HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE … · HOMEOWNERS ASSOCIATION OF PINEHAVEN...

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPC (Registration number 2003/005340/08) Annual financial statements for the year ended 28 February 2015

Transcript of HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE … · HOMEOWNERS ASSOCIATION OF PINEHAVEN...

Page 1: HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE … · HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPC ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015 Directors'

HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPC(Registration number 2003/005340/08)

Annual financial statementsfor the year ended 28 February 2015

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Index

The reports and statements set out below comprise the annual financial statements presented to the director:

Index Page

Directors' Responsibilities and Approval 2

Independent Auditors' Report 3

Directors' Report 4

Statement of Financial Position 5

Statement of Changes in Funds 7

Statement of Comprehensive Income 6

Statement of Cash Flows 8

Accounting Policies 9 - 10

Notes to the Annual Financial Statements 11 - 15

The following supplementary information does not form part of the annual financial statements and is unaudited:

Tax Computation 16

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Directors' Report

The directors submit their report for the year ended 28 February 2015.

1. 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 anequitable 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 inour opinion require any further comment.

Net surplus of income over expenditure of the homeowners association was R 1,270,275 (2014: surplus R 891,665), after taxation of R 39,129(2014: R 19,716).

2. Events after the reporting period

The directors are not aware of any material event which occured after the reporting date and up to the date of this report.

3. Directors

The directors in office of the homeowners association during the year and to the date of this report are as follows:

NameA WehmeyerHD dos SantosAC SayerM OosthuizenJA BothaA van QuickelbergerP SwartO Woeke

At the last AGM held of 14 October 2014, a board of directors were proposed and elected. However, these new directors have not been registeredwith the CIPC as directors yet. The board elected at the AGM were as follows:

NameA WehmeyerHD dos SantosNM RamodibeM OosthuizenJA BothaA van QuickelbergerJ BothaMG GoosensM Wilke

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 newauditor.

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Statement of Financial PositionFigures in Rand Note(s) 2015 2014

Assets

Non-Current Assets

Property, plant and equipment 1.2&2 77,144 110,533

Current Assets

Current tax receivable 54,315 65,556

Trade and other receivables 4 1,943,350 1,785,963

CSTM debtor 3 - -

Cash and cash equivalents 5 4,487,937 3,366,363

6,485,602 5,217,882

Total Assets 6,562,746 5,328,415

Funds and Liabilities

Funds

Reserves 6 1,900,000 1,400,000

Retained income 3,140,307 2,370,032

5,040,307 3,770,032

Liabilities

Current Liabilities

Trade and other payables 7 1,522,439 1,558,383

Total Funds and Liabilities 6,562,746 5,328,415

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Statement of Comprehensive IncomeFigures in Rand Note(s) 2015 2014

Revenue

Levies - Ordinary 2,763,179 2,481,569

Levies Sectional Title Units - Maintenance 32,346 30,077

Levies Sectional Title Units - Main gate 22,183 20,627

Levies Sectional Title Units - Access Control 3,072 2,856

Levies Non-development 425,000 540,000

3,245,780 3,075,129

Other income

Access cards recoveries 15 67,504 136,410

Clearance fees 23,465 30,702

Electricity recoveries 16 6,632,527 6,034,743

Fines and Penalties 54,237 78,171

Interest received 123,241 85,014

Legal fee recoveries 17 60,141 32,341

Meter reading recoveries 16 32,652 31,608

Non development levies recoveries 12,600 167,665

Plan fees 18 10,500 7,410

Security recoveries 20 185,741 167,492

Sundry recoveries 34,543 123,394

7,237,151 6,894,950

Operating expenses

Access cards 15 (41,880) (87,891)

Administration and management fees (208,436) (177,727)

Auditors' remuneration 10 (13,024) (13,200)

Bad debts (44,200) (32,203)

Bank charges (16,912) (17,751)

Computer expenses (5,339) (5,303)

Consulting fees (8,470) -

Depreciation, amortisation and impairments 2 (41,456) (38,876)

Employee costs (644,715) (471,137)

Donations - (30,000)

Insurance 21 (46,763) (31,655)

Legal expenses 17 (62,662) (33,209)

