Financial Statements

Transcription

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2 REGISTERED OFFICE 310 Main Road Bryanston 2021 PROPERTY BUYING COMPANY Sandton Sales (Proprietary) Limited 310 Main Road Bryanston 2021 TRUSTEES I. Demirtas R.W.Dickson M. Gopal D.I. Gordon C. Hutton F.J. Swanepoel AUDITORS Booysen & Dry 435 Kirkness Street Clydesdale 0002 RENTAL AGENT Dream Hotels and Resorts (Pty) Ltd 310 Main Road Bryanston 2021 POSTAL ADDRESS P.O. Box Sandton 2146 CONTACT DETAILS BANKERS First National Bank Limited Telephone: (011) Facsimile: (011) Web Site: WHOLLY OWNED COMPANIES Northern Investments (Proprietary) Limited Avalon Springs Timeshare (Proprietary) Limited Unit 11 Castleton (Proprietary) Limited Nettie Property Trust 2016 Page 1

3 Table of Contents Page APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS 3 REPORT OF THE INDEPENDENT AUDITORS 4-5 TRUSTEES REPORT 6-13 STATEMENT OF FINANCIAL POSITION 14 STATEMENT OF COMPREHENSIVE INCOME 15 STATEMENT OF CHANGES IN EQUITY 16 CASH FLOW STATEMENT 17 NOTES TO THE FINANCIAL STATEMENTS DETAILED INCOME STATEMENT 25 ANALYSIS OF HOLIDAY ACCOMMODATION DRAFT MINUTES OF ANNUAL GENERAL MEETING Approval of the Annual The financial statements of the Club which appear on pages 6 to 28 were approved by the Board of Trustees on Monday 9 th October 2017, and are signed on their behalf by: WESTON DICKSON CHAIRMAN 2016 Page 2

4 Report of the Independent Auditors REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF DREAM VACATION CLUB We have audited the annual financial statements of set out on pages 9 to 18 for the year ended 31 December These financial statements are the responsibility of the trustees. Our responsibility is to express an opinion on these financial statements based on our audit. Trustee's Responsibility for the Financial Statements The trustees are responsible for the preparation and fair presentation of these financial statements in accordance with the basis of accounting as described in note 1 to the financial statements. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts disclosed in the financial statements. The procedures selected depends on the auditor's judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the financial statements 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the trustees, as well as evaluating the overall presentation of the financial statements, in accordance with the basis of accounting policies described in note 1. Without qualifying our opinion, we emphasise that the basis of accounting and the presentation and disclosures contained in the financial statements do not in some respects, comply with the requirements of International Financial Reporting Standards. Basis for Qualified Opinion The accounting policy with regard to the disclosure of the value of holiday accommodation states that the value will be determined by the trustees. According to the Clubs' Scheme Rules the value of holiday accommodation will be determined, from time to time, by an independent valuator. We received the valuation method used by the trustees and although it is consistent with the method used in previous years, taking into consideration the current economic climate and property market, we disagree with the method used. For the year under review no independent valuation was done by a valuator and subsequently we could not obtain sufficient audit evidence to confirm the value of holiday accommodation as disclosed in the financial statements Page 3

5 Report of the Independent Auditors Qualified Opinion In our opinion, except for the effect on the financial statements of the matter referred to in the preceding paragraphs, the financial statements present fairly, in all material respects, the financial position of Dream Vacation Club as at, its financial performance and its cash flows for the year ended, in accordance with the basis of accounting as described in note 1 to the financial statements. Supplementary Information The supplementary schedules, set out on pages 19 to 23, do not form part of the annual financial statements and are presented as additional information. We have not audited these schedules and accordingly we do not express an opinion on them. Booysen & Dry G BOOYSEN CA(SA) Booysen & Dry Registered Auditors Pretoria Date: 31 July Page 4

