SA CREDIT AND RISK REPORTING ASSOCIATION ANNUAL FINANCIAL STATEMENTS · 2017-07-17 · Main...

SA CREDIT AND RISK REPORTING ASSOCIATION

ANNUAL FINANCIAL STATEMENTS

for the year ended 31 December 2016

Carlisle Financial Services

Issued : February 23, 2017

Country of Incorporation and Domicile South Africa

Nature of Business and Principal Activities

Members authorised to sign on behalf Louise le Kay

of management Hugh Wroe-Street

Registered Office Unit N, Central Park

16th Road

Midrand

2194

Business Address Unit N, Central Park

16th Road

Midrand

2194

Postal Address P. O. Box 11741

Wierdapark South

0057

Bankers Nedbank Limited

Auditors Carlisle Financial Services

Financial Statements Prepared By Henk Nieuwenhuis - CA (SA)

Level of Assurance

Published

Legal Form Association

February 23, 2017

General information

These Annual Financial Statements have

been audited in compliance with the

applicable requirements of the

Companies Act of South Africa


Annual Financial Statements for the year ended 31 December 2016

Credit and Risk Information Reporting

Facilitation

Index page

Statement of Management Committee's Responsibility and Approval 4 - 5

Auditor's Report 6 - 7

Management Committee's Report 8 - 9

Statement of Financial Position 10

Statement of Comprehensive Income 11

Statement of Changes in Equity 12

Statement of Cash Flow 13

Accounting Policies 14 - 17

Notes to the Annual Financial Statements 18 - 21

Details of Operating costs 22

Taxation Calculation 23

The following supplementary schedules do not form part of the financial

statements, and are unaudited:



Index

The reports and statements set out below comprise the annual financial statements

presented to the Management Committee

The Annual Financial Statements are prepared in accordance with International

Financial Reporting Standard applicable to Small and Medium-Sized Entities and are

based upon appropriate policies consistently applied and supported by reasonable and

prudent judgements and estimates.

The Management Committee acknowledges that they are ultimately responsible for the

system of internal financial control established by the Association and place

considerable importance on maintaining a strong control environment. To enable the

Management Committee to meet these responsibilities, the Management Committee 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 Association and all employees are required to maintain the highest ethical standards

in ensuring the Association's business is conducted in a manner that in all reasonable

circumstances is above reproach. The focus of risk management in the Association is on

identifying, assessing, managing and monitoring all known forms of risk across the

Association. While operating risk cannot be fully eliminated, the Association

endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems

and ethical behaviour are applied and managed within predetermined procedures and

constraints.



Statement of Management Committee's Responsibility and Approval

The Management Committee is required in terms of the Companies Act of South Africa

to maintain adequate accounting records and are responsible for the content and

integrity of the Annual Financial Statements and related financial information included

in this report. It is their responsibility to ensure that the Annual Financial Statements

fairly present the state of affairs of the Association 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 International Financial Reporting Standard applicable to Small and Medium-Sized

Entities. The external auditors are engaged to express an independent opinion on the

Annual Financial Statements.

Louise le Kay Hugh Wroe-Street

Chairperson Treasurer



The Annual Financial Statements set out on pages 10 to 21, which have been prepared

on the going concern basis, were approved by the Management Committee on 23

February 2017 and were signed on its behalf by:

The Management Committee has reviewed the Association's cash flow forecast for the

year to 31 December 2017 and, in light of this review and the current financial position,

they are satisfied that the Association has or has access to adequate resources to

continue in operational existence for the foreseeable future.

The external auditor is responsible for auditing and reporting on the Annual Financial

Statements. The Annual Financial Statements have been examined by the external

auditor and his report is presented on page 6 - 7.

The Management Committee is 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 Annual Financial Statements. However any system of internal financial control can

provide only reasonable, and not absolute, assurance against material misstatement or

loss.

Statement of Management Committee's Responsibility and Approval

Main business and operations

Financial results

Auditors

Carlisle Financial Services will continue in office.

Page 8


Management Committee Report


The Association commenced with the facilitation of credit and risk information reporting

from April 1989.

The Management Committee presents their annual report on the Annual Financial

Statements of the Association for the year ended 31 December 2016.

No matter which is material to the financial affairs of the Association and requires

disclosure in the financial statements has occurred between 31 December 2016 and the

date of the approval of the Annual Financial Statements.

