORY
T
he FSRA came into existence following the
promul-gation of the FSRA Act 2010, as
an integrated regulatory and supervisory
authority for non-bank financial services providers.
The FSRA consolidates and transfers the supervision
and regulation of all non-banking financial services
Institutions (NBFIs) from various regulators to be
under one roof.
a) The supervision of Insurance and Retirement
Funds Industries was trasferred from the Office
of the Registrar of Insurance and Retirement Funds
(RIRF) to the FSRA;
b) The supervision of SACCOs - was transferred from
the Office of the Commissioner of Cooperatives to
the FSRA;
c) The supervision of Capital Markets and the
Swaziland Stock Exchange - were transferred
from the Central Bank of Swaziland to the FSRA;
d) The supervision of Credit Only institutions - was
transferred from the Central Bank of Swaziland to
the FSRA.
During the year under review, the FSRA continued to
strengthen its establishment as an effective supervisor
of NBFIs in Swaziland. To achieve this effectiveness,
the FSRA has to manage the transition process quickly
and smoothly so as to be optimally positioned to tackle
the technical and operational challenges that lie ahead.
To do so, the FSRA must:
Ensure that its institutional structures for
supervision are firmly in place;
Make sure that transitional issues are completed;
Ensure that steps are taken to secure its financial
and operational independance; and
Lay the basis for strengthening the legal,
regulatory, and operational frameworks for
effective supervision.
The FSRA is responsible for ensuring that regulated
NBFIs comply with the relevant legislative and
capital adequacy requirements in order to promote the
financial soundness of the entities thereby protecting
the investing community.
FSRA MANDATE
The principal objects of the Authority are spelt out in
the FSRA Act, as being 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 services
providers;
c) The highest standards of conduct of business by
financial services providers;
d) The promotion of fair competition between
different financial service providers for the benefit
of stakeholders;
e) The fairness, efficiency and orderliness of the
Swaziland non-bank financial sector, and
f) The protection of the stakeholders.
THE FSRA STRATEGY: 2014 TO 2017
As the financial year under review drew to a close,
the entire FSRA team came together again in March
2015, to review progress on the implementation of the
strategy.
This strategic plan has been developed by the FSRA
in order to provide a disciplined approach to the
management of the organisation over the next three
years. It has been developed to guide the organisation
in the achievement of its future vision. The objectives
of the Strategic Planning Process are:
a) To create a definite link between the organisations
vision and strategic focus areas;
b) To identify internal and external environmental
issues and opportunities that could influence the
organisation (similar to the traditional SWOT
analysis);
c) To identify key measures of success and factor them
in a scorecard to measure and evaluate progress and
performance (a balanced scorecard);
d) To develop key strategic focus areas, strategic action
plans and supporting business plans to drive the
implementation of the strategy;
e) To create context for the strategic team in terms
of strategic thinking/planning competencies and
strategy implementation;
f) To link strategy implementation to performance
management; and
g) To craft structures to drive and review the strategic
action plans.
5
 GENERAL OVERVIEW

KEY STRATEGIC FOCUS AREAS (SFA)

The Key Strategic Focus Areas have been identified as those areas that the organisation has to focus on to deliver
on the Vision, taking into account the socio, political, economic and competitive environment in which we
operate:
SFA No. Strategic Focus Area (SFA) Measures of Success
SFA 1 HARMONISED Harmonised legal framework in place with:
LEGISLATION AND a. Integration of all Financial Services laws and sub legislations;
REGULATIONS b. Integration of FSRA Act with other local laws;
c. Integration with SADC-CISNA, and FIP objectives;
d. Integration with international best practices;
e. Integration with AML/CFT recommendations;
f. Voluntary compliance by our regulated stakeholders;
g. Effective intervention and enforcement to deter
malpractices;
h. Lobbying mechanisms in place;
i. Enhanced public awareness;
j. Effective environment for supervision; and
k. Reduced financial crime quantifiable.
SFA 2 STAKEHOLDER a) Consumer protection and education plans in place
AWARENESS AND b) Improved Consumer awareness;
COMMUNICATION c) Improved service levels;
incorporating our d) Improved financial literacy;
communication strategy, e) Coverage of stakeholders/number of persons trained;
consumer awareness and f) Enhanced investor protection;
protection programmes. g) Improved stakeholder relationships;
h) FSRA Corporate image entrenched;
i) Communication policy in place;
j) Education programs in place and available on the FSRA website;
k) Informed investment decisions; and
l) Effective and timely complaints resolution mechanism in place;
SFA-3 INFORMATION AND a) Generation of timely and appropriate reports;
COMMUNICATION b) Automated operations of the FSRA;
TECHNOLOGY (ICT) c) Accurate industry Statistics;
incorporating a supervi- d) Supervisory system in place;
sory system and all other e) Cost effective system identified;
operational systems. f) System scalability ability to grow with FSRA needs;
g) High levels of system Integrity;
h) Contingency and back up plans in place (business continuity plans
and disaster recovery plans)
i) Competent Users achieved, both internally and externally; and
j) Dedicated Support always available.
SFA-4 IMPROVED a) Supervisory model identified and in place;
SUPERVISORY MODEL b) Legislation aligned with the model of supervision;
c) Risks identified ( industry and internal risks);
d) Risk management policies and procedures in place;
e) FSRA an autonomous regulator;
f) Financial and operational independence achieved;
g) Competent and trained staff in place;
h) Implementation plan of the supervisory model in place;
i) Model successfully implemented.

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

SFA No. Strategic Focus Area (SFA) Measures of Success

SFA-5 PEOPLE / HUMAN a) Approved organisational structure in place;
CAPITAL b) Ensure that structure enhances team effectiveness;
incorporating an c) Low staff turnover;
approved organogram, d) Performance Management in place;
skills development, staff e) Competent staff developed and retained;
retention and successive f) Competency based training programme in place;
planning. g) Career growth progression/job rotation in place;
h) Corporate values entrenched;
i) Career succession planning in place;
j) Knowledge management system in place;
k) Excellent service delivery to all stakeholders achieved;
SFA-6 FUNDING a) Achieve, as a minimum, a breakeven financial position;
ensuring an integration of b) A responsive levy model in place;
financial resources and an c) Funding related legislation must be amended and vest only in the
increase in revenue base. FSRA Act;
d) Adequate and timely budgeting in place;
e) Appropriate allocation of resources;
f) Effective monitoring of revenue and expenses/ Cost
containment/variance analysis in place;
g) Effective Internal controls system in place.
SFA-7 FSRA REGULATORY a) Integrated FSRA policies and procedures in place and
AND INTERNAL approved.
POLICIES AND b) To ensure compliance with policies and procedures.
PROCEDURES
development of policies
and procedures
SFA-8 DEVELOPMENT OF a) New investment instruments in place;
FINANCIAL MARKETS b) New Financial Services Providers (FSPs) licensed;
ensuing Capital Markets c) Increased absorption of local investment assets as prescribed in
Development and legislation;
prescribed Investment d) Diversified and increased investment instruments in place;
Instruments; e) Participation in the establishment and implementation of the
DMO for centralisation of Government debt;
SFA-9 DEVELOPING THE a) Established and autonomous SSX in place;
SWAZILAND STOCK b) Increased listings and Market Capitalisation;
EXCHANGE c) Notable increase in secondary trading;
- towards autonomy from
the FSRA.

CORPORATE GOVERNANCE REPORT FSRAS CORPORATE GOVERNANCE

According to the OECDs Principles of Corporate
Governance, 2004, Corporate Governance involves a
set of relationships between a companys management,
its Board, its shareholders, and other stakeholders.
Corporate Governance also provides the structure
through which the objectives of the company are
set, and means of attaining those objective and
monitoring performance.
PHILOSOPHY
At FSRA, Corporate Governance is the creation
and enhancing of long-term sustastainable value for
the stakeholders through ethically driven business
processes. As such, our affairs are managed in a fair
and transparent manner.

7
 GENERAL OVERVIEW
We ensure that we evolve and follow the corporate
governance guidelines and best practices. We
consider it our inherent responsibility to disclose
timely and accurate information regarding our
financials and performances as well as the leadership
and governance of the Authority.
In accordance with our Vision, the FSRA aspires to be
the SADC regions benchmark in supervision as well
economic development.
BOARD OF DIRECTORS
The FSRA Board of Directors (the Board) is at the core
of our corporate governance practices and oversees
how Management serves and protects the long-term
interests of all our stakeholders. We believe that an
active, well-informed and independent Board is
necessary to ensure the highest standars of corporate
governance.
THE SIZE AND COMPOSITION OF
THE BOARD
The composition of the Board is stupulated in Section
7 of the FSRA Act and consists of the following:
a) A Chairperson and not more than four (4) other
members, who shall be appointed by the Minister;
b) A representative of the Swaziland Law Society;
c) A representative of the Institute of Accountants;
d) The Principal Secretary of the Ministry of Finance,
or a person authorised by the Prinicipal Secretary
in writing to act on behalf of the Prinicipal
Secretary; and
8
e) The Chief executive officer of the Authority, who
shall act as secretary to the Board.
During the year under review, the following Board
member were in office:
1. Chairman - Mr Muhawu Maziya
2. Deputy Chairman - Mr Nathie Maseko
3. Other Members - Walter Matsebula
- Theo Mason
- Modern Samketi
- Gigi Reid
- Dumisile Magagula
4. Secretary/CEO - Mr Sandile Dlamini
CORPORATE GOVERNANCE
CHALLENGES THAT HAVE BEEN
FACED DURING THE YEAR UNDER
REVIEW
The main challenge faced by the FSRA during the
year under review was the expiry of the Board term
of office, with a time lag in re-appointment into office.
During the year under review, the Board term of office
expired in September 2014 and there was no Board
until the end of the period. This effectively means
that for the duration the Board was not in office,
programmes requiring Board Approval got stalled,
and the office was run without proper governance.
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

FACTS AND FIGURES

FSRA HISTORICAL DATA AS AT 31 MARCH
2015 2014 2013 2012 2011 2010 2009
FSRA FSRA FSRA RIRF RIRF RIRF RIRF

STATEMENT OF SURPLUS OR DEFICIT

Government Subvention 8 015 000 12 000 000 12 614 588 - 4 000 000
5 500 000
5 500 000
Regulatory Levies and fees 27 618 148 22 594 280 16 019 730 17 194 890 14 794 227 13 049 474 10 547 532
Other income 1 170 260 1 490 566 1 338 922
1 816 568 1 235 982 974 394 1 192 577
Total Income 36 803 408 36 084 846 29 973 240 19 011 458 20 030 209 19 523 868 17 240 109

Operating Expenses (32 355 286) (29 777 488 (24 238 289 ) (18 188 258) (14 765 747) (10 254 008) (8 966 981)
Depreciation (694 460) (662 259) (438 884)
(333 935) (296 410)
(350 095) (327 536)
Total expenses (33 049 746 (30 439 747) (24 677 173) (18 522 193) (15 062 157) (10 604 103) (9 294 517)

Net surplus 3 753 662 5 645 099 5 296 067 489 265 4 968 052 8 919 765 7 945 592

2015 2014 2013 2012 2011 2010 2009

FSRA FSRA RIRF RIRF RIRF RIRF RIRF

STATEMENT OF FINANCIAL POSITION

Non-Current Assets
Property, plant and equipment 3 231 188 3 458 760 3 744 896 1 909 494 1 922 882 1 730 606 2 002 981
Financial Assets 18 437 989 21 536 538 7 481 617 9 791 455 2 000 000 1 000 000 -
21 669 177 24 995 298 11 226 513 11 700 949 3 922 882 2 730 606 2 002 981

Current Assets
Trade and other receivables 10 782 026 5 830 216 5 087 876 8 430 711 1 732 960 4 579 241 1 576 284
Cash and Cash equivalents 15 183 598 11 816 425 20 921 929 10 970 681 22 798 975 18 836 667 12 673 225
25 965 624 17 646 641 26 009 805 19 401 392 24 531 935 23 415 908 14 249 509
Total Assets 47 634 801 42 641 939 37 236 318 31 102 341 28 454 817 26 146 514 16 252 490

Equity and Fund balances
Retained Income 43 081 144 39 327 482 33 682 383 28 386 316 27 522 874 25 304 822 15 758 504

Liabilities
Trade and other payables 2 542 676 1 667 562 1 460 044 489 456 335 865 821 219 473 513
Provisions 723 300 533 399 - - 574 500 - -
Trust Fund / Guarantee Fund 1 287 681 1 113 496 2 093 891 2 226 569 21 578 20 473 20 473
4 553 657 3 314 457 3 553 935 2 716 025 931 943 841 692 493 986
Total Equity and Liabilities 47 634 801 42 641 939 37 236 318 31 102 341 28 454 817 26 146 514 16 252 490

9
 FACTS AND FIGURES REGULATED INDUSTRIES

10
NON-BANKING FINANCIAL INSTITUTIONS vs TOTAL FINANCIAL SYSTEM ASSETS AS AT 31 MARCH
2015 2014 2013 2012 2011 2010 2009
GDP Estimate 54 920 402 820 53 580 880 800 36 623 820 000 33 246 670 000
NON-BANKING FINANCIAL
INSTITUTIONS (NBFIs) 49 850 496 256 45 438 610 581 28 454 068 733 26 871 311 994 15 106 499 071 14 112 296 912 12 234 368 008
Retirement Funds 22 319 605 062 20 800 083 879 17 962 047 512 15 098 460 825 13 490 704 586 12 800 606 679 11 182 907 510
Long term Insurance 2 567 705 186 2 359 953 026 1 784 482 731 1 304 745 730 1 053 866 276 812 876 461 620 184 716
Short term insurance 283 798 034 297 448 168 434 912 861 536 349 588 561 928 209 498 813 772 431 275 782
Collective Investment Schemes 19 490 744 974 16 944 995 028 5 138 728 164 7 178 848 821
SACCOs 752 624 000 1 023 807 000 916 531 000 835 931 000
Credit institutions 2 644 471 000 2 643 597 000 664 979 465 473 882 030 Data not yet collected
Building Societies 1 791 548 000 1 725 848 000 1 552 387 000 1 443 094 000

COMMERCIAL AND DEVELOPMENT
BANKS 12 770 591 000 13 437 973 000 12 885 753 000 11 097 926 000
Government owned 1 889 276 000 1 969 005 000 1 866 128 000 1 758 093 000
Data not yet collected
Subsidiaries of SA Banks 10 881 315 000 11 468 968 000 11 019 625 000 9 339 833 000
GENERAL OVERVIEW

FINANCIAL REGULATORS 9 413 945 801 9 266 119 939 7 283 197 000 5 353 147 000
Central Bank of Swaziland (CBS) 9 366 311 000 9 223 478 000 7 245 961 000 5 322 045 000
Financial Services Regulatory Authority Data not yet collected
(FSRA) 47 634 801 42 641 939 37 236 000 31 102 000

TOTAL FINANCIAL SYSTEM 72 035 033 057 68 679 825 040 48 623 018 733 43 322 384 994 15 106 499 071 14 112 296 912 12 234 368 008
Non-Bank Assets as a % of Total
Financial System 69% 67% 59% 62%
Non-Bank Assets as a % of GDP 91% 85% 78% 81%
 FACTS AND FIGURES REGULATED INDUSTRIES
REGULATED INDUSTRIES REQUIRING 30% LOCAL INVESTMENTS - LOCAL VS FOREIGN ASSETS

RETIREMENT FUNDS 2015 2014 2013 2012 2011 2010 2009
Industry local investments 7 299 822 198 6 381 985 763 5 223 198 949 4 301 219 033 3 618 499 127 3 657 486 061 1 746 872 527
Industry foreign investments 15 541 843 944 14 418 098 116 12 738 848 563 10 797 241 792 9 872 205 459 9 143 120 618 9 436 034 983
Total Investments (E) 22 841 666 142 20 800 088 899 17 962 047 512 15 098 460 825 13 490 704 586 12 800 606 679 11 182 907 510

LONG TERM INSURANCE 2015 2014 2013 2012 2011 2010 2009
Industry local investments 292 429 078 314 259 040 45 543 816 289 914 869 284 863 972 262 578 450 121 355 968
Industry foreign investments 2 275 276 108 2 045 693 986 1 352 635 042 1 014 830 861 769 002 304 550 298 011 498 828 748
Total Investments (E) 2 567 705 186 2 359 953 026 1 698 178 858 1 304 745 730 1 053 866 276 812 876 461 620 184 716

SHORT TERM INSURANCE 2015 2014 2013 2012 2011 2010 2009
Industry local investments 282 258 401 183 404 071 168 636 124 167 631 558 196 190 167 193 319 692 164 403 998
Industry foreign investments 74 277 804 184 344 705 266 276 737 368 718 030 365 738 042 305 494 080 266 871 784
Total Investments (E) 356 536 205 367 748 776 434 912 861 536 349 588 561 928 209 498 813 772 431 275 782

TOTAL 30% LOCAL INVESTMENTS - LOCAL VS FOREIGN ASSETS

TOTAL 2015 2014 2013 2012 2011 2010 2009
Total local investments 7 874 509 677 6 879 648 874 5 737 378 889 4 758 765 460 4 099 553 266 4 113 384 203 2 032 632 493
Total foreign investments 17 891 397 856 16 648 136 807 14 357 760 342 12 180 790 683
11 006 945 805 9 998 912 709 10 201 735 515
Total Investments (E) 25 765 907 533 23 527 785 681 20 095 139 231 16 939 556 143
15 106 499 071 14 112 296 912 12 234 368 008
FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

% Local investments to total investments 31% 29% 29% 28% 27% 29% 17%
% Foreign investments to total investments 69% 71% 71% 72% 73% 71% 83%
Total Investments (%) 100% 100% 100% 100% 100% 100% 100%

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GENERAL OVERVIEW

FINANCIAL HIGHLIGHTS OF THE FSRA

Funds of the Authority Sundry Income

Income and Expenditure Salaries and Wages
Registration and Renewal Fees Rent Paid
Levies Legal Fees
Subventions Income

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

FINANCIAL HIGHLIGHTS OF THE FSRA

The main highlights of the year to 31 March 2015 are as d) The payment to the authority of administrative
follows: penalties imposed under section 68;
e) Notwithstanding section 38 of the insurance
INCOME AND EXPENDITURE Act, such percentage out of the Registrars levies
account as the Minister may, acting on the advice
of the Board, by notice published in the gazette,
Income and Expenditures 31-Mar-2015 31-March-2014
determine;
f) Grants and donations made to the authority; and
Income g) Such sums of money or such other assets as may
Levies 26 636 543 21 770 076 accrue to or vest in the authority from time to
Subvention 8 015 000 12 000 000 time, whether in the course of the exercise of its
Interest income 1 080 959 1 097 173 functions or otherwise.
Registration/Renewal fees 981 605 824 204
Sundry Income 89 301 393 393 REGISTRATION AND RENEWAL
Total Income 36 803 408 36 084 846 FEES
Operating expenses (33 049 747) (30 439 747)
Application/Registration and renewal fees received
during the year were as follows:
Surplus for the year 3 753 662 5 645 099
2015 2014
Registration fees 396 620 277,010
FUNDS OF THE AUTHORITY Renewal fees 584 985 547,194

Sections 20 of the FSRA Act, 2010 stipulates that the 981 605 824,204
authority shall be funded by:
a) Monies appropriated by Parliament for the LEVIES
purpose;
Actual levies raised from FSRA regulated entities as at
b) The payment to the authority of fees or other
the end of 31 March 2015 totalled E26.6million (2014:
charges, as prescribed by the authority;
E21.8 million). The breakdown of levies charged to
c) The payment to the authority of supervisory
the industry is as follows:
levies imposed under section 21;

Regulated Entity Calculation basis per legislation 2015 2014

Retirement Funds 0.07% of Total Balance Sheet Assets 16 779 080 14,267,907
Insurance Companies Short term - 1.25% of Net Premiums
Long term 0.07% of Assets 5 919 141 6,027,012
Insurance Brokers 1.25% of Commission 709 958 669,248
Insurance Agents 1.25% of Commission 68 082 136,224
Fund Administrators 1.25% of Fee Income 77 996 302,567
Investment Managers 1.25% of Fee Income 2 353 258 367,118
SACCOs 0.1% of member savings 729 029 -
TOTAL 26 636 544 21,770,076

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 BUSINESS OVERVIEW

FINANCIAL HIGHLIGHTS OF THE FSRA - continued

The collection of industry levies is in line with
the requirements of the FSRA Act, as well as
in compliance with the requirements of the
International Organisations in which the FSRA is
affiliated. Collection of levies is intended to enable
regulatory authorities to achieve financial autonomy
and operational independence from Government.
Salaries and Wages
Staff costs accounts for the largest percentage in
our income statement. The simple reason is that the
Authority is a services organisation, which relies on
its people to deliver its mandate. The total salaries for
the year under review totalled E20 583 267 (2014: E18
809 561).