6 Trustees Report The Trustees have pleasure in presenting their report in respect of operations to the Members for the financial year ended 31 December Nature of Business The Club operates a holiday points system in respect of property owned by the Club. Holidays are provided using the Club s own holiday properties, swopping with other timeshare organisations, renting of accommodation on a preferential basis and making use of various exchange organisations. Review of Activities The Club had a fairly stable year with the member base decreasing from to , which amounts to a 3% decrease. As a result of the current difficult times, some members have had their Club memberships cancelled due to non-payment of their annual subscriptions. Sandton Sales (Pty) Ltd, the development company have implemented stricter credit vetting procedures in order to protect Members from over-extending themselves financially. All upgrade applications will be scrutinised on an individual basis to ensure each Member s situation is appropriately considered. Our credit department endeavours to assist all members to ensure their membership is not cancelled. Loan repayment periods are extended and the skipping of the points allocated for a year, are some examples of how we are assisting members without affecting the financial viability of the Club. Once again, a large number of members who initially purchased a starter pack have acquired additional points to holiday more frequently or during the high and peak seasons. Your trustees have been listening to our older members. With effect from 2017, we introduced a reduction in member subscriptions upon reaching 65 years of age, or older. The reduction of their annual subscriptions will be reduced by 50%; however, their usage of holiday accommodation will be limited to certain seasons and resorts. Our Senior Membership allows full week access to specific resorts around the country during off peak periods. In addition, our Senior Members will have access to midweeks at all other resorts within the Club s portfolio, excluding peak and high demand periods. All Senior Members are also entitled to book the bonus breaks available from time to time during the year. Furthermore, should payment of subscription fees be made before the 15 th December each year for the following year, our Senior Members will receive a further 10% discount, although if this payment is made via credit card, only a 5% discount will be allowed due to bank charges incurred has been another exciting year with the acquisition of more new properties being added to the Club s portfolio, the expansion and development of the rental division and the completion of much needed renovations to certain properties continues. I would like to expand on some of the major highlights: Dream Hotels & Resorts At the start of 2015, we announced the rebranding of the Group to Dream Hotels & Resorts. is one of the products developed and sold by the Group. The rebranding has allowed the Group to position themselves as a reputable hospitality and tourism group, which has opened doors and connected relationships; ultimately improving the offering to the Club and its 2016 Page 5

7 Trustees Report Members. We are proud of the brand traction to date and we believe that it will continue to improve the Club s rental division, thereby reducing the Club levy liabilities on slowmoving stock. The Vic Hotel 1906, Montagu The Vic Hotel 1906 was originally purchased to accommodate the students for the Dream Hotel School. The progress was initially fairly slow, however the demand for 2018, has exceeded our original forecasts. The Vic Hotel 1906 in 2016 and 2017 was used by Dream Vacation Club to alleviate the high demand at Avalon Springs. During 2016, the staff house was upgraded in order to accommodate additional staff and students. Avalon Springs has purchased the neighbouring house to accommodate additional students, and The Vic Hotel 1906 will remain part of the portfolio. Piekenierskloof Mountain Resort The Western Cape is experiencing one of the worst droughts in many years, which resulted in a very disappointing flower season during August and September; regrowth in the area after the devastating fire in 2016 has also been slow. Recent improvements and upgrades include the following: The indoor pool, shower and toilet facilities have been upgraded; The laundry and workshop building has been rebuilt, together with new staff shower and toilet facilities; Above the laundry and workshop area staff accommodation, all on-suite, plus a communal lounge and kitchen area, has been built. The accommodation caters for 16 staff and is the envy of the industry; The sewerage plant has also been expanded; Additional water storage tanks have been erected in the old water reservoir area as additional back up supply. The fire damaged zip line has been reinstalled and is now fully operational. Mjejane Bush Camp The terrible drought in Mpumalanga was broken in 2016, and the bush has returned to its previous condition. Game viewing on the property has been outstanding. The sales progress has been excellent in an extremely difficult market. To date 33 units have been completed. The sales program should be completed by end of Dream Hotels & Resorts have transferred additional timeshare weeks to in order to cater for the growing demand. The opening of the bridge from Mjejane directly into the Kruger National Park is receiving the full attention of the Mjejane Home Owners Association, and it is hoped that this matter will be resolved as soon as possible. Dream Hotels & Resorts is only involved with Mjejane Bush Camp, and not with the Lodge or with the rest of the ownership development. In September 2017, AfriAsia Bank (based in Mauritius) rated Mjejane Estate as the 7 th ranked Estate in South Africa. The other estates included Fancourt, Zimbali and Steyn City. Mjejane is the only wildlife estate. Finfoot Lake Reserve In 2016, Dream Hotels & Resorts re-launched Finfoot Lake Reserve, situated in the Vaalkop Conservancy in the Greater Pilanesberg region, and has been added to the Club s portfolio. The resort comprises of 2,000 hectares of pristine wildlife, direct access onto the Vaalkop dam with barges, canoes and 2016 Page 6

