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ANNUALREPORT2016

02 South African Property Owners Association NPC (Registration number 1966/008959/08)Financial Statements for the year ended 31 December 2016

General Information 3 Notice to Annual General Meeting 4

Research 6 Industry affiliations 7

Education, Training and Development 8 - 11Advocacy 12 - 16

Networking and Industry Participation 17 - 18President’s and CEO’s Report 19 - 21

Index 22 Directors’ Responsibilities and Approval 24 - 25

Directors’ Report 26 - 27 Board of Directors 28 - 29

Councillors - National and Regional / Honorary Life Members 30 - 31Independant Auditor’s Report 32 - 35

Statement of Financial Position 36 Statement of Profit or Loss 37

Statement of Changes in Equity 38 Statement of Cash Flows 39 Accounting Policies 40 - 45Notes to the Financial Statements 46 - 51Detailed Income Statement 52 - 53

CONTENTS

03South African Property Owners Association NPC (Registration number 1966/008959/08)Financial Statements for the year ended 31 December 2016

GENERAL INFORMATION

Country of incorporation and domicile Nature of business and principal activities

Directors

Registered office

Business address

South Africa

The entity promotes the interests of its members by representing them on matters affecting the property industry on National and Local Government levels, by providing a continuous program of educational activities and by organising conventions, seminars and workshops on matters of topical interest. The Association publishes journals and other literature for the benefit of its members. A full-time Secretariat provides direct services to members and related Associations.

NNN Radebe (President) PA Levett (President Elect)NA Gopal (Chief Executive Officer)GS MosenekeME DeightonDJ GreenJN AlingJN ZidelIN MkhariVW HakoN ByrdP EngelbrechtA BeattieIS Petersen

Paddock View BuildingHunts End Office Park36 Wierda Road WestWierda ValleySandton

Paddock View BuildingHunts End Office Park36 Wierda Road WestWierda ValleySandton

Postal address

Bankers Auditors

Public Officer

Secretary

Company registration number

Level of assurance

Preparer

PO Box 78544Sandton 2146

First National BankPricewaterhouse Coopers Inc.NA Gopal

NA Gopal

1966/008959/08

These financial statements have been audited in compliance with the applicable requirements of the Companies Act of South Africa.

The financial statements were independently compiled by: Marlice Boshoff CA (SA)


Notice is hereby given that an Annual General Meeting for the South African Property Owners Association (NPC) will be held at the Cape Town International Convention Centre, Main Auditorium, Cape Town, at 17h45, on 21 June 2017.

The purpose of the Annual General Meeting is as follows

a) Consideration of the Annual Financial Statements;b) Appointment and Fixing of the remuneration of the Auditor.c) To transact such other business as may be transacted at an Annual General Meeting.

Any member entitled to attend and vote at the meeting shall be entitled to appoint another person as his/her proxy to attend, spoke and vote in his/her stead, whether on a show of hands or on a poll. A proxy need not be a member of the Association.

The instrument appointing a proxy and any power of attorney or other authority under which it is signed shall be deposited not less than 48 hours (12h00, 19 June 2017) before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote at the registered office of the Association, and may be e-mailed to [email protected] for the attention of (Mumtaz Moola).

By order

Director NA Gopal (Chief Executive Officer)

NOTICE OF AN ANNUAL GENERAL MEETINGSAPOA BOARD


SAPOA publishes regular research on a continuous basis. The organisation is intensely involved in the collection and dissemination

of property data and statistics. Research reports provide ease and cost effective access to accurate, up-to-date research that can be used by

industry makers. Some regularly published research reports include the office vacancy survey, industrial vacancy survey, capitalisation and discount

rate report, retail trends report, operating cost report as well as the rates and taxes report.

SAPOA research is conducted through various strategic partnerships with private and public sector formations.

RESEARCH

REGULARLY PUBLISHED RESEARCH REPORTS

A Retail Trends Report

B Office Vacancy Survey

C Industrial Vacancy Survey

D Operating Cost Report

E Rates and Taxes Report

F Capitalisation & Discount Rate Report


INDUSTRY AFFILIATIONS

SAPOA has formed strong affiliations with key industry stakeholders. It has long-standing partnerships with various organisations including:

Through these relationships and the backing of a number of research and analysis listed property groups, residential property groups, urban regeneration associations and local online resources, SAPOA has a wealth of information at its fingertips, which it is able to share, to inform and to enlighten its members. Global connections such as the Building Owners Managers Association (BOMA) also ensure that SAPOA has its finger on the pulse of the international property market.

[AFRES

[BCA

[BCO

[BOMA

[BPF

[CESA

[CID

[COGTA

[DPW

[EAAB

[GBCSA

[GPG

[JPOMA

[KLCBT

[PCA

[PCNZ

[PSCC

[REIT SA

[RICS

[SACSC

[SACN

[SACPLAN

[SAIV

[SAPI

[SAPVIA

[WPN

[SAIBB

[PCNS

[ULI

Black Conveyancing Association

British Council of Offices

Building Owners and Managers Association (USA)

British Property Federation

Consulting Engineers South Africa

City Improvement District

Department of Cooperative Governance and Traditional Affairs

Department of Public works

Estate Agency Affairs Board

Green Building Council of South Africa

Gauteng Provincial Government

Johannesburg Property Owners and Managers Association

Property Council ofNew Zealand

Kruger Lowveld Chamber of Business and Tourism

The Property Council of Australia

The Property Sector Charter Council

Royal Institution of Chartered Surveyors

South African Institute of Black Practitioners

Property Council of New Zealand

Urban Land Institute

The African Real Estate Society

South African Photovoltaic Industry Association

SA Cities Network

South African Council for Planners

The South African Institute of Valuers

South African Planning Institute

South African Council of Shopping Centres

Real Estate Investment Trust SA

Women’s Property Network


The Association provides continued growth and development opportunities to its members and the property industry at large by hosting

informative, crucial and current seminars and workshops on the latest industry developments. One of the Association’s aim in 2016, as with previous years, was

to provide professionally designed, globally competitive educational programmes to introduce prospective students to the commercial and industrial property sector as

well as to empower working professionals with tools to forge ahead in their companies.

SAPOA achieved this goal of increasing the pool of well-equipped industry professionals by providing study opportunities through its accredited flagship educational programme

offered in collaboration with leading universities across the country. Some of the universities SAPOA collaborates with in its programmes include the University of Cape Town Graduate School

of Business, University of the Witwatersrand, University of Johannesburg. SAPOA continued to forge relationships to address the scarce and critical skills of our country.