Subvention Income This represents a staff compliment of 40.

The Authority has been allocated E8.15 million
Government Subvention for the year to 31 March
2015 (2014: E12 million). This is meant to capitalise
the new FSRA divisions, namely, the Capital Markets
Development, Credit and Savings institutions, the
Swaziland Stock Exchange, the Ombudsman of
Financial Services and Appeals Tribunal.
Sundry Income
Sundry income this year is made up of the compo-
nents as listed below as follows:
Rent paid
The Authority is leasing 2.5 floors from the Public
Service Pension Funds Ingcamu Building. At the end
of the review period, the authority had spent E2,508
588 (2014: E2,128,033).
Legal Fees
Legal fees paid amounted to E597 014 in the year
under review as detailed below:

2015 2014
Penalties - Brokers 3 000 81,800
Penalties - Asset Managers - 200,000
Penalties - Retirement Funds 42 000 111,593
Penalties - Agents 10 000 -
Penalties - Fund
Administrators 30 000 -
Interest Received 1 085 260 1,097,173
1 170 260 1,490,566

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

HUMAN CAPITAL
Brief Outline of Roles and Responsibilities of Regulatory Divisions
Strategic Actions
Human Resource Operational activities during the year

15
 BUSINESS OVERVIEW
HUMAN CAPITAL - continued
BRIEF OUTLINE OF ROLES AND
RESPONSIBILITIES OF
REGULATORY DIVISIONS
Insurance and Retirement Funds (IRF)
T
he IRF Division is responsible for the
following broad functions:
Relationship Management of supervised entities
under the FSRA, Insurance and Retirement Funds
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;
Ensuring compliance with regulations and
prudential standard by supervised institutions;
Administration of the Retirement Funds Act 2005
and its sub-legislations; and
Administration of the Insurance Act 2005 and
its sub-legislations.
Capital Markets Development (CMD)
The CMD Division is responsible for the following
broad functions:
Overseeing and regulating capital raising
activities of corporations and other capital market
participants;
Reviewing and signing-off on company disclosure
filings such as registration statements for newly
offered securities, annual and quarterly filings,
reports to shareholders, and filings related to
mergers and acquisitions;
Overseeing market conduct by capital market
participants;
Relationship Management of supervised entities;
On-site and off-site monitoring and analysis of
entities falling under their supervision;
Ensuring sound risk management and operating
policies by supervised institutions;
Ensuring compliance with regulations and
prudential standards by supervised institutions;
and
Administration of the Securities Act 2010.
16
Credit and Savings Institutions (CSI)
The CSI Division is responsible for the following
broad functions:
Regulation and Supervision of Building Societies;
Regulation and Supervision of SACCOs;
Regulation and overseeing of lotteries;
pawnbrokers, and hire purchase institutions;
Regulation and supervision of Microfinance
Credit Providers;
Administration of the Money-Lending and Credit
Financing Act, 1991;
Future administration of the National Credit Act;
Relationship Management of supervised entities;
On-site and off-site monitoring and analysis of
supervisor entities;
Ensuring sound risk management and operating
policies by supervised institutions; and
Ensuring compliance with regulations and
prudential standards by supervised institutions.
STRATEGIC ACTIONS
The FSRA strategic objective is to recruit, retain and
develop happy, competent people who reflect the
values and image of the FSRA. Our values as outlined
earlier, entirely depend on our people. Throughout
the year under review, we consistently checked
ourselves against our measures of success as outlined
in our strategy, namely:
Approved organisation strucuture in place
ensuring that the structure enhances team
effectiveness.
During the year under review, the FSRA Board
approved a new organisational structure,
following the recommendation that had been
received from the IMF Mission.
The FSRA receives technical assistance from the
International Monetary fund (IMF). The IMF
Mission entitled Strengthening supervision
of Savings and Credit Cooperatives and
Capital Markets Institutions in Swaziland
visited the FSRA in August 2013, and made
the following obervations in relation to our
organisational integration.
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
The mission observed that the replicated
FSRA Departments are effectively acting along
departmental lines, rather than as an integrated
team. This silo approach works against the
ability of the FSRA to use its limited staff
resources to its best advantage and to achieve
a more efficient distribution of those resources
accross the FSRA.
The IMF then recommended that we explore
scope to re-organise roles and responsibilities
with a view of promoting staff integration and
extracting synergies where possible.
During the period April to May 2014, the IMF
Mission returned to the country and initiated
discussions for revamping our organisational
structure to ensure we meet the objective of
enhancing team effectiveness and address
operational silos.
The major changes that IMF recommended,
and were extensively discussed by Management
were as follows:
Transfer the signing powers of all Registrars
to the CEOs office, so that Licences will
come from the CEOs office, instead of each
division issuing its licenses.
Change job titles of all Registrars to General
Managers, making sure that all duties
and functions and remuneration remain
unchanged.
Create a new Division called Legal Services,
and transfer all existing legal and consumer
protection persons from IRF, CSI and CM
into this Division.
Just like the Finance and Corporate
Service, this division has to service all
FSRA divisions.
The outcome of these proposed changes was an
Organogram which looks like this:
17
18
FSRA BOARD

CHIEF EXECUTIVE OFFICER

HUMAN CAPITAL

GENERAL MANAGER: GENERAL MANAGER: GENERAL MANAGER: GENERAL MANAGER:

GENERAL
INSURANCE CREDIT CAPITAL MARKETS FINANCE AND
MANAGER:
AND RETIREMENT AND SAVINGS DEVELOPMENT CORPORATE
LEGAL SERVICES
FUNDS (RIRF) INSTITUTIONS (CSI) (CMD) SERVICES
- continued

Manager
Manager Manager Manager Manager Manager Manager
BUSINESS OVERVIEW

SSX

Staff Staff Staff Staff Staff

 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Ensure job evaluation and grading is completed
During the previous year under the review,
a consultant was engaged to complete the job
evaluation and grading exercise. However, half-
way through the project, it was paused in order
to implement the recommendations of the IMF,
and review the organisational structure.
At the end of the year under review, this
project was still paused as the new organisa-
tional structure was still being implemented.
Ensure FSRA performance management
system is in place
The FSRA currently has a performance
management system in place.
As a matter of policy, in order to maximise
their potential, staff members are given
the opportunity to perform in such a way
that they add value and help attain the
organisational goals.
The key to successful perfomance manage-
ment in our organisation lies in honest
two-way communication between managers
and employees.
The 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.
Ensure the FSRA HR Policies and procedures
are finalised and approved
When the FSRA was established, we already
had HR Policies and Procedures that were
approved during the RIRF era.
During the year under review, the Board
allowed us to continue using the RIRF
policies until the FSRA reviewed policies are
approved.
By the end of the review period, the process
of reviewing and revamping our HR Policies
had started and was ongoing.
Pending action plans - at the end of the review
period
The following action plans were pending
implementation commencement as at the
end of the review period:
Conducting a skills audit and training
needs analysis;
Developing and implementing a values
based code of ethics;
Developing and implementing a staff
retention policy and mechanisms for
protecting talent;
Improving our internal branding and
corporate image;
Succession planning; and
Introducing a staff welfare programme.
HUMAN RESOURCE OPERATIONAL
ACTIVITIES DURING THE YEAR
This report is a snapshot of the human resources
activities for fiscal year 2014-2015. 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 Office of the
Human Resources and Corporate Services provides
services and support to the whole of FSRA in various
activities.
i. Employment
Staffing
The Human Resources department assists with
all phases of the employment process. We over-
see the processes of recruitment, interviewing,
testing, background checks, selection and evalu-
ation of employees. Depending on the positions
being filled, we also outsource the employment
process by engaging consultants to coordinate
the recruitment process on behalf of the FSRA.
Staff compliment
The FSRA had a staff compliment of 40 (2014:
41) as at 31 March 2015. These were made up as
follows:
19
 BUSINESS OVERVIEW

HUMAN CAPITAL - continued

DIVISION Number of Employees

CEOs Office 2
Insurance and Retirement Funds (IRF) Division 11
Capital Markets Development (CMD) Division 2
Credit and Savings Institutions (CSI) Division 8
Legal Services Division 7
Finance and Corporate Services Division 7
Swaziland Stock Exchange (SSX) 1
Ombudsman of Financial Services 2
TOTAL STAFF COMPLIMENT 40

ii. Compensation Administration To optimise the scarce financial resources and

Payroll Administration
The Human Resources Office 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.
iii. Training and Development
The FSRA offered a variety of training and
development opportunities for its staff members.
reduce the number of trainings that do not
benefit the organisation, each division was
allocated a training budget and the head of
each division came up with a training plan for
its division. This was done merely to be able to
monitor the expenses and ensure that employees
taken for training are gaining new competencies
that are necessary for the employees in executing
their jobs, new competencies that will benefit
the organisation.

20
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

FSRA FINANCE AND CORPORATE

SERVICES

Financial and Management Accounting Audited Financial Statements

Human Resources Function Planned activities in the coming year
Information and Communication
Technology

21
 BUSINESS OVERVIEW
FINANCE AND CORPORATE SERVICES
T
he Finance and Corporate Services is
responsible for managing the FSRAs 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.
FINANCIAL AND MANAGEMENT
ACCOUNTING
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. As a result of the effeciency of this
function, the FSRA continues to be a viable
authority.
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.
22
- continued
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
Authoritys 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
Authoritys 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. Were proud to report
that ever since the authority was established,
we have always received a clean, unqualified
audit 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 admin-
istrative support to the entire FSRA across all
divisions.
HUMAN RESOURCES FUNCTION
This function falls within the Finance and
Corporate Services Division. Refer to the Human
Capital section for detailed information.
INFORMATION AND
COMMUNICATION TECHNOLOGY
This function falls under the Finance and
Corporate Services Division. The ICT infra-
structure at FSRA assists the organisation in
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

running efficiently. These services are essential iv. Computer networking At the FSRA, our
to the everyday mechanics of an organisation networking support is provided by an
and integral to effective service delivery. These outsourced service provider. Our networking
technologies include hardware, software, is a complete network encompassing a mix
networking, internet, email, website and imple- of cabled and wireless access points, multiple
mentation. printers and high speed internet connection
via a purpose-built server. The cabled
i. Service Providers At FSRA we currently do
access points were introduced when it was
not have an in-house systems administrator.
discovered that the wireless access points
We use outsourced services from Service
could no longer handle the increase in volume
providers we inherited from the office of the
of users. Internet speed was also upgraded to
Registrar of Insurance and Retirement Funds
the highest speed available.
(RIRF). While at RIRF, we deliberately delayed
the establishment of this department, until as v. Internet As already mentioned above, with
users, we were sure what ICT technologies we the increase in volume of users as FSRA
require, especially on the supervisory side of established all the Divisions, the need to
business. Thus far, outsourcing has been cost upgrade the speed was realised, and the speed
effective for us. However with the coming into was increased.
force of the office of the FSRA, it is envisaged
vi. Email Communication - the email server is
that the technology needs will expand
also outsourced. With the establishment of
significantly. There is now a need to establish
the FSRA, the new FSRA email and the old
a fully-fledged in-house ICT support service.
RIRF email addresses are running parallel,
Hence we have budgeted for the recruitment
and will run like that until we are sure that all
of this resource. As at the end of the review we
our stakeholders and our contacts have now
had not yet recruited this resource.
received our FSRA email addresses.
ii. Hardware at the FSRA, our hardware
comprise of the Windows Server, desktop AUDITED FINANCIAL STATEMENTS
PCs, laptops, photocopiers and printers. The
relationships we have maintained with our Refer to the Audited Financial Statements annexed
service providers over time has ensured that to this report.
we receive support promptly whenever our
hardware needs attention. PLANNED ACTIVITIES IN THE
iii. Software system softwares have direct COMING YEAR
control and access to your computer
The following are planned activities for the
hardware, and memory locations, to make the
upcoming year:
applications software do a task. At the FSRA,
i. Recruitment of additional staff for the division
the following softwares are widely used:
in line with the budget;
Microsoft Windows, Pastel Accounting, and
ii. The establishment of the ICT department
D-Bit Payroll.
inhouse;
iii. Close monitoring of actual expenditure
We are still exploring the acquisition of a
against approved budgets;
supervisory system that can be used by all
iv. Implementation of divisional management
Regulatory Divisions in carrying out their
accounting to assist division heads to monitor
regulatory function, for licensing, on-site and
their spending on an ongoing basis;
off-site monitoring, as well as intervention.
v. Implementation of pastel accounting modules
that will enable us to achieve ii and iii above.
vi. Ensure that the reporting deadlines stipulated
in the FSRA act are met.

23
BUSINESS OVERVIEW

24
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

INSURANCE AND RETIREMENT FUNDS -

OPERATONAL UPDATE REPORT
FOR THE YEAR

Key Industry Highlights Risk Assessment Reports

Collaboration with Central Bank of Swaziland Supervisory Interventions
On-site Inspections Registered Entities
Off-site Surveillance Participation at Regional and
International Regulatory Forums

25
 BUSINESS OVERVIEW
KEY INDUSTRY HIGHLIGHTS
Engagement of Swaziland Post and
Telecommunications Corporation and MTN
Swaziland for premium collection
n the previous report, we reported that we had
consultations with the Swaziland Post and
Telecommunications Corporation and MTN
Swaziland to discuss the possibility of these
entities allowing insurers to use their facilities
for the collection of premiums. The use of these
entities by insurers will ease premium collection
as policyholders can pay their premiums anywhere
there is a post office and also use mobile technology.
During the year under review the FSRA approved
the use SPTCs facilities by Safrican Swaziland
and Liberty Life Swaziland and Metropolitan Life
Swaziland.
The Authority also approved MTNs collaboration
with Old Mutual for the distribution of the
Likhandlela mobile insurance.
Product Development to enable the
inclusion of low income households in the
insurance sector
Although the micro-insurance regulations have not
been passed by parliament, insurers have taken
steps in developing products that are suitable
for the low income households. During the year
under review, the Authority received notification
of the Likhandlela mobile insurance, a funeral
product targeted at people in the informal sector.
The Authority was also notified of the Nedbank-
Old Mutual Funeral Assistance Cover which is
aimed at Nedbanks low-income customers.
Despite the efforts made by the Authority together
with the industry, the Swaziland Finscope
Consumer Survey for 2014 revealed that Insurance
coverage had increased by 5 percentage points
since 2011 when the last survey was carried out.
The survey report revealed that funeral insurance
continued to have the highest uptake despite and
the main barriers to insurance that were identified
were the lack of awareness of insurance products by
people in the rural areas and negative perceptions
about providers of insurance products.
26
COLLABORATION WITH CENTRAL
BANK OF SWAZILAND
The FSRA works closely with the Central Bank of
Swaziland. During the year under review joint training
sessions on anti-money laundering and macro-
prudential supervision were held. The Authority also
makes quarterly contributions to the Financial Stability
Unit for the preparation of the financial sector report.
ON-SITE INSPECTIONS
During the period under review, 4 on-site inspections
were carried out in terms of Regulation 13 of the
Insurance Regulations, 2008 and 3 on-site inspections
were carried out in terms of Section 35 of the
Retirement Funds Act, 2005.
Type of Entity Number of Entities
Inspected
Insurance Companies 3
Retirement Funds 3
Corporate Agent 1
Total 7
The inspections highlighted several areas of concern
but the following areas were the found to be common
in the inspected entities:
Insurance Companies
a. Insurers whose holding companies are in
South Africa continue to rely heavily on
their holding companies for their operational
functions. There was minimal effort from the
Management of local insurers to develop the
technical skills locally in order to facilitate the
transfer of administration functions like the
premium allocation, claims processing and
the finance and accounting functions of the
entities registered in Swaziland;
b. Lack of monitoring of intermediaries by the
insurers resulting in the inflation of prices of
products distributed on behalf of the insurers,
without the insurers knowledge, to the extent
that commission retained by the intermediary
is higher than the legislated commission
rates. As a result of this, policyholders end
up paying higher premiums for products
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
that would have cost them half the amount
of the premium had they sourced the product
directly from the insurer.
c. Compliance with the legislated local share-
holding for insurance companies is
progressing slowly as investors indicate
that they are having difficulty in identifying
suitable business partners.
d. Fronting was also common amongst local
insurers, some insurers were fronting risks
that they could afford to retain in their books;
e. Lack of documented operating policies
and procedures and in some cases insurers
adopted group policies and procedures
and did not customise them for the local
operations;
f. Violation of Section 49 of the Insurance Act
by inducing group policyholders by paying
them commission, administration fees or
having profit sharing arrangements with
them in order to keep them as policyholders.
g. The insurers risk management policies
and procedures do not take into account
AML/CFT issues and as such they have no
mechanisms in place to monitor and identify
suspicious transactions. FSRA is working
with insurers to improve the situation.
Insurance Brokers
a. Most brokers did not have adequate financial
resources to fund their operations, meaning
that there was a high risk of these brokers
misusing policyholders premiums;
b. Violation of Section 63 (2) of the Insurance
Act, by not remitting premiums within 60
days;
Retirement Funds
a. Lack of adequate controls on the Retirement
Funds financial resources; retirement funds
trustees delegate several functions to the
retirement fund administrators but do not
oversee the activities of the administrators
in matters relating to the retirement fund
e.g. several retirement funds have given the
signatory powers over their bank accounts to
the administrators, trustees only get quarterly
reports pertaining to the transactions of their
bank accounts;
b. Trustees have no service level agreements
in place regarding activities outsourced
to investment managers and fund
administrators. This then makes it difficult
for trustees to monitor the performance on
the contracted services as there are no specific
targets and timelines set for the discharge of
the contracted the services.
c. Several retirement Funds do not have their
bank accounts registered in their own name
as per the requirements of Section 18 of the
Retirement Funds Act;
d. Some funds had implemented changes in
their structures without the approval of the
FSRA, e.g. participation in umbrella funds
and making contributions into the Umbrella
without being registered as participating
employers under the relevant umbrella
funds.
e. Some retirement funds had inadequate credit
controls such that loan disbursements for
investment purposes in other entities were
done without a proper due diligence being
carried out to determine the viability of the
entities that funds are being invested in.
f. One of the retirement funds had arrear
contributions of E5 025 683.41, this was a
result of the non-remittance of employer
and employee contributions by the employer
from December 2011 to July 2013. The non-
remittance of contributions also led to the
lapsing of the permanent health insurance
(PHI) cover as premiums were not being
paid.
g. The provision of Group Life Assurance
(GLA) by retirement funds has to be
rationalised such that contributions towards
GLA do not take up a higher percentage
27
 BUSINESS OVERVIEW

INSURANCE AND RETIREMENT FUNDS -

OPERATONAL UPDATE REPORT OF THE YEAR - continued

of pension contributions to the extent that
contributions put towards a members
pension are compromised.
Supervisory action to guide the concerned
entities to comply with legal requirements
has been recommended to the concerned
entities.
for the regulated entities. The reports are not shared
with the industry as the office uses them as a guide
for assessing the risks inherent in each entity
and the quality of the risk mitigating controls. In
order to have a holistic view of the operations of a
company the office uses the results of both the risk
assessment report and the on-site inspection report
to determine the relevant supervisory action.