8 Trustees Report fishing. The resort is 45 minutes from Sun City and the Pilanesberg National Park. Finfoot Lake Reserve officially opened their doors at the end of September 2016 and offers not only conference facilities but fantastic wildlife and interactive activities for both family holidays and corporate events. The self-catering unit, consisting of 4 bedrooms was also upgraded in The Club members have access to Finfoot Lake Reserve rooms and the self-catering unit on a preferential rate basis. The intention is to build 18 additional self-catering units over a period of 3 to 4 years, depending on demand. Bilene Club Lodge Dream Hotels & Resorts funded the completion of Block 4, consisting of 2 x two bedroom units and 2 x three bedroom units. The existing three blocks made up of 12 x two bedroom units were upgraded during the year. This included the upper floor units receiving a concrete slab floor (this has helped dramatically with the noise problem), glass balustrades, new staircases and more recently the kitchens have been replaced. The rim flow swimming pool has since been completed, which has contributed to the fantastic ambience of the lodge. Excursions have been added, including complimentary boat rides across the lagoon to the beach, guided walks to the turtles, and a road trip to the awesome sand dunes for dune riding. A dhow has been purchased for guided sundowner trips. These have been added to the lagoon beach activities along with the kayaks. The border post between South Africa and Mozambique has improved dramatically, taking between 40 minutes to an hour. A new bypass to Maputo has made this trip to Bilene and Chicuanga far more pleasant. The roads are in good condition. The rental demand from the Maputo market has increased in leaps and bounds. Le Franschhoek Hotel & Spa In May 2015, Dream Hotels & Resorts concluded the purchase of the management company of the prestigious Le Franschhoek Hotel & Spa, situated in the beautiful town of Franschhoek. The hotel experience has been offered to our Club members. In June 2016, the lease of the 16 one and two bedroom Villas was finalised, adding another dimension to the Club offering. A feature of Dream Hotels & Resorts is to not only offer self catering accommodation, which is the cornerstone of the Club, but to also offer a typical hotel experience on the same property. The properties that provide this are Piekenierskloof Mountain Resort in the Cederberg, Le Franschhoek Hotel & Spa in Franschhoek, Avalon Springs and The Vic 1906 Hotel in Montagu, The Peninsula All-Suite Hotel in Cape Town, The Blue Marlin Hotel in Scottburgh and Nibela and Sobhengu Lake Lodge on Lake St Lucia. The Peninsula All-Suite Hotel The demand for Cape Town, both by the local and international market, continues to rise, pushing rental rates to new levels. The owning of points has at least alleviated the price push for our members. The Strolla Restaurant is growing all the time. Friday evenings offer some live entertainment up until 22:00. The demand from the local Capetonians has been encouraging and, as people say, eat where the locals eat, as they know best. When next at The Peninsula, do try the Strolla restaurant. A recent improvement to the Strolla Restaurant is a roof cover on the outside deck. This has assisted with the chill during the winter months and cooler evenings, as well as shade from the sun during the summer months Page 7

