1. Opening & Welcome. 2. Constitution of the Meeting - Attendance Register. 3. Notice Convening the Meeting. 4. Proxies Received

Transcription

1 A G E N D A The Financial Planning Institute of Southern Africa NPC - Annual General Meeting to be held on 7 June 2017 at 16h30 at Indaba Hotel, William Nicol Drive & Pieter Wenning Road, Fourways, Johannesburg 1. Opening & Welcome 2. Constitution of the Meeting - Attendance Register 3. Notice Convening the Meeting 4. Proxies Received 5. Chairperson s Address and Directors Report 6. Chairperson of the Audit Committee s Report 7. Ordinary Resolutions Numbers 1 to 7 Annexure A (in respect of Ordinary Resolution Number 1) Annexure B (in respect of Ordinary Resolution Number 2) Annexure C (in respect of Ordinary Resolution Number 5) 8. Special Resolution Number 1 9. Closure

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6 THE FINANCIAL PLANNING INSTITUTE OF SOUTHERN AFRICA NPC AND ITS SUBSIDIARY (Registration no: 2004/028055/08) Annual consolidated financial statements for the year ended 31 December 2016

7 GENERAL INFORMATION Country of incorporation: Nature of business and principal activities: Directors: Bankers: Registered office address: Business address: Postal address: Company registration number: Auditors: Secretary: Level of assurance: Independently compiled by: Published: Republic of South Africa To operate as a professional body to the financial planning industry. GN Nti WJ Fourie N Ramparsad WG Wheatley SM Cloete DC Fortuin KH Scully NPO Phoofolo L Govender DJ Thomson SS Morata RN King The Standard Bank of South Africa Limited 381 Ontdekkers Road Florida Park Ext Sophia Street (cnr 11the Avenue) Fairland 2170 P O Box 6493 Weltenvredenpark /028055/08 Zeelie Auditors Registered Auditors GN Nti These financial statements have been audited in compliance with the applicable requirements of the Companies Act 71 of EFJ du Preez AGA (SA) 04 May

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10 DIRECTORS' REPORT The directors have pleasure in submitting their report together with the audited annual consolidated financial statements for the year ended 31 December General review The Financial Planning Institute of Southern Africa NPC and its subsidiary are companies incorporated in the Republic of South Africa. The principal activities of the company are to operate as a professional body to the financial planning industry. Financial results The group / company retained a surplus of: Group Group Company Company R R R R 2,204,735 1,791,170 2,635,937 1,652,320 Property, plant and equipment The group / company acquired assets to the value of: Revaluation of land and buildings to the value of: 1,922, ,597 1,922, , Dividends No dividends were declared or proposed during the year under review. Post balance sheet events No material fact or circumstance, which requires comment, has occurred between the accounting date and the date of this report. Share capital There were no changes in the authorised and issued share capital of the company during the year under review. Directors The directors of the group during the accounting period and up to the date of this report were as follows: Name Nationality Date appointed Date resigned GN Nti Cameroonian WJ Fourie South African N Ramparsad South African WG Wheatley South African GE Meyer South African DC Fortuin South African K Potgieter South African NPO Phoofolo South African L Govender South African DJ Thomson South African SS Morata South African RN King South African SM Cloete South African KH Scully South African Consolidation The company's subsidiary is FPI Centre for Professional Development Pty Ltd. Auditors Zeelie Auditors were the auditors for the year under review. 4

11 DIRECTORS' REPORT Liquidity and solvency The directors have performed the required liquidity and solvency tests required by the Companies Act of South Africa and are satisfied with the financial performance and position of the company. Going concern The directors believe that the company has adequate financial resources to continue in operation for the foreseeable future and accordingly the annual financial statements have been prepared on a going concern basis. The directors have satisfied themselves that the company is in a sound financial position and that it has access to sufficient borrowing facilities to meet its foreseeable cash requirements. The directors are not aware of any new material changes that may adversely impact the company. The directors are also not aware of any material non-compliance with statutory or regulatory requirements or of any pending changes to legislation which may affect the company. The directors are of the opinion that the company will have access to sufficient resources to be liquid and solvent in the near future. 5

12 STATEMENT OF FINANCIAL POSITION AND CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS Group Group Company Company Notes R R R R Non-current assets 18,915,732 18,241,201 15,845,654 13,617,731 Property, plant and equipment 3 18,915,732 18,241,201 5,187,402 3,692,446 Investment in subsidiaries Group loans receivable ,657,952 9,924,985 Current assets 15,443,895 11,915,647 13,709,923 11,039,277 Trade and other receivables 6 1,427, ,966 1,072, ,413 Taxation refundable 7 204, , Bank and cash balances ,811,757 10,859,590 12,637,412 10,697,864 TOTAL ASSETS 34,359,627 30,156,848 29,555,577 24,657,008 EQUITY AND LIABILITIES Equity 15,285,620 13,080,885 17,013,748 14,377,811 General reserve 10 5,000,000 5,000,000 5,000,000 5,000,000 Revaluation surplus 9 425, , Retained earnings 9,860,620 7,630,885 12,013,748 9,377,811 Non-current liabilities 5,660,631 6,084, Interest bearing borrowings 11 5,567,391 5,991, Deferred tax liabilities 12 93,240 93, Current liabilities 13,413,376 10,991,452 12,541,829 10,279,197 Trade and other payables 13 8,779,417 8,406,351 8,412,195 8,242,894 Deferred income 14-21, Current portion of interest bearing borrowings , , Short-term provisions 15 4,129,634 2,036,303 4,129,634 2,036,303 TOTAL EQUITY AND LIABILITIES 34,359,627 30,156,848 29,555,577 24,657,008 6

