HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPC (Registration number 2003/005340/08) Annual financial statements for the year ended 28

Transcription

1 (Registration number 2003/005340/08) Annual financial statements for the year ended 28 February 2018

2 Index The reports and statements set out below comprise the annual financial statements presented to the home owners: Page Directors' Responsibilities and Approval 2 Independent Auditors' Report 3-4 Directors' Report 5 Statement of Financial Position 6 Statement of Changes in Funds 8 Statement of Comprehensive Income 7 Statement of Cash Flows 9 Accounting Policies Notes to the Annual Financial Statements The following supplementary information does not form part of the annual financial statements and is unaudited: Tax Computation 16 1

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6 Directors' Report HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPC The directors submit their report for the year ended 28 February Review of activities Main business and operations The homeowners association is engaged to provide and maintain essential community services, amenties an activities within, and to raise levies on an equitable basis as may be required to cover all costs incurred and operates principally in South Africa. The operating results and state of affairs of the homeowners association are fully set out in the attached annual financial statements and do not in our opinion require any further comment. Net surplus of income over expenditure of the homeowners association was R (2017: R ), after taxation of R (2017: R ). 2. Events after the reporting period Subsequent to year end the operational changes were implemented against security and the current security contract was amended. The security infrastructure was upgrade and two additional vehicles were purchased to the amount of R364,000. A third vehicle to the amount of R182,750 was purchased for maintenance. The changes implemented remains within the approved budget for the period 2018/ Directors The directors in office of the homeowners association elected at the last AGM held 29 August 2017, are the following: Name Mr. A. van Quickelberger Mr. D. van Wyk Mr. G.J. Bronkhorst (Resigned 3 November 2017) Mr. J.A. Campbell Mr. M. Goossens (Resigned 19 March 2018) Mr. M. Oosthuizen Mr. M. Steenkamp (Resigned 7 May 2018) Mrs. R. Blank Mrs. S. Coetzee 4. Auditors D Arvanitis & Co. will continue in office until the next Annual General Meeting, during which the members approve, re-appoint or propose a new auditor. 5

7 Statement of Financial Position Figures in Rand Note(s) Assets Non-Current Assets Property, plant and equipment 1.2& Current Assets Current tax receivable Trade and other receivables CSTM debtor Cash and cash equivalents Total Assets Funds and Liabilities Funds Reserves Retained surplus Liabilities Current Liabilities Trade and other payables Total Funds and Liabilities

8 Statement of Comprehensive Income Figures in Rand Note(s) Revenue Levies - Normal Levies - Non-development Levies - Special Levies Sectional Title Units - Access Control Levies Sectional Title Units - Maintenance Levies Sectional Title Units - Main gate Levies Sectional Title Units - Security Other income Access control income Advertisement Clearance fees Electricity recoveries Fines and Penalties Insurance income Interest received Legal fee recoveries Meter reading recoveries Plan fees Sale of non-current assets Sundry income Sundry recoveries Operating expenses Access cards (18 000) (35 000) Administration and management fees - ( ) Auditors' remuneration (13 070) - Bad debts ( ) ( ) Bank charges (17 832) (17 328) Computer expenses (5 457) (6 658) Consulting fees - (4 725) Depreciation 2 ( ) (68 853) Employee costs ( ) ( ) Insurance ( ) ( ) Legal expenses (55 082) (17 274) Meter reading fees (57 825) (40 625) Plan fees (4 500) (2 700) Rates and taxes (422) - Printing and stationery (15 905) (22 040) Repairs and maintenance 15 ( ) ( ) Secretarial fees (2 336) (4 441) Security 16 ( ) ( ) Staff welfare (1 038) (1 084) Subscriptions (4 409) (4 101) Telephone and fax (17 527) (18 168) Utilities 14 ( ) ( ) Venue hire and AGM expenses (10 502) (8 400) Website maintenance (1 730) (1 880) ( ) ( ) Operating surplus Abnormal item 8 ( ) ( ) Surplus before taxation Taxation Surplus for the year

9 Statement of Changes in Funds Figures in Rand Reserve fund Retained surplus Total funds Balance at 01 March Changes in funds Total comprehensive income for the year Total changes Balance at 01 March Changes in funds Total comprehensive income for the year Transfer between reserves - ( ) ( ) Total changes Balance at 28 February

10 Statement of Cash Flows Figures in Rand Note(s) Cash flows from operating activities Cash generated from operations Tax paid 11 ( ) (72 879) Net cash from operating activities Cash flows from investing activities Purchase of property, plant and equipment 2 ( ) ( ) Total cash movement for the year Cash at the beginning of the year Total cash at end of the year