9 Trustees Report Avalon Springs Demand still remains very high at this resort. Upgrading and refurbishments are ongoing. An energy saving system has been installed in the Mountain Chalets, which should start showing savings during In addition, this should overcome the outside spa bath water temperature problems. The Blue Marlin Hotel Additional rooms have been upgraded and the increased demand is very pleasing. The resort is cash neutral and further dining facility upgrades are due to start shortly. The demand from members has been encouraging. Cabana Beach Cabana Beach was awarded the Sanlam Top Destination award for Dream Vacation Club is the largest shareholder at Cabana Beach. Tala Collection Dream Hotels & Resorts continues to pursue the development and purchase of holiday properties. During 2017, Dream Hotels & Resorts purchased a 40% share in Tala Collection, which is situated between Pietermaritzburg and Durban. Our partners are the local community and the NEF (National Empowerment Fund), which is part of the Trade & Industry Department. Tala Collection is principally a game reserve. The intention is to create an urban safari centre including game drives and guided walks, mountain bike tracks, archery, zip lines, Segway (a two-wheeled, self-balancing, battery powered, electric vehicle) and a water park. The Club members will have access to this property once the program to remove the operation from business rescue, which is currently in progress, has been finalised. Jackalberry Ridge The revamp of the tents at Jackalberry Ridge has commenced. Kiara Lodge The Club purchased and built 6 new units at Kiara Lodge, situated outside the picturesque town of Clarens in the Eastern Free State with easy access to the Golden Gate Reserve. These have been well utilised by our members. Member Services The department has had another busy year. Member Services dealt with calls, but still managed to maintain a service level of 90%. In addition, consultants made bookings and the on-line website booking facility is gaining momentum with bookings being made during We encourage all members to utilise this facility. As can be seen on the detailed analysis of weeks owned, the Club has increased its accommodation portion at our members favourite resorts like Umhlanga Sands, Umhlanga Cabanas and Cabana Beach (all in Umhlanga Rocks), Club 10 in Ballito and Perna Perna in Umdloti. On the South Coast additional accommodation was acquired at La Cote d Azur Page 8

10 Trustees Report RCI Grading We have summarised the stock held by the Club, as graded by RCI, the top resorts are graded Gold Crown Resorts, the next Silver Crown Resorts with the balance referred to as Lifestyle Resorts. We have analysed our stock holding on this basis: Number of Weeks 2016 Number of Weeks % 2015 % Gold Crown 10, , Silver Crown 3, , Lifestyle Resorts 2, , , , Out of RCI Portfolio 2, , TOTAL WEEKS 19, % 19, % In terms of VOASA, we are obliged to ensure that we have sufficient time and suitable dates to satisfy our members holiday requirements. The weeks owned by the Club are summarised into seasons. The peak seasons are the school holidays, the high season is normally high demand season outside the school holidays, including certain long weekends and public holidays, the mid-season demand is good but obviously less than high, and low season speaks for itself. The analysis is as follows: Number of Weeks 2016 Number of Points % Weeks allocation 2015 % per Season % Peak Season 5, , ,005, High 9, , ,407, Medium 3, , ,032, Low ,689,700 3 TOTAL 19, % 19, % 731,923,28 100% The Club endeavours to purchase more weeks in the peak and the high holiday seasons and only a few weeks in the low seasons. As demand increases for breakaway weekends and weekdays at nearby destinations, the Club has catered for these changing needs Page 9

