Silver Heritage Group Limited Appendix 4D Half-year report

1. Company details Name of entity: Silver Heritage Group Limited ABN: 74 604 188 445 Reporting period: For the half-year ended 30 June 2017 Previous period: For the half-year ended 30 June 2016

2. Results for announcement to the market US$'000 Revenues from ordinary activities up 7.2% to 8,058 Loss from ordinary activities after tax attributable to the owners of Silver Heritage Group Limited

up

114.3%

to

(3,523)

Loss for the half-year attributable to the owners of Silver Heritage Group Limited

up

114.3%

to

(3,523)

Refer to note 2 for details on comparative information. Dividends There were no dividends paid, recommended or declared during the current financial period. Comments Further details on the financial performance of the Group are provided in the investor presentation released to the ASX on the same day as this report.

3. Net tangible assets

Reporting

period Previous

period US Cents US Cents Net tangible assets per ordinary security 14.00 14.74

4. Details of associates and joint venture entities Interest in joint venture Gaming Concepts Group Limited (Belize) - Ownership interest - 50% as at 30 June 2017 and 31 December 2016.

5. Audit qualification or review Details of audit/review dispute or qualification (if any): The financial statements were subject to a review by the auditors and the review report is attached as part of the Interim Report.

6. Attachments Details of attachments (if any): The Interim Report of Silver Heritage Group Limited for the half-year ended 30 June 2017 is attached.

For

per

sona

l use

onl

y

Silver Heritage Group Limited Appendix 4D Half-year report

7. Signed

Signed ___________________________ Date: 22 August 2017 David Green Chairman

For

per

sona

l use

onl

y

Silver Heritage Group Limited ABN 74 604 188 445

Interim Report - 30 June 2017

For

per

sona

l use

onl

y

Silver Heritage Group Limited Contents 30 June 2017

1

Directors' report 2 Auditor's independence declaration 4 Statement of profit or loss and other comprehensive income 5 Statement of financial position 6 Statement of changes in equity 7 Statement of cash flows 8 Notes to the financial statements 9 Directors' declaration 16 Independent auditor's review report to the members of Silver Heritage Group Limited 17 Corporate directory 19 

For

per

sona

l use

onl

y

Silver Heritage Group Limited Directors' report 30 June 2017

2

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of Silver Heritage Group Limited (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 30 June 2017. Directors The following persons were Directors of Silver Heritage Group Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated: David Green Mike Bolsover Richard Barker Matthew Hunter Robert Benussi Appointed on 7 August 2017 Hugh Holmes Resigned on 9 March 2017 Principal activities The Group operates and manages casinos in Nepal and Vietnam, and leases electronic gaming equipment to casino operators in Laos. The Group is also building a five-star hotel and casino resort in Nepal. Dividends There were no dividends paid, recommended or declared during the current or previous financial half-year. Review of operations The Group’s revenue for the half-year increased by 7% to US$8,058,000 (half-year to 30 June 2016: US$7,516,000); this is mainly due to the strong performance of the Group’s casino management business in Vietnam, partially offset by a reduction in revenue from the Group’s electronic gaming equipment leasing business in Laos and exiting the Cambodian market. The latter was in turn primarily due to a change in business model part way through 2016 when the Group switched from being entitled to a share of each machine’s gaming revenue to charging a fixed lease amount per machine per month. This led to a reduction in revenue but also to a reduction in costs associated with generating that revenue. The Group’s loss for the half-year increased by 114% to US$3,523,000 (half-year to 30 June 2016: US$1,644,000). The growth in operating profitability in Vietnam was more than offset by an increase in costs following the Group’s Initial Public Offering ("IPO") in August 2016, together with additional interest and option expenses associated with increasing the Group’s Borrowings from US$10,000,000 to US$20,000,000 at the same time as the IPO. Significant changes in the state of affairs There were no significant changes in the state of affairs of the Group during the financial half-year. Matters subsequent to the end of the financial half-year On 30 June 2017, the Company announced the launch of a fully underwritten accelerated renounceable entitlement offer to raise gross proceeds of approximately A$19,000,000 (US$14,400,000). This entitlement offer, which comprised an institutional component and a retail component, was completed subsequent to the end of the financial half-year. On 10 July 2017 the Company, under the institutional component, issued 206,533,143 ordinary shares at A$0.05 each raising a total of A$10,327,000 (US$7,914,000). In addition, the Company issued 8,518,727 ordinary shares in partial settlement of sub-underwriting fees. On 3 August 2017 the Company, under the retail component, issued 174,037,162 ordinary shares at A$0.05 each raising a total of A$8,702,000 (US$6,946,000). In addition, the Company issued 5,867,445 ordinary shares in partial settlement of sub-underwriting fees. The new shares issued rank equally with all existing fully paid ordinary shares. On 8 August 2017, in respect to amendments to the secured bond facilities, the Company issued to its bondholders options to acquire 29,904,306 new ordinary shares at an exercise price of A$0.11 and an expiry date of 26 August 2019. On exercise of the options, the ordinary shares issued will rank equally with all fully paid ordinary shares. As at the date of this report, the Company has a total of 585,241,630 ordinary shares in issue and a total of 59,808,612 options over ordinary shares in issue. The options are not listed on any recognised stock market.