Plan fees 18 (16,407) (11,970)

Printing and stationery (21,285) (21,612)

Repairs and maintenance 19 (476,123) (687,138)

Website maintenance (5,544) (2,744)

Secretarial fees (900) (1,200)

Security 20 (1,612,827) (1,513,953)

Staff welfare (3,711) -

Subscriptions (3,303) -

Telephone and fax (14,011) (13,939)

Training (434) -

Utilities 16 (5,696,182) (5,331,683)

Venue hire and AGM expenses (7,241) (7,077)

(8,991,825) (8,530,268)

Operating surplus 1,491,106 1,439,811

Abnormal item 8 (181,702) (528,430)

Surplus before taxation 1,309,404 911,381

Taxation 9 39,129 19,716

Surplus for the year 1,270,275 891,665

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Statement of Changes in FundsFigures in Rand Reserve fund Retained income Total funds

Balance at 01 March 2013 900,000 1,978,367 2,878,367Changes in fundsTotal comprehensive income for the year - 891,665 891,665Transfer between reserves 500,000 (500,000) -

Total changes 500,000 391,665 891,665

Balance at 01 March 2014 1,400,000 2,370,032 3,770,032Changes in fundsTotal comprehensive income for the year - 1,270,275 1,270,275Transfer between reserves 500,000 (500,000) -

Total changes 500,000 770,275 1,270,275

Balance at 28 February 2015 1,900,000 3,140,307 5,040,307

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Statement of Cash FlowsFigures in Rand Note(s) 2015 2014

Cash flows from operating activities

Cash generated from operations 11 1,157,530 964,553

Tax paid 12 (27,888) (79,388)

Net cash from operating activities 1,129,642 885,165

Cash flows from investing activities

Purchase of property, plant and equipment 2 (18,240) (97,562)

Sale of property, plant and equipment 2 10,173 -

Net cash from investing activities (8,067) (97,562)

Total cash movement for the year 1,121,575 787,603

Cash at the beginning of the year 3,366,363 2,578,760

Total cash at end of the year 5 4,487,938 3,366,363

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

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-sizedEntities, and the Companies Act of South Africa. The annual financial statements have been prepared on the historical cost basis, and incorporate theprincipal 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 theannual financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation ofestimates. Actual results in the future could differ from these estimates which may be material to the annual financial statements. Significantjudgements include:

Financial assets measured at cost and amortised cost

The company assesses its financial assets measured at cost and amortised cost for impairment at each reporting period date. In determining whetheran impairment loss should be recorded in the statement of comprehensive income, the company makes judgements as to whether there is observabledata 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 fornational 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 calculationsfor which the ultimate tax determination is uncertain during the ordinary course of business. The homeowners association recognises liabilities foranticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different fromthe amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which suchdetermination 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 thedeductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires thehomeowners association to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are basedon forecast cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxableincome differ significantly from estimates, the ability of the homeowners association to realise the net deferred tax assets recorded at the end of thereporting 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 carryingamount 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 ofproperty, 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 bymanagement.

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, plantand equipment.

Item Average useful lifePlant and equipment 4 yearsOffice Furniture 5 yearsComputer equipment 3 years

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

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 presentthat 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 includetrade and other receivables, loans and trade and other payables. At the end of each reporting period date, the carrying amounts of assets held in thiscategory 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 priorperiods 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 R50 000 of any other income are exempt in terms of interms 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 servicesprovided 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.

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Notes to the Annual Financial StatementsFigures in Rand 2015 2014

2. Property, plant and equipment

2015 2014

Cost / Valuation Accumulateddepreciation

Carrying value Cost / Valuation Accumulateddepreciation

Carrying value

Plant and equipment 206,792 (140,727) 66,065 209,113 (118,402) 90,711Office equipment 11,662 (11,658) 4 10,173 (10,171) 2IT equipment 61,129 (50,055) 11,074 61,129 (41,310) 19,819Computer software 5,473 (5,472) 1 5,473 (5,472) 1

