business operational review - own haven · target of 20% per annum, reflecting far greater resident...
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business reports05 CHAIRPERSON’S REPORT06 MANAGING DIRECTOR’S REPORT 09 CFO’S REPORT
OPeRATiOnAL reVIeW10 HIGHLIGHTS11 PROPERTY PORTFOLIO12 OPERATIONAL REPORT13 COMPANY STRUCTURE14 TECHNICAL MAINTENANCE 14 RELATIONSHIP MANAGEMENT
DeVeLOPMenT15 COMMUNITY DEVELOPMENT17 OWN HAVEN PROPERTY MANAGEMENT
CORPORATe GoVerNANCe18 BOARD OF DIRECTORS
FinAnCiAL stAteMeNts21 AUDITOR’S REPORT22 STATEMENT OF FINANCIAL POSITION23 STATEMENT OF COMPREHENSIVE INCOME 24 STATEMENT OF CHANGES IN FUNDS25 STATEMENT OF CASH FLOWS26 ACCOUNTING POLICIES
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bOARD of dIreCtors
H Scott Vice chairperson
AL WiSemAn Managing Director
H BASSingtHWAigHte chairperson
Vg mkAzA PA nAudetS grimmiuS
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ChAiRPeRsOn’s reportIt is with humility and a sense of achievement that I report on the activities of Own Haven Housing Association during 2015 as my tenure as Chairperson comes to an end. Within a challenging context, Own Haven remains steadfast in delivering on its mandate of providing well-located, sought-after rental accommodation.
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Reflecting on the period under review, Own Haven was impacted most significantly by local events rather than international realities as experienced in previous years. At a macro-economic level, the currency exchange free-fall of the ZAR following the unceremonious removal of Finance Minister Nene again highlighted the critical importance of ridding Own Haven’s balance sheet of any remaining Euro-denominated liabilities.
I must acknowledge the grace and pragmatic approach adopted by our guarantors Staedion and Ymere in facilitating a refinancing solution for the residual Euro loans held with funding partner, Dutch International Guarantees for Housing (DIGH).
We look forward to a medium-term stabilisation and stimulus of the local funding horizon to provide the requisite loan-funding element of future development initiatives as and when the SHRA subsidy processes are reconstituted and functional.
At a local level, the apparent inability of Buffalo City Municipality to provide basic services, such as regular refuse removal, has had a direct impact on our tenants with our residential complexes often being buried in uncollected garbage.
Pursuit of the Board-approved trajectory of growth of its subsidised rental portfolio continues with several further development opportunities being secured to accommodate a slow but steady delivery pipeline in due course. One such example was finalisation of a Land Availability Agreement with the Eastern Cape Department of Human Settlements for a significant land parcel in close proximity to the East London IDZ.
However, project delivery is still hampered by an unworkable sector funding model caused primarily by the non-indexing of subsidy instruments to keep abreast of ever-increasing construction costs. Reflecting on operational performance, the ever-improving organisational results and consistent performance is very encouraging, for which management must be complimented.
Critical to Own Haven’s functioning has been retention of its conditional accreditation status albeit in an environment where the regulator, SHRA, has been largely dysfunctional, noting that such status still ensures ability to access Restructuring Capital Grant subsidies, if required.
Even though the sector context cannot be described as conducive or supportive, Own Haven has pressed forward to achieve its developmental objectives.
Efforts have continued to secure further development opportunities with negotiations at an advanced stage to secure the Walmer Cosmo project in Port Elizabeth that will ultimately accommodate 630 subsidised rental units.
It is anticipated that the resuscitation of the SHRA in due time will provide opportunity to apply for project packaging funding to advance the Rustenburg development opportunity to subsidy submission readiness.
In terms of business expansion, the registration and operationalisation of the Own Haven Property Management Company as a 100%-owned subsidiary ensures compliance of our 3rd party management activities that can now be proactively pursued.
Finally, during this period Own Haven has focused on developing active relationships with its tenant base. The positive results are evidenced in a sustained reduction in tenant movements towards a target of 20% per annum, reflecting far greater resident coherence and community stability.
Our efforts to mainstream our community development activities into the day-to-day processes of Own Haven continue, with several of the programmes re-assessed and further internalised - impacting directly on how we do business.
As my tenure at Own Haven draws to a close, I reflect on what has been achieved during often challenging times and against almost insurmountable odds.
However, with the steadfast support of my Board colleagues, we have achieved what many thought was not possible.
My thanks to my fellow Directors for their wisdom in guiding Own Haven to becoming a significant social housing sector role-player, to Andrew Wiseman and Ryan King for their determination to negotiate a long-term restructuring solution with DIGH, and to management for leading your teams to realise ever-improving performance results as reflected in the audited financial statements.
I wish Own Haven well and every success as it embarks on the next chapter of its journey to provide sought-after well managed homes for those in need.
MACRO enViROnMenT
OPeRATinG COnDiTiOns
ACCReDiTATiOn
OuTLOOK AnD PROsPeCTs
CORPORATe ResPOnsibiLiTY
APPReCiATiOn
Hanlie Bassingthwaightechairperson
Own Haven has remained active within the social housing sector context participating in several policy debates and engagements, most notably with the COO and Acting Director General of the National Department of Human Settlements towards the stabilisation and re-alignment of the sector funding regime.
Following the successful restructuring of 60% of Own Haven’s Euro-denominated loan portfolio during 2014 realised with the support of guarantor Eigen Haard, a priority for 2015 was to completely insulate the organisation from the effects of the devaluation of the South African Rand against the Euro.
The final piece of the restructuring puzzle was to find a structural solution for the DIGH-financed Euro loan book.
Deliberations with the Trust for Urban Housing Fund (TUHF) tabled the scenario of including the ZAR-denominated DIGH portfolio as a holistic solution to enable final closure of the Dutch chapter for Own Haven.
While the TUHF offer was finally not accepted by DIGH, the engagements brought discussions to a crescendo with a face-to-face meeting of all involved roleplayers and guarantors being held in the Netherlands to plot out a palatable solution for all.