Graduates of SAPOA Programmes such as the Property Management Programme (PMP), the Property Development Programme (PDP), Introduction to Commercial Property Programme (ICPP) and others were

deservedly honoured in graduation ceremonies held by SAPOA and institutions that collaborated in offering the various courses across the country in 2016.

Flagship SAPOA educational courses include:

EDUCATION, TRAINING AND DEVELOPMENT


The SAPOA bursary fund is another tool that the Association implements in order to attract motivated youths to join the commercial property sector and increase the skills pool and support the Industry through educated Human Resources.

In an effort to promote transformation, redress the past, promote the property sector to youths and address the current and future skills shortage, SAPOA focused intensely on its bursary fund by providing deserving university students with study bursaries. Together with its member partners, SAPOA manages the bursary fund and seeks to award only the most promising and deserving candidates.

The bursary fund, which is accessible to students who are pursuing full-time study in South African universities, continues to be a game changer in the education and development of future property leaders.

The qualifications which the bursary fund recognises include:


THE BLUEPRINT FOR REAL ESTATE EDUCATION

SAPOA partners with Wits for all real estate courses.

The educational efforts of SAPOA are aimed at:

• Increasing knowledge and skills of the property industry amongst employees within the industry.

• Ensuring that the content of programmes/workshops and other educational interventions are aligned to industry needs.

• Raising employability and/or competence of the practitioners and professionals in the industry.

SAPOA decided to have the University of Witswatersrand (Wits) as our strategic partner in an effort to provide the industry with a one stop shop service for all real estate courses.

Why Wits Wits is a world-class research university in Africa, and is renowned for its commitment to academic and research excellence. It contributes to the global knowledge economy and local transformation through the generation of high-level, scarce skills and innovative research. At the forefront of a changing society, Wits is an engaged institution, dedicated to advancing the public good. It promotes intellectual communities and attracts talented students, distinguished academics and thinkers from around the world.

EDUCATION, TRAINING AND DEVELOPMENT

(Continuation)


Education, training and development initiatives are the backbone of the Association and assist in the quest for an improved built environment landscape.

SAPOA BURSARY SCHEME

Objectives of the SAPOA Bursary Scheme:

• To transform the commercial property industry demographics to reflect the population demographics in South Africa.• To redress the past by offering previously disadvantaged people property related education and entrance to the commercial property industry.• Promote the Commercial Property Industry at both school and tertiary levels to ensure growth into the future.• Address the current and future skills shortage in the Commercial Property Industry. Areas of Study:

SAPOA offers bursaries for full-time South African university and university of technology studies in the following disciplines:

BSc Property StudiesBSc Urban and Regional PlanningBSc Constructional StudiesBSc Quantity SurveyingBSc Town and Regional PlanningBSc Property ManagementBSc Real EstateBcom Property Valuation and ManagementND Real Estate In 2016 , 27 students were funded by the SAPOA Bursary Fund.7 graduated and are placed for internship programme

SSETA SAPOA BURSARY

In May 2016, the Services SETA (SSETA) partnered with SAPOA, contributing a R 40 million grant to sponsor 54 students with bursaries for a 4-year degree in property related studies. With this opportunity, we wish to address the skills shortages in commercial property nationally. The bursary opportunity is aimed at current first year students. We still have funding available and need students who meet the below criteria. The degrees that fall within the scope of the Services SETA (SSETA) will be funded – these are: • ND Real Estate: Cape Peninsula University of Technology• BSc Property Studies: University of the Witwatersrand and University of Cape Town• BSc Real Estate: University of Pretoria• BSc Property Development: University of KwaZulu-Natal• BCom Finance with Property Valuation and Management as a major: University of Johannesburg


1.1 BUSINESS RESCUE:

One of SAPOA’s main arguments is that a tenant’s rental, from the time that the tenant goes into business rescue until the time that the business rescue

process comes to an end, is post-commencement finance and accordingly, SAPOA requested the Specialist Committee to amend the Act to specifically provide for

this. Although the Committee was sympathetic towards SAPOA, it indicated that government was reluctant to change the Act. SAPOA brought a declarator on the

13 October 2016.

The court decided that we were not entitled to the declaratory relief sought. Judge Janse van der Westhuisen said that interpreting the Act in the way we wanted would defeat the

purpose or aim of business rescue intended in s 128(1)(b) and would “elevate an obligation prior to commencement of business rescue proceedings to a preference over other creditors not provided or

contemplated by the provisions of s 135 of the Act”. The judgement was handed down on the 29 November 2016. SAPOA addressed a letter to the Specialist committee on the 1 December 2016 to

address this issue and the amendment of the Act. SAPOA subsequently met with Michael Katz of the select Committee and put forward its argument. Michael Katz will put forward SAPOA’s argument at the committee

meeting on the 7 March.

ADVOCACY

1.2 PROPERTY PRACTITIONERS BILL

SAPOA has been assisting with the redrafting of this Bill. SAPOA has redrafted sections of the Bill and has sent it to the Department of Human Settlements for consideration. The intention is to make sure that the commercial property sector is not over regulated and ultimately exemptions and exclusions should be included which are applicable to the commercial property industry pertaining to this Bill.

The Department of Human Settlements has indicated that it would like the New Property Practitioners Act promulgated during the first quarter of 2017. SAPOA was informed by the EAAB February that there is a current version of the Bill that they want to table in Cabinet. They state that this version of the Bill has met the criteria and has a Pre-Certification legal opinion to certify that this piece of legislation is desirable, legal and constitutional. The Bill was published for public comment on the 31 March 2017.

1.3 EXPROPRIATION BILL

The Bill was approved by the National assembly and is currently before the National Council of Provinces. aParliament to present its comments. Deputy Minister Cronin had subsequent meetings with SAPOA to discuss amendments prior to the Bill being signed off. There have not been many changes with regards to our comments which were previously considered at the public deliberations in November 2015. The majority of the comments made by SAPOA were considered by the Department namely:

Definition of Court The Definition of Court which now includes a High Court within whose area of jurisdiction a property is situated. A Magistrate’s Court now includes “within whose area of jurisdiction a property is situated”, having competent jurisdiction and designated as such.


Offers of compensation

Although our time-frames were not taken into consideration (namely, a period of 6 months from notice of expropriation which is allowed for an expropriatee to issue summons with respect to the determination of compensation, but also with a provision that a court may extend the said period on application should the expropriating authority not be willing to so), the Department of Public Works has now added an extension regarding additional time that may be required should the claimant not accept the offer of compensation.

These time-frames must be reasonable within the circumstances and in accordance with Section 25.