The operating results and state of affairs of the Association are fully set out in the attached

Annual Financial Statements and do not, in our opinion require any other comment, save

for those mentioned below.

The financial results show that the Association has made a surplus during the current

financial year. The Management Committee expect that the Association will perform

adequately in the new financial year. The Association is expected to have sufficient cash

resources to meet its obligations.

Management Committee

Industry Represented Representative Organisation Note

Darrell Beghin SACRRAGroup Mark Seymour MicroFinance South Africa

Insurance Martin Kgoale Hollard Insurance Company

Insurance Hendrik Heyns Brolink (Pty) Ltd 1

Other Christopher Guy Harradine MBD Credit Solutions

Retail Apparel Hugh Wroe-Street Truworths Ltd 2

Retail Apparel Rene Moonsamy Edcon (Pty) Ltd

Retail Apparel Brendan Bayham The Foschini Group Ltd

Retail Furniture Eugene Ehlers JDG Trading Ltd

Retail Furniture Lambert Fick The Lewis Group

Secured Finance Leila Cassim Nedbank Ltd 3

Secured Finance Louise le Kay First National Bank Ltd 4

Secured Finance Paul Middleton ABSA Ltd

Telecommunications Riaan Smit Vodacom Ltd 5

Telecommunications Jacques Jardine Neotel (Pty) Ltd

Unsecured Finance Ian Wood Thuthukani Financial Services

Unsecured Finance Jean Rossouw Capitec Bank Ltd

Unsecured Finance Tracey Wheatley African Bank Ltd

Notes

1 Co-opted as per clause 9 of the Constitution

2 Treasurer

3 Vice Chairperson

4 Chairperson (Replaced Ian Wood)

5 Replacing Adrian Robson

The Management Committee of the Association during the year and to the date of this

report are as follows :

Page 9

Management Committee Report



Note 2016 2015

R R

Assets

Current assets 10 144 686 8 057 006

Trade and other receivables 3 348 215 300 232

Cash and cash equivalents 4 9 796 471 7 756 774

Total Assets 10 144 686 8 057 006

Equity and Liabilities

Capital and reserves 8 261 283 6 004 290

Retained surplus 8 261 283 6 004 290

Current liabilities 1 883 403 2 052 716

Trade and other payables 5 956 675 1 438 818

Short-term bank borrowings 6 3 973 724

Provisions 7 922 755 613 174

Total Liabilities 1 883 403 2 052 716

Total Equity and Liabilities 10 144 686 8 057 006

Page 10


Statement of Financial Position at 31 December 2016

Note 2016 2015

R R

Comprehensive income 8 12 732 403 11 845 753

Gross surplus 12 732 403 11 845 753

Other income 9 379 500 380 360

Audit fees (28 740) (24 295)

Employment costs (7 194 946) (5 633 651)

Administration expenses (4 453 483) (6 359 591)

Surplus from operations 1 434 734 208 576

Investment income 10 822 259 537 046

Surplus before taxation 2 256 993 745 622

Taxation 0 0

Surplus for the year 2 256 993 745 622

Other comprehensive income 0 0

Total comprehensive income for the year 2 256 993 745 622


Statement of Comprehensive Income for the year ended 31 December 2016

Page 11

Balance at 01 January 2015 5 258 668 5 258 668

Total comprehensive income for the year 745 622 745 622

Balance at 01 January 2016 6 004 290 6 004 290

Total comprehensive income for the year 2 256 993 2 256 993

Balance at 31 December 2016 8 261 283 8 261 283

Retained

Surplus Total

Page 12


Statement of Changes in Equity for the year ended 31 December 2016

Note 2016 2015

R R

Cash Flow from Operating Activities

Operating surplus before taxation 1 434 734 208 576

Adjustments for :

Changes in working capital 12 (530 126) 732 635

Increase / (decrease) in provisions 309 581 (9 771)

1 214 189 931 440

Cash flow from investing activities

Investment income 10 822 259 537 046

822 259 537 046

Net increase in cash and cash equivalents 2 036 448 1 468 486

Cash and cash equivalents at beginning of period 7 756 050 6 287 564

Cash and cash equivalents at end of period 9 792 498 7 756 050

Page 13


Statement of Cash Flow for the year ended 31 December 2016

Cash generated by investing activities

Cash generated by operating activities

1. Basis of preparation

1.1 Significant judgements and sources of estimation uncertainty

Critical judgements in applying accounting policies

2.