13 STATEMENT OF SURPLUS OR DEFICIT AND OTHER COMPREHENSIVE INCOME AND CONSOLIDATED STATEMENT OF SURPLUS OR DEFICIT AND OTHER COMPREHENSIVE INCOME Group Group Company Company Notes R R R R Revenue ,560,710 38,639,687 37,670,222 33,024,354 Other income 1,306,237 1,671,770 1,304,416 1,150,265 Change in accounting estimate , , , ,679 Interest received , , , ,586 Rental income , Expenses 17,343,469 14,793,963 15,793,714 14,267,603 Auditors' remuneration , , , ,718 Depreciation 16 1,876,461 1,924,866 1,056,036 1,104,441 Direct cost 16 13,347,984 11,027,499 10,958,526 9,497,745 Director's remuneration 16 1,743,209 1,486,939 1,743,209 1,486,939 Operating lease - premises 16 94,980 5,385 1,822,908 1,917,760 Other income (not included above) 2,365,900 1,933,281 5,151,631 4,341,996 Other administrative expenses 26,817,433 24,801,477 25,696,618 22,596,692 Profit before finance charges 3,071,945 2,649,298 2,635,937 1,652,320 Finance charges , , Surplus before taxation 2,356,100 1,949,798 2,635,937 1,652,320 Taxation , , Net surplus after taxation 2,204,735 1,791,170 2,635,937 1,652,320 Other comprehensive income Gain on revaluation of properties Total comprehensive surplus for the year 2,204,735 1,791,170 2,635,937 1,652,320 7

14 STATEMENT OF CHANGES IN EQUITY AND CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Group General reserve Revaluation reserve Accumulated surplus Total R R R R Balance at 31 December ,000, ,000 5,814,715 11,289,715 Transfer of depreciation on revaluation surplus portion - (25,000) 25,000 - Total comprehensive surplus for the year - - 1,791,170 1,791,170 Balance at 31 December ,000, ,000 7,630,885 13,080,885 Transfer of depreciation on revaluation surplus portion - (25,000) 25,000 - Total comprehensive surplus for the year - - 2,204,735 2,204,735 Balance at 31 December ,000, ,000 9,860,620 15,285,620 Note 10 9 Company General reserve Accumulated surplus Total R R R Balance at 31 December ,000,000 7,725,491 12,725,491 Total comprehensive surplus for the year - 1,652,320 1,652,320 Balance at 31 December ,000,000 9,377,811 14,377,811 Total comprehensive surplus for the year - 2,635,937 2,635,937 Balance at 31 December ,000,000 12,013,748 17,013,748 Note 10 8

15 STATEMENT OF CASH FLOWS AND CONSOLIDATED STATEMENT OF CASH FLOWS Group Group Company Company Notes R R R R Net cash retained in operating activities 5,320,956 3,987,716 4,594,762 3,910,023 Cash receipts from customers 43,066,085 39,091,276 36,939,124 33,806,406 Cash paid to suppliers and employees (37,473,954) (34,765,068) (33,020,032) (30,437,969) Cash generated from operating activities ,592,131 4,326,208 3,919,092 3,368,437 Interest received 677, , , ,586 Finance charges (715,845) (699,500) - - Taxation paid (232,821) (188,479) - - Cash flows from investing activities (1,922,247) (893,597) (2,655,214) (1,440,251) Purchase of property, plant and equipment 19.2 (1,922,247) (893,597) (1,922,247) (893,597) To increase operating capacity (1,922,247) (893,597) (1,922,247) (893,597) Advances of group loans receivable - - (732,967) (546,654) Cash flows from financing activities (446,542) (525,740) - - Proceeds from interest bearing borrowings (446,542) (525,740) Net increase in cash and cash equivalents 2,952,167 2,568,379 1,939,548 2,469,772 Cash and cash equivalents at beginning of year 10,859,590 8,291,211 10,697,864 8,228,092 Cash and cash equivalents at end of year ,811,757 10,859,590 12,637,412 10,697,864 9

16 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 1. Accounting policies The following are the principal accounting policies of the group, which are consistent in all material respects with those applied in the previous year. 1.1 Basis of preparation The consolidated financial statements have been prepared on the historical cost basis of accounting, except as modified by the revaluation of freehold land and buildings. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as approved by the Accounting Practices Board, and the Companies Act of South Africa. 1.2 Basis of consolidation Subsidiaries of the group are all entities over which The Financial Planning Institute of Southern Africa NPC ("the group") has control, to gain control the investor has all the following: power over the investee by having existing substantive rights that gives it the current ability to direct the relevant activities of the company (the holder must have the practicl ability to exercise these rights, and potential voting rights are also considered); exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor's returns. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are derecognised from the date that control ceases. The group accounts for business combinations using the acquisition method of accounting. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extend of any minority interest. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the statement of profit or loss and other comprehensive income. Inter-company transaction, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. 1.3 Standards and interpretations effective and adopted in the current year In the current year, the group has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations: IFRS 5 - Non-current assets held for sale and Discontinued operations Annual Improvements Cycle: Amendments clarifying that a change in the manner of disposal of a non-current asset or disposal group held for sale is considered to be a continuation of the original plan of disposal, and accordingly, the date of classification as held for sale does not change. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. IFRS 7 - Financial instruments: Disclosures Annual Improvements Cycle: Amendment clarifying under what circumstances an entity will have continuing involvement in a transferred financial asset as a result of servicing contracts. Annual Improvements Cycle: Amendment clarifying the applicability of previous amendments to IFRS 7 issued in December 2011 with regard to offsetting financial assets and financial liabilities in relation to interim financial statements prepared under IAS 34. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. IFRS 10 - Consolidated financial statements Investment Entities: Applying the Consolidation Exception: Narrow-scope amendments to IFRS 10, IFRS 12 and IAS 28 introduce clarifications to the requirements when accounting for investment entities. The amendments also provide relief in particular circumstances, which will reduce the costs of applying the Standards. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. IFRS 11 - Joint Arrangements Amendments adding new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business which specify the appropriate accounting treatment for such acquisitions. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. 10