Determination by Court

– The Department has now added that if the expropriating authority and expropriated owner or expropriated holder does not agree on the amount of compensation, they may attempt to settle the dispute by mediation. We had suggested arbitration as an alternative measure. However mediation would serve a purpose. The only issue would arise if the parties are unable to settle via meditation then there is no option of arbitration. The matter would be referred to court. Notice of expropriation – The Department did not add our wording regarding a different form of expropriation regarding roads and railways. The Bill is waiting to be signed off by the President.

Draft Policy and Bill on the Preservation and Development of Agricultural Land Framework

SAPOA submitted comments on the version 1 of the bill and suggested that the Bill be scrapped as it was poorly drafted and was in conflict with the Constitution. The bill was scrapped.

Version 2 of the Draft Bill was published for comment. SAPOA submitted comments on 30 October 2016. Once again we find the bill in conflict with the Constitution.

1.6 B-BBEEE REGULATIONS THRESHOLDS

SAPOA is busy drafting comments which are due on the 8 December 2016, and suggests that the Thresholds for major B–BBEE ownership transactions ownership be increased to R800m.

1.7 DRAFT GAUTENG SUSTAINABLE DEVELOPMENT IMPLEMENTATION GUIDELINES.

SAPOA submitted comments on 2nd December 2016.


1.8 NATIONAL BUILDINGS REGULATIONS AND BUILDINGS STANDARDS ACT

SAPOA has raised the issue of lost Occupancy Certificates with the Minister and the Department of Trade and Industry. The Minister has referred the matter

to the COE of the NBR. DTI has since decided to redraft the Act and SAPOA is on the drafting committee.

1.9 CARBON TAX BILL

SAPOA submitted comments and was invited by National Treasury to a workshop to understand how taxes will be recycled into the economy and what the impact thereof will

be. National Treasury is at pains to indicate that the impact will be negligible on the economy.

1.10 LAND REFORM BILL

This Act was pushed through Parliament and hence there was a subsequent Constitutional Court challenge as it was felt that there was not enough public participation.

2. LOBBYING HIGHLIGHTS

3.1 SELF DETERMINED MUNICIPAL VALUATIONS

The implementation of the Municipal Property Rates Act (MPRA) has become problematic, resulting in general and supplementary valuation rolls that are not accurate, consistent, efficient and uniform as intended by the Act.

A solution to this issue is the formation of a Valuers Office. Professional and registered Valuers will work closely with the private sector in order to get the correct valuations of property owners.

An accurate valuation roll can then be sent to the relevant municipality. This would be a key tool to fair rating. We have engaged with the City of Johannesburg and they have shown interest regarding the running of a pilot programme in order to begin to unlock the numerous benefits of this concept.

3.2 EXCLUSIVITY CLAUSES (MARKET INQUIRY INTO THE GROCERY RETAIL SECTOR

On behalf of its members, SAPOA has lodged a complaint with the Competition Commission and has requested the Commission to reopen its investigation into exclusivity clauses and to give a definitive ruling regarding the anti-competitive nature of exclusivity clauses in leases once and for all. The Inquiry will officially began on 27 November 2015 (the Commission is required to wait 20 business days from date of publication of the final Terms of Reference) and the Commission aims to complete the Inquiry by 29 May 2017. The Competition Commission has called for public hearings and has indicated dates where these hearings will be held in Gauteng, Western Cape and KwaZulu -Natal.

The Commission has also requested SAPOA’s assistance in gathering details of small and independent retailers who have been negatively affected by exclusivity clauses in lease agreements. The Commission requires the information as it would like to invite these businesses to attend and participate in the public hearings.

ADVOCACY (Continuation)


3.3 MASSMART COMPLAINT

Massmart decided to self-refer its complaint to the Competition Tribunal

The matter of the exceptions raised by Pick’n Pay, Shoprite/Checkers and Spar was heard in July. SAPOA was cited as a respondent by virtue of its interest in the matter only. SAPOA was cited as a respondent for service of notice purposes and the question vis-à-vis SAPOA was whether service on SAPOA was due service on its members. With regards to the exceptions that were brought by Pick’n Pay, Shoprite/Checkers and Spar the Tribunal’s decision was that Massmart had to amend its complaint referral and the “Stay application” was not granted, and service on SAPOA was accepted as sufficient notice of service on its members.

In summary, the parties and the Tribunal had agreed on a timetable for the filing of pleadings following the outcome of the interlocutory applications. Massmart was due to file its amended complaint referral. It failed to meet the initial deadline and was given an extension by the Tribunal to file its amended complaint. It then requested a second extension during the holiday period of December).

All of the parties agreed to this, but for Shoprite/Checkers. Shoprite/Checkers insisted that Massmart bring a formal condonation application for failure to meet the deadline. It was this hearing of the condonation that was held on the 21st February 2017. It was Shoprite/Checkers alone that insisted that Massmart bring an application for condonation. The arguments were purely procedural in nature and no mention of the merits was made. As SAPOA had expected Massmart was successful in its application for condonation.

3.4 CITY OF TSHWANE RESELLERS TARIFF The City of Tshwane published its Resellers Tariff for public comment. In terms of the electricity pricing policy the consumer (in the case of the landlord, the tenant) should not be in a less favourable position than had he been supplied by the council directly.

Tshwane introduced a reseller’s tariff which is the tariff at which the landlord can sell electricity to the tenant. According to their tariff, the landlord may no longer charge any fixed charges to certain tenant categories (80 Amp supply or less). Tshwane’s tariff document mentions that it may not discriminate against any customer classes, yet the very introduction of the reseller tariff and the removal of the fixed charge means the landlord is now discriminated against as the council is permitted to levy certain charges while the landlord is not.

Armed with a legal opinion SAPOA approached the City of Tshwane and advised them of the ultra vires nature of their conduct with the intention of influencing the new tariffs. In the event that they disagree then we would approach the High Court for relief. An initial meeting was held with the City of Tshwane and it was agreed that they will send us the relevant tariff documentation in order for us to be part of the tariff design process by way of submitting comments, which will be considered by them. This is in an effort to establish open lines of communication and avoid reactive behaviour.


City of Tshwane acknowledged that they did foresee the Resellers tariff posing a challenge but are willing to address any issues that stem from same.

They requested that members compile a list of individual properties that have been affected along with the accompanying accounts.

We subsequently sent a letter to the CFO of the City Of Tshwane highlighting

imperative aspects of the legal opinion. The City also offered us a forum to discuss property tariffs with the CFO and City Manager. The current financial year’s tariffs have

seen the reintroduction of the breaker charge. This charge is dictated by a combination of the supply size and physical breaker size connected to a tenants metering supply. Along with

this reintroduction the increase on the charge per kWh only went up by 1.08%. This was done to negate the drastic increase of 26.13% on the kWh charge that was effected last year. The net effect

is that a landlord or reseller will be recovering a greater rand value on the fixed charges which should therefore result in the profit on the building seeing a slight increase compared to the previous year.