Once the clinical approach of the DIGH-appointed transaction advisors had failed, through calling on personal relationships, a deal was finally brokered that will see Own Haven funding, from reserves and the sale of its interest in Kenwick Close, the agreed-to residual ZAR liability. The arrangement was only made possible through the generous concessions of the guarantors, particularly Staedion, to reach a solution at last.
A reflection on 2015 highlights several hard-fought victories that were secured
to ensure that Own Haven is well-positioned to move into the next chapter
of managed growth and expansion.
MAnAGinG DiReCTOR’s report
2015 : LiGhTs, CAMeRA, ACTiOnseT FOR GROWTh
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A seCTOR ROLe-PLAYeR
A FinAnCiAL FuTuRe
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The resultant strategic plan for Own Haven is firmly underpinned by the realisation of a growth trajectory primarily focussing on the delivery of subsidised social rental stock.
Measured progress was made during 2015 in securing development opportunities for the future to be realised as and when the funding regime and subsidy structuring challenges have been resolved.
In this regard, the year culminated in the signing of a Land Availability Agreement with the Eastern Cape Department of Human Settlements for the well-located parcel of land adjacent to the East London IDZ totalling some 19 ha that is earmarked for integrated, mixed use development.
Steady progress has been made with the Rustenburg Municipality where policy considerations including a rates rebate are being dealt with to facilitate signature of a land sales agreement for the allocated infill site that will ideally accommodate approximately 100 units.
Exciting progress has been made with the review and packaging of the Walmer Cosmo development opportunity in Port Elizabeth. It is envisaged that the Own Haven social rental element of 630 units will serve as catalyst for the overall integrated project of up to 1200 residential opportunities.
The project has progressed to the stage of initial submission to the SHRA. Subject to funding resolution, construction could commence by 2016 year-end. Critical to any delivery is securing an equity funding partner. In this regard, contact has been made with the National Housing Finance Corporation (NHFC) within the context of possibly refinancing the remaining ZAR-denominated DIGH loans in the future to consolidate long-term financing with one banking partner.
These initial interactions have facilitated a review of Own Haven by the NHFC with all indications pointing to a desire to extend funding facilities to Own Haven for bankable projects within its expansion programme.
The secured development opportunities will enable Own Haven to respond proactively as soon as the funding context becomes conducive to achieve requisite hurdles and indicators.
Own Haven’s tenant engagement culture has matured from one of aggressive debt collection during 2014 to focusing on developing meaningful tenant relationships while reducing complaints by addressing them at source.
The structured role that the Rental Housing Tribunal can and does play in the tenant engagement process has also matured to one of proactive engagement with Own Haven management to identify possible process weaknesses towards continuous improvement.
It is argued that one measure of tenant satisfaction is rental payment trends. Here significant improvements are evident with typically 65% of tenants paying in advance on a monthly basis.
Further significant improvements have also been made in the physical stabilisation of the tenant base, measured as the number of monthly mutations, with figures reducing to a consistent norm of 20% per annum measured over the managed portfolio of 1500 units.
The streamlining and consolidation of processes following the unbundling of the Client Services function during 2014 has been well grounded in a review of all systems and procedures. This is particularly relevant when reflecting on the development pipeline that will demand improved efficiencies and expansion of the satellite model to harness decentralised opportunities as they present themselves.
2015 saw the operationalisation of the Own Haven Property Management Company with it achieving accreditation with the EAAB to ensure compliance of its management of 3rd party rental stock. Growth of this business is seen as a niche opportunity for the Group to pursue.
Own Haven brand awareness continues to grow as reflected in the increase in accommodation enquiries.
Regarding active marketing, the power of ‘word of mouth’ as a marketing instrument has been borne out in the increased number of referrals received from tenants. This again emphasises the importance of offering a sought-after product in all respects that the organisation can be proud of.
My sincere thanks to the Board, and in particular, our outgoing Chairperson, Mrs Hanlie Bassingthwaighte, for standing by me when adopting a principled and pragmatic stance in dealing with the DIGH refinancing arrangements; to our CFO, Ryan King, for his support in negotiating with TUHF to secure a firm re-financing offer that ultimately served as trigger to approach the guarantors directly, and for his sound financial oversight of the organisation.
My gratitude to the management team for overseeing the daily operations of Own Haven while fostering a culture of accountability and continuous improvement; and finally, to all the staff for their commitment to achieving the short-term organisational goals set to realise our strategic objectives to take Own Haven confidently forward to deliver on its mandate.
Andrew WisemanManaging Director
A DeVeLOPMenT PiPeLine
TenAnT enGAGeMenT
ORGAnisATiOnAL MATTeRs
COMMuniCATiOns AnD MARKeTinG
APPReCiATiOn
oWn haVenProviding sought-after, well managed rental homes.
VisiOnOwn Haven Housing Association was set up to provide affordable, quality rental housing with its
VISION:
to be recognised as the company that delivers sustainable communities through high quality affordable rental homes
MIssIoNOwn Haven Housing Association is committed to being the leading provider of new and refurbished rental homes through
• realising affordable good quality rental housing products located in decent
living environments;
• Securingviablelocationsfordevelopmentwithlinkstopublicfacilitiesand
economic opportunities;
• Fosteringarapportwithtenantsandattractingtherighttenants;
• Growingavibrant,efficientandviablecompanyofferingqualityservices;and
• Recruitingappropriatelyskilledstaff.
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Revenue generated for the year under review was in line with expectation, with rental streams increasing by an effective 4,5% when compared to earnings levels of 2014.
The year was very much a time during which we completed a formal process of introspection and reflection, where we acknowledge that service delivery and a healthy tenant base is key to us being successful within the sector. This too will provide us with the base to grow our business over the medium term.
2015 also involved us splitting out our third party management function in its entirety. This involved us setting up a wholly owned subsidiary for this purpose and registering with the EAAB. Growing this business commercially is an opportunity we see within both local and national markets, where landlords and local authorities alike are looking to outsource the management of their residential stock.