Total 285,056 (207,912) 77,144 285,888 (175,355) 110,533

Reconciliation of property, plant and equipment - 2015

Opening balance Additions Disposals Depreciation TotalPlant and machinery 90,711 6,578 - (31,224) 66,065Office equipment 2 11,662 (10,173) (1,487) 4IT equipment 19,819 - - (8,745) 11,074Computer software 1 - - - 1

110,533 18,240 (10,173) (41,456) 77,144

Reconciliation of property, plant and equipment - 2014

Opening balance Additions Depreciation TotalPlant and machinery 43,940 66,500 (19,729) 90,711Office equipment 1 1,661 (1,660) 2IT equipment 6,310 29,401 (15,892) 19,819Computer software 1,596 - (1,595) 1

51,847 97,562 (38,876) 110,533

A register containing the information required by Regulation 25(3) of the Companies Regulations, 2011 is available for inspection at the registeredoffice 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 waswithdrawn and its trust accounts placed under curatorship. A claim subsequently has to be submitted to the EAAB of trust money due to PinehavenCountry Estate by CSTM.

An allowance for irrecoverable amount has been raised against the CSTM debtor. There is significant doubt whether the amount will be recoveredeven though the legal claim and case is ongoing.

CSTM Trust account balance as per disbursement 31,713 31,713Impairment (31,713) (31,713)

- -

4. Trade and other receivables

Electricity in arrears 478,866 649,798Levies in arrears 969,779 641,460Municipal deposits 494,705 494,705

1,943,350 1,785,963

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Notes to the Annual Financial StatementsFigures in Rand 2015 2014

4. Trade and other receivables (continued)

Levies in arrears: Normal leviesCurrent 33,772 48,86630 days 710 18,98560 days 16,923 21,88390 days 10,885 19,023120 + days 87,489 27,703

149,779 136,460

Levies in arrears: Non-development leviesCurrent 35,000 45,00030 days 35,000 55,00060 days 35,000 50,00090 days 35,000 55,000120 days 680,000 300,000

820,000 505,000

Electricity in arrearsCurrent* 289,583 352,02730 days (24,827) 11,28660 days 28,351 212,71790 days 4,400 4,065120 days 181,359 69,703

478,866 649,798

*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 2,324 881Nedbank accounts - levies and electricity 872,765 500,580Nedbank Call accounts 1,161,106 1,155,365Nedbank Investment account 2,451,742 1,709,537

4,487,937 3,366,363

6. Reserves

Balance at beginning op period 1,400,000 900,000Transfer for the year 500,000 500,000

1,900,000 1,400,000

The board has continued with the practice to build a reserve for future infra-structure maintenance and or replacement from the surplus electricityrecoveries. The reserve is represented by amounts invested in Nedbank Investment accounts.

7. Trade and other payables

Prepaid levies 10,258 24,143Accrued audit fees 12,540 13,200Accrued electricity 427,045 446,033Accrued meter reading fee 3,036 3,036Accrued other expenses 258 1,445Accrued salaries and wages (PAYE) 2,967 5,733Electricity deposits 894,578 921,478Footway deposit 118,150 98,150SARS - VAT 53,607 45,165

1,522,439 1,558,383

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Notes to the Annual Financial StatementsFigures in Rand 2015 2014

8. Abnormal item

Additional maintenance costs for the yearGenerator - Electrical - (6,684)Generator - Structure - (3,600)Parks - Entrance (Garden) - (38,755)Parks - Irrigation - (54,150)Parks - Topsoil - (79,347)Parks - Trees (13,020) -Parks - Playground Equipment (22,711) -Paint - Entrance (16,321) -Security - Main gate - (6,933)Security - Access Control System - (19,495)Security - Cameras - (28,368)Security - Booms - (95,916)Security - Parking Bays - (33,368)Security - Boundary Wall (Guards) - (9,880)Security - Boundary Wall (30,398) (51,453)Security - Electric fence upgrade (96,972) -

(179,422) (427,949)

Forensic audit and consulting fees Audit fees - (2,400)

- (2,400)

Legal feesCosts (2,280) (242,115)Recoveries - 144,035

(2,280) (98,080)

Total Abnormal costsCosts (181,702) (672,465)Recoveries - 144,035

(181,702) (528,430)

9. Taxation

Major components of the tax expense

CurrentLocal income tax - current period 39,129 19,716

The income tax rate is 28% in 2015.