3.5 RATES POLICIES

SAPOA identified the need for research to be conducted pertaining to the budgets and rates policies of the 8 metropolitan municipalities, as well as the local municipalities of Msunduzi, Polokwane and Mbombela. This would aid in informing SAPOA members of critical aspects of the budgets and policies which would have a direct effect on their businesses.

Estate Agency Affairs Board Various concerns were raised by members with respect to the EAAB. SAPOA met with the EAAB and the following undertakings were given by the EAAB. Non-Executive Director Exemptions

The concern from members was that the system is not allowing Non-Executive Directors to initiate the process for exemptions.

The EAAB stated that Members who apply for exemption and who are not registered, have to send a letter applying for the exemption for Clive Ashpol’s attention together with all their supporting documentation. EAAB will assess and write back to the member stating that the application was received and approved. The Member will then have to apply for the Fidelity Fund Certificate (FFC) and attach the letter from the EAAB. The EAAB registration Department will then attend to it. This is an anomaly and cannot be done online.

Professional Designation Examination

SAPOA requested that the EAAB should look at an alternate method of allowing members to qualify for the PDE. EAAB has now adopted a process that will commence in 2017. Members will not have to write the exams but can submit Proof of Experience (POE) with all supporting documents. They will be called in for an interview to be assessed and will be receive a certificate if they pass. This will then allow them to apply for a FFC.

ADVOCACY (Continuation)


NETWORKING AND INDUSTRY PARTICIPATION

SAPOA strives to create networking opportunities for industry professionals by hosting various networking functions, breakfasts and golf days across the country’s various regions. Often hosted in collaboration with member partners, these events provide holistic access to other industry players under one roof.

In 2015 SAPOA particularly strengthened conversations between the private and public sector and participated in several engagement events with the Department of Public Works, the Department of Human Settlement, Department of Cooperative Governance and the National Treasury among others. These talks culminated in SAPOA signing a Memorandum of Understanding with the National Treasury with the outlook to collaborate in meeting the National Development Plan (Vision 2030) goals. Among the numerous public sector events that SAPOA participated in was the Gauteng City Region Spatial Planning Summit and the Urban Investment Partnerships Summit.

SAPOA also attends and participates in externally hosted industry events and in 2015, it participated in the Building Owners and Managers Association (BOMA) international conference where SAPOA CEO, Neil Gopal is chairperson of the International Regional Council. The Association also showed its support and assisted in promoting the Ecomobility festival held in October 2015 with the aim of encouraging green solutions to transportation challenges in the country. SAPOA also hosted a successful Convention in 2015. The event brings together hundreds of industry players and creates unmatched opportunities for networking and sharing ideas. The event included the SAPOA Property Journalism awards as well as the SAPOA Innovative Excellence Award for some of the country’s most innovative commercial and industrial property developments.

SAPOA National Treasury

Memorandum of Understanding

Collaborating in meeting the National Develoment Plan (Vision 2030) Goals


BUILDING OWNERS AND MANAGERS ASSOCIATION (BOMA)

The International Council is comprises real estate associations from around the world that have affiliated with BOMA International.

The mission of the International Council is to advance global cooperation within the world community of commercial real estate by creating a more informed marketplace. To

achieve this goal the International Council provides opportunities for high-level networking to exchange information, best practices, research, standards, education and training, public

policy strategies and to facilitate business opportunities among members.

The International Council members are interested in:

• Emerging trends in commercial property

• Reliable information on doing business in other countries

• Investment opportunities in emerging markets • Strategic asset management issues to drive high

performance buildings • Improving investment returns and shareholder value

The International Council members are also interested in participating in study tours and affiliate-hosted conferences as well as other industry conferences. BOMA International’s annual June conference features world-renowned keynote speakers, 40-plus education sessions, 425-plus exhibit booths, plus special VIP programming, property tours and networking events exclusive to International Council members.

Once an association affiliates with BOMA International it is automatically a member of the International Council. The Council meets annually at BOMA’s June conference. Special Council programming includes a VIP Reception and Dinner on Monday evening, the International Council Workshop on Tuesday morning, a private building tour on Tuesday afternoon, and VIP seating at The Outstanding Building of the Year Reception and Banquet on Tuesday evening. The high-level networking and information sharing are just two of the countless benefits enjoyed through participation in the International Council programming.

SAPOA and its directors acknowledge their role in ensuring that the organisation strengthens its level of influence while remaining self-sufficient through increasing the skills pool, promoting building excellence and exercising the highest level of industry participation.

NETWORKING AND INDUSTRY PARTICIPATION

(Continuation)

...in 2016


PRESIDENT’S AND CEO’S REPORT

Revenue for the 2016 year was R 39.5 million, up by 12.22% compared to 2015, while retained earnings went down by 8.3% to R 11.8 million

Over the last few years, SAPOA has contributed the following for the benefit of the industry:

• R 2.2 million towards the Property Sector Charter Council;• R 600 thousand towards the establishment of the Green Building Council of SA;• R 255 thousand towards the Business Against Crime initiative;• R 1.7 million towards the SAPOA Busary Fund;• R 1 million towards the industry Advocacy Fund;• R 10.3 million spent since 2008 with regards to Advocacy• R7.6 million spend on Research since 2008

SAPOA has yet again received an unqualified audit from PwC.

[12.22%

[8.3% Retained earnings decreased by 8.3% to R 11.8 million

Revenue for the 2016 year atR 39.5 million up by 12.22% compared to 2015

NEIL GOPALChief Executive Officer ,SAPOA

NOMZAMO RADEBESAPOA President 2016 - 2017Chief Executive Officer, JHI Properties


Over the last few years, SAPOA has contributed the following for the benefit of the industry:

R 2,200,000 towards the Property Sector Charter Council

R 600,000 towards the establishment of the Green Buildings Council of SA

R 255,000 towards the Business Against Crime initiative

PRESIDENT’S AND CEO’S REPORT (Continuation)


R1,700,000 towards the Bursary Fund

R 1,000,000 towards the industry Advocacy Fund

R 10,300,000spent since 2008 with regards to Advocacy

R 7,700,000Research spend since 2008

SAPOA has yet again received an unqualified audit from PwC.