For

per

sona

l use

onl

y

Silver Heritage Group Limited Directors' report 30 June 2017

3

On 20 August 2017, the Group agreed with the consortium of Nepalese banks to increase the lending facility in Nepal from NPR 750,000,000 (US$7,351,000) to NPR 1,110,000,000 (US$10,781,000). It was also agreed that a one-year demand facility of up to NPR 150,000,000 (US$1,470,000) would be made available to the Group. In connection with the extension of banking facilities in Nepal, it was agreed to prepay US$2,000,000 of bonds at a redemption price of US$2,134,000 on or around 25 August 2017. As a result of this prepayment the amount of the bonds to be redeemed on or before 24 August 2019 shall be reduced from US$11,000,000 to US$9,000,000. No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years. Rounding of amounts The Company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this Directors' report. This report is made in accordance with a resolution of Directors, pursuant to section 306(3)(a) of the Corporations Act 2001. On behalf of the Directors

___________________________ ___________________________ David Green Mike Bolsover Chairman Managing Director and Chief Executive Officer 22 August 2017

For

per

sona

l use

onl

y

Level 17, 383 Kent Street Sydney NSW 2000 Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 4445 E info.nsw@au.gt.com W www.grantthornton.com.au

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation.

4

Auditor’s Independence Declaration To the Directors of Silver Heritage Group Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Silver Heritage Group Limited for the half-year ended 30 June 2017, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

b no contraventions of any applicable code of professional conduct in relation to the review.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

N J Bradley Partner - Audit & Assurance

Sydney, 22 August 2017

For

per

sona

l use

onl

y

Silver Heritage Group Limited Statement of profit or loss and other comprehensive income For the half-year ended 30 June 2017

Consolidated Note 30 June 2017 30 June 2016 US$'000 US$'000

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

5

Revenue 4 8,058 7,516 Share of profits of joint ventures accounted for using the equity method 19 180 Expenses Employee benefits expense (2,860) (2,944)Depreciation and amortisation expense (1,378) (1,285)Legal and professional fees (541) (169)Nepal gaming royalties and license fees (186) (184)Advertising and promotion expenses (898) (970)Occupancy expense (590) (640)Travel and accommodation expenses (299) (281)Expenses for future projects (724) (902)Other expenses (977) (681)Finance costs (1,896) (508)Vietnam casino costs reimbursement (1,230) (688) Loss before income tax expense (3,502) (1,556) Income tax expense (16) (88) Loss after income tax expense for the half-year (3,518) (1,644) Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation 1,677 (34) Other comprehensive income for the half-year, net of tax 1,677 (34) Total comprehensive income for the half-year (1,841) (1,678) Loss for the half-year is attributable to: Non-controlling interest 5 - Owners of Silver Heritage Group Limited (3,523) (1,644) (3,518) (1,644) Total comprehensive income for the half-year is attributable to: Non-controlling interest 5 - Owners of Silver Heritage Group Limited (1,846) (1,678) (1,841) (1,678) US Cents US Cents Basic earnings per share 11 (1.85) (1.29)Diluted earnings per share 11 (1.85) (1.29) Refer to note 2 for details on comparative information.