OFF-SITE SURVEILLANCE REGISTERED ENTITIES

The Authority has adopted the progressive
supervisory approach, which provides for a gradual
transition from a compliance-focused approach to
a risk-based approach. The framework uses off-
site analyses and on-site inspections to support
supervisory risk assessments. Risk assessments deal
with various categories of risk related to financial,
operational, and market conduct matters. An
intervention policy exists to help formulate timely
and effective responses to supervisory concerns.
RISK ASSESSMENT REPORTS
In preparation for Risk Based Supervision, the
FSRA continues to prepare risk assessment reports
The existence of a healthy 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 infant
stages of development and are faced with several
challenges, there is a notable increase in the
number of regulated entities and total assets held
by the regulated entities and this is an indication of
industry growth.
In the period under review registered entities stood as
follows:

Category of Entity Registered as at Registered as at Changes

31st March 2015 31st March 2014
Insurers 10 10 0
Brokers 27 28 -1
Corporate Agents 29 26 3
Individual Agents 105 45 60
Retirement funds 70 72 -2
Foreign Funds 33 22 11
Funds administered under Umbrella 127 121 6
Funds
Asset Managers/Investment managers Moved to capital markets 6 -6
Fund Administrators 5 4 1
Beneficiary fund administrators 2 2 0
Medical Aid Schemes 1 0 1
Medical Aid Scheme Administrator 1 0 1
Total 410 336 74

28
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
n the period under review registered entities regulated
under the Insurance Act, 2005 and the Retirement
Funds Act, 2005 increased from 336 to 410 entities,
inclusive of 127 retirement funds registered as
participating employers under 10 Umbrella funds. As
seen in the table above, the increase is attributed to
the individual agents, who had not yet renewed their
licenses in the previous review period, had now been
renewed at the close of the current review period.
Insurers:
No changes occurred in the number of registered
insurers in the period under review.
Insurance Brokers and Agents:
In the period under review, the number of
registered brokers decreased by one due to the
closure of one institution (FINROC Consult
Financial Solutions) attributed to failure to
address compliance issues raised by FSRA during
an onsite inspection carried out in October
2012. From the date of the onsite inspection,
the institution was put on an intervention
plan wherein FSRA stipulated a programme of
compliance which was aimed at assisting the
broker to comply with all issues identified by the
onsite inspection as needing attention.
The company ceased operations as at 30th
March 2015 after failure to comply with all
material requirements for operating as a broker
in Swaziland as stipulated by the Insurance
Act, 2005.
Corporate Insurance Agents:
Corporate agents stood at 29 (2014: 26) and these
comprise of all registered commercial banks
which demonstrate an active banc-assurance
market in the country.
Retirement funds:
70 local retirement funds were registered as active
at the end of the period under review. Out of the
seventy (70) locally registered retirement funds,
ten of them are Umbrella funds constituting of
127 participating employers. Registered foreign
retirement funds, registered in terms of section
67 of the Retirement Funds Act 2005 stood at 33,
showing an increase of 11 foreign funds.
In the financial year ending March 2015 the
number of registered retirement funds decreased
by two due to the closure of two retirement
funds. These funds were liquidated as a result
of the closure and termination of operations of
the sponsors. Payment of benefits to members
concerned have all been made.
Retirement Fund Administrators:
The number of registered retirement fund
administrators increased by 1 administrator,
and these reflected in this report excludes three
life insurers who are also authorised to act as
fund administrators for insured funds. Two
beneficiary trust funds were also registered by
the end of the period under review.
Participation at regional and
international regulatory forums
The FSRA is a member of regional and inter-
national organisations. Organisations specific to
these industries are:
Name of Organisation Industries covered
SADC-CISNA (Committee All non-banking
of Insurance Securities and financial services in
Non Banking Financial the SADC region.
Authorities).
IAIS International Insurance
Association of Insurance
Supervisors
IOPS International Retirement Funds
Organisation of Pensions
Supervisors
29
BUSINESS OVERVIEW

INSURANCE AND RETIREMENT FUNDS -

LEGAL, POLICY AND INTERVENTION

Update on Intervention Issues Update on Financial Inclusion Issues

Update on Circulars Issued Consumer Protection and Education
Anti Money Laundering/Counter Update on Relationships With Other
Financing of Terrorism (AML/CFT) Regulators

30
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
T UPDATE ON CIRCULARS ISSUED
he Authority is empowered to take corrective
and enforcement action and may impose
administrative sanctions against non-complying
entities. During the year under review, the following are
some of the administrative decisions taken:
UPDATE ON INTERVENTION ISSUES
a) Getmed Swaziland Ltd and the Board
of Directors of GetMed Swaziland Ltd
The entity and its board of directors were jointly
and severally fined an administrative penalty of
E50, 000 payable on or before 31 August 2014 for
wilfully and habitually neglecting their statutory
duties to the detriment of the insuring public.
In fining the insurer and its board of directors
the Registrar also ruled that the insurer should
be placed under judicial management in terms
of section 65 and 66 of the Insurance Act 2005
for a period of 12 months in order to undergo
rehabilitation. The Registrar further ruled that
should the insurer not be rehabilitated within
12 months, an application will be made to court
for the compulsory winding up of the insurer in
terms of section 67 of the Act to safeguard the
interests of policyholders.
b) AON Umbrella Provident Fund and
the trustees of AON Umbrella
Provident Fund
The umbrella provident fund and its trustees
were jointly and severally fined an administrative
penalty of E50, 000 for failure to amend the
general rules of the fund, unlawfully receiving the
assets of the Times of Swaziland Provident Fund
into the umbrella fund without the Registrars
approval, failure to submit audited financial
statements and financial reviews for the different
participating employers in contravention of
sections 13, 20, 20(1), 24(2) of the Retirement
Funds Act 2005, respectively.
c) Namaga Insurance Brokers (Pty) Ltd
The insurance broker was given a final written
warning for failure to pay administrative penalties,
failure to submit annual returns and audited
financial statements and failure to maintain its
business in a financially sound condition.
Circular 3/2014 on the exemption
of foreign retirement funds from
certain provisions of the Retirement
Funds Act
Circular 3/2014 on the exemption of foreign
retirement funds from certain provisions of the
Retirement Funds Act
The Circular is directed to foreign retirement
funds, employers, trustees and principal
officers of foreign retirement funds. It is aimed
at exempting all registered foreign retirement
funds from the annual license requirement. The
exemption is granted in terms of section 67(1) of
the Retirement Funds Act. The circular provides
that from the 1st October 2014, all registered
foreign retirement funds will be granted a three
year renewable license subject to the fulfilment
of all financial reporting requirements as set out
in the Act.
ANTI MONEY LAUNDERING/
COUNTER FINANCING OF
TERRORISM (AML/CFT)
a) National Risk Assessment training
The Eastern and Southern Africa Anti Money
Laundering Group (ESAAMLG) organised a
regional workshop on the 30th June 2014 to
the 4th July 2014 in Centurion, Pretoria which
was aimed at exposing member countries to
the concepts of ML/TF and the practicalities
surrounding National ML/TF Risk Assessment.
The training was also intended to guide countries
on the general principles to be considered when
conducting a national risk assessment. Member
countries were also introduced to the National
Risk Assessment methodologies used by the
World Bank and International Monetary Fund.
The Authority took part in the workshop which
proved to be beneficial to the participants as the
FSRA will be one of the supervisory authorities
that will be taking part in the National Risk
Assessment for Swaziland.
31
 BUSINESS OVERVIEW
INSURANCE AND RETIREMENT FUNDS -
LEGAL, POLICY AND INTERVENTION - continued
b) Proposed amendment of Money for a financial inclusion roadmap in Swaziland;
Laundering and
Financing of Terrorism (Prevention) Act 6/2011
As a member of the legislative review committee,
which is a sub-committee of the National Task
Force, the Authority embarked on an exercise
to amend the AML/CFT (Prevention) Act
6/2011. Some of the highlights of the proposed
amendments include, empowering the Swazi-
land Financial Intelligence Unit (SFIU) and
supervisory authorities to impose administrative
sanctions against non-complying accountable
institutions such as insurers, brokers, retirement
funds, fund administrators. Other possible areas
of amendment include revising the structure
and composition of the National Task Force
and this includes, among others, providing for
the establishment of a two tiered structure with
policy making task force and sub-committees
which will be serviced by the secretariat.
UPDATE ON FINANCIAL
INCLUSION ISSUES
As part of the Financial Inclusion task team,
the Authority attended a workshop hosted by
Finmark Trust and its partners on the Making
Access to Financial Services Possible (MAP)
Diagnostic. The workshop was held on 18 June
2014 at the Happy Valley Resort.
The aim of the workshop was to achieve
the following specific objectives, namely:
presentation and review of MAP findings, agree
on financial inclusion priorities for Swaziland,
develop a vision / mission for financial inclusion
in Swaziland, develop an activity map to address
the priorities identified for Swaziland, assign
ownership of each priority area and to determine
the next steps to carry on the process.
The workshop provided an overview of key
findings from the MAP Research and further
discussed the following five priorities identified
32
mobile money to transact and save; remittances
to support dependents; deepening bank reach;
managing risks; and getting credit basics right.
The task team analysed these five focus areas,
developed an activity map for each which will
form the basis of a financial inclusion roadmap.
CONSUMER PROTECTION AND
EDUCATION
a) Financial Services Industry Day 2014
This years event took place on the 24th May
2014, at the Mavuso Trade and Exhibition Centre
in Manzini. The objective of the industry day
was to create a forum of interaction between the
various entities operating in the financial services
industry and consumers; therefore affording
consumers the opportunity to come face to face
with the entities and learn about their products
and services. Thirty-six companies participated in
the event, including Insurers, Insurance Brokers,
Investment Advisors, Financial Cooperatives,
Retirement Funds, Fund Administrators, Medical
Schemes, Money Lenders, Building Societies,
Banks, Corporate Agents and Utility Companies.
The Industry Day has become a memorable event
in the financial services industry in Swaziland.
b) IAIS Regional Seminar for Insurance
Supervisors in Sub-Saharan Africa
In September 2014, the Authority hosted the
IAIS Regional Seminar on solvency of insurers
and insurance groups. The event was held at the
Happy Valley Hotel and it was jointly organized
by the International Association of Insurance
Supervisors (IAIS) and the Financial Stability
Institute (FSI). The objective of the seminar
was to strengthen capacity for regulators in the
Sub- Saharan African region with emphasis
on solvency and group-wide supervision. It
also provided a forum for sharing supervisory
experiences. In attendance to this seminar were
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
supervisors from the following countries: Ghana,
Kenya, Namibia, Zimbabwe, Zambia, Malawi,
Mozambique, Botswana, Swaziland, Tanzania,
Mauritius, Nigeria and South Africa.
The seminar was graced by trainers from the
Financial Stability Institute (FSI), Australian
Prudential Regulation Authority (APRA),
International Association of Insurance Supervisors
(IAIS) and Access to Insurance Initiative (aii).
c) Consumer Financial Literacy
The Authority continues to engage in activities
aimed at creating awareness and educating the
public about financial products and services. In
order to achieve a meaningful impact in this area,
the Authority is developing a Consumer Financial
Literacy Strategy which is built around 4 key areas:
Promoting financial literacy through
education, communication and consultation
with the consuming public;
Enhancing protection of consumers and
investors;
Strengthening collaboration with strategic
stakeholders of FSRA; and
Effectively communicating FSRA mandate
and corporate image to the public.
The strategy encompasses the various sector
of the financial services industry, including
Capital Markets, Credit and Savings Institution
and Insurance and Retirement Funds.
UPDATE ON RELATIONSHIPS WITH
OTHER REGULATORS
a) Memorandum of Understanding with
the SRA
FSRA signed a Memorandum of Understanding
with the Swaziland Revenue Authority (SRA).
The MoU provides a framework for cooperation
in information sharing, promoting and improving
the development of, compliance with and
enforcement of revenue and tax laws by non-
bank financial services providers; deterrence of
financial crime such as money laundering and
counter financing of terrorism, tax fraud and tax
evasion within the non-bank financial services
sector; capacity building and training; consumer
protection and education, investigating and
facilitating the prosecution of persons involved in
financial crime and the evaluation and alignment
of legislative frameworks with international
standards and best practice.
b) Capacity Building By SRA
The Swaziland Revenue Authority conducted
training for the insurance and retirement funds
personnel. The training was held at the Royal
Villas on the 20th March 2015 and it was arranged
as part of implementing the Memorandum
of Understanding that the Authority and the
Swaziland Revenue Authority (SRA) concluded in
September 2014 on exchange of information for
cooperation, collaboration and consultation.
The topics covered during the training were as
follows:
Approval of retirement funds for tax purposes;
Tax treatment of contributions to retirement
funds;
Tax treatment of benefits from retirement
funds;
Taxation of benefits due to dependants from
retirement funds upon death of members;
Transfers between retirement funds; and
Tax treatment of insurance products.
The training was useful to all staff members as it
dealt with issues that arise daily in the execution
of their responsibilities and it was a platform for
everyone to share insights on how to improve
the tax regime for the benefit of stakeholders that
have a role to play in the insurance and retirement
funds sphere.
33
BUSINESS OVERVIEW

34
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

CAPITAL MARKETS DEVELOPMENT

DIVISION (CMD) -
OPERATIONAL UPDATE REPORT

Market Regulation Structure Regulations

Collective Investment Schemes IMF Report
Investment Advisors Interventions
Stockbrokers Challenges
Trustees International and Regional Affiliations

35
 BUSINESS OVERVIEW

CAPITAL MARKETS DEVELOPMENT DIVISION(CMD)

- OPERATIONAL UPDATE REPORT - continued

MARKET REGULATION Financial Services Regulatory Authority (FSRA)

and secondly to make sure it is operation-
STRUCTURE

alised through the application of the Securities Act.
n June and December 2010, the Financial
Services Regulatory Authority Act and the Below is a schema showing the entities supervised by
Securities Act were passed, first to set up the the Capital Markets Development (CMD).

Capital Markets
Development (CMD)

Swaziland Collective Investment

Stock Investment Fund Trustees
Advisors Managers
Exchange Schemes

Dealing Dealer
Members Representatives

COLLECTIVE INVESTMENT 3. STANLIB Swaziland Management Company;

4. JM Busha Capital Swaziland; and
SCHEMES
5. Sanlam Investment Management.
For the period ending 31st March 2015, five (5)
Collectively, the fund managers are responsible for
fund managers were recognised as Authorised
seventeen (17) investment schemes with a total of
Collective Investment Schemes in Swaziland. The
E12 639 386 380 under their management as at
licensed entities are namely:
1. African Alliance Swaziland Management 31st March 2015. The list of fund managers and their
respective funds are shown in the below:
Company;
2. Old Mutual Swaziland Unit Trusts Company;

36
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

FUND MANAGERS FUND NAMES VALUE OF FUNDS VALUE OF FUNDS

NAME UNDER UNDER
MANAGEMENT MANAGEMENT
31 MARCH 15 31 MARCH 14
African Alliance General Equity Fund E3 353 790 975 E3 346 259 542
Swaziland Offshore Fund
Portfolio Fund
Target Fund
Ligcebesha Fund
Managed Fund
High Income Fund
Lilangeni Fund
STANLIB Swaziland Managed Unit Trust Fund E7 583 504 000 E8 103 000 000
Money Market Fund
Old Mutual Swaziland Enhanced Money Market E836 093 470
Fund
Balanced Fund
J M Busha Capital Real Return Fund E7 127 003 E5 297 757
Swaziland
Sanlam Investments Balanced Mandate Fund E632 191 843 E10 419 382
Management Absolute Return Fund
Swaziland Limited Money Market Fund
Yekucala infrastructure fund
TOTAL ASSETS E12 639 386 380 E12 301 070 151

INVESTMENT ADVISORS 7. BLZI Investments;

8. Sanlam Investment Management Swaziland;
For the period ending 31st March 2015, eleven (11) 9. STANLIB Swaziland;
entities were recognised as Investment Advisors in 10. Old Mutual Investment Group Swaziland; and
Swaziland. The licensed entities are namely: 11. Momentum Asset Management.
1. Inhlonhla;
2. Imbewu Yesive; Collectively, the Investment Advisors had
3. Allan Gray; E8 177 742 859 under advisement as at 31st March
4. Ecsponent Limited; 2015. The list of Investment Advisors and the assets
5. Calderon Capital Partners Swaziland; under their advisement are shown in the table.
6. African Alliance Limited;

37
 BUSINESS OVERVIEW

CAPITAL MARKETS DEVELOPMENT DIVISION(CMD)

- OPERATIONAL UPDATE REPORT - continued

INVESTMENT ADVISOR NAME ASSETS UNDER ADVISEMENT AS AT 31 MARCH 2015

Imbewu Yesive E1 326 384 265
Allan Gray E5 073 599 507
Ecsponent Limited E7 170 000
Momentum Asset Management E600 531 829
Inhlonhla E1 170 057 258
TOTAL ASSETS E8 177 742 859

*** Note that this table has removed funds that are held by entities that have an Investment Advisor and Collective
Investment Scheme Manager Licence***

This brings the total of Assets-Under-Management
(AUM) and Assets-Under-Advisement (AUA) to a
total of E20 817 129 239.
STOCKBROKERS
Two (2) Dealing Members are currently licensed as
dealers on the Swaziland Stock Exchange (SSX). These
are:
Swaziland Stockbrokers Limited (SSL)
African Alliance Swaziland Securities Limited
(AASSL)
TRUSTEES
Four (4) companies are currently licensed as Trustees.
These are:
Nedbank (Swaziland);
Standard Bank (Swaziland);
Orchard Insurance Group; and
First National Bank Swaziland.
REGULATIONS
The Capital Markets Department completed its
various rules, regulations and guidelines namely:
Capital adequacy standards rules;
Collective Investment Scheme accounts and
reports rules;
Collective Investment Scheme Prospectus
requirements rules;
Collective Investment Scheme borrowing powers
rules;
Licensing rules;
Securities exchanges regulations;
Business conduct rules;
Central Securities Depository rules;
Scheme rules; and
Fit and proper persons guidelines.
These regulations have received input and feedback
from the International Monetary Fund through a
consultant who was assisting the local consultant and
the office, Industry players and the FSRA Board. The
regulations have since been submitted to the Ministry
of Finance in order for them to be taken through the
legislative process.
An external consultant was contracted to review
the listings requirements for the Swaziland Stock
Exchange in order to align them to the Companies Act
and the JSE listing rules.
IMF REPORT
The IMF Report tabled in the period under review
addressed numerous issues pertinent to the CMD
Division. One of the outcomes of this report was the
adoption of an interim levy formula for the CMD
Division regulated entities. This was set at 1.25% of
Fee Income.

38
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
Secondly, quarterly and annual reporting templates
have been developed by the division and circulated to
the industry. The CMD Division is currently working
on modifying these templates so that they can be
mapped onto the automated system (BSA) that the
FSRA is in the process of procuring. The division is
yet to develop reporting templates for the following
licensee types:
Dealers;
CSD;
Exempt Dealers; and
Stock Exchanges.
INTERVENTION
No interventions were undertaken during the
period under review due to lack of capacity within
the CMD Division. These were deferred to the next
financial year in which a recruitment drive would
be undertaken to properly staff the division so that
it can deliver on its mandate. However, the division
developed questionnaires that were circulated to all
capital markets intermediaries. This exercise, which
was termed the X-Ray Survey was meant to give
the CMD Division a snapshot of the pertinent risks
prevalent in the capital markets industry in Swaziland.
An analysis of the responses received revealed the
existence of:
Inappropriate assets;
Conflicts of interest by CIS Managers when
investing;
Poor corporate governance practices eg. No
independent members in investment committee;
Large number of unvalued investment products;
and
Inadequate complaints procedures.
CHALLENGES
The current challenges in the department are training,
funding, and shortage of staff. However, the Division
has embarked on an internal training initiative and has
highlighted its key needs in the capital markets action
plan. Letters have been written to similar regulators
such as NAMFISA in Namibia, FSB in South Africa
requesting technical assistance with the development of
a supervisory model for capital markets intermediaries.
There are other initiatives still underway which will
include training of CMD staff by the Swaziland financial
intelligence unit on the prevention of money laundering
and terrorist financing in the capital markets industry,
training from other regulators and service providers
on risk management and abuses by financial services
providers in the capital markets industry amongst
others.
INTERNATIONAL AND REGIONAL
AFFILIATIONS
Swaziland is a member of the Southern African
Development 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).
39
BUSINESS OVERVIEW

40
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

CREDIT AND SAVINGS INSTITUTIONS

(CSI) DIVISION
OPERATIONAL UPDATE REPORT

Legislation Market Share

Statistics Challenges

41
 BUSINESS OVERVIEW

CREDIT AND SAVINGS INSTITUTIONS (CSI)

DIVISION - OPERATIONAL UPDATE REPORT - continued

LEGISLATION

egislation in place for the regulation and supervision of financial cooperatives is the
FSRA Act, 2010. The Ministry of Finance is currently working towards the development of a
SACCO Bill.