With the group adopting a strategy of consolidation over the past 2 years, significant investments have been made in streamlining operations to effectively manage our existing property base.
As a result, we have seen increases in direct property expenses being limited to 8% over the year while total group costs increased by 1,5%. This demonstrates that internal efficiencies were achieved.
Utility costs remain a stress point for us as an organisation. Local authority incapacity and inability to effectively administer on their service delivery targets affects us directly as a social housing delivery agent with increases in service charges and taxes levied well above inflation, leaving very little room to manoeuvre.
Strides have however been made with the Nelson Mandela Metro granting a 50% rebate on our rates expenses for the first time during 2015 benefiting us greatly.
During 2015, the Rand weakened against the EURO by 25%, closing out the year at ZAR 16,95. The general degeneration of our currency over the past 4 years had a catastrophic impact on Own Haven’s liquidity abilities and solvency capabilities.
Negotiations were therefore concluded during the year whereby ALL remaining Euro denominated loan contracts with DIGH were refinanced and converted to local currency loans. This facilitated us being able to peg the liabilities and furthermore, allows our Dutch guarantors to exit their surety exposures by the end 2016/2017.
I have to acknowledge the efforts of Mr Tjeerd Grimmius and Mr Erik Beijer in facilitating this process ‘paving the way’ for our exchange rate risk to finally cease.
Looking ahead to 2016/2017 I believe there are 2 critical items which the organisation needs to manage through and deliver upon.
SAFE GUARD ITS CURRENT PORTFOLIO
Whilst critical mass of units under management is yet to be achieved, it remains of utmost important that we continue the current service delivery patterns of which we are so proud.
Our vacancy rates, collection patterns and investments spend will be monitored closely so that, operationally, we are poised to take on new business.
SUSTAINED GROWTH
Social Housing is currently the only sustainable mechanism whereby Government can deliver quality housing for people within the inner cities. The sector at large has been crippled over the past 2 years which has led to very little growth nationally.
Own Haven, during this time, has used the opportunity to build a robust pipeline to be in a position to roll out new units in the 2017 to 2020 financial years - i.e. once the industry is normalised.
It is key that we grow strategically and sustainability, and that we learn from past experience. All role-players in the sector, I believe, recognise that project roll-out is key to Government’s ability to deliver on its commitment to provide homes.
Looking back at 2015, I am thrilled to be in a position to confirm that, for the very first time in its history, the group is no longer exposed to any currency risk whatsoever. I suggest that 2015 was a pivotal year for the company, its staff and tenants. I am looking forward very much to be a part of the next exciting chapter where more housing is finally delivered to the people that are most in need.
CFO’s report
2015 was a pivitol year for own Haven
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ReVenue
exPenses
FOReiGn exChAnGe ResuLTs
LOOKinG AheAD
TO COnCLuDe
Ryan KingChiefFinancialOfficer
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VACANCIES
CollECtIoNrAtE
Identification of Walmer Cosmo Development opportunity
revitalisation of the Haven Hills South vegetable gardenexpANsIoN
of GreeNING proGrAMMe At
CoMplexes
REFINANCING COMPLETE for all euro LoansOperationalizationofOwnHavenPropertyManagementandgrowth of third party portfolio
Landavailabilityagreementsignedwitheastern cape Department of human SettlementsforWestbankland
hiGhLiGhTs 2015
AGe ANAlysIs
of monthly rent-roll of R4,478 million
1.73%
99%
PROPeRTY portfolIo
sOCiAL / subsiDiseD ACCOMMODATiOnThe1095subsidisedrentalunitswithintheOwnHavengroupmakeupthemajorityofthepropertyportfolio.Fivecomplexes-ReservoirMews,SouthernwoodSquare,Ekuphumleni,SunriseViewandOewerrusinEastLondonandthethreeinPortElizabeth-ParkTowers,MilnerCourtandTalanaCourt,provideaffordableaccommodation to those in need. All the accommodationis centrally located in the respective towns and close to jobopportunities,educational,recreationalandmedicalfacilities.
the remaining 85 middle/higher income commercial rental units within three complexes are all situated in East London, namelyEriko Court, Skyview and Kenwick Close, providing modernaccommodationtoyoungprofessionalsandfamilies.
COMMeRCiAL ACCOMMODATiOnThe Own Haven Group owns commercial office space located in Port Elizabeth, offering centrally located offices to businesses. In addition, the 5 business units situated at Haven Hills South in East London provides basic commercial space to small entrepreneurs servicing the local community, with 1 unit being a community hall available for hire by the local community.
SuBSidiSed AccommodAtion
numBer of unitS BAcHeLor 1 Bed 2 Bed 3 Bed
Ekuphumleni 24 4 16 4Sunrise View 108 2 104 2Oewerrus 126 28 70 28Resevoir Mews 430 86 172 172Southernwood Square
249 57 78 114
Park Towers 136 136Talana Court 12 1 8 3Milner Court 10 10
1095 280 302 479 34
commerciAL AccommodAtion
numBer of unitS BAcHeLor 1 Bed 2 Bed 3 Bed office
Skyview 61 11 50Eriko Court 8 1 7Kenwick Close 16 5 9 2Market Plaza 5 5Park Towers Commercial
10 10
100 0 6 27 52 15
SNAPSHOT OF ProPerty PortfoLio
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2015 saw Own Haven investing a considerable amount into its existing properties - beautifying the complexes as well as installing pre-paid water meters at Eriko Court and Ekuphumleni.
Own Haven’s Utility Specialist, Sandra Schroeder,continues with the roll-out and installation of pre-paid water meters at our local complexes, with theassistance of the Client Services, Maintenance andOperationsDepartments.
With the establishment of our very own nursery in2014, Own Haven implemented a greening projectin2015underthewatchfuleyeofourCFO,whoisakeengardener.StaffintheOperationsDepartmentwereresponsibleforrollingouttheprojectsandtheycontinueto maintain and implement additions to our gardens.The results of the beautification at Reservoir Mews,Southernwood Square and Eriko Court is profound,givingthecomplexesa“homely”settingforourexistingtenantsandappealingtoourprospectivetenants.
this is also testament to our slogan:PROVIDING SOUGHT-AFTER,WELL MANAGED RENTAL HOMES.
the number of permanent staff remained the same compared to the prior year,with 45 staffmembers employedwithin theOwnHavenGroupofcompanies.