Provision has been made for 2015 tax as the homeowners association has taxable income. As per section 10(1)(e)(i) of the Income Tax Act, allincome from any other source up to R50 000 will be exempt and only the income in excess of R50 000 will be subject to tax.

10. Auditors' remuneration

Fees 13,024 13,200

13,024 13,200

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Notes to the Annual Financial StatementsFigures in Rand 2015 2014

11. Cash generated from operations

Surplus before taxation 1,309,404 911,381Adjustments for:Depreciation and amortisation 41,456 38,876Provision for CSTM trust account - 30,033Changes in working capital:Trade and other receivables (157,387) (457,869)Trade and other payables (35,943) 442,132

1,157,530 964,553

12. Tax paid

Balance at beginning of the year 65,556 5,884Current tax for the year recognised in surplus or loss (39,129) (19,716)Balance at end of the year (54,315) (65,556)

(27,888) (79,388)

13. Related parties

`

RelationshipsBoard of directors A van Quickelberger

A WehmeyerHD dos SantosJA BothaM OosthuizenNM RamodibeJ BothaMG GoossensM Wilke

14. 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 servicesrendered.

15. Access cards

Costs (41,880) (87,891)Recoveries 67,504 136,401

25,624 48,510

16. Utilities

Electricity (5,659,750) (5,291,489)Electricity recoveries 5,421,386 4,862,577Electricity - Basic 807,793 801,246Electricity recoveries - Environmental 218,466 193,545Electricity recoveries - General 184,882 177,375Meter Reading Fees (36,432) (40,194)Meter Reading recoveries 32,652 31,608

968,997 734,668

17. Legal fees

Costs (62,662) (33,209)Recoveries 60,141 32,341

(2,521) (868)

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HOMEOWNERS ASSOCIATION OF PINEHAVEN COUNTRY ESTATE NPCANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Notes to the Annual Financial StatementsFigures in Rand 2015 2014

18. Plan fees

Costs (16,407) (11,970)Recoveries 10,500 7,410

(5,907) (4,560)

19. Repairs and maintenance

Access Control (59,070) (35,331)Building - (18,806)Electrical - (2,220)Entrance (10,486) (166,834)Garden (41,448) (75,550)Gate & Fences (8,549) (84,478)General (68,067) (22,256)Lawnmower (13,543) (20,929)Parks (11,984) (22,749)Paint - (1,105)Refuse Removal (262,976) (236,880)

(476,123) (687,138)

20. Security

Costs (1,612,827) (1,513,953)Recoveries 185,741 167,492

(1,427,086) (1,346,461)

21. Insurance

Insurance Company: PSG Konsult FairlandsPolicy number: PSGBC0000733310Anniversary date: 01/02/2015A schedule of the present replacement values of all units in terms of Annexure 8 Rule 29(1)(c) will be tabled for approval at the forthcoming annualgeneral meeting.

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Homeowners Association of Pinehaven Country Estate NPC(Registration number 2003/005340/08)Financial Statements for the year ended 28 February 2015

Tax Computation

R

Taxable income (a)Interest and penalties 177,480Other income 23,465Less: Exemption(As per section 10(1)(e)(i) of the Income Tax Act, all in come from any other source up to R50 000 will beexempt and only the income in excess of R50 000 will be subject to tax.)

(50,000)

150,945

Allowable deductions (c)Audit fees 13,024Accounting/Secretarial fees 900Administration fees 208,436Bankcharges 16,912Printing and stationery 21,285 Total income (b) - Applied rate (a/b) x Allowable deductions (c) (11,197)

(11,197)

Taxable income 139,748

Tax thereon @ 28% 39,129

Tax liability

RAmount owing/(prepaid) at the beginning of year (65,556)Amount refunded/(paid) in respect of prior year (27,888)

Amount owing/(prepaid) in respect of prior year (93,444)

Tax owing/(prepaid) for the current year

Normal taxPer calculation 39,129

Amount owing/(prepaid) at the end of year (54,315)

16The supplementary information presented does not form part of the financial statements and is unaudited