2.1 Cash and Cash Equivalents

Cash and cash equivalents includes cash on hand, demand deposits and other short-

term highly liquid investments with original maturities of three months or less. Bank

overdrafts are shown within borrowings in current liabilities on the statement of

financial position.

Page 14


These financial statements comply with International Financial Reporting Standards

applicable to Small and Medium-Sized entities.

In preparing the Annual Financial Statements, management is required to make

judgements that affect the amounts represented in the Annual 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

results in the future could differ from these estimates which may be material to the

annual financial statements.


Accounting Policies

Summary of significant accounting policies

The principal accounting policies used in preparing these financial statements are set

out below and are consistent with those used in prior years, unless otherwise

disclosed. The financial statements are prepared on the historical cost and fair value

bases as disclosed in these policies, using South African Rand, which is the

functional currency of the Association.

Management did not make critical judgements in the application of accounting

policies, apart from those involving estimations, which would significantly affect the

financial statements.

2.2 Financial Instruments

Initial Recognition

Page 15


Financial assets are recognised when the Association becomes a party to the

contractual provisions of the respective instrument. Such assets consist of cash, a

contractual right to receive cash or another financial asset, or a contractual right to

exchange financial instruments with another entity on potentially favourable terms.

Financial assets are derecognised when the right to receive cash flows from the asset

has expired or has been transferred and the group has transferred substantially all

risks and rewards of ownership.

The Association classifies financial instruments, or their component parts, on initial

recognition as a financial asset, a financial liability or an equity instrument in

accordance with the substance of the contractual arrangement.


Accounting Policies

The classification depends on the purpose for which the financial assets were

acquired. Management determines the classification of its financial assets at initial

recognition.

Financial instruments at fair value through profit or loss are financial assets held for

trading and/or designated by the Association upon initial recognition as fair value

through profit or loss. A financial asset is classified in this category if acquired

principally for the purpose of selling in the short term or if so designated by

management.

Loans and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. They are included in current

assets (trade and other receivables), except for maturities of greater than 12 months

after the balance sheet date which are classified as non-current assets.

The Association assesses at each balance sheet date whether there is objective

evidence that a financial asset or group of financial assets is impaired.

Financial liabilities are recognised when there is an obligation to transfer benefits

and that obligation is a contractual liability to deliver cash or another financial asset

or to exchange financial instruments with another entity on potentially unfavourable

terms. Financial liabilities are derecognised when they are extinguished, that is

discharged, cancelled or expired.

2.3 Provisions

2.4 Leases

2.5 Employee benefits

Short-term employee benefits

Page 16



Accounting Policies

Leases in which substantially all the risks and rewards of ownership are retained by

the lessor are classified as operating leases. Payments made under operating leases

(net of any incentives received from the lessor) are charged to the surplus or deficit

on a straight-line basis over the period of the lease.

The cost of short-term employee benefits, (those payable within 12 months after the

service is rendered, such as paid vacation leave, bonuses, and non-monetary

benefits), are recognised in the period in which the service is rendered and are not

discounted.

Provisions for bonuses and leave pay are recognised when: the Association has a

present legal or constructive obligation as a result of past events; it is probable that a

transfer of economic benefits will be required to settle the obligation; and the

amount can be reliably estimated. Provisions are not recognised for future operating

losses.

Provisions are measured at the present value of the amount expected to be required

to settle the obligation using a pre-tax rate that reflects current market assessments

of the time value of money and the risks specific to the obligation. The increase in

the provision due to passage of time is recognised as interest expense.

2.6 Revenue recognition

- the amount of revenue can be measured reliably

- it is probable that the economic benefits associated with the transaction will

flow to the Association;

- the stage of completion of the transaction at the end of the reporting period can

be measured reliably; and

- the costs incurred or to be incurred in respect of the transaction can be measured

reliably.

A - Membership and Project Fees

B - Interest income

Interest income is recognised using the effective interest method.

Membership and Project fees are charged in advance on an annual basis on the

commencement of the Financial year. New memberships are calculated on a pro-

rata basis for the remainder of the year.