11 Trustees Report Holiday Bookings We again report the same as in previous years. The Club has a delivery promise that should a member request a local booking 8 months prior to occupation, the members request will be honoured. We are proud to report that each and every request was honoured, apart from a few bookings received in September, October and November. As trustees, we believe this is an indication of dedication and commitment, and that the system works. Over Crowding of Accommodation Overcrowding of accommodation cannot be tolerated. The maximum number of guests entitled to stay in a unit is clearly stipulated on the members booking confirmation. Should members exceed this number, resort management has been instructed to request members to vacate the accommodation. The same applies to excessive noise levels after an acceptable time in the evening. Please don t fight with the resort management. Overcrowding places additional wear and tear costs on the Club and excessive noise levels are unfair on your neighbours and fellow Club members. Management The affairs of the Club are managed by Dream Hotels & Resorts. The management includes the arranging of members holidays, collection of members annual subscriptions, payment of levies to various resorts, management of properties owned outright by the Club and normal daily affairs. Interesting Statistics The American Resort Development Foundation (ARDA) published an interesting statistic, Vacation owners spent 20.6 days on holiday per annum in 2016, while non-owners spent a shorter 14.6 days per annum. I am certain this is because their holidays are prepaid. In America, millennials and younger adults are more likely to be vacation owners. The age group makes up 69% of owners, age group makes up 21% and the 50 and over age group constitutes a smaller 10%. This is definitely not the trend in South Africa. This is a major concern for our industry and every effort must be made to turn this around. The Financial Affairs The Club s financial affairs were well managed during the year. The surplus of the Club was R27,102 after taxation, allowing for future holiday needs. The subscription income increase was as a result of new points sold and existing members purchasing additional points, as well as an inflationary increase of 7.75% The Club has a rental division that rents out excess accommodation. The accommodation is normal over quieter times and excludes any peak season time. All the income generated from rentals is utilised to assist with overseas bookings, and certain 8-month delivery promises. Rentals received, plus exchange fees totalled R10,380,106. Overseas rentals and local rentals paid, was R8,417,853. Reasons for some of the variances are as follows: Levies paid increased as a result of the increased stock holding and due to certain large special levies; The management fee payable to Dream Hotels & Resorts increased by 8%. The fee covers salaries of all staff, rent, telephone costs and general office expenses. A certain amount of these costs is shared with the development company, Sandton Sales (Pty) Ltd; Printing and stationery decreased this year due to the fact that the printing of the Member Companion only gets printed every second year; 2016 Page 10

12 Trustees Report Exchange fees increased this year as more exchange companies were utilised; Accounting fees were charges paid to an outside company to assist with the Clubs VAT payments and allowable input allowances; Bank charges showed a substantial reduction due to an error discovered after last year s audit. A charge of R875,000 was reversed. This benefit will not be repeated in IT Development IT is crucial to the Club s and the Dream Hotels & Resorts business model. The young mainly use online booking systems. We are developing these platforms in order to integrate, Dream Hotels & Resorts and the various booking channels to ensure we stay abreast of the market. The use of social media is used extensively. Our e Guest Survey system allows members to complete an online guest questionnaire. This enables real-time information to be circulated to resort managers and appropriate personnel, ensuring any problems that may arise are addressed immediately. The overall satisfaction rating for 2016 was 87.7% from completed surveys. Exchange Organisations The Club has various agreements with several exchange organisations including RCI and Interval International. In most instances, there are exchange fees and space banks required to obtain stock from them. The offering of our exchange and rental programme through Dream Premier Collection at upmarket resorts, including Zimbali, Zebula, Mjejane, Black Rhino and Pinnacle Point, to name a few, is available to our Platinum Club members. All hotel facilities offered by Dream Hotels & Resorts are available to members using their points. Awards At the RCI Annual Awards evening held in March 2017, the following resorts owned / managed by Dream Hotels & Resorts were recognised: Gold Crown Resorts Jackalberry Ridge; Piekenierskloof Mountain Resort; The Peninsula All-Suite Hotel; Burchell s Bush Lodge. Silver Crown Resorts Avalon Springs; Blue Marlin Hotel; Nibela Lake Lodge; Sobhengu Lodge. Trip Advisor has awarded their Certificate of Excellence to the following resorts: Blue Marlin Hotel; Burchell s Bush Lodge; Finfoot Lake Reserve; Stonehill River Lodge; Nibela Lake Lodge was awarded A 2017 Top Valued Establishment Award by AccommoDirect.com. Finfoot Lake Reserve was awarded 4 Stars by the SA Tourism Grading Council. Camelot Spa at the Le Franschhoek Hotel and Spa in Franschhoek won the Thalgo award for Best Hotel Spa in South Africa in September Note: All these resorts are managed by Dream Hotels & Resorts Page 11