17 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 1.3 Standards and interpretations effective and adopted in the current year (continued) IFRS 12 - Disclosure of interests in other entities Investment Entities: Applying the Consolidation Exception: Narrow-scope amendments to IFRS 10, IFRS 12 and IAS 28 introduce clarifications to the requirements when accounting for investment entities. The amendments also provide relief in particular circumstances, which will reduce the costs of applying the Standards. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. IFRS 14 - Regulatory deferral accounts IFRS 14 permits first-time adopters to continue to recognise amounts related to its rate regulation activities in accordance with their previous GAAP requirements when they adopt IFRS. However, to enhance comparability with entities that apply IFRS and do not recognise such amounts, the Standard requires that the effect of rate regulation must be presented separately from other items. An entity that already presents IFRS financial statements is not eligible to apply the Standard. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. IAS 1 - Presentation of financial statements Disclosure Initiative: Amendments designed to encourage entities to apply professional judgement in determining what information to disclose in their financial statements. For example, the amendments make clear that materiality applies to the whole of financial statements and that the inclusion of immaterial information can inhibit the usefulness of financial disclosures. Furthermore, the amendments clarify that entities should use professional judgement in determining where and in what order information is presented in the financial disclosures. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. IAS 16 - Property, Plant and Equipment Amendment to both IAS 16 and IAS 38 establishing the principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset. Clarifying that revenue is generally presumed to be an inappropriate basis for measuring the consumption of economic benefits in such assets. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. IAS 19 - Employee Benefits Annual Improvements Cycle: Clarification of the requirements of to determine the discount rate in a regional market sharing the same currency (for example, the Eurozone). The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. IAS 27 - Employee Benefits Amendments to IAS 27 will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. IAS 28 - Investments in associates Investment Entities: Applying the Consolidation Exception: Narrow-scope amendments to IFRS 10, IFRS 12 and IAS 28 introduce clarifications to the requirements when accounting for investment entities. The amendments also provide relief in particular circumstances, which will reduce the costs of applying the Standards. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. IAS 34 - Investments in associates Annual Improvements Cycle: Clarification of the meaning of disclosure of information elsewhere in the interim financial report. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. 11

18 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 1.3 Standards and interpretations effective and adopted in the current year (continued) IAS 38 - Intangible assets Amendments to IAS 16 and IAS 38 to clarify the basis for the calculation of depreciation and amortisation, as being the expected pattern of consumption of the future economic benefits of an asset. Amendment to both IAS 16 and IAS 38 establishing the principle for the basis of depreciation and amortisation as being the expected pattern of consumption of the future economic benefits of an asset. Clarifying that revenue is generally presumed to be an inappropriate basis for measuring the consumption of economic benefits in such assets. The effective date of these amendments of this standard is for years beginning on or after 01 January The impact of the standard is not material. 1.4 Standards and interpretations to existing standards that are not yet effective and have not been adopted early by the group The group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the company s accounting periods beginning after 01 January 2017 or later periods: # IFRS 1 - First-time adoption of International Financial Reporting Standards IFRS 2 - Share-based payments IFRS 4 - Insurance contracts Standard or interpretation Name Annual Improvements Cycle: Deletion of short-term exemptions that are no longer applicable. Classification and Measurement of Share-based Payment Transactions: A collection of three distinct narrow-scope amendments dealing with classification and measurement of share-based payments. The amendments address: - The effects of vesting conditions on the measurement of a cash-settled share-based payment; - The accounting requirements for a modification to the terms and conditions of a share-based payment that changes the classification of the transaction from cashsettled to equity-settled; and - Classification of share-based payment transactions with net settlement features. Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts: Two amendments to IFRS 4 to address the interaction between IFRS 4 and IFRS 9: - A temporary exemption from IFRS 9 has been granted to insurers that meet specified criteria; and - An optional accounting policy choice has been introduced to allow an insurer to apply the overlay approach to designated financial assets when it first applies IFRS 9. Effective Date 01 January January January 2018 IFRS 9 - Financial instruments A finalised version of IFRS 9 has been issued which replaces IAS 39 Financial Instruments: Recognition and Measurement. The completed standard comprises guidance on Classification and Measurement, Impairment Hedge Accounting and Derecognition: - IFRS 9 introduces a new approach to the classification of financial assets, which is driven by the business model in which the asset is held and their cash flow characteristics. A new business model was introduced which does allow certain financial assets to be categorised as fair value through other comprehensive income in certain circumstances. The requirements for financial liabilities are mostly carried forward unchanged from IAS 39. However, some changes were made to the fair value option for financial liabilities to address the issue of own credit risk. - IFRS 9 introduces a new approach to the classification of financial assets, which is driven by the business model in which the asset is held and their cash flow characteristics. A new business model was introduced which does allow certain financial assets to be categorised as fair value through other comprehensive income in certain circumstances. The requirements for financial liabilities are mostly carried forward unchanged from IAS 39. However, some changes were made to the fair value option for financial liabilities to address the issue of own credit risk. - The new model introduces a single impairment model being applied to all financial instruments, as well as an expected credit loss model for the measurement of financial assets. - IFRS 9 contains a new model for hedge accounting that aligns the accounting treatment with the risk management activities of an entity, in addition enhanced disclosures will provide better information about risk management and the effect of hedge accounting on the financial statements. - IFRS 9 carries forward the derecognition requirements of financial assets and liabilities from IAS January 2018 *IFRS 9 (2014) supersedes any previous versions of IFRS 9, but earlier versions of IFRS 9 remain available for application if the relevant date of application is before 1 February 2015* 12