STATISTICS
The CSI division has the following number of licensed entities:

Category of Entity Registered as at Registered as at Changes

31st March 2015 31st March 2014
Apex body 1 1 -
Multipurpose Cooperatives 7 0 7
Savings and Credit Cooperatives (SACCOs) 46 21 25
Development Finance Institutions 2 2 -

56 24

In total, thereafter, the CSI division had 56 licensed entities contributing to the NBFIs industry with assets to
the value of E1 052 012 483.

MARKET SHARE
This is a summary of key figures as at 31 March 2015 in respect of financial cooperatives contribution to the
NBFIs industry expressed in US dollars:

Indicator Figures
Number of Institutions 56
Number of branches None
Total Assets (E) E 982 601 347
Total outstanding loans (E) E 661 712 995
Total deposits (E) E 800 585 835
Number of depositors 38 674

42
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
CHALLENGES
The most recent study, called Making Access
Possible (MAP) is being conducted through
the partnership of United Nations Capital
Development Fund (UNCDF), FinMark Trust and
the Centre of Financial Regulation and Inclusion
(CENFRI). This partnership in cooperation with
government and private stakeholders is aimed at
facilitating the development of financial inclusion
in Swaziland. Part of the study included a survey
on the countrys demographics, the demand-
and-supply of financial services, and the barriers
and opportunities in the financial market.
The FSRA continues to work in cooperation
with this initiative in an attempt to advance on
its mandate of regulating and supervising NBFIs
through understanding the challenges faced by
these institutions. The study depicted challenges
faced by financial cooperatives largely related to
savings, technology advancements and consumer
education. The culture of saving remains low in
the country which may be directly correlated to
the lack of consumer education.
In addition, the financial cooperatives major
asset is that of loans, but minimal technological
advancements have been made to protect the
value of this asset. Investing in management
information systems (MIS) for the classification
and provision of loans remains essential alongside
improving methods of making collections on
loan repayments. Employers are yet to fully
support the movement of financial cooperatives
through the assistance of making monthly salary
deductions for the repayment of loans. In this
regard consumers also remain less educated
about reckless borrowing and indebtness.
Overcoming these major challenges of techno-
logical advancements and consumer education
will require creativity and understanding of the
NBFI industry by the financial cooperatives
in order to increase its financial market share.
Therefore, broadening of the consumer base
firstly entails retaining current members and
secondly attracting new consumers through
education especially those that remain unbank-
able among our commercial banks.
A challenge with regard to the countrys laws,
the financial laws governing the NBFIs have
become archaic and nolonger efficient in the
proper regulation of the industry. As such,
the government is working with all relevant
stakeholders on the process of enacting relevant
legislation for the industry. These pieces of
legislation are aimed at addressing the problems
that have been facing NBFIs in the financial
markets. The coming into force of the FSRA Act,
2010, has addressed some of these gaps. The FSRA
Act, 2010, for instance has provided a mechanism
for the resolution of disputes between NBFIs and
the stakeholders through the establishment of
both the office of the Ombudsman of Financial
Services and Appeals Tribunal.
The bereft for a mechanism for the resolution of
disputes has been a cause for concern previously.
Notwithstanding such improvement, it must be
stated that the operationalisation of these offices
is still at an embryonic stage. This is a result of the
transition from the Central Bank of Swaziland
(CBS) to the FSRA of the regulation of all NBFIs
as is still ongoing, notwithstanding the lapse of
such transitional period by the FSRA Act, 2010.
That being said, it is therefore incumbent upon
the FSRA to ensure the full implementation of
such a mechanism.
Concluding on these challenges, the govern-
ment is working with all relevant stakeholders
on the process of finalising the Consumer Credit
Bill to address issues such as the cost of credit
in the financial market and all aspects of market
conduct. Over and above the Consumer Credit
Bill, also waiting to be drafted before parliament
is the Savings and Credit Cooperatives
(SACCOs) Bill. The SACCO Bill will provide
for the proper regulation and supervision of
financial cooperatives by providing for the FSRA
Act of same as the Co-operative Societies Act
(CSA), 2003, which nolonger applies to SACCOs
and as such there still exists uncertainty among
stakeholders as to the legislation governing
financial cooperatives.
43
 BUSINESS OVERVIEW

4446
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

SWAZILAND STOCK EXCHANGE (SSX) -

OPERATIONAL UPDATE REPORT
FOR THE YEAR

Listed Equity Companies Matured/Redeemed Cooperate

Bonds
Equity Turnover
SSX Members
SSX All Share Index Trend
Regulatory Changes
Capital Gain Comparison on
Equity Prices Other Developments

Government Debt Corporate Events on the SSX

Corporate Bonds

Disclaimer: The content of this publication is intended for general information sharing purposes only and is not intended for financial or other advice. While
every precaution has been taken to ensure accuracy of the data and information, the Swaziland Stock Exchange shall not be liable to any person for inaccurate
information or opinions contained in this publication. For more information on this publication, contact the research personnel at Tel: +268 2406 8114.

45
 BUSINESS OVERVIEW

LISTED EQUITY COMPANIES

here were no new listings in the period under review. Listed companies remained at 7 (seven)
on the SSX Main Board, and none on the Alternative Board.

Dec 2014 Jan 2015 Feb 2015 Mar 2015

Total companies listed 7 7 7 7
New entrants/listings 0 0 0 0
Domestic Companies 7 7 7 7
Foreign Companies 0 0 0 0
No. of Broking Firms 2 2 2 2
No. of Exempt Dealers 4 4 4 4
No. of Debt Sponsors 1 1 1 1

EQUITY TURNOVER
A total turnover of E102, 810 was recorded from 298.01 points recorded end of December 2014),
6,600 shares traded in 3 deals in the 1st Quarter of reflecting a 0.56% increase.
2015, compared to the previous quarters turnover
of E17 410 882 from 7,611,373 shares traded in CAPITAL GAIN COMPARISON ON
8 deals. The 1st Quarter deals were on the SEL EQUITY PRICES
shares (2 trades), and Nedbank shares (1 trade).
Below are the listed companies and their respective
share prices (cents per share), compared on an
SSX ALL SHARE INDEX TREND
end of quarter basis:
The SSX All-Share Price Index increased to
299.67 points as at the end of March 2015 (against

COMPANY NAME SHARE PRICE DEC 14 SHARE PRICE MARCH 15 (%) GAINS MKT CAP (E)
Nedbank 650 670 3.08% 159,869,424
RSSC 1300 1300 0% 1,252,502,160
SEL 2400 2450 2.08% 453,250,000
Swaprop 545 545 0% 126,712,500
SwaziSpa 600 600 0% 41,966,964
Greystone 140 140 0% 119,000,000
SBC 392 392 0% 378,240,800
2 531 541 848
Source: SSX Trading Statistics, 2015

Market indicators
Name of Index Dec 2014 Jan 2015 Feb 2015 Mar 2015
SSX All Share Price Index 298.01 299.10 299.67 299.67

Comparison of Index Performances 1st Quarter 2014/2015:

Name of Index Mar 2014 Mar 2015 % Change
SSX All Share Price Index 294.83 299.67 1.64%

46
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

Market Capitalisation 1st Quarter 2015

Dec 2014 Jan 2015 Feb 2015 Mar 2015
Market Capitalisation 2 517 519 626 2 526 769 626 2 531 541 848 2 531 541 848

Comparison of Market Capitalisation 1st Quarter 2014/2015

Name of Index Mar 2014 Mar 2015 % Change
SSX All Share Price Index 2 490 698 794 2 531 541 848 1.64%

SSX All Share Index 2015 SSX Market Cap (SZL). 2015

300,00 2 535 000 000

299,50
2 530 000 000
299,00
2 525 000 000
298,50

298,00 2 520 000 000

297,50
2 515 000 000
297,00

Dec-14 Jan-15 Feb-15 Mar-15 2 510 000 000

Dec-14 Jan-15 Feb-15 Mar-15 Dec-14 Jan-15 Feb-15 Mar-15

SSX ALL SHARE 298,01 299,10 299,67 299,67
SSX MARKET CAP. SZL

Value Traded by Counter (SZL). 2015 Number of Trades 2015

250 000,00 Ned 3 Ned

200 000,00 RSSC RSSC

SEL 2 SEL
150 000,00
Swaprop Swaprop
100 000,00
SwaziSpa 1 SwaziSpa
50 000,00
Greystone Greystone
- SBC 0 SBC
Dec-14 Jan-15 Feb-15 Mar-15 Dec-14 Jan-15 Feb-15 Mar-15

Total Value Bonds 2015 SSX Share Prices 2015

3000
1 835 000 000
1 830 000 000 2500
1 825 000 000 2000
1 820 000 000
1500
1 815 000 000
1 810 000 000 1000
1 805 000 000 500
1 800 000 000
0
1 795 000 000
1 790 000 000 Dec-14 Jan-15 Feb-15 Mar-15
Dec-14 Jan-15 Feb-15 Mar-15 Ned SEL SwaziSpa SBC
TOTAL VALUE OF BONDS RSSC Swaprop Greystone

GOVERNMENT DEBT
During the period under review, Government through the Central Bank of Swaziland (CBS) maintained a
number of bonds with different maturities, ranging from 3, 5 and 7 years.

47
 BUSINESS OVERVIEW

SWAZILAND STOCK EXCHANGE (SSX) -

OPERATIONAL UPDATE REPORT FOR THE YEAR - continued

The total outstanding bonds as at 31 March, 2015 are as outlined in Table below:

Bond Code ISIN Tenor Coupon Redemption Date Nominal Value (SZL)
SG009 SZG000441082 5 years 7.00% 30-Nov-15 219 384 000
SG011 SZG000441090 7 years 8.25% 31-Jan-18 146 330 000
SG013 SZG000441116 5 years 8.50% 20-Jun-16 78 855 000
SG016 SZG000441140 5 years 8.25% 31-Aug-18 150 000 000
SG017 SZG000441157 7 years 8.50% 31-Oct-20 250 000 000
SG018 SZG000441162 10 years 9.25% 31-Jan-24 200 000 000
SG019 SZG000441174 3 years 7.75% 30-Jun-17 160 110 000
SG020 SZG000441181 5 years 8.25% 20-Oct-19 82 000 000
TOTAL (SZL) E1 286 679 000
TOTAL (US$) $118 347 958

Average US$/SZL = 10.872

Bond Code ISIN Coupon Redemption Date Nominal Value (SZL)

NWR201 SZD000551325 Floating 28Oct2016 15, 000, 000
NWR202 SZD000551333 10.50% 30Oct2018 30, 100, 000
NWR203 SZD000551341 10.0% 30Nov2016 35, 832, 876
SML205 SZD000551374 9.75% 24-Feb-2017 31,639,775
SML206 SZD000551382 10.50% 16-April-2017 30,500,000
SML207 SZD000551390 10.00% 04-Jul-2017 20,000,000
SML208 SZD000551424 9.25% 22-Jun-2015 15,000,000
STDSZ 02 SZD000551242 8.10% 14Oct2020 50, 000, 000
FIN 001 SZD000551291 Floating 18-Apr-2016 30, 000, 000
FIN 002 SZD000551292 8.50% 08-Jul-2016 13, 500, 000
FIN 003 SZD000551293 Floating 08-Jul-2016 6, 187, 000
FIN 004 SZD000551309 10.50% 05-Dec-2015 50, 000, 000
FIN 005 SZD000551317 8.00% 31-Jul-2016 10, 850, 000
FIN 006 SZD000551358 10.00% 13Dec-2016 32,400, 000
FIN 007 SZD000551408 9.75% 16-Sep-2015 35,000,000
FIN 008 SZD000551416 10.50% 16-Sep-2015 5,000,000
FIN 009 SZD000551481 9.75% 30-Jan-2015 20,000,000
ICL 201 SZD000551473 9.75% 16-Dec-2016 20,000,000
ICL 202 SZD000551481 9.75% 30-Jan-2017 5,000,000
TOTAL (SZL) 456 009 651

48
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

MATURED/REDEEMED COOPERATE BONDS

Bond Code ISIN Coupon Redemption Date Nominal Value (SZL)
ICL07 SZD000551267 9.00% 21-Dec-2014 20 000 000
STDSZ 01 SZD000551226 8.70% 14Dec2019 30 000 000
SML204 SZD000551366 8.00% 19-Feb-2015 19 140 000
TOTAL (SZL) 69 140 000

SSX MEMBERS One (1) institution is recognised as a Debt

Two (2) broking companies are currently licensed
as Dealing Members of the SSX. These are:
Swaziland Stockbrokers Limited (SSL); and
African Alliance Swaziland Securities
Limited (AASSL)
Four (4) banks are currently recognised as
Exempt Dealers by the SSX. These are:
Nedbank;
Standard Bank;
First National Bank; and
SwaziBank.
Sponsor by the SSX. This is:
The Central Bank of Swaziland (CBS).
REGULATORY CHANGES
The SSX is currently revising its listing
requirements in order to align them with
the Securities Act, 2010. The project will be
finalised second quarter 2015.
OTHER DEVELOPMENTS
The SSX is currently developing a new
website in order to improve its visibility and
information dissemination. The project will be
finalised second quarter 2015.

CORPORATE EVENTS ON THE SSX

Date Commentary
19-Jan-15 Inyatsi Construction issued a E20,000,000 bond Local Code -ICL201 ISIN Code
-SZD000551473
16-Feb-15 Inyatsi Construction issued a E5,000,000 bond Local Code -ICL202 ISIN Code
-SZD000551481
24-Feb-15 FINCORP issued a E20,000,000 bond Local Code -FIN09 ISIN Code
-SZD000551499
05-Mar-15 The SSX attended the 47th Committee of the SADC Stock Exchanges (CoSSE)
meeting held in Zambezi Sun, Livingstone, Zambia.

49
REGULATED INDUSTRIES -
FINANCIAL STATISTICS

50
52
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

INSURANCE INDUSTRY FINANCIAL

PERFORMANCE

LONG TERM INSURANCE

SHORT TERM INSURANCE

INTRODUCTION
This section looks at the financial performance of both the Short Term Insurance and Long Term Insurance
industries, and also analysing the trends for a five year period.

51
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

LONG TERM INSURANCE INSURANCE BUSINESS -

FINANCIAL PERFORMANCE - continued

Long Term Consolidated Financial

Statements Analysis Profitibility Ratios
Industry Performance Analysis Analysis of Industry Growth Ratios
Growth in Premium Income Analysis of Solvency and Liquidity Ratios
Long Term Insurance Premium Market Industry Investments
Share Analysis Notes to the Financial Statements

LONG TERM CONSOLIDATED FINANCIAL STATEMENTS

s at 31 March 2015, there were seven review. Comparative data for the year 2014 is also
long term insurers operating in analysed in comparison to 2015. We will also track
Swaziland, namely: the trends for the past 5 years to determine how
Dups Direct; the industry has been performing.
Liberty Life Swaziland;
Metropolitan Life Swaziland; Worth mentioning for the benefit of the reader is
Momentum Life Swaziland; the fact that the following data was captured from
Old Mutual Swaziland; audited financial statements of the companies,
SAFRICAN; and which have different year end months. However,
Swaziland Royal Insurance Corporation for purposes of this report, these figures have
(SRIC); been used as best estimates of the industry as at
This section outlines how the Long Term Insurance 31 March 2015.
industry performed during the period under

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

LONG TERM INSURANCE BUSINESS STATEMENT OF PROFIT OR LOSS

Year end
Notes 31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Premiums received
Insurance premiums revenue 1 481 740 637 714 622 855 365 816 753 288 523 355 283 736 763
Less: (Insurance Premiums ceded 1 (38 045 200) (28 657 249) (28 049 794) (17 172 163) (22 913 931)
to reinsurers)
Net Insurance premiums revenue 443 695 437 685 965 606 337 766 959 271 351 192 260 822 832

Fee Income 2 10 989 414 10 543 148 10 219 166 9 850 204 7 276 763
Investment Income 3 188 194 433 237 892 735 218 698 239 89 448 116 132 252 534
Net Income (A) 642 879 284 934 401 489 566 684 364 370 649 512 400 352 129

Net Insurance Benefits and Claims 4 (478 223 312) (741 013 633) (391 795 390) (262 381 065) (314 591 369)
Expenses for the acquisition of
insurance and investments contracts 5 (22 959 883) (21 846 587) (19 607 987) (14 559 093) (14 002 679)
(Commission)
Expenses for marketing and 5 (4 549 000) (3 604 000) (2 736 000) (1 024 000) (426 000)
administration
Other operating expenses 6 (95 198 154) (79 604 941) (71 670 787) (54 306 630) (62 404 020)
Total expenses (B) (600 930 349) (846 069 161) (485 810 164) (332 270 788) (391 424 068)

(Loss)/Profit before tax (A - B) 41 948 935 88 332 328 80 874 200 38 378 724 8 928 061
Taxation (12 368 935) (32 344 908) (24 262 260) (11 513 617) (2 678 418
Net Profit for the year 29 580 564 55 987 420 56 611 940 26 865 107 6 249 643

The key highlight of the Industry Income Statement
above is the fact that the industry remained
profitable during the year, even though profitability
fell drastically by 47%, from E56.0 million in 2014
to E29.6 million in 2015. The main reason for this
drop is the fact that one of the Insurers introduced
a new investment product during the previous year,
which targeted funds from retirement funds. These
inflows were initially recognised as income during
the year ended 31 March 2014. For this review
period, no new inflows were recorded, hence the
drop in revenue.

53
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

LONG TERM INSURANCE INSURANCE BUSINESS -

FINANCIAL PERFORMANCE - continued

LONG TERM INSURANCE BUSINESS STATEMENT OF FINANCIAL POSITION

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
ASSETS
Property, Plant and Equipment 2 820 840 2 220 959 3 533 190 4 275 299 5 414 495
Intangible assets 3 727 412 2 679 940 217 486 119 349 124 824
Investments 2 567 704 185 2 359 952 025 1 698 178 858 1 208 084 730 1 053 866 276
Reinsurance assets 18 512 739 11 636 180 11 690 459 3 081 497 -
Loans and receivables 90 187 884 66 377 243 63 439 225 54 619 561 55 945 076
Technical assets 9 604 329 5 547 114 7 119 535 6 979 616 -
Deferred tax 2 375 375 1 595 418 303 978 584 000 538 000
Total assets 2 694 932 764 2 450 008 879 1 784 482 731 1 277 744 052 1 115 888 671

EQUITY
Ordinary shares 46 362 000 46 872 000 46 362 000 45 462 000 45 362 000
Share premium and Shareholders' 103 874 587 103 874 587 81 886 352 76 986 352 75 785 370
funding
Other reserves - 5 346 737 - - -
Retained earnings 251 775 053 230 517 324 191 272 611 121 728 449 103 768 905
402 011 640 386 610 648 319 520 963 244 176 801 224 916 275
LIABILITIES
Insurance contracts/policy holders' 1 135 569 808 1 008 303 084 905 967 116 746 673 110 664 274 952
liabilities
Investment contract liabilities 1 060 758 142 929 995 883 480 890 722 218 326 044 163 294 578
Trade and other payables 86 832 019 122 537 841 76 368 930 68 140 097 63 402 866
Deferred income tax - 278 423 136 000 - -
Taxation 9 761 155 2 283 000 1 599 000 428 000 -
Total liabilities 2 292 921 124 2 063 398 231 1 464 961 768 1 033 567 251 890 972 396

Total equity and liabilities 2 694 932 764 2 450 008 879 1 784 482 731 1 277 744 052 1 115 888 671

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

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

INDUSTRY PERFORMANCE Worth mentioning is the fact that the

ANALYSIS
Growth in Premium Income
The Long-Term insurance industry saw
a decrease in net premium income from
E686 million in 2014 to E444 million in
2015. This represents 36% reduction. As
already mentioned in the income statement
commentary above, there was an abnormal
increase in the previous year.
abnormal increase in premium income in
2014 distorted the trends for that year. Hence
as we analyse the ratios for 2015, you will
notice that the trends have returned to their
previous patterns.
Long-term premium market share
analysis the table and pie charts that
follow will analyse the market share of
industry players for both 2014 and 2015.