13 Trustees Report Dream Rewards Members Dream Hotels & Resorts, excluding Dream Vacation Club s various timeshare weeks, manages 699 rooms per night, translating into 2,088 bed nights (excluding sleeper couches). In order to capitalise on these guests, we have introduced the Dream Rewards Member program. The intention is to encourage these members to become members of Dream Vacation Club, thereby increasing the size and availability of holiday accommodation for our members. National Consumer Commission The N.C.C. (National Consumer Commission) is currently investigating the timeshare industry, and particularly the points based clubs. We encourage this investigation as we feel we have nothing to hide and we have a very satisfied member base. relevant resorts. Regular site visits are made during the year to the various resorts to ensure standards are maintained. Appreciation I would like to thank my fellow trustees and all staff involved with the Club for their hard work and dedication. The progress and development of, the guest reservation programmes and expansion of the hotel division doesn t just happen, all our staff have played a role in developing this growth and it is our intention to continue this growth. With this team in place, we can expect another year of providing memorable holidays for our members. Trustees The following acted as trustees during the year: Ilhami Demirtas; Weston Dickson; Mandy Gopal; Diane Gordan; Colin Hutton; Ferdie Swanepoel. WESTON DICKSON CHAIRMAN No remuneration was paid by the Club to the trustees for their duties. The trustees attend as many Annual General Meetings as possible for the resorts, where the Club owns timeshare or sectional title units. In addition, the trustees also act as directors, or trustees, in certain resorts where major stock holdings are held. It is an added benefit for our members to have such representation at these meetings, as the knowledge gained helps the trustees keep abreast of developments and standards at the 2016 Page 12

14 Statement of Financial Position Notes R R ASSETS Non-current assets Holiday accommodation Fixed assets Investments Current assets Trade and other receivables Prepayments Inventories Cash and cash equivalents Total assets EQUITY AND LIABILITIES Capital and reserves Members' investments Accumulated surplus Non-distributable reserve Non-current liabilities Interest bearing borrowings Current liabilities Trade and other payables Subscriptions in advance Taxation Total equity and liabilities Page 13

15 Statement of Comprehensive Income for the Year Ended Notes R R INCOME Subscriptions received OTHER INCOME Interest received Other Rentals received Operating costs after taking into account the following expenses: Interest paid Exchange fees Management fees Levies Rentals NET SURPLUS BEFORE TAXATION Less: Income tax NET SURPLUS FOR THE YEAR Page 14

16 Statement of Change in Equity for the Year Ended R R R R Members' investment Accumulated surplus Non - distributable reserves Total Balance at 31 December Net point sales for the year Net surplus for the 2015 year Revaluation of investments Balance at 31 December Net point sales for the year Net surplus for the 2016 year Revaluation of investments Balance at Page 15

17 Cash Flow Statement for the Year Ended December 2016 Notes R R Cash flow from operating activities Cash generated/(utilised) by operations Adjustments for: Interest received Interest paid ( ) ( ) Cash flow from investing activities ( ) ( ) Holiday accommodation purchased ( ) ( ) (Increase)/Decrease in fixed assets (77 535) ( ) (Increase)/Decrease investment ( ) Cash flow from financing activities Increase/(Decrease) in members investment Increase/(Decrease) in long term borrowings ( ) Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Page 16

18 Notes to the for the Year Ended 1. ACCOUNTING POLICIES: The following are the principle accounting policies of the Club which are consistent with those applied in the previous year. Basis of Preparation The financial statements are prepared in terms of International Financial Reporting Standards (IFRS) and in the manner required by the Constitution. The Financial statements have been prepared on historical cost basis except for: holiday accommodation carried at trustees fair value, financial assets and liabilities to be carried at amortised cost. Subscriptions Subscriptions are recognised as revenue when they become due and payable by the members. Members' Investments Members' investments is stated at the gross value of points sold to the members. Holiday Accommodation The cost of holiday accommodation is allocated points, which vary according to size, season and quality of the resort. The value of points allocated are reviewed annually by the trustees. Holiday accommodation is reflected at the trustees valuation. Fixed Assets Fixed assets are stated at cost less impairments and depreciation applied on a straight-line basis over the useful life of the asset. Computer Equipment -33.3% Motor Vehicles -25% Appliances -20% Inventories Inventories are valued at the lower of cost or estimated net realisable value and cost is determined on the following basis: Consumables and merchandise are valued at invoice cost on a first-in first-out basis Page 17