19 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 1.4 Standards and interpretations to existing standards that are not yet effective and have not been adopted early by the group (continued) IFRS 10 - Consolidated financial statements IFRS 12 - Disclosure of interests in other entities Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28): Narrow scope amendment address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28 (2011), in dealing with the sale or contribution of assets between an investor and its associate or joint venture. Annual Improvements Cycle: Clarification of the scope of IFRS 12 with respect to interests in entities classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. 01 January January 2017 IFRS 15 - Revenue from contracts from customers IAS 7 - Statement of cash flows New standard that requires entities to recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This core principle is achieved through a five step methodology that is required to be applied to all contracts with customers. The new standard will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively and improve guidance for multiple-element arrangements. The new standard supersedes: (a) IAS 11 Construction Contracts; (b) IAS 18 Revenue; (c) IFRIC 13 Customer Loyalty Programmes; (d) IFRIC 15 Agreements for the Construction of Real Estate; (e) IFRIC 18 Transfers of Assets from Customers; and (f) SIC-31 Revenue Barter Transactions Involving Advertising Services. New standard that introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee is required to recognise a right-ofuse asset representing its right to use the underlying leased asset and a lease liability representing its obligation to make lease payments. A lessee measures right-of-use assets similarly to other non-financial assets (such as property, plant and equipment) and lease liabilities similarly to other financial liabilities. As a consequence, a lessee recognises depreciation of the right-of-use asset and interest on the lease liability, and also classifies cash repayments of the lease liability into a principal portion and an interest portion and presents them in the statement of cash flows applying IAS 7 Statement of Cash Flows. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. IFRS 16 also requires enhanced disclosures to be provided by lessors that will improve information disclosed about a lessor s risk exposure, particularly to residual value risk. IFRS 16 supersedes the following Standards and Interpretations: (a) IAS 17 Leases; (b) IFRIC 4 Determining whether an Arrangement contains a Lease; (c) SIC-15 Operating Leases Incentives; and (d) SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. Disclosure Initiative: Amendments requiring entities to disclose information about changes in their financing liabilities. The additional disclosures will help investors to evaluate changes in liabilities arising from financing activities, including changes from cash flows and non-cash changes (such as foreign exchange gains or losses). Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12): Narrow-scope amendment to clarify the requirements on recognition of deferred tax assets for unrealised losses on debt instruments measured at fair value. 01 January 2018 IFRS 16 - Leases 01 January 2019 IAS 12 - Income taxes IFRS 16 contains expanded disclosure requirements for lessees. Lessees will need to apply judgement in deciding upon the information to disclose to meet the objective of providing a basis for users of financial statements to assess the effect that leases have on the financial position, financial performance and cash flows of the lessee. 01 January January

20 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 1.4 Standards and interpretations to existing standards that are not yet effective and have not been adopted early by the group (continued) IAS 28 Investments in associates IAS 40 - Investment property Sale or Contribution of Assets between an Investor and its Associate or Joint Venture The effective date of this (Amendments to IFRS 10 and IAS 28): Narrow scope amendment to address an amendment has been deferred acknowledged inconsistency between the requirements in IFRS 10 and those in IAS indefinitely until further 28 (2011), in dealing with the sale or contribution of assets between an investor and notice its associate or joint venture. Transfers of Investment Property: Clarification of the requirements on transfers to, or from, investment property. 1 January 2018 IFRIC 22 This interpretation addresses the exchange rate to use in transactions that involve advance consideration paid or received in a foreign currency. 1 January Property, plant and equipment Property, plant and equipment are tangible assets that: are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, and are expected to be used during more than one period. Items of property plant and equipment are initially recognised at cost, being the cash price equivalent at the recognition date. The cost of an item of property, plant and equipment is recognised when: it is probable that future economic benefits associated with the item will flow to the company and; the cost can be measured reliably. Expenditure on additions and improvements to property, plant and equipment including the cost of related interest is capitalised as the expenditure is incurred. Subsequent to initial recognition, items of property plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses, except for land and buildings which are subsequently shown at fair value based on the revaluation model. Depreciation is charged to profit or loss so as to allocate the cost of assets less their residual values over their estimated useful lives, using the straight-line method. The following useful lives are used for the depreciation of property, plant and equipment: Years Land and buildings 20 Computer equipment 4-18 Computer software 2-21 Furniture and fittings 4-22 The residual values, useful lives and economic consumption patterns for all items of property, plant and equipment are regularly reviewed and, if necessary, the consequent depreciable amounts, rates and methods are adjusted at each financial year end date. Any changes are accounted for as changes in accounting estimates and included in profit or loss for the current and future periods by adjusting the relevant future depreciation charges. Gains or losses on disposal are calculated by deducting the carrying value from the proceeds on the date of disposal and are included in profit or loss. 1.6 Investments Investments are initially recognised at cost, including transaction costs. Subsequent to initial recognition the investment are still measured at cost. 1.7 Leased assets Leases under which the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Obligations incurred under operating leases are charged to the statement of comprehensive income in equal instalments over the period of the lease, except when an alternative method is more representative of the time pattern from which benefits are derived. Where assets are acquired under finance lease agreements that transfer to the corporation substantially all the risks and rewards of ownership, their cash cost equivalent is capitalised. The capital element of the leasing commitment is disclosed under long-term liabilities. Lease rentals are apportioned between capital and interest elements, using the effective interest rate method. 1.8 Impairments The carrying value of the assets is reviewed at each financial year end date to assess whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated. Where the carrying value exceeds the estimated recoverable amount, such assets are written down to their estimated recoverable amount. 14