WiththeoperationalisationofOwnHavenPropertyManagementduring2015,fivestaffmembersdirectlyinvolvedinmanagingthethirdpartyportfolioweretransferredtotheentity.
Atthesametimethreestaffmembers,basedinPortElizabeth,weretransferred to sa solid estates (pty) Ltd as they are directly involved in managingParkTowerswhichisownedbytheentity.
IntervolveemploysonestaffmemberwhoisresponsibleforcommunitydevelopmentandtenantinteractionfortheOwnHavenGroup.
Own Haven Housing Association 36Own Haven Property Management 5SA Solid Estates 3Intervolve 1
TheOwnHavenGrouphadastaffturnoverof5during2015,excludingthe7transfersofstafftotheentitieswithinthegroup.
TheFinanceManager,JustinWittstock,andOperationsManager,KarenScott,continuetooverseetheirowndepartmentsaswellas thatof theClientServicesDepartment,withgreatsuccess.TarynCloete,OwnHaven’sMaintenanceManager,overseestheTechnicalMaintenanceDepartmentandsuccessfullycompletedanumberofprojectsduring2015.
although staff turnover is disruptive to any business our longstanding staffmembershavemadeconsiderablecontributionsovertheyears.
AndrewWiseman,OwnHaven’sManagingDirector,hasbeenwiththecompany for 14 years and has made a positive impact to the success ofthecompany.
PatriciaBomvana,whohasbeenwithOwnHavenHousingAssociationfor12years,hastakencareofcleaningourofficesandmakingsuretea&coffeeisonhandforstaff.Shehastrulybeenanassettothecompanyandhercommitmentanddedicationcannotbequestioned. KarenScotthasbeenatOwnHavenfor10yearsandhasgrownwithinthe groupbeingappointedasOfficeManager and thenpromoted toOperationsManagerin2010.Againanotherdedicatedstaffmemberwhogoesaboveandbeyondtodeliverinherrole.
ReflectedinthetablebelowisasummaryofthelengthofserviceofOwnHavenstaff:
Years Number of Staff0 – 4 years 355 – 9 years 710 – 14 years 3
MARKETING
Therehasbeenasignificantchange in theway thatourprospectivetenantssearchforaccommodation.ThemajorityofenquiriesarenowwebbasedviaProperty24andGumtreeaswellasourownwebsite.
Inthepastthelocalnewspaperwasthestartingpointwhenitcameto advertising our vacant units. However, with the trend movingto electronic marketing, we will need to align our marketing plansaccordinglyinthefuture.
COMMUNICATION
Own Haven embarked on a drive to “get to know our tenants” andthrough this process communication has improved considerably resulting in staff having a good relationship with our tenants.CommunicationiskeyinkeepingtenantsinformedofourplansaswellaswhatisexpectedofthemwhenlivinginanOwnHavencomplex.Itisalsokeyfortenantstocommunicatewithus,whenthingsgowrong,sothatwecanrespondtotheirneeds.
Westrivetoprovideaclean,secureandharmoniousenvironmentforallofourtenantsandopencommunicationchannelsgoalongwayinOwnHavenachievingthis.
nelson Mandela international Day (or Mandela Day) is an annual internationaldayinhonourofNelsonMandela,celebratedeachyearon18July,Mandela’sbirthday.Itisaglobalcalltoactionthatcelebratestheideathateachindividualhasthepowertotransformtheworld-theabilitytomakeanimpact.
On17July,OwnHavenstaffmadetheirMandelaDaycontributionbyparticipating in a st georges road clean-up campaign and a donation offunds,foodandtoystotheEastLondonChildandYouthCareCentre.
OPeRATiOnAL reportsTAFFinG COMMuniCATiOns AnD MARKeTinG
sOCiAL ResPOnsibiLiTY
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BoArD oF DIrECtorS
MANAGING DIRECTOR
CHIEF FINANCIAL OFFICER
PROPERTY MANAGER
PROPERTY MANAGERKNYSNA
PORTFOLIO MANAGER PORT ELIZABETH
CLEANER
COMPAnY struCture
oPErAtIoNS MANAGEr ClIENt SErVICES DEPt. FINANCE MANAGEr
SENIOR BOOKKEEPER
RELATIONSHIP MANAGER X2RECEPTIONIST
COMMUNITY DEVELOPMENT OFFICER
SENIOR LETTING MANAGER
LETTING MANAGER
OFFICE CLEANER X2
PROPERTY MANAGER THIRD PARTY
SENIor rElAtIoNSHIP MANAGEr
OFFICE MANAGER
CREDITORS CLERK
COMPLEX SUPERVISOR
CLEANING SUPERVISOR
GARDEN TEAM LEADER
FINANCECONTROLLER
CREDIT CONTROLLER
BOOKKEEPER
UTILITY SPECIALIST
TECHNICAL ADMINISTRATOR
MAINTENANCE SUPERVISOR
MAINtENANCE MANAGEr
HANDYMAN X2
GENERAL WORKER X3
SENIOR HANDYMAN
GENERAL WORKER X3
GENERAL WORKER X2
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TeChniCAL MAINteNANCe Withthemandateofproviding“sought-after”rental
homes, the Maintenance Department’s focus wasplaced on the general upkeep of the complexes,bothinternallyandexternally.VariousPreventativeMaintenanceprojectswerecarriedoutin2015asperourPreventativeMaintenancePlan.