Page 17



Accounting Policies

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.

The outcome of a transaction can be estimated reliably when all the following

conditions are satisfied:

2016 2015

R R

3. Trade and other receivables

Trade receivables 233 451 70 164

Deposits 6 598 6 598

Value Added tax 89 471 201 944

Other receivables 18 695 21 526

348 215 300 232

Trade receivables due now 43 572 (4 353)

Trade receivables past due :

30 days and less past due 0 0

60 days and less past due 7 386 0

More than 60 days past due 182 493 74 517

233 451 70 164

4. Cash and cash equivalents

Cash and cash equivalents consist of:

Current account 1 008 843 1 285 223

Savings accounts 8 787 628 6 471 551

9 796 471 7 756 774

Page 18



Notes to the Annual Financial Statements

2016 2015

R R

5. Trade and other payables

Expense accruals 40 704 631 770

Income received in advance - BusCRI Project 915 971 807 048

956 675 1 438 818

6. Short term bank borrowings

Business credit card 3 973 724

3 973 724

7. Provisions

809 804 613 174

Provision for leave pay 112 951 0

922 755 613 174

Page 19




Provision for salary bonus

Provision for salary bonus

The provision for bonuses is payable in January of the succeeding financial year.

2016 2015

R R

8. Comprehensive income

Income from trading activities 12 732 403 11 845 753

12 732 403 11 845 753

9. Other Income

379 500 379 500

Recoveries 0 860

379 500 380 360

10. Investment income

Interest received from financial institutions 822 259 537 046

822 259 537 046

11. Taxation

Preferential tax treatment is designed to assist non-profit organisations by

augmenting their financial resources. The conditions and requirements for an

organisation to be approved as a tax exempt association are contained in section 30B

of the Income Tax Act, 1962 (Act 58 of 1962) while the rules governing the

preferential tax treatment of associations are contained in section 10(1)(d)(iv) of the

Income Tax Act, 1962 (Act 58 of 1962). Section 10(1)(d)(iv) provides for the exemption

from normal tax of certain receipts and accruals of approved associations. Certain

receipts and accruals from trading or business activities will nevertheless be taxable.

Page 20




Income Received for Special Projects (Automation and

Project Evolution)

2016 2015

R R

12. Changes in working capital

(Increase) / Decrease in accounts receivable (47 983) 922 800

(Decrease) in accounts payable (482 143) (190 165)

(530 126) 732 635

13. Events after the reporting period

The Chairperson and the Treasurer are not aware of any events that occurred since the

Financial Reporting date that warrant disclosure in these Annual Financial

Statements.

Page 21




2016 2015

R R

Operating costs 11 496 907 12 017 537

Accounting Fees 36 753 26 629

Advertising and Promotions 0 21 179

Audit Fees 28 740 24 295

Bank Charges 2 344 3 630

Communications 19 419 88 561

Office Consumables 10 400 9 647

Computer Expenses 468 505 165 543

Data Hub Operating Expenses 1 573 903 1 333 128

Employment Costs 7 194 946 5 633 651

Functions 31 584 39 806

Gifts 12 088 7 666

Insurance 30 001 15 159

Lease Rentals 358 177 354 995

Legal Fees 487 923 467 426

Contracting Fees 69 315 744 387

Printing and Stationery 99 117 70 684

Repairs and Maintenance 7 040 5 670

Staff Training 57 589 36 374

Small Asset Purchases 51 739 279 451

Special Projects (Automation and Project Evolution) 868 037 2 608 746

Telephone and Fax 10 085 16 750

Travel - Local 78 014 63 140

Web Hosting Costs 1 188 1 018

BusCRI operating costs 180 262 0

BusCRI Project expenses 180 262 0

11 677 169 12 017 537

This Statement does not form part of the Financial Statements and is unaudited.

Page 22


Details of operating costs for the year ended 31 December 2016

2016 2015

R R

Surplus before taxation 2 256 993 745 622

Current year taxable income 2 256 993 745 622

Tax loss brought forward 0 0

2 256 993 745 622

Tax loss carried forward 0 0

Net taxable income 2 256 993 745 622

Current taxation 0 0

This Statement does not form part of the Financial Statements and is unaudited.

Page 23


Taxation Calculation for the year ended 31 December 2016

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