21 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 1.9 Deferred taxation Deferred taxation is provided for on the comprehensive basis as per the balance sheet method in respect of all material timing differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax liabilities are recognised for all temporary differences. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that the taxable profit will be available against which the deductible temporary differences can be utilised Revenue and other income Revenue comprises membership fees and member examination fees (non-member revenue and other income 11.0% of total income), recorded in the financial statements at the date services are provided. Revenue which excludes Value Added Tax, comprises of the rendering of services and interest received. Revenue from the rendering of services is recognised on an accrual basis in accordance with the substance of the agreement Foreign currency transactions Foreign currency transactions are accounted for at the rates of exchange ruling on the date of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the financial year end date. Gains and losses arising from the settlement of such transactions are recognised in the statement of comprehensive income in the period in which they occur Financial instruments Initial recognition The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement. Financial assets and financial liabilities are recognised on the group's statement of financial position when the company becomes party to the contractual provisions of the instrument. Financial assets and liabilities are recognised initially at fair value. In the case of financial assets or liabilities not classified as at fair value through profit and loss, transaction costs that are directly attributable to the acquisition or issue of the financial instruments are added to the fair value. Subsequent measurement After initial recognition financial assets are measured as follows: Loans and receivables and held-to-maturity investments are measured at amortised cost less any impairment losses recognised to reflect irrecoverable amounts. Financial assets classified as available-for-sale or at fair value through profit or loss, including derivatives, are measured at fair values. Fair value, for this purpose, is market value if listed, or a value arrived at by using appropriate valuation models, if unlisted. Investments in equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured, are measured at cost. After initial recognition financial liabilities are measured as follows: Financial liabilities at fair value through profit or loss, including derivatives that are liabilities, are measured at fair value. Financial liabilities at amortised cost are measured at amortised cost using the effective interest rate method. Gains and losses A gain or loss arising from a change in a financial asset or financial liability is recognised as follows: Where financial assets and financial liabilities are carried at amortised cost, a gain or loss is recognised in profit or loss through the amortisation process and when the financial asset or financial liability is derecognised or impaired. A gain or loss on a financial asset or financial liability classified as at fair value through profit or loss is recognised in profit or loss. A gain or loss on an available-for-sale financial asset is recognised directly in equity, through the statement of changes in equity, until the financial asset is derecognised, at which time the cumulative gain or loss previously recognised in equity is recognised in profit or The particular recognition methods adopted are disclosed in the individual policies stated below: Loans to group companies These include loans to and from the subsidiaries. Loans to group companies are classified as loans and receivables. Loans from group companies and shareholders are classified as financial liabilities at amortised cost. Trade and other receivables Trade and other receivables are classified as loans and other receivables. Cash and cash equivalents Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash. Cash and cash equivalents are measured at fair value. Trade and other payables Trade and other payables are classified as financial liabilities at amortised cost. 15

22 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 1.13 Cash flows For the purposes of the statement of cash flows, cash includes cash on hand, deposits held on call with banks and investments in money market instruments Share capital Share capital issued by the company is recorded at the proceeds received, net of issue costs Borrowing costs Borrowing costs are recognised as an expense in the period in which they are incurred Taxation Current tax assets and liabilities Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities, using the tax rates that have been enacted or substantively enacted by the financial year end date. Tax expenses Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from: a transaction or event which is recognised, in the same or different period, directly in equity, or a business combination. Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly to equity Provisions Provisions are recognised when: The company has a present legal or constructive obligation as a result of a past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be made of the obligation. The amount of a provision is the present value of the expenditure expected to be required to settle the obligation. Provisions shall not be recognised for future operating losses. Employee benefits Short-term employee benefits The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted. 2. Significant management judgements in applying the accounting policies Judgements In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significant judgements include: Estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the statement of financial position date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Impairment of trade receivables The process of identifying potential impairment in the trade receivables balances is the result of a process of estimating what trade receivables, in line with the evidence at year end, will not be able to meet their obligations in the future. A specific impairment is then allocated to individual trade receivables balances in line with the evidence. Portfolio impairments are only made after the specific impairment has been made and overriding historical conditions indicate that the trade receivables balance as a whole might still be impaired after the specific impairment. Provisions Provisions were raised and management determined an estimate based on the information available. Other provision has been recognised as a potential contribution to historical examination setting costs of the FSB regulatory examinations offered by the FPI Examination Body. FPI disputes the legality of the claim in terms of current FSB authority as well as the calculation methodology. Accordingly the FSB is reconsidering its stance and the claim remains unresolved. Disclosure of this provision is not based on any expectation as to the outcome of the matter. 16

23 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 3. Property, plant and equipment Group Land and buildings (*) Computer equipment Computer software Furniture and fittings Accum. Carrying Accum. Carrying Cost Cost deprec. value deprec. value R R R R R R 16,408,507 (2,680,177) 13,728,330 16,408,507 (1,859,752) 14,548, ,138 (560,640) 283,498 1,533,664 (1,132,143) 401,521 7,912,510 (3,545,546) 4,366,964 6,039,181 (3,221,397) 2,817,784 1,599,889 (1,062,949) 536,940 1,591,077 (1,117,936) 473,141 26,765,044 (7,849,312) 18,915,732 25,572,429 (7,331,228) 18,241,201 The carrying amounts for 2015 can be reconciled as follows: Land and buildings (*) Computer equipment Computer software Furniture and fittings Carrying value at beginning of year Additions Change in accounting estimate Deprec. Carrying value at end of year R R R R R 15,369, (820,425) 14,548, ,742 60,263 82,025 (250,509) 401,521 2,140, , ,953 (573,623) 2,817, , ,701 (280,309) 473,141 18,663, , ,679 (1,924,866) 18,241,201 The carrying amounts for 2016 can be reconciled as follows: Land and buildings (*) Computer equipment Computer software Furniture and fittings Carrying value at beginning of year Additions Change in accounting estimate Deprec. Carrying value at end of year R R R R 14,548, (820,425) 13,728, ,521 40,106 84,309 (242,438) 283,498 2,817,784 1,873, ,467 (577,616) 4,366, ,141 8, ,969 (235,982) 536,940 18,241,201 1,922, ,745 (1,876,461) 18,915,732 * The land and buildings are encumbered as per note 11. Per IAS 40 investment property rented bya subsidiary to a parent is not investment property in the consolidated financial statements, as the property is owner-occupied from the perspective of the group. Therefore land and buildings are disclosed as property, plant and equipment at consolidation level based on the revaluation model. On group level, land and buildings is stated at fair value on the basis of open market value supported by market evidence as determined by an independent third party and relied upon by the directors. Depreciation on land and buildings is calculated on a group level and not in the accounting records of the subsidiary due to the change in disclosure, the effect being a decrease in group profit of R 820,425 as outlined in note 16. Company Computer equipment Computer software Furniture and fittings Accum. Carrying Accum. Carrying Cost Cost deprec. value deprec. value R R R R R R 844,138 (560,640) 283,498 1,533,664 (1,132,143) 401,521 7,912,510 (3,545,546) 4,366,964 6,039,181 (3,221,397) 2,817,784 1,599,889 (1,062,949) 536,940 1,591,077 (1,117,936) 473,141 10,356,537 (5,169,135) 5,187,402 9,163,922 (5,471,476) 3,692,446 17