LONG TERM INSURANCE BUSINESS PREMIUM MARKET SHARES

ENTITY % MARKET SHARE GROSS PREMIUMS
31-Mar-15 31-Mar-14 31-Mar-15 31-Mar-14
SRIC 37% 21% 177 673 629 149 821 430
METROPOLITAN 15% 10% 72 582 000 68 734 000
LIBERTY LIFE 12% 7% 57 159 000 52 280 000
OLD MUTUAL 33% 59% 158 873 837 423 016 781
MOMENTUM 2% 2% 8 611 000 14 745 000
SAFRICAN 1% 1% 4 829 216 4 013 689
DUPS DIRECT 0.4% 0.3% 2 011 955 2 011 955
TOTAL INDUSTRY PREMIUMS 481 740 637 714 622 855

31 March 2015 - Long-term 31 March 2014 - Long-term

Insurance Gross Premium Market Share Insurance Gross Premium Market Share

1% 1%
2% 0.4% 0.3%
2%
SRIC - 37% OLD MUTUAL - 59%
27% 21%
33% OLD MUTUAL - 33% SRIC - 21%
METROPOLITAN - 15% 10% METROPOLITAN - 10%
12% 15% 59%
LIBERTY LIFE - 12% 7% LIBERTY LIFE - 7%
MOMENTUM - 2% MOMENTUM - 2%
SAFRICAN - 1% SAFRICAN - 1%
DUPS DIRECT - 0.4% DUPS DIRECT - 0.3%

The table and pie chats above reflect the following
shifts in market shares of the players as follows:
SRIC saw an increase in market share from
21% in 2014 to 37% in 2015.
Old mutual saw a market share decrease from
59% in 2014 to 33% in 2015.
Metropolitan saw a market share increase
from 10% in 2014 to 15% in 2015.
Liberty saw a major market share increase
from 7% in 2014 to 12% in 2015.
Momentums market share remained the
same at 2% from 2014 to 2015.
SAFRICAN maintained its market share at 1%
from 2014 to 2015.
DUPS Direct was a new player in 2014, hence
they have a small 0.4% market share in
2015.
The market share is swinging back
and forth between players The
landscape of the long term insurance sector
continues to shift from year to year, swinging
back and forth between the players. Before

55
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

LONG TERM INSURANCE INSURANCE BUSINESS -

FINANCIAL PERFORMANCE - continued
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. From the analysis above, we see that in the
previous period, Old Mutual took a bigger pie of
the premium market share. In 2015, the largest
pie has returned to SRIC at 37%, followed by
Old Mutual at 33%. The rest of the player are
sharing the remaining 30%.
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

2015 2014 2013 2012 2011 2010
PROFITABILITY RATIOS:
1. Incurred expense ratio = Incurred Expenses/Earned(net) Premiums 27% 15% 27% 25% 29% 22%
2. Incurred Claims ratio = Cash Incurred Claims / Earned (net) Premiums 36% 25% 45% 46% 45% 78%
3. Combined ratio = Incurred Expenses ratio + Incurred Claim ratio 63% 40% 72% 71% 74% 100%
4. Net Profit margin = Net Income after tax / Earned (net) premium 7% 8% 16% 9% 2% 5%
5. Return on equity = Net Income after tax / Equity (total Capital and reserves) 7% 7% 17% 11% 2% 6%

INDUSTRY GROWTH RATIO:

6. Gross Premium growth ratio = percentage change in gross premiums (33%) 95% 27% 2% 18% 60%
between current year and previous year
FINANCIAL PRUDENCE RATIOS:
7. Solvency Ratio = Admitted Assets / Total Liabilities 1.2x 1.2x 1.2x 1.2x 1.3x 1.3x
8. Liquidity Ratio = Available cash / short term payables 1.7x 1.2x 2.4x 2.3x 2.8x 2.3x

ANALYSIS OF PROFITABILITY 15% in 2014. For this year 2015, the ratio has
returned to 27%, which is a normal trend from
RATIOS
the previous years. This is a favourable trend
because it means the industry spent less costs
1. Incurred expense ratio this ratio
in earning more premium.
measures underwriting and administrative
expenses as a percentage of net earned
In calculating this ratio, we have added
premium. The trend for this ratio has been
commission plus expenses for marketing
ranging between 22% and 29% for the previous
plus all other operating expenses, as a
years, since 2010. However, 2014 saw a major
percentage of net premium income.
decrease in the ratio from 27% in 2013 to

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
2. Incurred claims ratio claims incurred
represents the aggregate of all claims paid during
an accounting period adjusted by the change
in the claims provision for that accounting
period. The trend for this claims ratio indicates
that since 2011, the claims experience has been
stable between 45% and 46%. However, in
2014, we saw a major decrease in the ratio from
45% in 2013 to 25% in 2014. In the year 2015,
the ratio has increased again to 36%.
In calculating this ratio, we used data from Note
4 using the formula, total insurance benefits and
claims less changes in policyholder liabilities,
in order to arrive at actual claims expenses
incurred during the year.
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 only in 2010 the ratio was at 100%
of earned premium. Since 2011, the combined
ratio declined to 72%, and the industry has
maintained that 70s ratios since 2011 to 2013.
In 2014, this ratio dropped significantly from
72% in 2013 to 40%. In the year 2015, the ratio
has increased again to 63%, indicating that the
trend is returning to the familiar trends.
This is a very good indicator because; the
industry can meet its expenses without
relying on investment income.
4. Net profit ratio The ratio measures net
insurance profit as a percentage of net earned
premium. The trend for this ratio reflects that
after the decline to 2% in 2011, net income
started improving in 2012, rising up to 16%
in 2013. This increase from year to year was
mainly attributable to significant investment
gains; meanwhile the claims experience
remained stable. However, in 2014 we see
a decline in the ratio to 8%, mainly due to a
significant increase in policyholder liabilities
that accompanies the growth in premiums. In
2015, the ratio fell again to 7% mainly due to a
decrease in investment income from E238 million
in 2014 to E188 million in 2015.
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 between 2010 and 2013. In 2014, the ratio
decreased to 7% from 17% in 2013. Even though
we see a decline in the ratio, the attribute comes
from a significant increase in business, which
in turn increased the policyholder liabilities. In
2015, the ROE has remained at 7% again, mainly
due to the decrease in income, as well as decrease
in investment income.
ANALYSIS OF THE INDUSTRY
GROWTH RATIO
6. Premium growth ratio this ratio
measures the level of industry growth from
year to year. In 2014 we saw an abnormal 95%
increase in premiums. As a result of the 2014
trend, 2015 has recorded a 33% decrease in
this ratio. We will monitor this trend closely
in upcoming periods to see if the industry can
improve it.
THE INDUSTRY IS FAIRLY
SOLVENT AND LIQUID
7. The solvency ratio of an insurance company
is the size of its capital relative to all the risk
it has taken, which is all liabilities subtracted
from total assets. In other words, solvency is
a measurement of how much the insurer has
in assets versus how much it owes. A great
deal of the viability of an industry depends
on the degree to which insurance liabilities
and payables can be settled, as insolvency and
illiquidity might lead to insurers failing to settle
57
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

LONG TERM INSURANCE INSURANCE BUSINESS -

FINANCIAL PERFORMANCE - continued
insurance claims. The trend in the Solvency Ratio
shows that the industry ratio ranges between 1.3
times and 1.2 times, implying that the industry
is able to meet its future obligations, including
insurance claims not yet accounted for.
8. 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.
However, during the year under review, we
observe that the liquidity ratio improved
from 1.2 times in 2014 to 1.7 times in 2015,
representing a 42% increase. This is attributable
to a noticeable decline in short term payables,
while cash decreased only a little. We will
monitor this this trend in the period to come.

LONG TERM INSURANCE BUSINESS INVESTMENT MIX

LONG TERM INVESTMENTS - LOCAL Vs FOREIGN ASSETS
Year
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Total local investments 292 429 078 314 259 040 345 543 816 289 914 869 284 863 972
Total foreign investments 2 275 276 108 2 045 693 986 1 352 635 042 997 659 861 769 002 304
Total Investments (E) 2 567 705 186 2 359 953 026 1 698 178 858 1 287 574 730 1 053 866 276

% Local investments to total investments 11% 13% 20% 23% 27%

% Foreign investments to total investments 89% 87% 80% 77% 73%
Total Investments (%) 100% 100% 100% 100% 100%

LONG TERM INSURANCE - LOCAL INVESTMENTS

Year
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Swaziland Stock Exchange 5 076 120 5 076 120 5 058 620 4 926 120 7 115 420
Bonds 45 168 501 35 372 010 35 497 034 35 497 034 29 848 231
Property 80 078 899 108 004 815 117 274 001 89 313 471 72 454 400
Cash and money market instruments 146 134 558 150 089 095 187 714 161 160 178 244 175 445 921
TOTAL LOCAL INVESTMENTS: 276 458 078 298 542 040 345 543 816 289 914 869 284 863 972

2015 - LOCAL INVESTMENTS 2014 - LOCAL INVESTMENTS

2% 2%
16% 12%

53% 50%
29% 36%

Swaziland Stock Exchange - 2% Bonds - 16% Swaziland Stock Exchange - 2% Bonds - 12%
Cash and Money Makert Property - 29% Cash and Money Makert Property - 36%
Instruments - 53% Instruments - 50%

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

LONG TERM INSURANCE - FOREIGN INVESTMENTS

Year
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Johannesburg Stock Exchange 1 573 307 181 1 557 656 233 872 872 823 570 809 621 404 971 366
Cash and Money Market instruments - 49 494 273 41 705 249 36 476 813 90 724 833
Bond exchange of South Africa 388 284 689 233 021 519 362 250 270 334 279 256 159 313 579
Offshore equities - - - - 23 758 526
Offshore bonds 313 684 238 205 521 961 75 648 700 56 094 171 90 234 000
TOTAL FOREIGN INVESTMENTS 2 275 276 108 2 045 693 986 1 352 477 042 997 659 861 769 002 304

2015 - LONG TERM INSURANCE - FOREIGN INVESTMENTS 2014 - LONG TERM INSURANCE - FOREIGN INVESTMENTS

14% 10%
11%
17%
2%

69% 76%

Johannesburg Stock Johannesburg Stock

Exchange - 69% Offshore bonds - 14% Exchange - 76% Offshore bonds - 10%
Cash and Money Makert Bond Exchange of Cash and Money Makert Bond Exchange of
Instruments - 0% South Africa - 17% Instruments - 2% South Africa - 11%

LONG TERM INVESTMENTS - GROWTH CURVE

3 000 000 000

2 500 000 000

Total Investments

2 000 000 000

1 500 000 000

1 000 000 000

500 000 000

-
2009 2010 2011 2012 2013 2014 2015
Years

Total Local Investments Total Foreign Investments Total Investments (E)

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 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

LONG TERM INSURANCE INSURANCE BUSINESS -

FINANCIAL PERFORMANCE - continued
LONG TERM INSURANCE BUSINESS
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: PREMIUM REVENUE
Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Long term insurance contracts 448 641 042 699 383 928 349 485 468 254 128 094 278 929 923
Contributions from Pension and 31 087 640 15 238 927 16 331 285 34 395 261 4 806 840
Retirement annuity schemes
Total Premium 479 728 682 714 622 855 365 816 753 288 523 355 283 736 763

Reinsurance Premiums Ceded to (37 779 300) (28 657 249) (28 049 794) (17 172 163) (22 913 931)
Reinsurers

NOTE 2: FEE INCOME

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Policy administration services:
Insurance contracts - - 397 000 410 560 -
Investment contracts 10 946 990 10 471 491 9 799 868 9 410 050 438 871
Commission Income 13 200 71 657 22 298 - 14 000
Administration fees - - - 29 594 6 823 892

Total fee income 10 960 190 10 543 148 10 219 166 9 850 204 7 276 763

NOTE 3: INVESTMENT INCOME

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Dividend income 142 319 454 104 380 429 67 923 094 60 663 679 60 449 610
Interest income 22 459 320 17 459 534 15 197 214 10 747 173 13 759 089
Net realised gains on Financial Assets - - - - 6 571 000
Net fair value gains through Profit or Loss 23 316 311 116 052 772 135 577 931 18 037 264 51 472 835
Rental Income - - - - -
Total investment income 188 095 085 237 892 735 218 698 239 89 448 116 132 252 534

NOTE 4: INSURANCE BENEFITS AND CLAIMS

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Insurance Benefits and Claims
Death, maturity and surrender benefits (149 995 399) (136 836 453) ( 150 020 594) (124 636 108) (131 160 442)
Investment contracts 2 913 465 (13 496 465) (13 034 000) ( 6 805 000) -
Increase in policyholder liability (316 424 360) (564 331 241) (238 135 492) (135 622 404) (194 738 814)
Pension and Retirement claims (8 798 784) (6 728 407) (3 480 943) ( 5 672 434) (4 222 747)
Less: Reinsurance recoveries (5 261 443) (19 621 067) 12 875 639 10 354 881 15 530 634

(477 566 521) (741 013 633) (391 795 390) (262 381 065) (314 591 369)

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

NOTE 5: COMMISSION AND MARKETING EXPENSES

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
a) Expenses for the acquisition of
insurance contract (Commission paid):
Costs incurred and expensed in the year (28 434 829) (27 647 604) (21 727 799) (16 382 372) (15 811 952)
Less: (Commission earned from 5 474 946 5 801 017 2 119 812 1 823 279 1 809 273
reinsurance contracts)
Total expenses for the acquisition of (22 959 883) (21 846 587) (19 607 987) (14 559 093) (14 002 679)
insurance contracts

b) Marketing expenses
Marketing expenses (1 399 000) (1 470 000) ( 965 000) ( 111 000) (426 000)
Bancassurance (3 150 000) (2 134 000) (1 771 000) ( 913 000) -
(4 549 000) (3 604 000) (2 736 000) (1 024 000) (426 000)

Total Commission and Marketing expenses (27 508 883) (25 450 587) (22 343 987) (15 583 093) (14 428 679)

NOTE 6: OTHER EXPENSES

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Auditors remuneration (1 420 922) (1 257 097) (2 009 501) (1 175 343) (659 688)
Depreciation (6 575 391) (4 561 485) (3 995 990) (2 740 210) (1 605 565)
Employee Costs (18 305 595) (16 595 490) (25 841 827) (23 207 473) (20 251 436)
Interest expense (2 068 922) (1 295 486) (1 357 779) (1 431 081) (2 181)
Purchases of goods and services (13 971 901) (8 354 580) (15 044 499) (10 578 684) (15 183 219)
IT costs (1 235 000) (1 595 640) (4 885 007) ( 3 321 307) (3 633 742)
Management Fees (47 260 135) (42 206 149) (14 749 858) (8 658 662) (15 117 824)
RIRF levy fees (224 000) (450 000) (1 181 356) (526 649) (563 640)
Directors fees and travel (2 622 440) (1 954 680) (1 297 695) (1 431 345) (3 444 464)
Operating lease rentals (1 513 848) (1 434 334) (1 307 275) (1 235 876) (1 942 261)
Total other expenses (95 198 154) (79 704 941) (71 670 787) (54 306 630) (62 404 020)

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FINANCIAL STATISTICS

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

SHORT TERM INSURANCE BUSINESS

FINANCIAL PERFORMANCE

Consolidated Industry Financial Statements Analysis of Profitability Ratios

Industry Performance Analysis Analysis of Industry Growth Ratio
Growth in Premium Income Industry Solvency and Liquidity
Short Term Premium Market Share Industry Investments
Key Industry Ratios Notes to the Financial Statements

63
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

SHORT TERM INSURANCE BUSINESS -

FINANCIAL PERFORMANCE - continued
CONSOLIDATED INDUSTRY FINANCIAL STATEMENTS

A s at 31 March 2015, there were four short term

insurers in Swaziland, namely:
Swaziland Royal Insurance Corporation
the trends since 2011, being trends for the last
5 years.

(SRIC) Once again, worth mentioning for the benefit of

Lidwala Insurance Company
Umber/Orchard Insurance
The following sections outline how the short term
industry performed during the year to 31 March
2015. Comparative data for the year 2014 is also
analysed in comparison to 2015. We will also track
the reader is the fact that the following data was
captured from audited financial statements of the
companies, which have different year end months.
However, for purposes of this report, these figures
have been used as best estimates of the industry as
at 31 March 2015.

SHORT TERM INSURANCE - INDUSTRY SUMMARY

STATEMENT OF PROFIT OR LOSS
Year end
Notes 31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Premiums received

Insurance Premiums revenue 1 509 052 030 456 951 262 375 893 633 355 920 320 332 276 038
(Insurance premiums ceded to reinsurers) 1 (198 519 738) (180 014 817) (128 396 090) (123 225 755) (105 594 463)
Net Insurance premiums revenue 310 532 292 276 936 445 247 497 543 232 694 565 226 681 575

Fee Income 2 14 377 223 11 495 602 10 622 053 5 912 874 4 248 818
Investment Income 3 22 964 829 30 239 306 45 626 909 23 942 936 45 465 438
Net Income (A) 347 874 344 318 671 353 303 746 505 262 550 375 276 395 831

Insurance claims and loss adjustment 4 126 931 484 186 462 696 140 031 728 122 328 752 122 274 408
expenses
Less: (Insurance claims and loss adjustment 4 (21 934 361) (95 867 505) (38 404 385) (23 519 662) (4 428 063)
expenses recovered from reinsurers)
Net insurance claims 104 997 123 90 595 191 101 627 343 98 809 090 117 846 345

Expenses for the acquisition of insurance 5 17 899 725 23 813 518 21 557 410 19 671 365 14 163 464
contracts (Commission)
Expenses for marketing 5 955 343 1 118 235 1 258 817 814 228 421 721
Other operating expenses 6 75 476 232 77 189 180 62 431 667 51 781 221 46 720 953
Total expenses (B) 199 328 423 192 716 124 186 875 237 171 075 904 179 152 483

Results from Operating activities (A - B) 148 545 921 125 955 229 116 871 268 91 474 471 97 243 348
Less: Finance Costs - (1 411) - - (81 829)
Profit/(Loss) before tax 148 545 921 125 953 818 116 871 268 91 474 471 97 161 519
Less: (Income tax expense) - (30 456 151 (33 892 668) (26 552 706) (33 517 153)
Net Profit for the year 148 545 921 95 497 667 82 978 600 64 921 765 63 644 366

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

SHORT TERM INSURANCE - STATEMENT OF FINANCIAL POSITION

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
ASSETS
Property, Plant and Equipment 42 435 336 28 448 557 36 541 737 34 901 495 29 432 447
Intangible assets 574 209 958 947 1 098 683 800 284 399 575
Deferred acquisition costs - - 888 788 534 805 -
Deferred income tax assets 1 447 959 3 629 277 3 545 094 2 741 371 2 370 154
Prepaid Taxes 12 509 675 - - - -
Financial Assets 356 536 205 367 748 776 434 912 861 536 349 588 430 326 136
Reinsurance Contracts 45 097 054 48 782 896 15 031 686 14 483 163 -
Loans and receivables 87 566 122 87 058 017 69 634 724 60 625 767 62 255 210
Technical Assets 76 543 699 112 199 200 80 735 930 72 172 137 65 991 763

Total assets 622 710 259 648 825 670 642 389 503 722 608 610 590 775 285

EQUITY
CAPITAL AND RESERVES
Ordinary shares 7 242 805 6 867 805 6 867 805 6 526 400 5 950 000
Share premium 11 160 217 8 535 217 8 363 420 5 668 130 2 929 420
Other reserves 4 200 088 18 780 320 25 946 987 22 946 987 16 465 477
Retained earnings 234 357 372 237 128 491 241 981 117 311 560 054 290 201 507
Total Capital and Reserves 256 960 482 271 311 833 283 159 329 346 701 571 315 546 404

LIABILITIES
Insurance contracts/policy holders' 305 984 477 325 481 533 306 259 125 323 821 736 214 807 870
liabilities
Amounts owing to related parties - - 89 547 457 736 3 341 371
Reinsurance liabilities 10 478 422 18 830 076 690 948 4 567 434 690 948
Borrowings - - 175 010 238 117 595 953
Trade and other payables 45 521 465 31 023 819 50 829 954 46 175 441 55 611 323
Provision for other liabilities and charges 3 132 747 2 114 711 1 116 211 605 821 177 432
Current tax payable 632 666 63 698 69 379 40 754 3 984
Total liabilities 365 749 777 377 513 837 359 230 174 375 907 039 275 228 881

Total equity and liabilities 622 710 259 648 825 670 642 389 503 722 608 610 590 775 285

65
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

SHORT TERM INSURANCE BUSINESS -

FINANCIAL PERFORMANCE - continued
INDUSTRY PERFORMANCE SHORT-TERM PREMIUM MARKET
ANALYSIS SHARE ANALYSIS the table below
analyses the market share of industry players for
GROWTH IN PREMIUM INCOME both 2014 and 2015.
the short term industry saw a slight increase in net
premium income from E277 million in 2014 to
E310 million in 2015. This represents 12% growth.