PreventativeMaintenanceprojectscompleted:• ResurfacingofOewerrusdriveway• Replacementofcarpetsandcupboardsat
Oewerrus,SunriseViewandEkuphumleni• HeighteningofEkuphumleni’sboundarywalland
installationofapedestriangatewithpinpadforenhanced security
• ConstructionofanewfrontwallatSunriseView• Installationofprepaidwatermetersat
EkuphumleniandErikoCourt• BagwashingofOewerrusboundarywall• RepaintingofErikoCourtexterior
• ResurfacingofErikoCourtdriveway• WaterproofingofSouthernwoodSquaretower• Installationof430hotwatermetersatReservoir
Mews
A totalofR1200822wasspentonPreventativeMaintenance projects during 2015, marking asignificantincreaseinprojectscarriedoutcomparedto2014whereatotalofR508470wasspentonPreventativeMaintenanceprojects.
A total of R495 315 was spent on day-to-daymaintenanceacrossallthecomplexeswithatotalof3861jobcardsclosedduringthecourseoftheyear.
Focussingontheupkeepofourcomplexesthroughourday-to-dayandPreventativeMaintenancePlan,weareableto“providesought-after,wellmanagedrentalhomes”.
ReLATiOnshiP MANAGeMeNtThe Client Services Department, which consists of the relationshipmanagementstaffandlettingstaff,hascontinuedtobuildonstabilisingOwnHaven’stenantbasebygettingtoknowitstenants.
TheSeniorRelationshipManagerandSeniorLettingManager,reportingto the Finance Manager and Operations Manager respectively, headuptheirrespectivefocusareasensuringweprovidethebestpossibleservicetoourcurrentandprospectivetenants.Thewellnessofourtenantbaseisguagedonmonthlytenantturnoveraswellasthenumberofvacancies.Theresultsshowanaverageof29tenantsgivingnoticemonthlywiththemainreasonsbeingrelocation,affordabilityand“out-grown”(boughtahouseormovedinwithfamily),allofwhichareoutofOwnHaven’scontrol.
Vacancy levels have also stabilised with an average vacancy level of1.73%achieved over the period. This is a great achievement by thelettingstaffbetteringthevacancylevelduring2014andthetargetof2%.Lynn Wood and her team need to be congratulated on this outstanding achievement.
Asaresultofourcontinuedeffortsonbuildingrelationshipswithourtenants,OwnHaven’saccommodationhasbecomesought-after,withprospectivetenantspayingdepositswellinadvancetosecureaunit,asandwhenavailable,inanOwnHavencomplex.
During 2015 the Technical Maintenance standards within the Department were enhanced and it proved to be a very busy and productive year.
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COMMuniTY deVelopMeNt
The Happy Hearts soup kitchen initiative is showing promise of growth with several community members coming on board as volunteers to continue with Own Haven’s serving on a Tuesday. Amalinda Superspar is still providing for and running their serving day on a Thursday. We are grateful to the Superspar in their response to the ever-growing need within the community by increasing the amount of soup and bread they serve each week. We have also been receiving bread and ingredient donations to reduce our monthly expenses.
The growing numbers attending each week bears testimony to our answering a need in the community.
We successfully constructed and opened our netball court/multi-purpose hard surface at the Reservoir Mews complex and demarcated a netball area in the parking area at Southernwood Square.
The recreational areas have been well-received. A highlight was an inter-complex netball tournament that was facilitated by the tenant netball focus group. We hope to expand the tournament during 2016
to include further complexes, ideally including complexes managed by our sister SHI organisations too.
The long-term sustainability of the Homework Centre initiative has been a concern. However, I am pleased to report that very encouraging discussions have been held with two local school headmasters who are very keen to establish a steering committee to assist and guide this vital project.
Reading has been identified as an issue of concern amongst the learners attending our centre. Again, the headmasters have expressed a desire to share their schools’ successful reading programme with our Homework Centre. This is a very positive step for our centre and would take our education programme to a new level of sustainability.
The year under review marked the 4th year of our soccer tournament. 16 teams participated in the tournament and they thoroughly enjoyed themselves. In the end, Stars took the winning trophy, and FC Classics, a team made up of Reservoir Mews youth, were the runners up.
Acknowledging the three broad focus areas of Society, Ecology and Economy of the Board-approved Community Development Framework, we have continued to implement programmes and initiatives that align to these mandates.
sOCieTY
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Below: Beautiful cabbages grown in the Own Haven Housing Association Veggie garden project
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During 2014, in an effort to get tenants to understand the importance of recycling, our Reservoir Mews and Southernwood Square complexes were included in the “All Hands On Waste” initiative of BCM. However, BCM’s commitment to the initiative beyond the initial pilot faltered with no sustainable plan in place.
Rather than pursuing recycling objectives, efforts were directed towards litter reduction and encouraging the use of the refuse facilities provided within the various complexes.
Our Community Garden Project, based at Oewerrus was initially started in 2012. Application for Lotto funding was made during 2015 and a grant of R 300k secured to upgrade the garden infrastructure, plant an orchard and purchase a vehicle to support produce distribution.
The three main objectives of the garden initiative are providing food security for the broader community, generating organic produce, and ultimately becoming sustainable.
To date, a total of 4000 seedlings have been planted and harvested. Spinach, beetroot, cabbages and onions are the most popular, and also the easiest to produce.
Our aim is certainly to ultimately become self-sufficient, with tanks to harvest rain water installed and an organic worm farm introduced.
We current supply produce to our Happy Hearts local soup kitchen, Own Haven tenants as incentives and sell produce to cover operating costs. News about the garden is certainly spreading and support of the initiative is growing.
The project has been an enabler creating opportunities for staff to interact with our tenant base as well as the broader community on a more intensive basis thereby paving the way for better relationships between us as landlord, and our customers.
A special word of gratitude to Sharon du Preez and David Ngegama who have spent enormous amounts of time and effort in rolling out and implementing the programme. Both have led from the front, been diligent, and delivered far more than we ever committed to achieve.
Plans for the future include identifying a commercial distribution channel where produce can be sold, ensuring a return to reinvest and restock on a continual basis.
Although only able to offer to a limited number of tenants at a time, our computer training course has proved to be popular. The course equip students to use Microsoft Word, internet and email at an introductory level with them receiving attendance certificates upon completion of the course.