For

per

sona

l use

onl

y

Silver Heritage Group Limited Statement of financial position As at 30 June 2017

Consolidated

Note 30 June

2017 31 December

2016 US$'000 US$'000

The above statement of financial position should be read in conjunction with the accompanying notes 6

Assets Current assets Cash and cash equivalents 5 8,456 16,931 Trade and other receivables 863 1,344 Inventories 708 1,727 Other 656 1,660 Total current assets 10,683 21,662 Non-current assets Receivables 1,375 1,113 Investments accounted for using the equity method 199 180 Property, plant and equipment 6 47,704 28,256 Intangibles 10,944 11,380 Other 4,713 3,966 Total non-current assets 64,935 44,895 Total assets 75,618 66,557 Liabilities Current liabilities Trade and other payables 7 12,431 2,573 Borrowings 8 193 178 Employee benefits 61 56 Total current liabilities 12,685 2,807 Non-current liabilities Borrowings 9 25,351 24,327 Total non-current liabilities 25,351 24,327 Total liabilities 38,036 27,134 Net assets 37,582 39,423 Equity Contributed capital 55,985 55,985 Reserves 4,412 2,735 Accumulated losses (23,134) (19,611)Equity attributable to the owners of Silver Heritage Group Limited 37,263 39,109 Non-controlling interest 319 314 Total equity 37,582 39,423

For

per

sona

l use

onl

y

Silver Heritage Group Limited Statement of changes in equity For the half-year ended 30 June 2017

The above statement of changes in equity should be read in conjunction with the accompanying notes 7

Contributed

Accumulated

Non-controlling

Total equity capital Reserves losses interest Consolidated US$'000 US$'000 US$'000 US$'000 US$'000 Balance at 1 January 2016 38,893 877 (14,987) - 24,783 Loss after income tax expense for the half-year - - (1,644) - (1,644)Other comprehensive income for the half-year, net of tax

-

(34)

-

-

(34)

Total comprehensive income for the half-year - (34) (1,644) - (1,678) Balance at 30 June 2016 38,893 843 (16,631) - 23,105 Refer to note 2 for details on comparative information.

Contributed

Accumulated

Non-controlling

Total equity capital Reserves losses interest Consolidated US$'000 US$'000 US$'000 US$'000 US$'000 Balance at 1 January 2017 55,985 2,735 (19,611) 314 39,423 Profit/(loss) after income tax expense for the half-year

-

-

(3,523)

5

(3,518)

Other comprehensive income for the half-year, net of tax

-

1,677

-

-

1,677

Total comprehensive income for the half-year - 1,677 (3,523) 5 (1,841) Balance at 30 June 2017 55,985 4,412 (23,134) 319 37,582

For

per

sona

l use

onl

y

Silver Heritage Group Limited Statement of cash flows For the half-year ended 30 June 2017

Consolidated 30 June 2017 30 June 2016 US$'000 US$'000

The above statement of cash flows should be read in conjunction with the accompanying notes 8

Cash flows from operating activities Receipts from customers 8,555 8,368 Payments to suppliers and employees (6,744) (6,876) 1,811 1,492 Interest received 17 15 Interest and other finance costs paid (800) (400)Income taxes paid (140) (104) Net cash from operating activities 888 1,003 Cash flows from investing activities Payments for property, plant and equipment (8,660) (4,398)Repayment of loans advanced to related parties - 130 Payments for future project expense (724) (78) Net cash used in investing activities (9,384) (4,346) Cash flows from financing activities Proceeds from borrowings - 3,119 Transaction cost related to issues of shares or options (181) (688) Net cash from/(used in) financing activities (181) 2,431 Net decrease in cash and cash equivalents (8,677) (912)Cash and cash equivalents at the beginning of the financial half-year 16,931 6,034 Effects of exchange rate changes on cash and cash equivalents 202 (606) Cash and cash equivalents at the end of the financial half-year 8,456 4,516 Refer to note 2 for details on comparative information.