The reports and statements set out below comprise the final report presented to the members:

Index Page

Directors’ Responsibilities and Approval 24 - 25 Directors’ Report 26 - 27

Board of Directors 28 - 29 Councillors - National and Regional / Honorary Life Members 30 - 31

Independant Auditor’s Report 32 - 35 Statement of Financial Position 36

Statement of Profit or Loss 37Statement of Changes in Equity 38

Statement of Cash Flows 39 Accounting Policies 40 - 45

Notes to the Financial Statements 46 - 51Detailed Income Statement 52 - 53

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

INDEX


The directors are required by the Companies Act of South Africa to maintain adequate accounting records and are responsible for the content and integrity

of the financial statements and related financial information included in this report.

It is their responsibility to ensure that the financial statements fairly present the state of affairs of the company as at the end of the financial year and the results of its operations

and cash flows for the period then ended, in conformity with the InternationalFinancial Reporting Standard for Small and Medium-sized Entities. The external auditor is

engaged to express an independent opinion on the financial statements.

The financial statements are prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities and are based upon appropriate accounting policies

consistently applied and supported by reasonable and prudent judgements and estimates.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the company and place considerable importance on maintaining a strong control environment.

DIRECTORS’ RESPONSIBILITIES

AND APPROVAL

To enable the directors to meet these responsibilities, the board of directors sets standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk.

These controls are monitored throughout the company and all employees are required to maintain the highest ethical standards in ensuring the company’s business is conducted in a manner that in all reasonable circumstances is above reproach.

The focus of risk management in the company is on identifying, assessing, managing and monitoring all known forms of risk across the company. While operating risk cannot be fully eliminated, the company endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.


The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the company’s cash flow forecast for the year to 31 December 2017 and, in the light of this review and the current financial position, they are satisfied that the company has or has access to adequate resources to continue in operational existence for the foreseeable future.

The external auditors are responsible for independently auditing and reporting on the company’s financial statements. The financial statements have been examined by the company’s external auditors and their report is presented on pages 32 to 35.

The external auditors were given unrestricted access to all financial records and related data, including minutes of all meetings of the shareholders, the board of directors’s and committees of the board. The directors’s believe that all representations made to the independent auditors during their audit are valid and appropriate. The financial statements set out on pages 36 to 53, which have been prepared on the going concern basis, were approved by the board on 19 April 2017.

and were signed on its behalf by:

DirectorNNN Radebe (President)

Director NA Gopal (Chief Executive Officer)


The directors submit their report for the year ended 31 December 2016:

1. Nature of business

The association is engaged to promote the interests of its members by representing them on matters affecting the property industry on National and Local Government levels,

by providing a continuous program of educational activities and by organising conventions, seminars and workshops on matters of topical interest. The association publishes journals and

other literature for the benefit of its members. A full-time secretariat provides direct services to members and related associations. The company operates principally in South Africa. There have

been no material changes to the nature of the company’s business from the prior year.

2. Review of financial results and activities

The financial statements have been prepared in accordance with International Financial Reporting Standard for Small and Medium-sized Entities and the requirements of the Companies Act of South Africa. The accounting

policies have been applied consistently compared to the prior year. The operating results and state of affairs of the company are fully set out in the attached financial statements and do not in our opinion require any further

comment. Net loss of the company was R 1,066,447 (2015: profit R 943).

3. Directors

The directors in office at the date of this report are as follows:

Directors ChangesNNN Radebe (President)PA Levett (President Elect)NA Gopal (Chief Executive Officer)A Beattie Resigned 22 June 2016GS MosenekeME DeightonIS Petersen Resigned 22 June 2016DJ GreenJN AlingJN ZidelIN MkhariVW HakoN Byrd Appointed 22 June 2016P Engelbrecht Appointed 22 June 2016

DIRECTORS’ REPORT


5. Events after the reporting period

The directors are not aware of any other matter or circumstance arising since the end of the financial year and the reporting date, that would materially impact the financial statements.

6. Directors’ interests in contracts

No material contracts in which the directors have an interest were entered into in the current year, which might have a material impact on the reported results.

7. Authorised and issued share capital

The company has no share capital as it is a non-profit company in terms of the Companies Act of South Africa.

8. Public Officer

The company secretary is NA Gopal of:

9. Secretary

The secretary of the company is N.A. Gopal.

10. Auditors

PricewaterhouseCoopers Inc. will continue in office in accordance with section 90 of the Companies Act of South Africa

4. Going concern

The directors believe that the company has adequate financial resources to continue in operation for the foreseeable future and accordingly the 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.

Postal addressPO Box 78544Sandton2146

Business addressPaddock View BuildingHunts End Office Park36 Wierda Road WestWierda ValleySandton


BOARD OF DIRECTORS 2016

NOMZAMO RADEBESAPOA President 2016 - 2017Chief Executive Officer, JHI Properties

DR SEDISE MOSENEKEExecutive Director, Vukile Property Fund

PETER LEVETTSAPOA President Elect 2016 - 2017 Managing Director,Old Mutual Property

IPELENG MKHARIChief Operating Officer, Motseng Investment Holdings

MICHAEL DEIGHTONSAPOA Immediate Past President: 2016 - 2017 Managing Director, Tongaat Hulett

NEIL GOPALChief Executive Officer,SAPOA


JEFF ZIDELDirector Fortress Income Fund

VUYANI HAKODirector, Public Investment Corporation

DAVID GREENDirector, ProAfrica Properties

PIETER ENGELBRECHT (ELECTED)Head of Development, Growthpoint Properties

JAMES ALINGManaging Director, Halls & Sons

NNEMA BYRD (ELECTED)Investment Principal, STANLIB Africa Direct Property DevelopmentFund


NOMZAMO RADEBESAPOA PresidentChief Executive Officer, JHI Properties

NICOLE BAUMGARTENBroll Property GroupProperty and Facilities Management

DAVID GREENPro Africa Properties Services ConventionCommittee

NEIL GOPALChief Executive Officer, SAPOA

BERNADET HARTLEYEris Property Group (Pty) Ltd HR, Education, Training & Development Committee

WARWICK LORDLords PropertiesNational Developers Forum

LILIAN BARNARDMetope Investment Managers REIT Committee

PIETER ENGELBRECHTGrowthpoint PropertiesInnovative Excellence Awards Committee

DR SEDISE MOSENEKEVukile Property FundGovernment Liaison Committee

NATIONAL COUNCILLORS

DESIREE NAFTEHyprop Investments LimitedLegal Committee

ELAINE WILSONBroll Commercial Property Services Company Research Committee

JOSEPH QURAISHIAmdec Property DevelopmentSustainability Committee

NNEMA BYRD (ELECTED)Investment Principal, STANLIB Africa Direct Property Development Fund

RENE STYBERRosh Pinah PropertiesBrokers Committee


MR BRIAN KIRCHMANNMR AJ VAN RIET

ROBIN KNOTTInvestPro Property East LondonEast London Regional Councillor

JAMES ALINGHalls & Sons (Pty) LtdMpumalanga Regional Councillor

EDWIN VAN NIEKERKMax PropKZN Regional Councillor

MARK BAKKERBruce McWilliams Industries (Pty) LtdPort Elizabeth Regional Councillor

PAUL ALTENROXELLKnottrox Property TrustLimpopo Regional Councillor

MARLON PARRINGPar BrokerageWestern Cape Regional Councillor

REGIONAL COUNCILLORS

HONORARY LIFE MEMBERS


To the shareholders of South African Property Owners Association NPC

Our opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of South African Property Owners Association NPC (the Company)

as at 31 December 2016, and its financial performance and cash flows for the year then ended in accordance with the International Financial Reporting Standard for Small and

Medium-sized Entities and the requirements of the Companies Act of South Africa.