SHORT-TERM INSURANCE - PREMIUM MARKET SHARE

ENTITY % MARKET SHARE GROSS PREMIUMS % CHANGE
31-Mar-15 31-Mar-14 31-Mar-15 31-Mar-14
SRIC 76% 79% 385 460 938 363 099 288 6%
LIDWALA INSURANCE 22% 18% 109 730 281 82 688 974 33%
ORCHARD INSURANCE 2% 3% 13 860 811 11 163 000 24%
TOTAL INDUSTRY PREMIUM 100% 100% 509 052 030 456 951 262 11%

The table above shows that even though SRIC is still
enjoying a lions share of the market, their market
share is gradually decreasing as the other players are
growing. As at 31 March 2015, SRIC lost 3% market
share, meanwhile Lidwala Insurance gained 4%.
Orchards market share dropped to 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

2015 2014 2013 2012 2011 2010
PROFITABILITY RATIOS:
1. Incurred expense ratio = Incurred Expenses/Earned (net) Premiums 30% 37% 34% 31% 27% 28%
2. Incurred Claims ratio = Incurred Claims / Earned (net) Premiums 34% 33% 41% 42% 52% 59%
3. Combined ratio = Incurred Expenses ratio + Incurred Claim ratio 64% 70% 75% 73% 79% 87%
4. Net Income ratio = Net Income / Earned (net) premium 48% 34% 34% 28% 43% 41%
5. Return on equity = Net Income / Equity 58% 35% 29% 19% 31% 34%

INDUSTRY GROWTH RATIO:

6. Premium growth ratio = percentage change in earned premiums 12% 6% 7% 5% 7%
between current year and previous
FINANCIAL PRUDENCE RATIOS:
7. Solvency Ratio = Admitted Assets / Total Liabilities 0.97x 0.97x 1.21x% 1.43x% 1.56x 1.33x
8. Liquidity Ratio = Available cash / short term payables 3.6x 1.23x 1.42x 1.65x 2.10x 1.56x

66
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
ANALYSIS OF PROFITABILITY
RATIOS
1. Incurred expense ratio this ratio for 2015
dropped to 30%, compared to the 37% in 2014.
Looking at the trend since 2010, the incurred
expense ratio has been increasing steadily from
year to year. However, we see a drop this year. In
calculating this ratio, we have added commission
plus expenses for marketing plus all other
operating expenses, as a percentage of net
premiums. An 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. The
drop we see this year indicates that the industry
is realising the benefits of marketing drive that
has been incurred in the previous years, with
increase in premiums.
2. Incurred Claims ratio looking at the trend
for this ratio it has been declining steadily since
2010, from 59% in 2010 to 34% in 2015. The
lower the loss ratio the better for the insurers,
because it means their risk management policies
are effective. However, from a regulators point
of view, there is a need to monitor this trend
to make sure that policyholders claims are not
declined unfairly.
In calculating this ratio, we used data from Note
4 using the formula, total insurance benefits
and claims less changes in policyholder
liabilities, in order to arrive at actual claims
expenses incurred during the year.
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
industrys underwriting efficiency. The trend
analysis shows that this ratio improved from
87% in 2010 to 64% in 2015. 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 this ratio has increased
significantly this year from 34% in 2013 and
2014 to 48% in 2015.
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 35% in 2014 to 58% in 2015. This
is a very 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 growth rate from 2014 to
2015 remained the same at 12%. The trend in
this ratio seemed to be modest ranging from
5% to 7% since 2010. Hence this significant
increase in 2014 and 2015, is good news for the
short term industry, implying that the short
term industry is attracting 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 the
solvency ratio fell below 100% in both 2014
and 2015, implying that the industry might
struggle to meet future obligations should a
catastrophe arise. The trend in the liquidity
ratios show that the industry is above 100%,
implying that the industry is well able to meet
its current obligations.
67
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

SHORT TERM INSURANCE BUSINESS -

FINANCIAL PERFORMANCE - continued
INDUSTRY INVESTMENTS
LONG TERM INVESTMENTS - LOCAL Vs FOREIGN ASSETS
Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Total local investments 282 258 401 183 404 071 168 636 124 167 631 558 196 190 167
Total foreign investments 74 277 804 184 344 705 266 276 737 368 718 030 365 738 042
Total Investments (E) 356 536 205 367 748 776 434 912 861 536 349 588 561 928 209

% Local investments to total investments 79% 50% 39% 31% 35%

% Foreign investments to total 21% 50% 61% 69% 65%
investments
Total Investments (%) 100% 100% 100% 100% 100%

LOCAL INVESTMENTS
Year end
TYPE OF INVESTMENT 31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Swaziland Stock Exchange 5 113 620 5 076 120 4 126 120 4 338 620 1 330 000
Bonds - - - - -
Property 40 000 000 26 640 602 34 654 421 32 437 620 29 420 001
Cash and money market instruments 237 144 781 151 687 349 129 855 583 130 855 318 165 440 166

Total Local Investments 282 258 401 183 404 071 168 636 124 167 631 558 196 190 167

FOREIGN INVESTMENTS
Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Johannesburg Stock Exchange 16 253 999 40 231 210 72 282 931 117 691 546 199 350 714
Offshore equities - - 64 671 826 72 506 365 21 499 682
Bond exchange of South Africa 12 109 560 29 863 969 23 166 564 25 530 058 68 126 488
Offshore bonds - - - - 8 464 564
Cash and Money Market instruments 45 914 245 114 249 529 106 155 416 152 990 061 68 296 594
Total Foreign Investments 74 277 804 184 344 705 266 276 737 368 718 030 365 738 042

Total Investments 356 536 205 367 748 776 434 912 861 536 349 588 561 928 209

68
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

SHORT-TERM INSURANCE BUSINESS

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1: PREMIUM REVENUE

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Short-term insurance contracts:
Premium receivable 514 609 527 477 278 073 376 649 323 351 647 148 330 870 627
Change in unearned premium provision (5 557 497) (20 326 811) (755 690) 4 273 172 1 405 411
Premium revenue arising from 509 052 030 456 951 262 375 893 633 355 920 320 332 276 038
insurance contracts
Less: Premiums ceded to short term (198 519 738) (180 014 817) (128 396 090) (123 225 755) (105 594 463)
reinsurers

Net insurance premium revenue 310 532 292 276 936 445 247 497 543 232 694 565 226 681 575

NOTE 2: FEE INCOME

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011

Policy administration services:

Insurance policy administration fees 9 445 777 7 868 761 7 007 405 5 219 650 4 248 818
Commission income 4 931 446 3 626 841 3 614 648 693 224 -

Total fee income 14 377 223 11 495 602 10 622 053 5 912 874 4 248 818

NOTE 3: INVESTMENT INCOME

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Dividend and Interest income 26 347 460 32 617 631 40 660 441 46 532 021 40 633 590
Net fair value gains on financial assets at (4 302 093) (9 607 767) 4 966 468 (22 589 085) 4 831 848
fair value through Income Statement
Other operating income 919 462 7 229 442 - - -
Total investment income 22 964 829 30 239 306 45 626 909 23 942 936 45 465 438

69
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

SHORT TERM INSURANCE BUSINESS -

FINANCIAL PERFORMANCE - continued

NOTE 4: INSURANCE CLAIMS

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Claims and loss adjustment expenses
Gross insurance claims 160 171 523 141 655 986 135 026 093 110 909 095 116 046 348
Change in the provision for claims (33 240 039) 44 806 710 5 005 635 11 419 657 6 228 060
126 931 484 186 462 696 140 031 728 122 328 752 122 274 408
Reinsurance Recoveries
Gross reinsurance recoveries 10 432 171 (106 912 870) (51 483 289) (13 332 674) (12 224 192)
Less: change in provision for reinsurance (32 366 532) 11 045 365 13 078 904 (10 186 988) 7 796 129
recoveries
(21 934 361) (95 867 505) (38 404 385) (23 519 662) (4 428 063)

Net insurance claims 104 997 123 90 595 191 101 627 343 98 809 090 117 846 345

NOTE 5: COMMISSION AND MARKETING EXPENSES

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
a) Expenses for the acquisition of
insurance contract (Commission
paid):
Costs incurred for the acquisition of 64 269 245 57 844 546 46 726 032 45 522 799 42 672 594
insurance contracts expensed in the year
Less: (Commission earned from (46 369 520) (34 031 028) (25 168 622) (25 851 434) (28 509 130)
reinsurance contracts)
Total expenses for the acquisition of 17 899 725 23 813 518 21 557 410 19 671 365 14 163 464
insurance contracts

b) Marketing expenses
Marketing expenses 955 343 1 118 235 1 258 817 814 228 421 721
955 343 1 118 235 1 258 817 814 228 421 721

Total marketing and administrative 18 855 068 24 931 753 22 816 227 20 485 593 14 585 185
expenses

70
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

NOTE 6: OTHER EXPENSES

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Audit fees 3 172 511 3 057 789 1 984 227 1 358 356 1 382 986
Actuarial fees 1 270 662 2 240 429 1 624 940 1 386 935 1 386 935
Amortisation of intangible assets 3 044 831 1 039 542 3 897 334 978 047 783 689
Asset management fees 5 392 935 7 415 923 4 056 054 4 917 480 4 941 216
Directors fees 1 011 807 1 298 586 897 038 946 414 595 352
Depreciation 1 920 820 2 012 550 1 723 195 1 600 604 1 519 404
Employee costs and benefits 31 194 161 34 498 802 29 716 361 21 630 598 19 766 091
Impairment allowance on insurance 802 624 1 225 830 - - -
receivables
Regulatory levy fees 3 449 927 4 026 609 3 767 938 3 178 359 3 178 359
Legal fees 768 429 49 435 4 439 134 580 134 580
Management fees 147 960 70 056 1 641 059 2 445 147 1 689 330
Operating expenses 6 186 939 5 463 118 3 809 233 2 895 734 1 050 430
Professional fees 1 122 064 967 414 500 115 500 447 494 387
Repairs and maintenance 4 564 361 3 420 602 2 793 152 2 470 031 2 464 160
Software licenses and maintenance fees 11 426 201 10 402 495 6 016 582 7 338 489 7 334 034

Total other expenses 75 476 232 77 189 180 62 431 667 51 781 221 46 720 953

71
REGULATED INDUSTRIES -
FINANCIAL STATISTICS

72
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

RETIREMENT FUNDS
INDUSTRY FINANCIAL PERFORMANCE

Industry Consolidated Financial Investment by Asset Manager

Statements
Notes to the Financial Statements
Commentary on Financial Results
Detailed Local Investments and
Industry Investments Counter Parties

INDUSTRY CONSOLIDATED FINANCIAL STATEMENTS

T
he 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
as 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 2015. Comparative data for the year 2014 is
also analysed in comparison to 2015. We will also
track the trends for the past 5 years to see how the
industry has been performing.

73
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued

RETIREMENT FUNDS - INDUSTRY SUMMARY

STATEMENT OF SURPLUS OR DEFICIT
Year end
Income/ Notes 31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Expense
ratios
INCOME
Contributions 42% 1 1 436 374 119 1 092 493 268 1 214 368 273 1 125 738 371 921 698 024
Investment Income (Losses) 56% 2 1 915 009 216 2 850 180 497 2 611 709 788 1 325 591 505 1 607 380 783
Other Income 2% 3 92 852 708 82 953 716 80 005 600 60 481 004 60 717 147
Total income 100% 3 444 236 044 4 025 627 481 3 906 083 661 2 511 810 880 2 589 795 954

EXPENSES
Premiums paid 16% 5 (56 727 731) (52 140 223) ( 49 714 016) ( 44 671 040) ( 41 502 538)
Professional fees paid 37% 6 (129 970 089) (100 257 739) (90 066 844) (68 291 811) (69 810 201)
Provision for impairment - - 117 504 466 (383 252 942) (452 940 666)
Regulatory levies and 4% (15 620 651) (13 148 413) (11 205 269) ( 9 536 673) (7 012 793)
service fees
Administration expenses 42% 7 (147 404 085) (120 086 726) (103 691 353) (89 501 544) (83 927 144)
Total expenses 100% 349 722 556 (285 633 101) (137 173 016) (595 254 010) (655 193 342)

Net Income for the period 3 094 513 488 3 739 994 380 3 768 910 645 1 916 556 870 1 934 602 612

ACCUMULATED FUNDS
At the beginning of the 20 691 184 657 18 060 452 224 15 197 108 830 13 901 537 444 12 810 067 182
period
Net Income for the period 3 094 513 488 3 739 994 380 3 768 910 645 1 916 556 870 1 934 602 612
Net accumulated Fund 23 785 698 144 21 800 446 604 18 966 019 475 15 818 094 314 14 744 669 794
before benefits
Benefits paid 4 (1 150 158 756) (1 109 261 947) (905 567 250) (843 132 350) 643 776 704

Accumulated funds at the 22 635 539 388 20 691 184 657 18 060 452 225 13 901 537 444 12 810 067 182
end of the period

74
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

STATEMENT OF FUNDS AND NET ASSETS

Year end
Notes 31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
ASSETS
Fixed Assets 140 809 888 131 212 673 265 250 084 262 927 058 123 463 806
Investments 22 841 666 142 20 800 083 879 17 962 047 512 15 098 460 825 13 490 704 587

Current assets
Account receivable 8 40 049 249 46 466 865 34 029 781 22 784 041 27 730 255
Arrear contributions 102 009 584 89 769 983 102 897 023 48 687 058 497 085 542

Total assets 23 124 534 863 21 067 533 400 18 364 224 400 15 432 858 982 14 138 984 190

FUNDS
Accumulated funds/Liability for 22 635 539 388 20 691 184 657 18 060 452 225 15 197 108 830 13 901 537 444
future benefits & surpluses
Current liabilities
Benefits payable 10 408 448 143 301 497 579 247 144 084 193 052 615 187 784 736
Accounts payable 11 80 547 332 74 851 164 56 628 091 42 697 537 49 662 010

Total funds and liabilities 23 124 534 863 21 067 533 400 18 364 224 400 15 432 858 982 14 138 984 190

RETIREMENT FUNDS - LOCAL VS FOREIGN ASSETS

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Total Local Investments 7 299 822 198 6 381 985 763 5 223 198 949 4 301 219 033 3 618 499 127
Total Foreign Investments 15 541 843 944 14 418 098 116 12 738 848 563 10 797 241 792 9 872 205 460
TOTAL INVESTMENTS 22 841 666 142 20 800 083 879 17 962 047 512 15 098 460 825 13 490 704 587
% Local Investments to Total Investments 32% 31% 29% 28% 27%
% Foreign Investments to Total 68% 69% 71% 72% 73%
Investments
TOTAL INVESTMENTS 100% 100% 100% 100% 100%

75
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued

INVESTMENTS - BY ASSET CLASS

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011

LOCAL INVESTMENTS: 7 299 822 198 6 381 985 763 5 223 198 949 4 301 219 033 3 618 499 127
Swaziland Stock Exchange: equities 483 987 786 535 584 715 449 178 626 387 803 971 318 753 122
Unlisted Shares 1 230 755 505 639 940 059 350 776 974 282 483 532 74 003 570
Bonds Funds own portfolio 246 339 997 244 104 995 924 643 609 924 345 792 487 089 076
STANLIB Bonds 173 145 962 173 194 059 - - -
Old Mutual Bonds 48 652 727 48 652 727 - - -
Loans and Advances Funds own 464 351 052 691 667 119 40 745 339 41 796 052 -
portfolio
Inhlonhla Swaziland Loans Portfolio 609 885 334 446 308 166 - - -
STANLIB Loans Portfolio 108 626 538 78 573 425 - - -
Old Mutual Swaziland Loans Portfolio 39 064 360 30 883 512 - - -
African Alliance Loans Portfolio 133 806 250 20 495 616 - - -
Property 878 229 102 835 895 493 1 388 439 895 1 161 586 001 345 484 632
INSURED FUNDS 166 251 611 165 395 847 215 220 045 108 971 078 79 672 006
Cash and money market instruments 2 716 725 974 2 471 290 030 1 854 194 461 1 394 232 607 2 313 496 721

FOREIGN INVESTMENTS BY 15 541 843 944 14 418 098 116 12 738 848 563 10 797 241 792 9 872 205 460
INVESTMENT CLASS:
Johannesburg Stock Exchange Equities 8 327 735 187 7 798 406 377 7 771 128 417 6 638 683 107 5 922 188 581
Offshore equities 3 461 023 601 3 167 813 168 2 073 874 355 1 756 635 129 1 496 886 689
Bond exchange of South Africa 1 679 017 757 1 387 029 483 1 459 101 832 1 088 018 959 1 088 018 959
Offshore bonds 2 950 965 2 682 695 83 647 644 69 150 730 160 369 950
Cash and Money Market instruments 1 121 149 787 1 343 399 952 1 158 550 817 1 081 988 887 1 006 129 479
Offshore Cash - - 36 784 248 29 627 345 26 524 191
Orbis Mutual Funds - - - - 13 834 542
Commodities 35 061 086 33 537 076 16 739 796 15 217 996 -
Equity Linked Derivatives 130 783 949 124 776 194 ( 59 366 087) (59 646 244) -
Property 784 121 612 560 453 171 198 387 541 177 565 883 158 253 069

TOTAL INVESTMENTS 22 841 666 142 20 800 083 879 17 962 047 512 15 098 460 825 13 490 704 587

76
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

COMMENTARY ON FINANCIAL funds assets totalled E23.1 billion (2014: E21.1

billion). This represents 10% growth from prior
RESULTS year. This growth is also consistent with the
Income Statement increase in accumulated funds.
The industry income statement above highlights
that overall, the net income for the period Analysis of Investments
decreased by 17% from E3.7 million in 2014 to
E3.1 million in 2015.The main reason for the a. Local vs Foreign Assets
increase is evident in the investment Income line, The Retirement Funds legislations requires
which has decreased by 33% from E2.8 million that 30% of assets must be invested in
to E1.9 million. This has resulted in a significant Swaziland. The purpose of tracking this local
decrease in the overall income from E4.0 million and foreign investment ratio is to check how
in 2014 to E3.4 in 2015. compliant the industry is with this legislation.