For

per

sona

l use

onl

y

Silver Heritage Group Limited Notes to the financial statements 30 June 2017

9

Note 1. General information The financial statements cover Silver Heritage Group Limited ('Company' or 'parent entity') as a Group consisting of Silver Heritage Group Limited and the entities it controlled at the end of, or during, the half-year, together are referred to in these financial statements as the 'Group'. The financial statements are presented in United States dollars, which is Silver Heritage Group Limited's functional and presentation currency. Silver Heritage Group Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business are: Registered office Principal place of business Level 12, 225 George Street 6/F The Phoenix, 23 Luard Road Sydney, NSW 2000 Wan Chai Australia Hong Kong A description of the nature of the Group's operations and its principal activities are included in the Directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of Directors, on 22 August 2017. The Directors have the power to amend and reissue the financial statements. Note 2. Significant accounting policies These general purpose financial statements for the interim half-year reporting period ended 30 June 2017 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 31 December 2016 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the policies stated below. Comparative information On 25 August 2016, as part of a group reorganisation, Silver Heritage Group Limited became the legal parent of Silver Heritage Limited (Silver Heritage Group Limited was previously the legal subsidiary of Silver Heritage Limited prior to the reorganisation). This transaction did not meet the definition of a business combination in AASB 3 ‘Business Combinations’. The transaction had therefore been accounted for in the consolidated financial statements for the year ended 31 December 2016, using the pooling of interests method and represented a continuation of the financial statements of Silver Heritage Limited. Consequently, these financial statements are presented as follows: ● Statements of financial position represent consolidated balances of the Company and its subsidiaries as at 30 June 2017 and 31 December 2016; ● Statements of changes in equity represent the consolidated balances of the Company and its subsidiaries as at 30 June 2017 and balances of Silver Heritage Limited and its subsidiaries as at 30 June 2016; and ● Statements of profit or loss and other comprehensive income and statements of cash flows represent the consolidated results and cash flows of the Company and its subsidiaries for the half-year ended 30 June 2017 and the results and cash flows of Silver Heritage Limited and its subsidiaries for the half-year ended 30 June 2016. New or amended Accounting Standards and Interpretations adopted The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Group during the financial half-year ended 30 June 2017 and are not expected to have any significant impact for the financial year ending 31 December 2017.

For

per

sona

l use

onl

y

Silver Heritage Group Limited Notes to the financial statements 30 June 2017

Note 2. Significant accounting policies (continued)

10

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Going concern The financial statements have been prepared on a going concern basis, notwithstanding the loss for the period and accumulated losses to date. Subsequent to the half-year end, and as further detailed in Note 12, the Group raised a total of A$19,029,000 (US$14,860,000) via the issue of new ordinary shares, and increased its lending facilities by a net US$3,000,000. In addition, the Group’s bondholders agreed to amend the financial covenants associated with the bonds, and as a result the Group was not in breach of any of the covenants either at the half-year end or at any time during the period. Note 3. Operating segments Identification of reportable operating segments The Group is organised into three geographical operating segments: Laos; Nepal; and Vietnam. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers (‘CODM’)) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments. Types of products and services The Group’s revenue is derived from the following sources: Own venues Nepal Shared venues Vietnam Electronic gaming machines Laos (2016: Cambodia, Laos and Tinian) The CODM review segment results which is Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation, adjusted for impairment of assets, expenses incurred for future projects, one-off exceptional items and share-based compensation expense). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to the CODM is on at least a monthly basis. Intersegment transactions Intersegment transactions were made at market rates. Intersegment transactions are eliminated on consolidation. Intersegment receivables, payables and loans Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.