What we have audited

South African Property Owners Association NPC’s financial statements set out on pages 9 to 30 comprise:• the statement of financial position as at 31 December 2016;

• the statement of profit or loss for the year then ended;• the statement of changes in equity for the year then ended;

• the statement of cash flows for the year then ended; and• the notes to the financial statements, which include a summary of significant accounting policies.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Company in accordance with the Independent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA Code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B).

INDEPENDENT AUDITOR’S REPORT


Other information

The directors are responsible for the other information. The other information comprises the Directors’ Report as required by the Companies Act of South Africa, the Directors’ Responsibilities and Approval and the Detailed Income Statement. Other information does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not and will not express an audit opinion or any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the financial statements

The directors are responsible for the preparation and fair presentation of the financial statements in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high-level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.


As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to

those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting

from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control.

INDEPENDENT AUDITOR’S REPORT (Continuation)


• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

PricewaterhouseCoopers Inc. Director: J. Mistri Registered Auditor Sunninghill


STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016

Notes

Assets

Non-Current AssetsProperty, plant and equipment

Current AssetsInventoriesTrade and other receivablesCash and cash equivalents

Total Assets

Equity and LiabilitiesEquityRetained income

Liabilities

Current LiabilitiesTrade and other payablesPrepaid SubscriptionsTotal Equity and Liabilities

1,017,918

230,8675,358,228

15,095,40720,684,50221,702,420

12,873,060

4,200,2144,629,146

8,829,36021,702,420

1,097,499

48,203 3,886,791

17,573,885 21,508,879 22,606,378

11,806,613

4,295,319 6,504,446 10,799,765

22,606,378

2016 2015

R R

2

345

6


STATEMENT OF PROFIT OR LOSS

RevenueDirect cost of revenue income

Gross profitOther incomeOperating expenses

Operating lossFinance income

(Loss) profit for the yearOther comprehensive income

Total comprehensive (loss) income for the year

35,227,988(17,122,159)

18,105,829466,042

(19,689,927)

(1,118,056) 1,118,999

943-

943

39,452,838(22,447,388)

17,005,450623,985

(19,911,182)

(2,281,747)1,215,300

(1,066,447)-

(1,066,447)

Notes

810

910

11

2016 2015

R R


STATEMENT OF CHANGES IN EQUITY

Balance at 1 January 2015 Profit for the yearTransfer loss to Advocacy fundTransfer Advocacy fund to Retain Earnings

Balance at 1 January 2016Loss for the year

Balance at 31 December 2016Note

11,998,230943

1,096,811(222,924)

12,873,060(1,066,447)

11,806,613

12,872,117943

--

12,873,060(1,066,447)

11,806,613

873,887 -

(1,096,811)222,924

--

-7

Advocacy fund

R

Retainedincome

R

Total equity

R


STATEMENT OF CASH FLOWS

Cash flows from operating activities

Cash generated from (used in) operationsFinance incomeNet cash from operating activities

Cash flows from investing activities

Purchase of property, plant and equipmentProceeds on sale of property, plant and equipmentNet cash from investing activities

Net increase in cash and cash equivalents for the yearCash and cash equivalents at the beginning of the yearCash and cash equivalents at end of the year

(2,636,597)1,118,999

(1,517,598)

(354,323)9,358

(344,965)

(1,862,563)16,957,970

15,095,407

1,863,7181,215,300

3,079,018

(602,340)1,800

(600,540)

2,478,47815,095,407

17,573,885

Notes 2016 2015

R R

14

22

5


ACCOUNTING POLICIES

1. Presentation of financial statements

The 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 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

Critical judgements in applying accounting policies

In preparing the financial statements, management is required to make judgements, estimates and assumptions that affect the amounts represented in the financial statements and related disclosures. The

estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual result in the future could differ from these estimates which may be material to the financial

statements.

1.2 Financial instruments

Initial measurement

Financial instruments are initially measured at the transaction price (including transaction costs except in the initial measurement of financial assets and liabilities that are measured at fair value through profit or loss) unless the arrangement constitutes, in effect, a financing transaction in which case it is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

Financial instruments at amortised cost

These include loans, trade receivables and trade payables. These instruments are subsequently measured at amortised cost using the effective interest method. Debt instruments which are classified as current assets or current liabilities are measured at the undiscounted amount of the cash expected to be received or paid, unless the arrangement effectively constitutes a financing transaction.

At each reporting date, the carrying amounts of assets held in this category are reviewed to determine whether there is any objective evidence of impairment. If there is objective evidence, the recoverable amount is estimated and compared with the carrying amount. If the estimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or loss.


Trade and other receivables

Trade receivables are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, demand deposits and other short-term highly liquid investments with original maturities of six months or less. Bank overdrafts are shown as a current liability on the statement of financial position.

Borrowings

Borrowings are recognised initially at the transaction price (that is, the present value of cash payable to the bank including transaction cost). Borrowings are subsequently stated at amortised cost. Interest expense is recognised on the basis of the effective interest method and is included in finance costs. Borrowings are classified as current liabilities unless company has an unconditional right to defer settlement of the liability for at lease 12 months after the reporting date.

Trade and other payables

Trade and other payables are recognised initially at the transaction price and subsequently measure at amortised cost using the effective interest method.

Trade and other payables are obligations on the basis of normal credit terms and do not bear interest. Trade payablesdenominated in a foreign currency are translated into rand using the exchange rate at the reporting date. Foreignexchange gains or losses are included in other income or other expenses.


1.3 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.

Cost includes all costs incurred to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

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. All other repairs and maintenance are charged to profit or loss during the period in which

they are incurred.

Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment loss. Depreciation on other assets 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, which is as follows:

An asset’s carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount.

The residual value, depreciation method and useful life of each asset are reviewed and adjusted prospectively, if appropriate, if there are indicators present that there has been a significant change since the last reporting date.