24 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 3. Property, plant and equipment (continued) The carrying amounts for 2015 can be reconciled as follows: Carrying value at beginning of year Additions Change in accounting estimate Deprec. Carrying value at end of year R R R R R Computer equipment 509,742 60,263 82,025 (250,509) 401,521 Computer software 2,140, , ,953 (573,623) 2,817,784 Furniture and fittings 644, ,701 (280,309) 473,141 The carrying amounts for 2016 can be reconciled as follows: 3,294, , ,679 (1,104,441) 3,692,446 Carrying value at beginning of year Additions Change in accounting estimate Deprec. Carrying value at end of year R R R R R Computer equipment 401,521 40,106 84,309 (242,438) 283,498 Computer software 2,817,784 1,873, ,467 (577,616) 4,366,964 Furniture and fittings 473,141 8, ,969 (235,982) 536,940 3,692,446 1,922, ,745 (1,056,036) 5,187, Investment in subsidiaries Group Group Company Company R R R R FPI Centre for Professional Development Pty Ltd 5. Group loans receivable 5.1 Subsidiary Ownership interest 2016 Ownership interest % 100% FPI Centre for Professional Development Pty Ltd ,657,952 9,924,985 The above loan is unsecured, non-interest bearing and has no fixed terms of repayment. This loan is repayable on demand. No repayments are expected within the next 12 months. 6. Trade and other receivables Trade debtors 212, ,145 1,105, ,391 Provision for doubtful debts (81,450) (56,450) (81,450) (56,450) 130, ,695 1,023, ,941 Sundry debtors 1,296, ,271 48,726 2,472 As at year end, the age analysis of trade receivables is as follows: 1,427, ,966 1,072, ,413 Neither past due nor impaired: Current 130, ,656 1,023, ,365 Past due but not impaired: days - 204, ,576 Total 130, ,695 1,023, ,941 Provision for doubtful debt Carrying amount at the beginning of the year (56,450) (252,419) (56,450) (252,419) (Increase) / decrease in provision (25,000) 195,969 (25,000) 195,969 Carrying amount at the end of the year (81,450) (56,450) (81,450) (56,450) The credit quality of trade receivables that are neither past due nor impaired are determined to be good, based on past experience with the customers. 18

25 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 7. Taxation refundable Group Group Company Company R R R R Taxation - this year (151,365) (65,388) - - Provisional payments made relating to previous year 231, , Taxation - prior year 124, Share capital Authorised 204, , Ordinary shares at no par value Issued 10 Ordinary shares at no par value Revaluation surplus Group The revaluation surplus arose as a result of the revaluation of land and buildings in accordance with the company's policy. Balance at beginning of the year 450, , Transfer from revaluation surplus (25,000) (25,000) - - Balance at end of the year 425, , General reserve Balance at the beginning of the year 5,000,000 5,000,000 5,000,000 5,000,000 Transfer during the year Balance at the end of the year 5,000,000 5,000,000 5,000,000 5,000,000 The board requires that a general reserve be maintained to cover costs should the financial position of the company deteriorate materially due to unforeseen circumstances. 11. Interest bearing borrowings The Standard Bank of South Africa Limited 6,071,716 6,518, Mortgage bond bearing interest at prime bank overdraft rate plus 2% per annum, secured by the group's freehold land and buildings (refer note 3) and repayable in monthly instalments of R 42,027 (2015: R 43,916). Less: current portion included in current liabilities (504,325) (526,987) - - 5,567,391 5,991, Deferred tax liabilities 12.1 Deferred tax liabilities consists of: Fair value adjustment - investment property (93,240) (93,240) - - Deferred taxation liability (93,240) (93,240) Reconciliation between deferred taxation opening and closing balance: Deferred tax liability at the beginning of the year (93,240) (93,240) - - Charge to income - included in timing differences Deferred tax asset at the end of the year (93,240) (93,240) Trade and other payables Trade creditors 45, , , ,879 VAT payable 772, , , ,905 Other payables 7,961,788 7,038,226 7,155,192 6,871,110 8,779,417 8,406,351 8,412,195 8,242,894 19

26 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 14. Deferred income Group Group Company Company R R R R Current liabilities - 21, This revenue is based on events still to be attended by customers 15. Short-term provisions Leave pay Carrying amount at the beginning of the year 571, , , ,824 (Decrease) / increase in provisions 434, , , ,374 Carrying amount at the end of the year 1,005, ,198 1,005, ,198 Bonuses Carrying amount at the beginning of the year 1,465,105 1,560,894 1,465,105 1,560,894 (Decrease) / increase in provisions 159,064 (95,789) 159,064 (95,789) Carrying amount at the end of the year 1,624,169 1,465,105 1,624,169 1,465,105 Other provisions Carrying amount at the beginning of the year (Decrease) / increase in provisions 1,500,000-1,500,000 - Carrying amount at the end of the year 1,500,000-1,500,000 - Total short-term provisions 4,129,634 2,036,303 4,129,634 2,036, Surplus before taxation 16.1 Surplus / (deficit) before taxation is arrived at after taking into account the following: Other income Change in accounting estimate 628, , , ,679 Interest received 677, , , ,586 Rental income (included in revenue) - 513, (Verbal 12 month agreement in place, reconsidered annually, therefore no additional disclosure necessary) Expenses Auditors' remuneration 280, , , ,718 Audit fees 255, , , ,128 Other services 20,125 34,975 20,125 34,975 Under provision - previous year 4,810 77,293 4,810 53,615 Depreciation 1,876,461 1,924,866 1,056,036 1,104,441 Land and buildings 820, , Computer equipment 242, , , ,509 Computer software 577, , , ,623 Furniture and fittings 235, , , ,309 Direct costs 13,347,984 11,027,499 10,958,526 9,497,745 Director's remuneration 1,743,209 1,486,939 1,743,209 1,486,939 Operating lease - premises 94,980 5,385 1,822,908 1,917,760 (Verbal 12 month agreement in place, reconsidered annually, therefore no additional disclosure necessary) Finance charges 715, , Interest expense on financial liabilities measured at amortised cost 16.2 Reconciliation of group profit Profit disclosed in subsidiary Profit disclosed in holding company Additional depreciation raised on land and buildings Profit disclosed in the group 389,223 2,635,937 (820,425) 2,204,735 20