For

per

sona

l use

onl

y

Silver Heritage Group Limited Notes to the financial statements 30 June 2017

Note 3. Operating segments (continued)

11

Operating segment information Laos Nepal Vietnam Total Consolidated - 30 June 2017 US$'000 US$'000 US$'000 US$'000 Revenue Gaming revenue - 2,411 4,984 7,395 Other revenue 335 14 244 593 Total revenue 335 2,425 5,228 7,988 Total segment revenue 335 2,425 5,228 7,988 Interest revenue 17 Intersegment eliminations/unallocated 53 Total revenue 8,058 Segment profit 181 57 2,857 3,095 Intersegment eliminations/unallocated (1,926)Share of profit from joint venture 19 Restructuring expenses (117)Fund raising expenses (575)Depreciation and amortisation (1,378)Finance costs (1,896)Expenses for future projects (724)Loss before income tax expense (3,502)Income tax expense (16)Loss after income tax expense (3,518) Cambodia, Laos and Tinian Nepal Vietnam Total Consolidated - 30 June 2016 US$'000 US$'000 US$'000 US$'000 Revenue Gaming revenue 1,021 2,458 3,503 6,982 Other revenue 192 19 4 215 Total revenue 1,213 2,477 3,507 7,197 Total segment revenue 1,213 2,477 3,507 7,197 Interest revenue 15 Intersegment eliminations/unallocated 304 Total revenue 7,516 Segment (loss)/profit 514 (90) 1,772 2,196 Intersegment eliminations/unallocated (1,237)Share of profit from joint venture 180 Depreciation and amortisation (1,285)Finance costs (508)Expenses for future projects (902)Loss before income tax expense (1,556)Income tax expense (88)Loss after income tax expense (1,644) F

or p

erso

nal u

se o

nly

Silver Heritage Group Limited Notes to the financial statements 30 June 2017

12

Note 4. Revenue Consolidated 30 June 2017 30 June 2016 US$'000 US$'000 Sales revenue Casino and gaming equipment revenue from own venues 2,411 2,458 Share of casino and gaming equipment revenue from third party venues 4,984 4,524 7,395 6,982 Other revenue Consulting fees 21 25 Interest 17 15 Income from the lease of gaming equipment 335 - Other revenue 290 494 663 534 Revenue 8,058 7,516 Note 5. Current assets - cash and cash equivalents Consolidated

30 June

2017 31 December

2016 US$'000 US$'000 Cash on hand 1,470 1,253 Cash at bank 2,869 8,261 Cash on deposit 4,117 7,417 8,456 16,931 The cash on deposit of US$4,117,000 (31 December 2016: US$7,417,000) is held in a bank account that is jointly controlled by the Group and the Group’s bondholder. These funds can only be withdrawn with the approval of the bondholder, and can only be used for the development of the Group’s Tiger Palace Resort project in Bhairahawa, Nepal or other purposes at the discretion of the bondholder. Note 6. Non-current assets - property, plant and equipment Consolidated

30 June

2017 31 December

2016 US$'000 US$'000 Land - at cost 2,191 2,014 Plant and equipment - at cost 9,810 9,569 Less: Accumulated depreciation (6,770) (6,001) 3,040 3,568 Construction in progress - at cost 30,046 21,886 Capital works in progress - at cost 12,427 788 47,704 28,256

For

per

sona

l use

onl

y

Silver Heritage Group Limited Notes to the financial statements 30 June 2017

13

Note 7. Current liabilities - trade and other payables Consolidated

30 June

2017 31 December

2016 US$'000 US$'000 Trade payables 741 135 Accrued expenses 7,536 1,779 Other payables 4,154 659 12,431 2,573 Note 8. Current liabilities - borrowings Consolidated

30 June

2017 31 December

2016 US$'000 US$'000 Bank loans 193 178 Refer to note 9 for further information on assets pledged as security and financing arrangements. Note 9. Non-current liabilities - borrowings Consolidated