11 Accounting Policies 1. Presentation of Annual Financial Statements The annual financial statements have been prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities, and the Companies Act of South Africa. The annual financial statements have been prepared on the historical cost basis, and incorporate the principal accounting policies set out below. They are presented in South African Rands. These accounting policies are consistent with the previous period. 1.1 Significant judgements and sources of estimation uncertainty 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: Financial assets measured at cost and amortised cost The homeowners association assesses its financial assets measured at cost and amortised cost for impairment at each reporting period date. In determining whether an impairment loss should be recorded in the statement of comprehensive income, the homeowners association makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset. The impairment for financial assets measured at cost and amortised cost is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry-specific economic conditions and other indicators present at the reporting period that correlate with defaults on the portfolio. These annual loss ratios are applied to loan balances in the portfolio and scaled to the estimated loss emergence period. Taxation Judgement is required in determining the provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The homeowners association recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. The homeowners association recognises the net future tax benefit related to deferred income tax assets to the extent that it is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the homeowners association to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the homeowners association to realise the net deferred tax assets recorded at the end of the reporting period could be impacted. 1.2 Property, plant and equipment Property, plant and equipment are tangible items 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. Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment. This includes cost incurred to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses. Depreciation is provided using the straight-line method to write down the cost, less estimated residual value over the useful life of the property, plant and equipment. Item Plant and equipment Office Furniture IT equipment Computer software Average useful life 4 years 5 years 3 years 2 years 10

12 Accounting Policies 1.2 Property, plant and equipment (continued) The residual value, depreciation method and the useful life of each asset are reviewed at each annual reporting period if there are indicators present that there is a change from the previous estimate. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss in the period. 1.3 Financial instruments Financial instruments at amortised cost Financial instruments may be designated to be measured at amortised cost less any impairment using the effective interest method. These include trade and other receivables, loans and trade and other payables. At the end of each reporting period date, the carrying amounts of assets held in this category are reviewed to determine whether there is any objective evidence of impairment. If so, an impairment loss is recognised. 1.4 Tax 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 liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the reporting period date. Tax expenses The Homeowers association is taxed at company rates. All levies, cost recoveries and up to R of any other income are exempt in terms of in terms of Section 10(1)(e) of the Income Tax Act. 1.5 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. 1.6 Revenue Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value added tax. Revenue comprises of all levies raised for the purpose of the homeowners association. Levies are charged on a monthly basis. Interest is recognised, in profit or loss, using the effective interest rate method. 11

13 Notes to the Annual Financial Statements Figures in Rand Property, plant and equipment Cost / Valuation Accumulated depreciation Carrying value Cost / Valuation Accumulated depreciation Carrying value Plant and equipment ( ) ( ) Office equipment (45 103) (37 228) IT equipment ( ) (98 770) Computer software (5 472) (5 472) 1 Total ( ) ( ) Reconciliation of property, plant and equipment Opening balance Additions Depreciation Total Plant and machinery (75 625) Office equipment (7 875) IT equipment (36 173) Computer software ( ) A register containing the information required by Regulation 25(3) of the Companies Regulations, 2011 is available for inspection at the registered office of the homeowners association. 3. CSTM debtor In May 2011 Constantia Sectional Title Management (Pty) Ltd were placed under provisional liquidation and CSTM's fidelity fund certificate was withdrawn and its trust accounts placed under curatorship. Correspondance was received from Ngidi Business Advisory in April 2018, that the they are in the process of finalising the investigation on the submitted claims. An allowance for irrecoverable amount has been raised against the CSTM debtor. There is significant doubt whether the amount will be recovered even though the legal claim and case is now almost finalised. CSTM Trust account balance as per disbursement Impairment (31 713) (31 713) Trade and other receivables Electricity in arrears Levies in arrears Provision for bad debts ( ) ( ) Municipal deposits Levies in arrears: Normal levies Current days days days days

14 Notes to the Annual Financial Statements Figures in Rand Trade and other receivables (continued) Levies in arrears: Non-development levies Current days days days days Electricity in arrears Current* days days days days *The current portion of electricity in arrears are normally received on the 7th day of the next month as per the rules of the estate. 5. Cash and cash equivalents Cash and cash equivalents consist of: Petty cash Nedbank accounts - levies and electricity Nedbank Call accounts Nedbank Investment account Nedbank Money Trader account The investments on hand consists of: Investments on Hand Less: Deposits & Reserves Electricity deposits ( ) ( ) Footway deposits ( ) ( ) Electricity Infrastructure ( ) ( ) Maintenance reserve ( ) Reserves Balance at beginning of period Transfer for the year The board has continued with the practice to build a reserve for future infrastructure maintenance and or replacement from the surplus electricity recoveries. The reserve is represented by amounts invested in Nedbank Investment accounts. 7. Trade and other payables Accrued other expenses Accrued salaries and wages (PAYE) Electricity deposits Footway deposit SARS - VAT