Fundraising remains challenging. During 2015 we were able to expand our donor list to include, Hometech, K Wittstock, Maclear Stationers and Visible Cleaning. We have also received a few once off cash donations, as well as goods donations from Nicks Food Spar towards our soup kitchen project.
In addition to securing further funding partners, it is planned that Own Haven contributes a fixed amount per tenant per month to consciously stimulate community mainstreaming activities recognising the value and importance of having a connected participative tenant community.
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eCOLOGY
eCOnOMY
FunDinG PARTneRshiPs
our aim is to ultimately become self-sufficient.
We supply produce to ourHAPPy HeArtSsoup kitchen
during 2015 we were able to
expand our donor list to include
Hometechk Wittstockmaclear StationersVisible cleaning
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OwnHavenPropertyManagement,asubsidiarywithintheOwnHa-venGroup,wasestablishedin2014tomeetcomplianceregulationsinmanagingthirdpartyproperties.Thecompanyoperationaliseditsactivitiesduring2015withall thirdpartyproperties loadedontoourpropertymanagementsystem,MDA,throughwhichOwnHavenProp-ertyManagementgeneratesitsmanagementfees.
Alignedto theoperationalisationof thecompanyabrandingexercisewascarriedoutwhichresulted in thedevelopmentofanewidentityforOwnHavenPropertyManagement.ThenewOwnHavenPropertyManagement logowasapplied toallmarketingandprintedmaterialwith theheadofficeblockdisplaying the logoalongside thatofOwnHavenHousingAssociation.
Withtheoperationalisationofthecompany,the5staffmembersinvolvedinthemanagementofthethirdpartypropertiesweretransferredfromOwnHavenHousingAssociationtoOwnHavenPropertyManagement.
Atyear-endOwnHavenPropertyManagementmanaged6SectionalTitle Schemes and Home Owners Associations, which includes theprestigiousCastlecomplexinBonnieDoon.
OwnHavenPropertyManagementcontinuedtomanagethecomplexesofGonubiePalmsandLagoonViewonbehalfofaDutchinvestor,managingthetenantrelationshipsofthe277residentswithinthesecomplexes. Furthertothisduringthelastquarterof2015anumberofmandateswere secured resulting in the total number of private landlord unitsunder management increasing to 305. Own Haven Property Man-agementextendeditsactivitiesinPortElizabethwithanewmandatesecured. Thedrive is to continuegrowing theOwnHavenPropertyManagementportfolioasopportunitiespresentthemselves.
ProPertieS under mAnAgementGonubie Palms Flats St Georges Gardens Body CorpLagoon View (Knynsa) Flats Gonubie Palms HOAThe Castle HOA Kingsgate Court Body CorpThe Castle Body Corporate Moselle Court Body Corp
OPeRATiOnALisATiOn
bRAnDinG
sTAFFinG
ThiRD PARTY PORFOLiO
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BoArd of DiReCTORs
The Board consists of 6 directors of which5 are non-executive members. The Boardmeets quarterly and operates in terms of a formalwrittencharter.
New appointments to the Board aresubmitted to the full Board for approval prior to appointment, with the chairperson beingelectedonanannualbasis.
the Board is ultimately responsible for the management and strategic direction of the Companyaswellasforattendingtolegislative,regulatory and best practice requirements.Accountability to all stakeholders remainsparamountinBoarddecisions.
Given Own Haven Housing Association’sdevelopmentplansandexpansionobjectives,the Board accommodates complementary skills in the fields of commercial property,marketing, legal and strategic planning,hereby ensuring that value is added to debatesandpolicyformulation.
the CurreNt bOARD MeMbeRsand their respective areas of expertise are
HAnLie BASSingtHWAigHte estate agent principalChairperson
HAmiSH Scott civil engineerVice Chairperson
AndreW WiSemAn housing DevelopmentManaging Director
tjeerd grimmiuS ProjectManagement
Pierre nAude Legal
nomSA mkAzA community Development
The company and its directors subscribe to and are committed to complying with the principles of openness, integrity and accountability as advocated in the king iii code of corporate governance.
DiReCTORs AtteNdANCe director
Auditcommittee
20 March 2015
Auditcommittee 07 April 2015
BoArdmeeting
14 April 2015
BoArdmeeting
04 August 2015
BoArdmeeting
17 November 2015
HBassingthwaighte 1 1
h scott 1 1 1 1 1
ts grimmius 1 1 1
pa naude 1 1
LJWeldon(resigned 21 april 2015) 1 1
VGMkaza 1 1
t cumming (resigned 14 april 2015) 1 1
a Wiseman 1 1 1
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It is the Directors’ responsibility to ensure that the financialstatements fairly present the state of affairs of the group as at theendofthefinancialyearandtheresultsofitsoperationsandcashflowsfortheperiodthenended,conformwithSouthAfricanStatementsofGenerallyAcceptedAccountingPractice.Theexternalauditorsareengagedtoexpressanindependentopiniononthefinancialstatements.
The financial statements have been prepared in accordancewithSouthAfricanStatementsofGenerallyAcceptedAccount-ing practice and are based upon appropriate policies consist-entlyappliedandsupportedbyreasonableandprudentjudg-mentsandestimates.
TheDirectorsareoftheopinion,basedontheinformationandexplanationsgivenbymanagement that thesystemof inter-nal control provides reasonable assurance that the financialrecordsmaybe reliedon for thepreparationof thefinancialstatements.
TheDirectorshavereviewedthegroup’scashflowforecastfortheyearto31December2016and,inlightofthisreviewandthecurrentfinancialposition,theyaresatisfiedthatthegrouphas or has access to adequate resources to continue in opera-tionalexistencefortheforeseeablefuture.
DiReCTORs’ respoNsIBIlItyThe Directors are 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 financial statements and related financial information.
RisK MAnAGeMenT ANd INterNAl CoNtrolOwn Haven Housing Association has a risk management function in place, responsible for identifying, evaluating, managing and monitoring the strategic, operational and financial risks facing the company.
the Board and senior Management conducted a de-tailedriskassessment,andtheriskregisterisupdatedwithriskandcontroldataonamonthlybasis.