The trend analysis above reflects that the

Balance Sheet industry is currently meeting this requirement,
The Statement of Funds and Net Assets above having achieved 32% in 2015 (2014: 31%).
shows that as at 31 March 2015, the retirement

RETIREMENT FUNDS - LOCAL VS FOREIGN ASSETS

TOTAL ASSETS IN E BILLIONS

25,0

20,0

15,0

10,0

5,0

0
2011 2012 2013 2014 2015
YEAR ENDED
Local Investments Foreign Investments Total Investments

77
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued

INDUSTRY INVESTMENTS
Local Investments by asset class

LOCAL INVESTMENTS - BY ASSET CLASS

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011

LOCAL INVESTMENTS:
Swaziland Stock Exchange: equities 483 987 786 535 584 715 449 178 626 387 803 971 318 753 122
Unlisted Shares 1 230 755 505 639 940 059 350 776 974 282 483 532 74 003 570
Bonds Own Portfolio 246 339 997 244 104 995 70 649 407 66 023 407 81 752 407
STANLIB Bonds 173 145 962 173 194 059 - - -
Old Mutual Bonds 48 652 727 48 652 727 - -
Loans and Advances Funds own 464 351 052 691 667 119 853 994 202 900 118 437 405 336 669
portfolio
Inhlonhla Swaziland Loans Portfolio 609 885 334 446 308 166 - - -
STANLIB Swaziland Loans Portfolio 108 626 538 78 573 425 - - -
Old Mutual Swaziland Loans 39 064 360 30 883 512 - - -
Portfolio
African Alliance Loans Portfolio 133 806 250 20 495 616 - - -
Property 878 229 102 835 895 494 1 388 439 895 1 161 586 001 345 484 632
INSURED FUNDS 166 251 611 165 395 847 215 220 045 108 971 078 79 672 006
Cash and money market instruments: 2 716 725 974 2 471 290 029 1 854 194 461 1 394 232 607 2 313 496 721
TOTAL 7 299 822 198 6 381 985 763 5 223 198 949 4 301 219 033 3 618 499 127
% INCREASE 14% 15% 21% 19% (1%)

78
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015
2015 - LOCAL ASSET CLASSES
2% 7%
17%
37%
3%
2%
1%
6%
8%
12% 2% 1% 1%
Cash and Money Market Instruments - 37%
Unlisted Shares - 17%
Property - 12%
Inhlonhla Swziland - Loans Portfolio - 8%
Swaziland Stock Exchange - 7%
Loans and Advance - Own Portfolio - 6%
Bonds - Own Portfolio - 3%
African Alliance Loans - Portfolio - 2%
Insured Assets - 2%
OLD Mutual Bonds - 1%
STANLIB Swaziland - Loans Portfolio - 1%
SSX - Worth noting when looking at the trends of
the local asset classes, we can see that there is no
significant improvement in the proportion invested
in the Swaziland Stock Exchange. We see a 2%
decrease from 9% in 2014 to 7% in 2015. 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 another
significant growth to 17% in 2015 (2014:11%
growth). This is very encouraging as retirement
funds participate more in local entities.
Bonds As you can see from the pie chart, this asset
class has now been expanded, to identify the Asset
Managers who have participated in local bonds,
as well as bonds held directly by retirement funds.
When looking at the overall balance in bonds this
year, this asset class remained almost the same from
E466 million in 2014 to E468 million in 2015.
2014 - LOCAL ASSET CLASSES
3% 9%
11%
35%
4%
3%
1%
11%
7%
14%
1%
0.3%
Cash and Money Market Instruments - 35%
Property - 14%
Unlisted Shares - 11%
Loans and Advance - Own Portfolio - 11%
Swaziland Stock Exchange - 9%
Inhlonhla Swziland - Loans Portfolio - 7%
Bonds - Own Portfolio - 4%
Insured Assets - 3%
OLD Mutual Bonds - 1%
STANLIB Swaziland - Loans Portfolio - 1%
African Alliance Loans - Portfolio - 0.3%
Property investments in this asset class have
increased slightly by 5% in the year under review,
from E835 million in 2014 to E878 in 2015. Looking
at this trend from 2009 to 2013, there had 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%. In 2014 we saw a major decline of 39%.
Loans and advances As you can see from the
pie chart, this asset class has now been expanded, to
identify the Asset Managers who have participated
in loans and advances, as well as direct lending
done by retirement funds. When looking at the
overall balance in loans this year, this asset class
increased slightly by 7% from E1.3 billion in 2014
to E1.4 billion in 2015. This major increase is due to
a significant drive by retirement funds to participate
more in local business projects, either via Investment
managers or directly.
79
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued

FSRA applauds this development, and we will keep
monitoring the performance of these loans, to ensure
pensioners do not lose out from failed projects.
Insured funds this class forms an insignificant 2%
(2014: 3%) of the total local assets. This asset class
has increased slightly from E165 million in 2014 to
E166 million in 2015.
Cash and Money market instruments cash
holdings by the end of 2015 had increased by 10%
from E2.5 billion in 2014 to E2.7 billion in 2015. The
Authority is still monitoring this asset closely, as we
are worried that money held in cash quickly return to
South Africa through the Commercial Banks.

FOREIGN INVESTMENTS BY ASSET CLASS

FOREIGN INVESTMENTS BY ASSET CLASS
Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011

Johannesburg Stock Exchange Equities 8 327 735 187 7 798 406 377 7 771 128 417 6 638 683 107 5 922 188 581
Offshore Equities 3 461 023 601 3 167 813 168 2 073 874 355 1 756 635 129 1 496 886 689
Bond exchange of South Africa 1 679 017 757 1 387 029 483 1 459 101 832 1 088 018 959 1 088 018 959
Offshore bonds 2 950 965 2 682 695 83 647 644 69 150 730 160 369 950
Cash and Money Market instruments 1 121 149 787 1 343 399 952 1 158 550 817 1 081 988 887 1 006 129 479
Offshore Cash - - 36 784 248 29 627 345 26 524 191
Orbis Mutual Funds - - - - 13 834 542
Commodities 35 061 086 33 537 076 16 739 796 15 217 996 -
Equity Linked Derivatives 130 783 949 124 776 194 (59 366 087) (59 646 244) -
Property 784 121 612 560 453 171 198 387 541 177 565 883 158 253 069
TOTAL 15 541 843 944 14 418 098 116 12 738 848 563 10 797 241 792 9 872 205 460
% Movement 8% 13% 17% 9% 7%

2015 - FOREIGN INVESTMENT BY ASSET CLASS 2014 - FOREIGN INVESTMENT BY ASSET CLASS

0.23% 0.23%
1% 5% 1% 4% 0.02%
0.02% 7% 9%

11% 10%

54% 54%

22% 22%

Johannesburg Stock Property - 5% Johannesburg Stock Property - 4%

Exchange - 54% Exchange - 54%
Equity Linked Equity Linked
Offshore Equities - 22% Derivatives - 1% Offshore Equities - 22% Derivatives - 1%

South African Bonds - 11% Commodities - 0.23% South African Bonds - 10% Commodities - 0.23%
Cash and Money Market Offshore Bonds - 0.02% Cash and Money Market Offshore Bonds - 0.02%
Instruments - 7% Instruments - 9%

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

The pie charts above shows that the pattern of asset
allocation almost remained the same when looking
at 2015 and 2014. As usual the JSE Equities took
the bigger pie of 54% (2014: 54%). Followed by
investments in offshore equities which took the
pie of 22% (2014: 22%). The next significant pie
was invested in both South African Bonds at 11%
(2014: 10%) as well as South African Cash and
Money Market which took 7% (2014: 9%) of the pie.
Overall, assets invested outside Swaziland increased
by 8% (2014: 13%).

INVESTMENTS BY ASSET MANAGER

INVESTMENTS BY ASSET MANAGER
Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Allan Gray 5 082 531 683 4 939 986 785 4 789 314 502 4 052 475 134 3 721 496 778
Coronation 4 119 524 663 3 613 077 937 3 095 700 018 2 494 742 890 2 233 444 885
Rmb And Momentum Asset Managers 609 356 894 738 996 429 1 207 993 745 1 042 884 190 1 271 992 561
Foord 2 012 787 198 1 801 411 301 1 404 924 906 1 137 326 406 969 577 041
African Alliance 811 802 366 750 306 937 1 525 838 900 1 274 733 145 1 127 656 564
Investec 335 391 117 342 063 230 352 890 764 324 595 628 290 629 770
Stanlib 2 025 436 301 1 808 480 797 1 372 228 710 1 324 776 097 1 566 074 997
Old Mutual Investment Management 179 815 049 157 770 659 112 327 410 132 449 065 99 902 121
Ten 50 Six Life Limited - - - - -
Advantage Asset Managers - - - 1 262 965 1 262 965
Inhlonhla 111 519 505 110 963 498 107 840 644 107 550 808 60 469 478
Insured Funds 166 251 611 165 395 847 215 220 045 108 971 078 79 672 006
Ovation Voluntary Investment Plan - - - - 3 972 013
Mergence Africa 25 070 814 18 815 792 25 713 258 25 713 258 -
Balondozi 100 470 187 28 586 770 - - -
SSgA 13 349 553 10 400 768 - - -
Orange 19 248 997 17 681 278 - - -
Metropolitan 95 539 618 79 555 935 - - -
Other Self Administered Assets 7 133 570 586 6 216 589 916 3 752 054 610 3 070 980 161 2 064 553 407
22 841 666 142 20 800 083 879 17 962 047 512 15 098 460 825 13 490 704 586

81
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued

2015 - INVESTMENTS ASSET MANAGER MARKET SHARE

Other Self Old Mutual Investment

Administered Assets - 30% Management Co - 1%
30% 23%
Allan Gray - 23% Insured Funds - 1%

Coronation - 18% 18% Balondolozi - 0.5%

9%
Foord - 9% Inhlonhla - 0.5%
2% 4% 9% 3%
Stanlib - 9% Metropolitan - 0.4%

African Alliance - 4% Mergence Africa - 0.1%

RMB and Momentum Orange - 0.1%

Asset Managers - 3%
SSgA - 0.1%
Investec - 2%

2014 - INVESTMENTS BY ASSET MANAGER MARKET SHARE Other Self

Administered Assets - 29%

Allan Gray - 24%

Coronation - 18%
Foord - 9%
Stanlib - 9%
24% African Alliance - 4%
29%
RMB and Momentum
Asset Managers - 4%
Investec - 2%
1%
0.1% Inhlonhla - 1%
1% Insured Funds - 1%
18%
1%
1% Old Mutual Investment
9% Management Co - 1%
Metropolitan - 0.4%
2% 4% 9% 4% Balondolozi - 0.1%
Mergence Africa - 0.1%
SSgA - 0.1%
Orange - 0.1%

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

RETIREMENT FUNDS INDUSTRY

NOTES TO THE FINANCIAL STATEMENTS

NOTE 1 - CONTRIBUTIONS
Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Contributions
Member contributions - regular 402 826 015 385 148 754 365 700 528 358 680 796 306 617 185
Employer contributions 1 007 116 636 858 569 747 722 436 391 690 489 933 598 529 682
Employer Ex Gratia Contributions 12 064 776 6 209 387 561 000 - 2 293 667
Member additional voluntary 4 312 894 (163 165 236) 125 482 207 71 670 542 11 827
contributions
Transfers-In 10 053 798 5 730 616 188 147 4 897 100 14 245 663
Total 1 436 374 119 1 092 493 268 1 214 368 273 1 125 738 371 921 698 024

NOTE 2 - INVESTMENT INCOME

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Investment Income
Dividends 86 306 341 80 010 979 77 076 311 81 880 029 54 272 438
Interest 379 631 696 290 786 241 224 410 848 212 447 483 234 183 937
Net realised gains/losses on financial 230 321 102 61 679 337 58 813 849 50 723 658 844 464 815
assets
Fair value adjustments through Profit & 1 218 750 077 2 417 703 940 2 251 408 780 980 540 336 474 459 593
Loss
Total 1 915 009 216 2 850 180 497 2 611 709 788 1 325 591 505 1 607 380 783

83
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued

NOTE 3 - OTHER INCOME

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Other income
Rent 71 662 980 56 436 340 56 107 884 42 545 498 30 367 301
Sundry Income 4 202 754 4 963 775 4 476 007 2 559 749 7 734 749
GLA recoveries proceeds 16 986 974 21 553 601 19 421 709 15 375 756 22 615 097
Total 92 852 708 82 953 716 80 005 600 60 481 004 60 717 147

NOTE 4 - BENEFITS PAID

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Retirement benefit paid (Pension/ (521 120 097) (460 165 447) (420 191 313) (198 930 827) (405 943 699)
annuity)
Periodic Payments to beneficiaries (30 441 177) (21 348 570) (9 010 758) (7 783 890) (7 248 948)
Lump sum benefit paid:
On death and disability (72 051 026) (103 836 642) (82 857 337) (80 607 542) (86 882 426)
On retirement (360 932 612) (382 925 857) (269 796 275) (209 722 367) (280 967 552)
On withdrawal (109 912 693) (109 390 463) (102 207 861) (75 941 286) (55 288 908)
Transfers to other funds (27 149 246) (4 179 734) (7 402 877) (3 303 456) (2 324 564)
Retrenchments/Voluntary Early (28 551 905) (27 415 234) (14 100 829) (14 100 828) (4 476 253)
Retirement
Other - USDF Past service - - - (30 595 288) -
contributions refund
Total (1 150 158 756) (1 109 261 947) (905 567 250) (620 985 484) (843 132 350)

NOTE 5 - PREMIUMS PAID

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Group life and funeral premiums (55 434 606) (50 215 902) ( 46 958 180) (42 004 769) (39 591 531)
Permanent Health Insurance (PHI) (1 293 125) (1 924 321) (2 517 580) (2 428 146) (1 911 007)
premium
Purchase of annuities - - (238 256) (238 125) -
Total (56 727 731) (52 140 223) (49 714 016) (44 671 040) (41 502 538)

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

NOTE 6 - PROFESSIONAL FEES PAID

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Professional Fees:
Actuarial fees (1 677 009) (1 050 366) ( 1 733 210) (980 388) (1 005 429)
Audit fees (3 038 634) (2 814 337) (2 417 975) (2 173 847) ( 2 151 929)
Fund administration fees (21 112 376) (19 200 879) (16 864 234) ( 16 477 301) (14 196 489)
Investment management fees (99 342 162) (73 179 705) (65 563 162) (45 675 366) ( 50 169 296)
Legal fees (2 121 460) (1 440 527) (1 569 299) (888 985) (798 592)
Consultants fees (2 678 448) (2 571 924) (1 918 964) (2 095 924) ( 1 488 466)
Total (129 970 089) (100 257 738) (90 066 844) ( 68 291 811) (69 810 201)

NOTE 7 - ADMINISTRATION EXPENSES

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Advertising and Communication to (4 999 264) (3 774 459) (2 458 120) (2 499 208) (1 482 505)
members
Bank charges (2 771 372) (2 128 021) (2 300 362) (2 045 745) (1 979 945)
Board expenses (2 860 899) (3 004 507) (3 568 680) (3 390 175) (2 424 688)
Computer expenses (1 393 625) (1 707 357) (904 367) (899 518) (932 199)
Depreciation (3 947 986) (3 851 663) (4 045 126) ( 4 459 045) (4 719 348)
General expenses (1 984 993) (1 750 682) (1 171 276) (871 994) (1 410 354)
Licenses (3 101 292) (2 592 668) (2 545 146) ( 2 026 508) (1 724 203)
Insurance (296 629) (409 665) ( 445 573) (686 759) (770 620)
Motor vehicle expenses (893 599) (627 194) (573 460) ( 392 555) (138 409)
Postage and telephone (2 217 681) (1 973 749) (2 713 099) ( 1 872 907) (687 606)
Printing and stationery (1 244 707) (1 200 788) (1 148 179) (850 740) (2 697 418)
Rent, property and office expenses (35 251 478) (25 906 666) (28 609 980 ) (20 328 517) (15 849 653)
Repairs and maintenance (685 279) (1 425 431) (807 350) (764 139) (969 407)
Salaries, wages and allowances (60 996 141) (57 883 648) (49 417 953) (46 151 211) (46 641 879)
Social Investments (1 248 768) (223 911) (197 870) (154 131) (934 069)
Travel and entertainment (714 996) (1 128 899) (1 608 442) (1 402 174) (333 278)
Public Functions (59 702) (37 541) (378 500) (83 010) -
Training expenses (3 610 416) (1 908 520) (797 870) (623 208) (231 563)
Other Withdrawing tax (19 125 258) (8 551 357) - - -
Total (147 404 085) (120 086 726) (103 691 353 ) (89 501 544) (83 927 144 )

85
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued

NOTE 8 - ACCOUNTS RECEIVABLE

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Prepayments 6 236 547 6 436 288 1 070 085 1 303 851 1 134 716
Staff receivables 2 672 249 2 717 388 2 514 278 3 155 246 4 248 622
Sundry Receivables 7 839 257 4 521 790 1 308 185 765 458 1 504 064
Interest receivable 1 152 291 2 172 785 328 479 3 005 291 5 444 774
Transfers from other funds - - 20 797 672 7 078 504 12 362 392
Proceeds from GLA policies 18 154 784 6 105 139 6 001 389 5 412 447 2 442 344
Rent receivables 3 994 121 2 546 822 2 009 693 2 063 244 593 343
Net Vat receivables - 21 966 653 - - -
40 049 249 46 466 865 34 029 781 22 784 041 27 730 255

NOTE 9 - ARREAR CONTRIBUTIONS

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011

Receivables from employers 337 848 444 566 371 032 821 586 165 884 880 666 497 085 542
Less: Provision for impairment (237 815 330) (478 252 236) (718 689 142) (836 193 608) (452 940 666)
Receivables from employees 1 976 470 1 651 187
Total 102 009 584 89 769 983 102 897 023 48 687 058 44 144 876

NOTE 10 - BENEFITS PAYABLE

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Accrued benefits due 374 666 160 251 940 054 188 571 354 134 475 014 128 971 510
Pensioners suspended 29 113 962 44 889 504 53 904 709 53 909 579 54 145 204
Exgratia benefit accrual 4 668 021 4 668 021 4 668 021 4 668 022 4 668 022
408 448 143 301 497 579 247 144 084 193 052 615 187 784 736

NOTE 11 - ACCOUNTS PAYABLE

Year end
31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
Accrued Expenses 45 891 087 64 080 495 30 857 709 31 970 268 21 278 913
Uncollected benefit claims 958 849 1 117 642 113 825 115 014 897 889
Other Payables 31 976 781 7 231 717 23 110 085 6 954 524 9 466 261
Retention 609 164 908 879 908 879 908 879 1 585 998
Provision for Foreign Tax 1 111 451 1 111 451 1 175 224 1 175 224 16 023 266
GLA premium payable - 400 980 462 370 1 573 628 409 683
80 547 332 74 851 164 56 628 092 42 697 537 49 662 010

86
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

DETAILED LOCAL INVESTMENTS AND COUNTERPARTIES

LOCAL INVESTMENTS, CASH AND CASH EQUIVALENTS
Year end
TYPE OF INVESTMENT AND 31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
COUNTERPARTY

Swaziland Stock Exchange 483 987 786 535 584 715 449 178 626 387 803 971 318 753 122
SWAPROP 53 656 330 53 617 400 35 133 809 37 683 125 23 697 795
SEL 354 752 650 333 033 100 352 181 700 297 557 835 281 771 647
RSSC 1 690 000 1 690 000 2 473 742 3 018 096 1 303 680
Nedbank Share 10 759 750 10 444 750 9 931 000 3 293 309 1 980 000
Newera Partners 24 833 312 55 992 547 13 403 055 13 000 000 10 000 000
Greyston Partners 38 295 744 80 806 918 36 055 320 33 251 606 -