30 June

2017 31 December

2016 US$'000 US$'000 Bank loans 7,158 6,580 Bonds payable 18,193 17,747 25,351 24,327 Bank loans The Group has a lending facility with a consortium of Nepalese Banks of NPR 750,000,000 (US$7,351,000) which is used for the construction of the integrated resort at Bhairahawa, Nepal. The terms of the loan are 12 years (from 30 April 2014), repayable in 38 quarterly instalments with the first instalment due on 22 April 2018. Interest is paid on a quarterly basis at a variable rate, which for the period averaged 9.92% (2016: 9.8%). Bonds payable Bonds payable represents bonds issued on 25 August 2016 for US$20,000,000. As at 30 June 2017, the total fair value of the debt was US$18,193,000 (31 December 2016: US$ 17,747,000). The bonds have an interest rate of 8% payable semi-annually in arrears and are redeemable at any time prior to the date of maturity at the redemption price that will entitle the bondholders to an internal rate of return equal to 15% per annum on the original principal amount of the bonds (calculated on a semi-annual basis) for the period from the date of issue to the date of redemption. In connection with the bondholder agreeing to amend the financial covenants in June 2017, the maturity dates of the bonds were amended from US$20,000,000 on or before 24 August 2019 to the following: ● US$2,000,000 on or before 31 December 2018; ● US$3,000,000 on or before 31 March 2019; ● US$4,000,0000 on or before 30 June 2019; and ● US$11,000,000 on or before 24 August 2019. Due to the bondholder agreeing to amend the financial covenants, the Group was not in breach of any of the financial covenants during the financial half-year to 30 June 2017.

For

per

sona

l use

onl

y

Silver Heritage Group Limited Notes to the financial statements 30 June 2017

Note 9. Non-current liabilities - borrowings (continued)

14

Total secured liabilities The total secured liabilities (current and non-current) are as follows: Consolidated

30 June

2017 31 December

2016 US$'000 US$'000 Bank loans 7,351 6,758 Assets pledged as security The lenders under the bank loans have taken security over all assets that Tiger One Pvt Ltd presently owns, or will own in the future, as well as its receivables. Financing arrangements Unrestricted access was available at the reporting date to the following lines of credit: Consolidated

30 June

2017 31 December

2016 US$'000 US$'000 Total facilities

Bank loans 7,351 6,758 Used at the reporting date

Bank loans 7,351 6,758 Unused at the reporting date

Bank loans - - The bank loan facility is denominated in NPR and the current facility limit is NPR 750,000,000 on 30 June 2017 (31 December 2016: NPR 750,000,000). Note 10. Equity - dividends There were no dividends paid, recommended or declared during the current or previous financial half-year. Note 11. Earnings per share Consolidated 30 June 2017 30 June 2016 US$'000 US$'000 Loss after income tax (3,518) (1,644)Non-controlling interest (5) - Loss after income tax attributable to the owners of Silver Heritage Group Limited (3,523) (1,644) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 190,285,153 127,785,152 Weighted average number of ordinary shares used in calculating diluted earnings per share 190,285,153 127,785,152

For

per

sona

l use

onl

y

Silver Heritage Group Limited Notes to the financial statements 30 June 2017

Note 11. Earnings per share (continued)

15

US Cents US Cents Basic earnings per share (1.85) (1.29)Diluted earnings per share (1.85) (1.29) The weighted average number of shares for the comparative period has been adjusted to give effect to reorganisation which occurred during the financial year ended 31 December 2016. 29,904,306 (2016: Nil) options are not included in the calculation of diluted earnings per share because they are anti-dilutive for the financial half-year ended 30 June 2017. These options could potentially dilute basic earnings per share in the future. Note 12. Events after the reporting period On 30 June 2017, the Company announced the launch of a fully underwritten accelerated renounceable entitlement offer to raise gross proceeds of approximately A$19,000,000 (US$14,400,000). This entitlement offer, which comprised an institutional component and a retail component, was completed subsequent to the end of the financial half-year. On 10 July 2017 the Company, under the institutional component, issued 206,533,143 ordinary shares at A$0.05 each raising a total of A$10,327,000 (US$7,914,000). In addition, the Company issued 8,518,727 ordinary shares in partial settlement of sub-underwriting fees. On 3 August 2017 the Company, under the retail component, issued 174,037,162 ordinary shares at A$0.05 each raising a total of A$8,702,000 (US$6,946,000). In addition, the Company issued 5,867,445 ordinary shares in partial settlement of sub-underwriting fees. The new shares issued rank equally with all existing fully paid ordinary shares. On 8 August 2017, in respect to amendments to the secured bond facilities, the Company issued to its bondholders options to acquire 29,904,306 new ordinary shares at an exercise price of A$0.11 and an expiry date of 26 August 2019. On exercise of the options, the ordinary shares issued will rank equally with all fully paid ordinary shares. As at the date of this report, the Company has a total of 585,241,630 ordinary shares in issue and a total of 59,808,612 options over ordinary shares in issue. The options are not listed on any recognised stock market. On 20 August 2017, the Group agreed with the consortium of Nepalese banks to increase the lending facility in Nepal from NPR 750,000,000 (US$7,351,000) to NPR 1,110,000,000 (US$10,781,000). It was also agreed that a one-year demand facility of up to NPR 150,000,000 (US$1,470,000) would be made available to the Group. In connection with the extension of banking facilities in Nepal, it was agreed to prepay US$2,000,000 of bonds at a redemption price of US$2,134,000 on or around 25 August 2017. As a result of this prepayment the amount of the bonds to be redeemed on or before 24 August 2019 shall be reduced from US$11,000,000 to US$9,000,000. No other matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