27 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS Group Group Company Company R R R R 17. Taxation 17.1 SA Normal taxation Group Current taxation 151,365 65, Deferred taxation - 93, Tax expense per statement of surplus or deficit and other comprehensive income Company The company's activities are exempt from income tax as it satisfied all the requirements set out in Section 30B of the Income Tax Act, this exemption is in accordance with section 10(1)(d)(iv)(bb) of the Income Tax Act. Accordingly, no income tax or deferred tax is provided for. 151, , Change in accounting estimate During the proceeding year the useful life of the property, plant and equipment was reassessed to give a better indication of the economic benefit that will flow to the company due to the usage of the specific property, plant and equipment. 19. Notes to statement of cash flows 19.1 Reconciliation of net surplus / (deficit) before taxation to cash flows generated from / (utilised by) operations Surplus before taxation 2,356,100 1,949,798 2,635,937 1,652,320 Adjustments for : Change in accounting estimate (628,746) (608,679) (628,746) (608,679) Depreciation 1,876,461 1,924,866 1,056,036 1,104,441 Movement in provision for doubtful debt - 504, Movement in short-term provisions 2,093,331 45,585 2,093,331 45,585 Interest received (677,491) (549,487) (675,670) (541,586) Finance charges 715, , Operating profit before working capital changes 5,735,500 3,966,063 4,480,888 1,652,081 Working capital changes (143,369) 360,145 (561,796) 1,716,356 Decrease / (increase) in trade and other receivables (494,625) (52,891) (731,098) 782,052 Increase in deferred income (21,811) (161,483) - - Increase in trade and other payables 373, , , ,304 Cash generated from operating activities 5,592,131 4,326,208 3,919,092 3,368, Property, plant and equipment Property, plant and equipment acquired during the year: By means of cash payments Computer equipment 40,106 60,263 40,106 60,263 Computer software 1,873, ,334 1,873, ,334 Furniture and fittings 8,812-8, Cash and cash equivalents 1,922, ,597 1,922, ,597 Cash and cash equivalents consist of cash on hand, balances with banks and investments in money market instruments. Cash and cash equivalents included in the statement of cash flows comprise the following statement of financial position amounts: Bank and cash balances 2,011,761 1,317,546 1,540,416 1,155,820 Investments in money market accounts 11,799,996 9,542,044 11,799,996 9,542,044 13,811,757 10,859,590 12,637,412 10,697,864 21

28 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 20. Related party disclosures The ownership vests in the fully paid up members of the company. The following parties are related to the company: Group Group Company Company R R R R Relationship Directors Professional body Subsidiary Name As disclosed on the directors' report Financial Planning Standards Board FPI Centre for Professional Development Pty Ltd 20.1 The following transactions were carried out with related parties: Management fee income FPI Centre for Professional Development Pty Ltd - - 2,530,402 2,322,493 Rental paid FPI Centre for Professional Development Pty Ltd - - 1,727,928 1,885,000 Webinar fees FPI Centre for Professional Development Pty Ltd ,329 1,108,816 Fees paid to the Professional body Financial Planning Standards Board 2,210,620 2,170,539 2,210,620 2,170,539 Directors' remuneration GN Nti 1,743,209 1,486,939 1,743,209 1,486, Loans to related party The loan to the subsidiary is disclosed in note Functional and presentation currency Functional and presentation currencies are both stated in South African Rand unless otherwise indicated. Functional currency is the currency of the primary economic environment in which the group operates. Presentation currency represents the currency in which the financial statements are presented. 22. Financial instruments Financial risk management The group's activities expose it to a variety of financial risks: market risk (including fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the company's financial performance. Risk management is carried out under the policies approved by management. Market risk Cash flow and fair value interest rate: As the group has no significant interest bearing assets, the group's income and operating cash flows are substantially independent of changes in market interest rates. The group's interest rate risk arises from interest bearing deposits and similar investments at varying interest rates. The group does not have significant exposure with regards to interest rate fluctuations on borrowings. All the group's interest earning investments and interest bearing borrowings are denominated in South African Rand. Other than the existence, and intention to maintain a General Reserve for such purposes, the group has no specific process in place to manage cash flow risk. Interest rate exposure is not analysed on a specific basis. Foreign currency risk The group incurs currency risk as a result of purchases/sales of items in a currency other than the group's functional currency. The foreign currency that the group primarily deals in is Dollar. This is consistent with the prior year. The following table demonstrates the sensitivity to resemble possible change in the foreign exchange rates, which all other variables held constant, of the group's profit before tax (due to changes in the fair value of the monetary assets and liabilities). There is no impact on the company's equity Average rate USD 1 14,70 12,96 Year end rate USD 1 13,69 15,19 22