Unlisted Shares 1 230 755 505 639 940 059 350 776 974 282 483 532 74 003 570
Old Mutual Swaziland Shares 7 988 235 7 988 235 19 623 272 18 823 272 2 703 570
SBS - permanent shares 146 309 853 147 611 991 149 367 429 123 373 987 -
SIDC Shares 124 000 000 124 000 000 124 000 000 82 500 000 71 300 000
Happy Valley Enterprises 123 484 392 104 506 561 21 303 136 21 303 136 -
Motel Enterprises - - 36 483 137 36 483 137 -
The New Mall equity 15 823 272 15 823 272
Emprop Limited equity 53 000 000 73 000 000
SRIC 32 500 000 32 500 000
RMS Manzini investments 2 000 28 890 000
Libuyile Equity 64 383 052 60 000 000
Old Mutual Agri- Fund 45 620 000 45 620 000
Swaziland National Housing Board 14 967 691 -
Montigny Group of Companies 602 677 010 -

Bonds Own Portfolio 246 339 997 244 104 995 70 649 407 66 023 407 81 752 407
Newera Bond 3 833 312 3 680 767 - - 18 000 000
Bond SG016 31/08/2018 50 259 712 50 259 712 - - -
Bond SG017 31/10/2020 93 300 820 92 712 516 - - -
Bond SG018 31/01/2024 98 946 153 97 452 000 - - -
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 -

Bonds Old Mutual 48 652 727 48 652 727 - - -

Swd Govt Bond SG017 31/10/2020 48 652 727 48 652 727 - - -

Bonds STANLIB 173 145 962 173 194 059

Bond STD202 (8.1010%) 14/10/2015 13 176 882 13 176 882
Bond SG08 (7.30%) 30/11/2015 46 055 587 46 055 587
Bond SG011 (8.25%) 31/01/2018 91 214 216 91 214 216
Bond SG0016 31/08/2018 17 315 360 17 363 457
Bond SG0017 31/10/2020 5 383 917 5 383 917

87
 REGULATED INDUSTRIES -
FINANCIAL STATISTICS

RETIREMENT FUNDS -
INDUSTRY FINANCIAL PERFORMANCE - continued

LOCAL INVESTMENTS, CASH AND CASH EQUIVALENTS

Year end
TYPE OF INVESTMENT AND 31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
COUNTERPARTY

Loans and Advances Own Portfolio 464 351 052 691 667 119 853 994 202 900 118 437 405 336 669
Swaziland Sugar Association 252 816 429 252 714 846 287 473 218 283 443 313 249 372 027
Swaziland Electricity Company 91 913 425 107 094 244 158 552 121 136 250 000 150 000 000
Swazi Bank 81 629 246 122 104 932 172 845 754 203 287 672 -
Central Bank of Swaziland - 3 year note - 202 810 822 202 620 109 202 838 400 -
STD Swazi - - - 39 445 275 5 964 642
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 -
Manzini City Council - - 11 533 531 19 987 978 -
Members loans - - 2 298 239 3 639 034 -
Less: Impairments - - (1 815 441) (1 815 441) -
Select Management Services 20 176 147 - - - -
Swaziland National Housing Board 10 873 530 - - - -

Loans portfolio Inhlonhla Swaziland 609 885 334 446 308 166 - - -
Swazi Observer Loan 2 885 643 3 396 144 - - -
Saphumula SACCO loan 1 886 337 4 132 189 - - -
Moshav Properties loan 2 580 007 2 876 833 - - -
Swazi Plaza Properties 63 012 921 69 475 188 - - -
Emprop Limited 129 980 859 105 737 715 - - -
Standard Bank Custodian Accountant 17 658 178 14 084 829 - - -
First Finance Loan 141 646 535 145 953 934 - - -
Amandla Financial Services 71 131 299 30 533 654 - - -
Libuyile (Pty) Ltd Loan 70 252 752 70 117 680 - - -
Montigny Group of Swaziland Companies 108 850 803 - - - -

Loans Portfolio - STANLIB Swaziland 108 626 538 78 573 425 - - -

Swaziland Sugar Association 75 069 350 75 053 425 - - -
RMS Manzini Investment (Pty) Ltd 33 557 188 3 520 000 - - -

Loans Portfolio Old Mutual Swaziland 39 064 360 30 883 512 - - -

Agri-Fund 24 926 849 22 810 000 - - -
Ezulwini Town Board 6 904 949 8 073 512 - - -
New Mall 7 232 562 - - - -

Loans Portfolio African Alliance 133 806 250 20 495 616

Inyatsi Construction 20 495 615 20 495 616 - - -
Select Limited Loan 1 31 316 096 - - - -
Select Limited Loan 2 31 436 919 - - - -
Select Limited Loan 3 50 557 620 - - - -

Property 878 229 102 835 895 493 1 388 439 895 1 161 586 001 345 484 632
Investment Property 878 229 102 835 895 493 741 301 720 455 171 826 345 484 632
Equity to property developers - - 309 167 000 376 160 000 -
Loans to property developers - - 337 971 175 330 254 175 -

88
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

LOCAL INVESTMENTS, CASH AND CASH EQUIVALENTS - continued

Year end
TYPE OF INVESTMENT AND 31-Mar-2015 31-Mar-2014 31-Mar-2013 31-Mar-2012 31-Mar-2011
COUNTERPARTY

Cash and money market instruments: 2 716 725 974 2 471 290 029 1 854 194 461 1 394 232 607 2 313 496 722
STANLIB Money Market 1 381 647 121 1 279 244 770 688 857 141 779 253 318 1 073 697 840
African Alliance Money Market 456 434 999 304 888 447 567 067 155 342 014 476 400 575 872
Swaziland Building Society 57 365 791 54 700 318 53 925 447 51 785 690 113 204 082
First National Bank 50 892 513 271 982 925 178 726 903 86 144 347 307 248 322
Nedbank Swaziland 62 164 507 38 310 223 40 780 598 37 553 993 73 737 192
Standard Bank Swaziland 69 784 016 151 819 083 111 420 116 86 641 210 95 880 148
Swazi Bank 102 067 461 2 558 471 209 394 000 7 008 048 245 993 897
Central Bank of Swaziland deposits 14 308 486 10 664 272 4 023 101 3 831 525 3 159 369
Old Mutual money market 522 061 080 357 121 520 - - -

Insured assets 166 250 611 165 395 847 215 220 045 108 971 078 79 672 006

Total Local Investments 7 299 821 198 6 381 985 763 5 223 198 949 4 301 219 033 3 618 499 127

89
REGULATED INDUSTRIES -
FINANCIAL STATISTICS

ANNUAL
Financial
Statements
For The Year Ended 31 March 2015

GENERAL
INFORMATION

Country of incorporation and domicile Swaziland

Nature of business and principal activities Regulator of non-bank financial

services providers

Business address 2nd Floor

Public Service Pension Fund
(Ingcamu) Building
Mhlambanyatsi Road
Mbabane
H100

Postal address P. O. Box 3365

Mbabane, H100
Swaziland

Bankers Standard Bank (Swaziland) Limited

First National Bank (Swaziland) Limited
Nedbank (Swaziland) Limited

Auditors Kobla Quashie and Associates

Chartered Accountants (Swaziland)
Manzini

86
90
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

INDEX
Contents Page

Report of the Independent Auditors 92

Boards Responsibility for Financial Reporting 93

Report of the Board 94

Statement of Financial Position 95

Statement of Surplus or Deficit 96

Statement of Changes in Equity 97

Statement of Cash Flow 98

Accounting Policies 99 - 108

Notes to the Annual Financial Statements 109 - 111

Detailed Income statement 112

91
 ANNUAL FINANCIAL STATEMENTS

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 comprise the statement of financial position as at 31 March 2015, the statement of surplus or deficit,
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 99 to 108.

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 accordance with International Standards on Auditing. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance whether the 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 entitys 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 entitys 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 2015, 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

Chartered Accountants (Swaziland)
Manzini
Daniel Bediako

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

Boards Responsibility for Financial Reporting

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 FSRAs 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 FSRAs cash flow forecast for the year to March 31, 2016 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 statements and reporting on FSRAs anual
financial statements. The annual financial statements have been examined by FSRAs external auditors and their
report is on page 92.

Boards approval of the annual financial statements

The annual financial statements set out on pages 94 to 112, which have been prepared on the going concern basis,
were approved by the Board on 5 November 2015 were signed on its behalf by:

___________________________________________ _________________________________________
Board Chairman CEO and Board Secretary
___________________________________________ _________________________________________
Date Date

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 ANNUAL FINANCIAL STATEMENTS

Report of the Board

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 2015.

1. General review
The 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 end

The 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. Subsequent events
The following persons served as board members during the period until the end of their term of office on
30 September 2014:

4. The Board
The following persons served as board members during the period:

Mr. Muhawu Maziya Chairman

Mr. Modern Samketi Member

Mr. Nathi Maseko Member
Mr. Theo Mason Member
Ms. Dumsile Magagula Member
Ms. Gigi Reid Member
Mr. Walter Matsebula Member
Mr. Sandile Dlamini CEO/Secretary

5. Auditors
Auditors for the Authority for the year under review are Kobla Quashie & Associates, P.O. Box 710 Manzini.

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

Statement of Financial Position

Note(s) 2015 2014

Assets
Non-Current Assets
Property, plant and equipment 3 3,231,188 3,458,760
Financial Assets 4 18,437,989 21,536,538
21,669,177 24,995,298

Current Assets
Trade and other receivables 5 10,782,026 5,830,216
Cash and cash equivalents 6 15,183,598 11,816,425
25,965,624 17,646,641
Total Assets 47,634,801 42,641,939

Equity
Retained income 43,081,144 39,327,482

Current Liabilities
Trade and other payables 7 2,542,676 1,667,562
Provision 8 723,300 533,399
Trust/Guarantee fund 9 1,287,681 1,113,496
4,553,657 3,314,457
Total Equity and Liabilities
47,634,801 42,641,939

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 ANNUAL FINANCIAL STATEMENTS

Statement of Surplus or Deficit

Note(s) 2015 2014

Income 36,803,408 36,084,846

Operating expenses (33,049,746) (30,439,750)
Operating surplus 2 3,753,662 5,645,096
Surplus for the year 3,753,662 5,645,096

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

Statement of Changes in Equity

Retained Income Total Equity

Balance at April 01, 2013 33,682,386 33,682,386

Changes in equity
Surplus for the year 5,645,096 5,645,096

Total changes 5,645,096 5,645,096

Balance at 01 April 2014 39,327,482 39,327,482
Changes in equity
Surplus for the year 3,753,662 3,753,662

Total changes 3,753,662 3,753,662

Balance at 31 March 2015 43,081,144 43,081,144

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 ANNUAL FINANCIAL STATEMENTS

Statement of Cash Flow

Note(s) 2015 2014

Cash flows from operating activities

Cash generated from operations 11 561,327 6,305,935

Cash flows from investing activities

Purchase of property, plant and equipment 3 (466,888) (376,123)
Movement in financial assets 3,098,549 (15,168,417)
Net cash from investing activities
2,631,661 (15,544,540)

Cash flows from financing activities

Net movements in trust fund - (980 395)
Movement in trust/guarantee fund 174,185 1,113,496
Net cash from financing activities 174,185 133,101

Total cash movement for the year 3,367,173 (9,105,504)
Cash at the beginning of the year 11,816,425 20,921,929
Total cash at end of the year 6
15,183,598 11,816,425

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

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 Authority 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 services 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 Retirement Funds (RIRF) and
currently holds the following divisions: Insurance and Retirements Funds (IRF) Division; Capital Markets (CM)
Division; and Credit and Savings Institutions (CSI) Division; Finance and Corporate Services and the CEOs
Office. The FSRA Act also establishes the Office of the Ombudsman of Financial Services and Appeals Tribunal.

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 Registrars Guarantee Account as per Sections 41 and 42 of the Insurance Act 7/2005 The 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.

The board has consitently applied 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.

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 ANNUAL FINANCIAL STATEMENTS

Accounting Policies - continued

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).
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.

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Accounting Policies - continued

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 heldwithin a business model whose objective is to collect the
contractual cash flows, and that have contractual cash flows that 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 liabilitys 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 liabilitys 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 authoritys financial statements as the authority does not have any financial assets and financial
liabilities that qualify for offset.

1.1 Property, plant and equipment

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.

Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their
estimated residual value.

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Accounting Policies - continued

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 Rate
Furniture 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: .

- Short Term insurer - 1.25% of gross written premium less commission.

- Long Term Insurer - 0.07% of the insurers 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 financial year
- Investment Managers - 1.25% of the income derived from insurance and retirement funds clients during
the financial year.
- SACCOS - 0.1% of members savings.
Registration and renewal fees
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.

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Accounting Policies - continued

Fines and penalties

Fines and penalties raised for late submission of returns are recognised on a cash basis. 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 assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an
assets 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.

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Accounting Policies - continued

(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 FSRAs board has the positive intention and ability to hold to maturity. Gains and losses on held
to maturity investments are recognised 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.

1.4 Financial instruments (continued)

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 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 arms length transactions, reference to other instruments that are substantially the same, discounted
cashflow analysis, and the option pricing models refined to reflect the issuers 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.
Cash and cash equivalents
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.

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Accounting Policies - continued

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.
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 Tax
Current 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
Where 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.
1.7 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.

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Accounting Policies - continued

Risk management is carried out under policies approved by the board. The board identifies, evaluates and
hedges financial risks in cooperation with the offices 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.
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 Total

3 months 3 months 6 months 9 months
or on but not but not but not
demand exceeding exceeding exceeding
6 months 9 months 1 year
2015
Trade and other payables 2,542,676 - - - 2,542,676
2014
Trade and other payables 1,667,561 - - - 1,667,561

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
FSRAs 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.
Fair value estimation
The 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.

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Accounting Policies - continued

1.8 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 E1,287,681.
1.9 Employee benefits
Provident Fund Obligations
FSRA Provident Fund is a defined contribution plan. For defined contribution plans FSRA pays contributions to
the self 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.

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 FSRAs obligation under the schemes is equivalent to those arising in a defined
contribution retirement benefit plan.
1.10 Financial instrument by category
The accounting policies for financial instruments have been applied to the line items below:

Description per the state- Amortised Carrying value

ment of financial position cost 2015 2014

Financial assets Trade and other receivables - 10 782 026 5 830 214
Cash and cash equivalent - 15 183 598 11 984 449
Investments - 18 437 989 21 536 538
Financial liabilities Trade and other payables - 2 542 676 1 667 561

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Accounting Policies - continued

1.10 Financial instrument by category (continued)

Credit quality of financial assets
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 Total

3 months or 3 months but 6 months but 9 months but
on demand not exceeding not exceeding not exceeding
6 months 9 months 1 year

2015
Trade and other receivables 6 469 214 4 312 810 - - 10 782 024

2014
Trade and other receivables 3 614 387 2 215 828 - - 5 830 214

1.11 Comparative figures

Where necessary, certain comparative figures have been restated.
1.12 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.
1.13 Segment reporting
Segment
The information available to us do not permit us to report according to the various segments of the authority.

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 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

Notes to the Annual Financial Statements

2015 2014
2. Operating surplus
Operating surplus for the year is stated after accounting for the following:
Auditors remuneration
- Auditors fees 136,800 105 000

Operating lease charges

Premises
Contractual amounts 2,508,588 2,128,033
Depreciation on property, plant and equipment 694,460 662,259
Employee costs( Note 10) 20,583,267 18,809,561

3. Property, plant and equipment

2015 2014
Cost / Accumulated Carrying Cost / Accumulated Carrying
Valuation depreciation value Valuation depreciation value
Furniture and fixtures 4,268,813 (1,926,017) 2,342,796 3,998,937 (1,509,604) 2,489,333
Motor vehicles 173,417 (78,038) 95,379 173,417 (43,354) 130,063
Office equipment 924,939 (396,211) 528,728 874,452 (306,995) 567,457
IT equipment 1,151,608 (887,323) 264,285 1,005,082 (733,175) 271,907
Total 6,518,777 (3,287,589) 3,231,188 6,051,888 (2,593,128) 3,458,760

Reconciliation of property, plant and equipment - 2015

Opening Additions Depreciation Total
Balance
Furniture and fixtures 2,489,333 269,876 (416,413) 2,342,796
Motor vehicles 130,063 - (34,684) 95,379
Office equipment 567,457 50,486 (89,215) 528,728
IT equipment 271,907 146,526 (154,148) 264,285
3,458,760 466,888 (694,460) 3,231,188

Reconciliation of property, plant and equipment - 2014

Opening Additions Depreciation Total
Balance
Furniture and fixtures 2,765,465 118,599 (394,731) 2,489,333
Motor vehicles 164,746 - (34,683) 130,063
Office equipment 528,534 118,529 (79,606) 567,457
IT equipment 286,151 138,995 (153,239) 271,907
3,744,896 376,123 (662,259) 3,458,760

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 ANNUAL FINANCIAL STATEMENTS

Notes to the Annual Financial Statements - continued

2015 2014

4. Financial Assets
This represents the following investment:
Swaziland Building Society - Permanent shares 2 000 000 2 000 000
Stanlib/Liberty Life Swaziland - Money Market instruments 16,437,989 19,536,538
18,437,989 21,536,538

5. Trade and other receivables

Trade debtors 9,389,308 4,897,607
Staff loans 898,670 787,428
Prepayments and other receivable 494,048 145,181

10,782,026 5,830,216

6. Cash and cash equivalents

Cash and cash equivalents consist of:
Cash on hand 2,000 2,000
Bank balances 13,658,720 10,561,897
Swaziland Building Society - Special Savings 235,197 139,032
Registrars Guarantee Trust Account 1,287,681 1,113,496
15,183,598 11,816,425
Bank balances consist of the following:
Standard Bank Swaziland Limited 8,307,483 3,993,448
First National Bank (Swaziland) Limited 6,239,252 6,516,941
Nedbank (Swaziland) Limited 69,273 51,509
14,616,008 10,561,898

7. Trade and other payables

Trade payables 246,987 1,257,279
Accrued audit fees 136,800 105,000
Unallocated deposits 2,158,889 305,283
2,542,676 1,667,562

8. Provision
Reconciliation of provision - 2015
Opening Additions Total
Balance
Provision for gratuity 533,399 189,901 723,300

The gratuity provision represents managements best estimate of the FSRAs liability under one period in
particular the CEOs provision for gratuity .

110
 FINANCIAL SERVICES REGULATORY AUTHORITY (FSRA) Annual Report 2015

Notes to the Annual Financial Statements - continued

2015 2014
9. Trust/Guarantee fund

Trust/Guarantee fund 1,287,681 1,113,496

10. Employee costs

The average number of employees during the year was 43 (2014 - 44)
Salaries 20,393,366 18,809,561

11. Cash generated from operations

Surplus 3,753,662 5,645,096
Adjustments for:
Depreciation and amortisation 694,460 662,259
Movements in provisions 189,901 12,333
Changes in working capital:
Trade and other receivables (4,951,810) (740,323)
Trade and other payables 875,114 726,570
561,327 6,305,935

111
 ANNUAL FINANCIAL STATEMENTS

Detailed Income Statement

Note(s) 2015 2014

Revenue

Government subvention 8,015,000 12,000,000
Registration and renewal fees 981,605 824,204
Interest received 1,080,959 1,097,173
Levies fee 26,636,543 21,770,076
Sundry income 89,301 393,393

36,803,408 36,084,846

Operating expenses

Advertising 49,192 321,091
Auditors remuneration 136,800 105,000
Bank charges 120,336 109,634
Cleaning 85,213 73,648
Computer expenses 66,354 91,982
Consulting and professional fees 695,270 182,201
Consumer education expenses 773,246 415,953
Depreciation, amortisation and impairments 694,460 662,259
Employee costs 20,583,267 18,809,561
Staff uniform 279,739 107,442
Legal expenses 597,014 432,621
Board fees and expenses 268,799 226,688
Insurance 194,778 25,452
Internet expenses 36,144 33,032
Lease rentals on operating lease 2,508,588 2,128,033
Printing and stationery 538,432 447,574
General office expenses 7,328 5,890
Postage 6,695 16,590
Repairs and maintenance 130,224 51,364
Staff welfare 181,841 155,700
Subscriptions 198,586 420,057
Telephone and fax 656,647 965,588
Travel and training 4,056,939 4,485,476
Utilities 183,854 166,914

33,049,746 30,439,750
Surplus for the year
3,753,662 5,645,096

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