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.

Item Average useful lifeFurniture and fixtures 5 yearsOffice equipment 6,6667 yearsComputer equipment 3 yearsLeasehold improvements 5 yearsRegalia 6,6667 years

ACCOUNTING POLICIES(Continuation)


1.4 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership to the lessee. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

Operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term unless:

• another systematic basis is representative of the time pattern of the benefit from the leased asset, even if the payments are not on that basis, or• the payments are structured to increase in line with expected general inflation (based on published indexes or statistics) to compensate for the lessor’s expected inflationary cost increases

Any contingent rents are expensed in the period they are incurred.

1.5 Inventories

Inventories are measured at the lower of cost and estimated selling price less costs to complete and sell, on the weighted average cost basis.

The cost of finished goods and work in progress comprises packaging costs, other direct costs and related production overheads (based on normal operating capacity). At each reporting date, inventories are assessed for impairment. If inventory is impaired, the carrying amount is reduced to its selling price less costs to complete and sell; the impairmentloss is recognised immediately in profit or loss.

1.6 Impairment of non-financial assets

Assets that are subject to depreciation or amortisation are assessed at each reporting date to determine whether there is any indication that they are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or CGU) to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s (or CGU’s) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs).


Non-financial assets other than goodwill that suffered an impairment, are reviewed for possible reversal of the impairment at each reporting date. If there

is any such indication , the recoverable amount of any affected asset (or group of related assets) is estimated and compared with its carrying amount. If the estimated

recoverable amount is lower, the carrying amount is reduced to its estimated recoverable amount, and an impairment loss is recognised immediately in profit or

loss. If an impairment loss subsequently reverses, the carrying amount of the asset (or group of related assets) is increased to the revised estimate of its recoverable amount, but

not in excess of the amount that would have been determined had no impairment loss been recognised for the asset (or group of assets) in prior years. A reversal of impairment is recognised

immediately in profit or loss.

An equity instrument is any contract that evidence a residual interest in the assets of an entity after deducting all of its liabilities. If the company reacquires its own equity instruments, those instruments

are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the company’s own equity instruments. Consideration paid or received shall be recognised

directly in equity.

1.7 Share capital and equity

If the company reacquires its own equity instruments, those instruments are deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the company’s own equity instruments. Consideration paid or received shall be recognised directly in equity.

1.8 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 leave pay 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.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or. in the case of non-accumulating absences, when the absence occurs. The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

Defined contribution plans

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

ACCOUNTING POLICIES(Continuation)


1.9 Revenue

Revenue comprises the fair value of the consideration received or receivable for the sale of goods or services in the ordinary course of the company’s activities. Revenue is shown net of sales/value-added tax, returns, rebates and discounts.

When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the end of the reporting period.

The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:• the amount of revenue can be measure reliably;• it is probable that the economic benefits associated with the transaction will flow to the company;• the stage of completion of the transaction at the end of the reporting period can be measured reliably; and• the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised only to the extent of the expenses recognised that are recoverable. Service revenue is recognised by reference to the stage of completion of the transaction at the end of the reporting period. The stage of completion is determined by services performed to date as a percentage of total services to be performed.

Interest is recognised, in profit or loss, using the effective interest rate method.

1.10 Borrowing costs

Borrowing costs are recognised as an expense in the period in which they are incurred.

1.11 Translation of foreign currencies

Foreign currency transactions

Items included in the annual financial statements are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency”). The annual financial statements are presented in ‘rand’ (“R”), which is the Company’s functional and presentation currency.

1.12 Advocacy fund

The Advocacy fund were created due to a court case South African Property Owners Association NPC had with the City of Johannesburg. South African Property Owners Association NPC allocated R 1 million of reserves to the Advocacy fundand some of the members contributed via a special levy that was raised. Income received was accounted as normalincome and expenses paid was accounted for as expenses.At the end of the financial year the difference between theincome and expense would be allocated against the Advocacy fund reserve .


3. Inventories

48,203 230,867Merchandise

3,221,554(200,106)

865,3433,886,791

3,781,873(32,193)

1,608,5485,358,228

Trade receivablesProvision for bad debtsPrepayments

4. Trade and other receivables

NOTES TO THE FINANCIAL STATEMENTS

304,26649,479

248,227543,985

20,3731,166,330

58,54770,085

225,691--

354,323

(114,691)(33,680)

(174,475)(163,460)

(4,001)(490,307)

-(9,358)(3,070)

--

(12,428)

248,12276,526

296,373380,525

16,3721,017,918

Furniture and fixturesOffice equipmentComputer equipmentLeasehold improvementsRegalia

TotalOpeningbalance

Additions DepreciationDisposals

Reconciliation of property, plant and equipment - 2016

The depreciation charged to the statement of comprehensive income during the year amounted to R 522,759(2015: R 490,307).

248,12276,526

296,373380,525

16,3721,017,918

99,547117,869384,924

--

602,340

(109,803)(19,814)

(225,681)(163,460)

(4,001)(522,759)

237,866174,581455,616217,065

12,3711,097,499

Furniture and fixturesOffice equipmentComputer equipmentLeasehold improvementsRegalia

TotalOpeningbalance

Additions Depreciation

Reconciliation of property, plant and equipment - 2015

2016 2015

2016 2015

816,045 282,411

1,111,928817,298

26,6753,054,357

(578,179)(107,830)(656,312)(600,233)

(14,304)(1,956,858)

237,866174,581455,616217,065

12,3711,097,499

723,907164,542879,759817,298

26,6752,612,181

(475,785)(88,016)

(583,386)(436,773)

(10,303)(1,594,263)

248,12276,526

296,373380,525

16,3721,017,918

Furniture and fixturesOffice equipmentComputer equipmentLeasehold improvementsRegaliaTotal

CostCost Accumulated depreciation andimpairments

Accumulated depreciationand impairments

Carrying value

Carrying value

2. Property, plant and equipment

Total



7,9904,741,596

12,824,29917,573,885

6,9052,812,109

12,276,39315,095,407

Cash and cash equivalents consist of:Cash on handBank balancesShort-term deposits

5. Cash and cash equivalents

922,103840,679979,448116,040

1,437,0494,295,319

1,482,65346,490

1,753,259156,821760,991

4,200,214

Trade payablesAmounts received in advanceReceiver of Revenue - Value Added TaxDeferred lease liabilityAccrued expense

6. Trade and other payables

----

873,887(1,096,811)