15 Notes to the Annual Financial Statements Figures in Rand Abnormal item Additional maintenance costs for the year Access control system - (27 324) Architect - (28 249) Booms and spikes - ( ) Building - ( ) Cabling - (28 015) Electrical - (880) Engineer - (6 380) Quantity Surveyor - (10 000) Signage (64 700) - Stormwater drain covers (20 168) - Tree felling and rubble removal (24 947) - Trees (23 667) - Entrance ( ) - Landscaping ( ) - Road maintenance (31 770) - Cameras and electricity fence (44 238) - ( ) ( ) Legal fees Costs - (12 584) - (12 584) Total Abnormal costs Costs ( ) ( ) ( ) ( ) 9. Taxation Major components of the tax expense Current Local income tax - current period The income tax rate is 28% in Provision has been made for 2018 tax as the homeowners association has taxable income. As per section 10(1)(e)(i) of the Income Tax Act, all income from any other source up to R will be exempt and only the income in excess of R will be subject to tax. 10. Cash generated from operations Surplus before taxation Adjustments for: Depreciation Changes in working capital: Trade and other receivables ( ) Trade and other payables ( ) Tax paid Balance at beginning of the year Current tax for the year recognised in surplus or loss (99 891) (82 305) Balance at end of the year (25 599) (19 798) ( ) (72 879) 14

16 Notes to the Annual Financial Statements Figures in Rand Related parties ` Relationships Board of directors Mr. A. van Quickelberger Mr. D. van Wyk Mr. G.J. Bronkhorst (Resigned 3 November 2017) Mr. J.A. Campbell Mr. M. Goossens (Resigned 19 March 2018) Mr. M. Oosthuizen Mr. M. Steenkamp (Resigned 7 May 2018) Mrs. R. Blank Mrs. S. Coetzee 13. Directors' emoluments No emoluments were paid to the directors during the year as it's not the policy of the homeowners association to remunerate directors for services rendered. 14. Utilities Electricity ( ) ( ) Electricity recoveries Electricity - Basic Electricity recoveries - General Electrical - Boundary Wall & Lights (67 363) (3 784) Electrical - Meters (95 741) (54 567) Electrical - Mini Substations (67 614) ( ) Electrical - Streetlights (21 211) ( ) Electrical - Switching Station (7 014) (28 735) Electrical - Sundries (20 127) (7 948) Electrical - Cabling - (13 771) Repairs and maintenance Access Control ( ) ( ) Building and entrance - (11 798) Cameras ( ) (44 000) Garden equipment (53 389) (23 519) Gardens and parks ( ) ( ) Gate & Fences ( ) ( ) General (41 917) (50 730) Landscaping (3 810) (7 970) Painting (16 914) (2 882) Plumbing (1 380) (2 783) Refuse Removal ( ) ( ) Road maintenance (16 714) (4 741) Signage - (16 767) Sundry security expense (4 415) (1 520) ( ) ( ) 16. Security Costs ( ) ( ) Recoveries ( ) ( ) 17. Insurance Insurance Company: Commercial and Industrial Acceptances (Pty)Ltd Policy number: CIA Anniversary date: 01/04/

17 Homeowners Association of Pinehaven Country Estate NPC (Registration number 2003/005340/08) Financial Statements for the year ended 28 February 2018 Tax Computation R Taxable income (a) Interest and penalties Other income Less: Exemption (50 000) (As per section 10(1)(e)(i) of the Income Tax Act, all in come from any other source up to R will be exempt and only the income in excess of R will be subject to tax.) Allowable deductions (c) Audit fees Accounting/Secretarial fees Bank charges Printing and stationery Total income (b) - Applied rate (a/b) x Allowable deductions (c) (4 055) Taxable income (4 055) Tax 28% Tax liability R Amount owing/(prepaid) at the beginning of year (19 798) Tax owing/(prepaid) for the current year Normal tax Per calculation st provisional payment (44 414) 2nd provisional payment (61 278) (5 801) Amount owing/(prepaid) at the end of year (25 599) 16 The supplementary information presented does not form part of the financial statements and is unaudited