29 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 22. Financial instruments (continued) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and continued financial support from the shareholders. The table below analyses the group's financial liabilities into relevant maturity groupings based on the remaining period at the financial year end date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant. Group Class 2016 Total Payable within 1 year Interest bearing borrowings 5,567,391 5,567,391 Deferred income - - Trade and other payables 8,779,417 8,779, Interest bearing borrowings 5,991,271 5,991,271 Deferred income 21,811 21,811 Trade and other payables 8,406,351 8,406,351 Company Class 2016 Total Payable within 1 year Trade and other payables 8,412,195 8,412, Trade and other payables 8,242,894 8,242,894 Credit risk Financial assets which potentially subject the group to concentrations of credit risk, consist principally of cash resources and trade receivables. The group's cash resources are placed with major South African financial institutions of high credit standing and approved by the executive committee comprising senior executives. Receivables are reflected net of doubtful debt provisions, which are considered adequate. An allowance for impairment is made where there is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. The group's credit risk in respect of amounts owing by related parties is also limited as the parties from whom the amounts are due, are related to the company. The group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers. Interest rate management The group's exposure to the risk of changes in market interest rates relates primarily to the group's long-term debt obligations with fixed contractual interest rates. The group's policy is to manage its interest cost using fixed contractual rate debts. Cash and bank balances are subject to variable rates. This risk is managed by apportioning the cash reserves to the accounts with the most favourable rate. Interest rate risk table The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, of the group's profit before tax (through the impact on floating rate borrowings). There is no impact on the group's equity. Increase / decrease in basis points Effect on surplus before tax , ,476 R 23

30 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 22. Financial instruments (continued) Fair value The directors are of the opinion that the carrying value of financial instruments approximates fair value. Capital risk management The group's objectives when managing capital are to safeguard the group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. 23. Fair value of financial instruments Group Financial assets 2016 Trade and other receivables 1,427,591 1,427,591 Bank and cash balances 13,811,757 13,811, The executive directors are involved in the daily operations of the group and the necessary decisions regarding capital risk management are made as and when necessary. Financial instruments on the Statement of Financial Position include: investments, derivatives, loans receivable, debtors, cash and cash equivalents, creditors, short-term loans and long-term loans. Details of the nature, extent and terms of these instruments are explained in the notes to the relevant items. The accounting policy for financial instruments was applied to the following Statement of Financial Position items. Loans and receivables 15,239,348 15,239,348 Trade and other receivables 932, ,966 Bank and cash balances 10,859,590 10,859,590 Total 11,792,556 11,792,556 Financial liabilities 2016 Interest bearing borrowings 6,071,716 6,071,716 Deferred income - - Trade and other payables 8,779,417 8,779, ,851,133 14,851,133 Interest bearing borrowings 6,518,258 6,518,258 Deferred income 21,811 21,811 Trade and other payables 8,406,351 8,406,351 Company Financial assets ,946,420 14,946,420 Investment in subsidiaries Group loans receivable 10,657,952 10,657,952 Trade and other receivables 1,072,511 1,072,511 Bank and cash balances 12,637,412 12,637, Amortised cost Loans and receivables 24,368,175 24,368,175 Investment in subsidiaries Group loans receivable 9,924,985 9,924,985 Trade and other receivables 341, ,413 Bank and cash balances 10,697,864 10,697, Total Total 20,964,562 20,964,562

31 NOTES TO THE ANNUAL CONSOLIDATED FINANCIAL STATEMENTS 23. Fair value of financial instruments (continued) Financial liabilities 2016 Trade and other payables 8,412,195 8,412, ,412,195 8,412,195 Trade and other payables 8,242,894 8,242,894 Fair value On 31 December 2016 and 2015 the amounts as per the above table reflect both the carrying and fair values. Fair value estimation Amortised cost 8,242,894 8,242,894 The following methods and assumptions are used to determine the fair value of each class of financial statements: Investments in subsidiary is recognised at cost. Cash and cash equivalents, debtors, creditors and short-term loans: Due to the expected short-term maturity of these financial instruments their carrying values approximates their fair values. Borrowings: The fair value of interest bearing long-term borrowings is based on discounted cash flows using the effective interest rate method. As the interest rates of interest bearing long-term borrowings are market related their carrying values approximate their fair value. The carrying values of non-interest bearing long-term borrowings approximate their fair values. No financial instruments were measured subsequent to initial recognition which requires further disclosure regarding levels based on the degree to which the fair value is observable. Total 25

32 Profiles of the Audit Committee Members Warren Wheatley, CFP Warren is currently the Group Chief Investment Officer of TSS Capital, a division of TSS Investment Holdings. Warren started his career as an article clerk with BC Hall & Company and concluded his professional training with Alexander Forbes Financial Services. Warren s career progressed for eight years at Alexander Forbes where he served various roles within the institutional consulting and actuarial business. He holds a B Comm. (Hons) (Acc) CTA and three postgraduate diplomas in auditing, financial law and corporate finance, respectively. Warren is also a Chartered Accountant (CA [SA]) and is the current chairperson of the FPI Audit Committee. Denver Fortuin, CFP Denver is currently employed as the executive director: risk and compliance at Unisa. He previously served as the chief operating officer at Absa Insurance and Financial Advisors and as the head of risk management and compliance at Alexander Forbes Financial Services. Denver holds a Masters in Business Leadership, a B.Iuris Degree, an Advanced Postgraduate Diploma in Financial Planning, a Diploma in Compliance Management and a Postgraduate Diploma in Business Management. He is a member of the Institute of Directors (IoD) and the Compliance Institute of Southern Africa. Logie Govender, CFP Logie is the Regional Manager at NMG Retirement Funds. She has served as a volunteer on numerous FPI structures including as a director on FPI Board of Directors, as a member of the FPI Audit Committee and as chairperson of the FPI Remunerations Committee. In addition, she has also served as a past chairperson of the FPI KwaZulu- Natal Regional Committee and is currently chairperson of the FPI Centre for Professional Development. Logie has in excess of 18 years experience and holds an Advanced Postgraduate Diploma in Financial Planning and a BComm in Industrial and Organizational Psychology as well as a Bcomm in Business Economics.