222,924-

Opening balanceAdvocacy fund expenseTransfer Advocacy fund to Retained Earnings

7. Advocacy

128,78024,037,557

3,789,29011,497,211

39,452,838

-20,739,052

3,594,99210,893,945

35,227,989

Other revenueEducational activitiesPublication revenueSubscriptions

8. Revenue

1,800223,193398,992

623,985

-336,401129,641

466,042

Profit and loss on sale of property, plant and equipmentBad debt recoveredOther income

9. Other income

2016 2015



2016 2015

134,750-

188,129467,367522,759

22,447,38810,996,897

1,105,472920,375871,894

1,587,116468,674283,100

1,917,009447,640

42,358,570

129,9101,096,811

167,773526,303490,307

17,122,15910,621,808

1,076,539873,581498,953691,027330,880267,000

1,187,750634,474

35,715,275

AdvertisingAdvocacy fund expenseAuditors remunerationBad debtsDepreciationDirect cost of revenue incomeEmployee costs (refer to note 11)Lease rentals on operating leaseLegal expensesMarketingOther expensesPlanning and development expensesProperty charter contributionResearchTravelTotal cost of sales, distribution costs and administrative expenses

10. Expense by nature

1,215,300 1,118,999Interest revenueInterest on short term bank deposits

11. Finance income

9,892,9221,103,975

10,996,897

9,515,5831,106,225

10,621,808

Basic salaryPension and medical aid contributions

12. Employee benefit expense

No provision has been made for 2016 tax as the company is exempt from SA normal tax in terms of Section10(1)(d)(iv)(bb) of the Income Tax Act of South Africa.

13. Taxation

943

490,3073,070

(1,118,999)

(56,155)(1,292,431)

(496,166)(167,166)

(2,636,597)

14. Cash generated from (used in) operations

(1,066,447)

522,759(1,800)

(1,215,300)

182,6641,471,437

95,1051,875,300

1,863,718

(Loss) profit before taxationAdjustments for:Depreciation(Profit) loss on sale of assetsFinance incomeChanges in working capital:InventoriesTrade and other receivablesTrade and other payablesPrepaid subscriptions



891,739179,372

1,071,111

990,2121,071,111

2,061,323

Operating leases – as lesseeMinimum lease payments due- within one year- in second to fifth year inclusive

15. Commitments

The Sandton office premises lease runs for 5 years from 1 March 2013. The lease has an annual escalation of 8%.Operating costs and parking expenses specified in the lease agreement has an annual escalation of 8%.The various office equipment leases run for 1 - 5 years with no annual escalation clause.No contingent rent is payable.

2016 2015

Executive

2016

Executive director remuneration

2015

Executive director remuneration

16. Directors’ remuneration

Emoluments

Emoluments

1,609,853

1,497,587

Bonuses andother

Bonuses andother

500,000

750,000

Pension

Pension

304,846

287,158

Total

Total

2,414,699

2,534,745



The financial statements have been prepared on the basis of accounting policies applicable to a going concern. Thisbasis presumes that funds will be available to finance future operations and that the realisation of assets and settlementof liabilities, contingent obligations and commitments will occur in the ordinary course of business.

The directors are not aware of any matter or circumstance arising since the end of the financial year and the reportingdate, that would materially impact the financial statements.

SAPOA Pareto Bursary Scheme Trust

NNN RadebePA LevettNA GopalGS MosenekeME DeightonDJ GreenJN AlingJN ZidelIN MkhariVW HakoN ByrdP EngelbrechtA BeattieIS Petersen

17. Related parties

18. Going concern

19. Events after the reporting period

RelationshipsDirector with significant influence in the following entity:(N Gopal and NNN Radebe are directors of SAPOA NPC andtrustees of SAPOA Pareto Bursary Scheme Trust)

Directors



2016

Trade and other payablesPrepaid subscriptionsTrade and other receivablesCash and cash equivalents

2015

Trade and other payablesPrepaid subscriptionsTrade and other receivablesCash and cash equivalents

20. Financial instruments by category

Financialassets atamortisedcost

Financialassets atamortisedcost

--

3,021,44817,573,885

20,595,333

--

3,813,05015,095,407

18,908,457

Financialliabilities atamortise

Financialliabilities atamortise

(4,295,319)(6,504,446)

--

(10,799,765)

(4,200,214)(4,629,146)

--

(8,829,360)

Total

Total

(4,295,319)(6,504,446)

3,021,44817,573,8859,795,568

(4,200,214)(4,629,146)

3,813,05015,095,407

10,079,097


DETAILED INCOME STATEMENT

2016 2015Notes

128,78024,037,55711,497,211

3,789,29039,452,838

(19,510,875)(2,649,934)

(286,579)(22,447,388)

17,005,450

223,1931,800

1,215,300398,992

1,839,285(19,911,182)

(1,066,447)

8

11

-20,739,05210,893,945

3,594,99135,227,988

(15,837,748)(2,472,161)

-(17,122,159)

18,105,829

336,401-

1,118,999129,641

1,585,041(19,689,927)

943

Other revenue Educational activitiesSubscriptionsMagazine revenue

Direct cost of revenue incomeEducational activitiesMagazineOther cost of revenue

Gross profitOther income

Bad debt - recoveredGains on disposal of assetsInterest receivedOther income

Expenses (Refer to page 25)(Loss) profit for the year

Revenue


DETAILED INCOME STATEMENT

134,750-

188,129467,367

25,781191,716129,690

58,363522,759

10,996,897-

211,478107,034

43,3631,105,472

920,375871,894468,674164,224130,636

-283,100112,603

11,03542,611

1,917,009140,452

70,227121,273237,390210,250

26,63019,911,182

129,9101,096,811

167,773526,303

24,293123,263113,801420,031490,307

10,621,80817,435

201,723103,806

40,9041,076,539

873,581498,953330,880120,671120,498

3,070267,000187,741

9,82468,166

1,187,75041,86266,625

103,426400,452234,022

20,69919,689,927

Advertising Advocacy fund expenseAuditors remunerationBad debtsBank chargesCommittee meetingsComputer expensesConsulting and professional feesDepreciationEmployee costsPenalties and interestGeneral expenseInsuranceInternetLease rentals on operating leaseLegal expensesMarketingPlanning and development expensesPostagePrinting and stationeryProfit and loss on sale of assets and liabilitiesProperty Charter contributionPublic relationsPublication subscriptionsRepairs and maintenanceResearch and development costsStaff trainingSubscriptionsTelephone and faxTravel - localTravel - overseasWorkmen’s compensation

Operating expenses2016 20152016 2015


NOTES


36 Wierda Road West • Hunt’s End Office ParkPaddock View • Wierda ValleyPO Box 78544 • Sandton, 2146Tel: (011) 883 0679 • Fax: (011) 883 0684www.sapoa.org.za

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