Thecompanymaintainsfinancialandoperationalsys-tems of internal control. The objectives of systems ofinternal control are to provide management with rea-sonable,butnotabsoluteassurancethatthebusinessisconductedinanorderlyandefficientmannerandthatthereisadherencetomanagementpolicies,assetsaresafeguardedandthattransactionsareexecutedaccord-ingtomanagement’sauthorisation.
Below: Our finance team concluding the group financial statements
the oWn haVen BoarD
is responsible for the management and strategic direction of the company.
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The following non-executive director is a member of the
AUDIT Committee
Hamish Scott
DiReCTORs’ reMuNerAtIoN
AuDiT CoMMIttee
2015 2014Non-executive Directors r 19 000 r 46 000Executive Directors r 1 869 000 r 1 869 000
this involves performing procedures to obtain audit evidence about the amountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentof the risks of material misstatement of the financial statements,whetherduetofraudorerror,inmakingthoseriskassessments.Theauditorconsiders internalcontrols relevant to theentity’spreparationandfairpresentationofthefinancialstatementsinordertodesignaudit
proceduresthatareappropriateinthecircumstances,butnotforthepurposeof expressinganopinionon theeffectivenessof theentity’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessof accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overallpresentationofthefinancialstatements.
The external auditor is responsible for independently reviewing and reporting on the group’s financial statements.
AuDiTOR’s respoNsIBIlIty
DuringtheperiodunderreviewtheAuditCommittee:• Reviewed theAnnualFinancialStatementsandconfirmed that theyarecompleteand
reflect appropriate accounting principles;• Assessedandconfirmedthat theexternalauditorsare independentandrecommended
theexternalauditorsfeesforthe2015financialyear;• Reviewedreportsonaccountingandinternalcontrolissues;• Reviewedandmonitoredtheriskmanagementfunction;• WereintegralinreviewingandinputtingintotheLTStrategicplanandRefundingProgress• Recommendedthattheannualauditgoouttotenderforthe2016financialyear.
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REPORT OF THE
inDePenDenT AuDiTORGROuPTheaccompanyingsummaryannualfinancialstatementsofOwnHavenHousingAssociation(NonProfitCompany)Group,whichcomprise thestatementoffinancialpositionasat31December2015,andthestatementofcomprehensiveincome,statementofchangesinfundsandstatementofcashflowsarederivedfromtheauditedannualfinancialstatementsofOwnHavenHousingAssociation(NonProfitCompany)Groupfortheyearended31December2015.Weexpressedanunmodifiedauditopiniononthoseannualfinancialstatementsinourreportdated15March2016.Thosefinancialstatementsandthesummaryfinancialstatementsdonotreflect the effects of events that occurred subsequent to the date of our reportonthosefinancialstatements.
The summary financial statements do not contain all the disclosuresrequired by International Financial Reporting Standards. Reading thesummaryfinancialstatements,therefore,isnotasubstitutetoreadingtheauditedannualfinancialstatementsofOwnHavenHousingAssociation(NonProfitCompany)Group.
MAnAGeMenT’s ResPOnsibiLiTY FOR The suMMARY FinAnCiAL sTATeMenTsManagement is responsible for the preparation of a summary of the audited annual financial statements in accordance with the basisdisclosedinnote1totheSummaryConsolidatedFinancialStatements.
AuDiTORs’ ResPOnsibiLiTYOur responsibility is to express an opinion on the summary financialstatementsbasedonourprocedureswhichwereconductedinaccordancewith International Standards on Auditing (ISA) 810, Engagements toReportonSummaryFinancialStatements.
OPiniOnIn our opinion, the summary financial statements derived from theauditedannualfinancialstatementsofOwnHavenHousingAssociation(NonProfit Company)Group for the year ended31December 2015,are consistent, in all material respects, with those annual financialstatements, in accordance with the basis disclosed in note 1 to theSummaryConsolidatedFinancialStatements.
eMPhAsis OF MATTeRWithout qualifying our opinion,we draw attention to the fact that theannualfinancialstatements,whichincludesthebackrankedloanwithG&BGonubieProp(Pty)LtdwithanominalvalueofR37,492milatafairvalueofnilastheextentandthetimingofthefuturerepaymentsisdependentuponthefinancialperformanceofthecompanygoingforward.