For

per

sona

l use

onl

y

Silver Heritage Group Limited Directors' declaration 30 June 2017

16

In the Directors' opinion: ● the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard

AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professionalreporting requirements;

● the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June

2017 and of its performance for the financial half-year ended on that date; and ● there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due

and payable. Signed in accordance with a resolution of Directors made pursuant to section 303(5)(a) of the Corporations Act 2001. On behalf of the Directors

___________________________ ___________________________ David Green Mike Bolsover Chairman Managing Director and Chief Executive Officer 22 August 2017

For

per

sona

l use

onl

y

Level 17, 383 Kent Street Sydney NSW 2000 Correspondence to: Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 4445 E info.nsw@au.gt.com W www.grantthornton.com.au

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation.

17

Independent Auditor’s Review Report To the Directors of Silver Heritage Group Limited

Report on the 30 June 2017 Financial Report Conclusion We have reviewed the accompanying half-year financial report of Silver Heritage Group Limited, which comprises the statement of financial position as at 30 June 2017, and the statement of profit or loss and other comprehensive income, statement of changes in equity and cash flow statement for the half-year ended on that date, a statement or description of accounting policies, other selected explanatory notes, and the declaration of those charged with governance.

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the half-year financial report of Silver Heritage Group Limited does not present fairly, in all material respects, the financial position of the entity as at 30 June 2017, and of its financial performance and its cash flows for the half-year ended on that date, in accordance with the Corporations Act 2001.

Directors’ Responsibility for the half-year Financial Report The Directors of the group are responsible for the preparation and fair presentation of the half-year financial report in accordance with the Australian Accounting Standards and for such internal control as the directors determine is necessary to enable the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, anything has come to our attention that causes us to believe that the financial report is not presented fairly, in all material respects, in accordance with the Corporations Act 2001. As the auditor of Silver Heritage Group

For

per

sona

l use

onl

y

18

Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Corporations Act 2001 and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence In conducting our review, we have complied with the independence requirements of the Australian professional accounting bodies.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

N J Bradley Partner - Audit & Assurance

Sydney, 22 August 2017

For

per

sona

l use

onl

y

Silver Heritage Group Limited Corporate directory 30 June 2017

19

Directors David Green Mike Bolsover Richard Barker Matthew Hunter Robert Benussi (appointed on 7 August 2017) Hugh Holmes (resigned on 9 March 2017) Company secretary Kim Clark Registered office Level 12, 225 George Street Sydney, NSW 2000 Australia Telephone: +852 2110 1684 Fax: +852 8169 8066 Principal place of business 6/F The Phoenix 23 Luard Road Wan Chai Hong Kong Share register Boardroom Pty Limited Level 12, 225 George Street Sydney, NSW 2000 Australia Telephone: +61 2 9290 9600 Auditor Grant Thornton Audit Pty Ltd Level 17, 383 Kent Street Sydney, NSW 1230 Australia Stock exchange listing Silver Heritage Group Limited (the 'Company') shares are listed on the Australian

Securities Exchange (ASX code: SVH) Website www.silverheritage.com.au

For

per

sona

l use

onl

y