Moore stephens pDB incorporatedCharteredAccountants(S.A.)registered auditors
Per:S.R.BarryDirector06 april 2016
pDB house12SansomRoad,Vincent,EastLondon,5201
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SUMMARY STATEMENT OF Financial Positionas at 31 December 2015
GrouP comPanyFiguresinRandThousand 2015 2014 2015 2014
assets non-current ASSetS
Property,plantandequipment 6 074 6 088 5 900 6 088
investment property 245 418 239 302 229 237 222 630
investments in subsidiaries - - 14 101 14 489
Loans to group companies - - 2 099 2 224
Deferredtax 3 - - -
251 495 245 390 251 337 245 431
current ASSetS
inventories 148 91 148 91
trade and other receivables 594 1 731 518 1 695
cash and cash equivalents 9 609 15 788 8 643 14 845
10 351 17 610 9 309 16 631
non-current ASSetS HeLd for SALe 6 853 0 6 853 0
totAL ASSetS 268 699 263 000 267 499 262 062
equity and liabilities equity
retained income 167 310 117 012 167 277 117 000
LiABiLitieS
non-current Liabilities
Otherfinancialliabilities 73 878 127 967 73 878 127 967
current Liabilities
trade and other payables 10 379 13 273 9 469 12 394
Otherfinancialliabilities 10 028 4 122 10 028 4 122
Deferred income 196 - - -
CurrentTaxPayable 96 - 93 -
provisions 717 626 659 579
21 416 18 021 20 249 17 095
LiABiLitieS of diSPoSAL grouPS 6 095 - 6 095 -
totAL LiABiLitieS 101 389 145 988 100 222 145 062
totAL equity And LiABiLitieS 268 699 263 000 267 499 262 062
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STATEMENT OF comPrehensive incomefor the year ended 31 December 2015
GrouP comPany
2015 2014 2015 2014
continuing oPerAtionS
revenue 38 108 38 472 34 326 35 049
cost of sales - (1 972) - (1 972)
groSS Profit 38 108 36 500 34 326 33 077
other income 2 617 5 258 1 999 5 532
Operatingexpenses (39 834) (31 371) (36 181) (28 882)
gain on release of debt 37 861 40 046 37 861 40 046
oPerAting SurPLuS (deficit) 38 752 50 433 38 005 49 773
investment revenue 406 359 615 555
Fairvalueadjustments 11 229 55 309 11 745 55 859
Financecosts (7 473) (10 595) (7 472) (10 550)
Profitbeforetax 42 914 95 506 42 893 95 637
Taxation (94) (94)
SurPLuS (deficit) from continuing oPerAtionS
42 820 95 506 42 799 95 637
diScontinued oPerAtionS - -
Profit(loss)fromdiscontinuedoperations 7 478 59 012 7 478 59 012
SurPLuS (deficit) for tHe yeAr 50 298 154 518 50 277 154 649
AttriButABLe to:
oWnerS of tHe PArent:
non-controlling interest - continuing operations 42 820 95 506 42 799 95 637
non-controlling interest - Discontinued operations 7 478 59 012 7 478 59 012
Surplus(deficit)fortheyearattributabletoownersoftheparent 50 298 154 518 50 277 154 649
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STATEMENT OF
chanGes in Fundsfor the year ended 31 December 2015
accumulated deFicit total Funds
GrouPBALAnce At 01 jAnuAry 2014 (37 506) (37 506)
surplus for the year 154 518 154 518
BALAnce At 01 jAnuAry 2015 117 012 117 012
surplus for the year 50 298 50 298
BALAnce At 31 decemBer 2015 167 310 167 310
comPanyBALAnce At 01 jAnuAry 2014 (37 649) (37 649)
surplus for the year 154 649 154 649
BALAnce At 01 jAnuAry 2015 117 000 117 000
surplus for the year 50 277 50 277
BALAnce At 31 decemBer 2015 167 277 167 277
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STATEMENT OF cash Flowsfor the year ended 31 December 2015
GrouP comPany2015 2014 2015 2014
cASH fLoWS from oPerAting ActiVitieS
cash receipts from customers 33 844 47 103 29 439 43 623
cash paid to suppliers and employees (26 142) (34 834) (22 260) (31 083)
cash (used in) generated from operations 7 702 12 269 7 179 12 540
interest income 406 359 615 555
Financecosts (7 473) (10 595) (7 472) (10 550)
Taxpaid (1) - (1) -
Cashflowsofheldforsale/discontinuedoperations
55 8 587 55 8 587
Net cash from operating activities 689 10 620 376 11 132
cASH fLoWS from inVeSting ActiVitieS
Purchaseofproperty,plantandequipment (360) (261) (180) (261)
Saleofproperty,plantandequipment 5 37 5 37
net movements in investment property (584) (1 770) (559) (1 711)
Netcashflowfrominvestingactivitiesofdiscontinued operations
- 92 512 - 92 512
Netmovementsinloanswithgroupcompany - - 125 -
Saleoffinancialassets - - (40) (973)
Net cash from investing activities (939) 90 518 (649) 89 604
cASH fLoWS from finAncing ActiVitieS
Netmovementsinotherfinancialliabilities (5 929) 1 331 (5 929) 1 331
Netcashusedforfinancingactivities-discontinued operations
- (94 774) - (94 774)
net cASH from finAncing ActiVitieS (5 929) (93 443) (5 929) (93 443)
Total cash movement for the year (6 179) 7 695 (6 202) 7 293
cash at the beginning of the year 15 788 8 093 14 845 7 552
Total cash at end of the year 9 609 15 788 8 643 14 845
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ACCouNtING POLiCies1. bAsis OF PResenTATiOn AnD ACCOunTinG POLiCies1.1.Basisofpresentation
TheSummaryConsolidatedFinancialStatementsofthegrouphavebeenpreparedinaccordancewiththerecognitionandmeasurementprinciplesofInternationalFinancialReportingStandards,andtherequirementsoftheCompaniesAct71of2008(amended).
1.2.Accountingpolicies
Theaccountingpoliciesappliedintheconsolidatedfinancialstatementsfromwhichthesummaryfinancialstatementswerederived,areintermsofInternationalFinancialReportingStandardsandareconsistentwiththeaccountingpoliciesappliedinthepreparationofthepreviousconsolidatedannualfinancialstatements.
1.3.Estimates
Inpreparingthesesummaryfinancialstatements,thesignificantjudgementsmadebymanagementinapplyingthegroup’saccountingpoliciesandthekeysourcesofestimationuncertaintyweremateriallythesameasthosethatappliedtotheconsolidatedannualfinancialstatementsfortheyearended31December2015.
2. AuDiTeD AnnuAL FinAnCiAL sTATeMenTs TheauditedannualfinancialstatementsofOwnHavenHousingAssociation(Non-ProfitCompany)Group,fortheyearended31
December2015,fromwhichthesummaryfinancialstatementswerederived,areavailableonrequest.
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DiReCTORsHBassingthwaighteChairpersonh scott Vice chairpersonaL Wiseman Managing Directorts grimmiuspa naudeVGMkazaReg.2001/002084/08031-101-npo(Non-ProfitCompany)
heAD OFFiCe320OxfordStreetEastLondon,5200south africa
P.O.Box12501amalindaEastLondon,5252south africa
t +27 (0) 86 169 6428ef +27 (0) 86 674 7230
PORT eLizAbeThParkTowers16RinkStreet,CentralPortElizabeth,6001t +27 (0) 41 582 2487f +27 (0) 41 585 3085
KnYsnALagoonViewcasino streethornlee heightsKnysna,6570t +27 (0) 44 385 0182f +27 (0) 44 385 0152
www.ownhaven.co.za