19 Notes to the for the Year Ended Impairment Assets subject to amortisation are reviewed for impairment if circumstances or events change to indicate the carrying value may not be fully recoverable. Where such circumstances exist the asset, value is determined at the net recoverable amount. Wholly Owned Companies The share investments are stated at nominal value and the financial positions are incorporated in holiday accommodation and long-term liabilities. Financial Assets and Liabilities Financial assets and financial liabilities are initially recorded at fair value. For those financial instruments that are not subsequently held at fair value, the Club assesses whether there is any objective evidence of impairment at each statement of financial position date. Financial assets are recognised when the Club has rights or other access to economic benefits. Such assets consist of cash, equity instruments, 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 have expired or have been transferred and the Club has transferred substantially all risk and rewards of ownership. Financial liabilities are recognised when there is an obligation to transfer benefits and the 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, discharged, cancelled or expired. If a legal enforceable right exists to set off recognised amounts of financial assets and liabilities, which are in determinable monetary amounts, and there is the intention to settle net, the relevant financial assets and liabilities are offset. Interest cost is charged against income in the year in which it accrues. Interest income earned is recognised in the year in which it accrues. Financial Assets at Fair Value Through Profit and Loss These financial instruments are carried at fair value with fair value movement recognised in the income statement. Where the investments are equity instruments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured shall be measured at cost. Loans and Receivables Loans and receivables are assets with fixed or determinable payments which are not quoted on an active market. They are included in current assets, except for maturities of greater than 12 months after the statement of financial position date which are classified as non-current assets. Loans and 2016 Page 18

20 Notes to the for the Year Ended receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method less provision for impairments. Financial Liabilities Financial liabilities are recognised initially at fair value, and subsequently stated at amortised cost including accrued interest and prepaid interest. Borrowing's are classified as current liabilities unless the Club has an unconditional right to defer settlement of the liability for at least 12 months from the statement of financial position date. Provisions Provisions are recognised when the Club has a present legal or contractual obligation as a result of a past event, for which it is probable that an outflow of economic benefits will occur, and where a reliable estimate can be made of the amount of the obligation. Financial Risk Management Foreign exchange risk The Club is not exposed to foreign exchange risk as no foreign currency transactions are entered into. Interest rate risk The club has interest bearing assets which earn interest at 3% above prime. Had interest rates been 1% higher during the year the net interest earned would have been R45,967 more. Had interest rates decreased by 1% the net interest income earned would have been R45,967 less. Credit risk Credit risk arises from non-payment of subscriptions from members. The Club manages this risk by administering strict ITC checks before the member is accepted into the Club and by close monitoring of repayments. The Club holds the right to restrict the member use of their points if accounts are not paid up in full. Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash resources to meet the operating requirements of the Club. This is monitored closely by the financial manager and trustees Page 19

21 Notes to the for the Year Ended HOLIDAY ACCOMMODATION: R R Holiday accommodation - at cost price Revaluation surplus Balance at the end of the year The accommodation comprises of unit modules purchased at various holiday resorts for the use and enjoyment of the Club's members. The list of resorts is provided on page 20 to 23. Some of the unit modules have not yet been registered in the Club's name or are registered in dormant wholly owned companies. The Trustees valuation of these properties at is R ( R ). 3. FIXED ASSETS Computer Equipment Motor Vehicles Appliances Total Carrying amount at beginning of year Cost price Accumulated depreciation ( ) ( ) (30 396) ( ) Additions Disposals (net) - ( ) - ( ) Depreciation for the year ( ) (51 792) - ( ) Carrying amount at end of year Cost price Accumulated depreciation ( ) ( ) (30 396) ( ) 2016 Page 20

22 Notes to the for the Year Ended 4. INVESTMENTS R R Long term loans: Sandton Sales (Proprietary) Limited-Debtors (The investment carries interest at 3% above the prime overdraft rate and the interest is utilised to pay for rental expenses on behalfof the members of the Club.) Sandton Sales (Proprietary) Limited-encumbrances (refer to note 10) Wholly owned companies at nominal value TRADE AND OTHER RECEIVABLES Subscriptions and rental debtors INVENTORIES Consumables stores MEMBERS' INVESTMENTS Balance at the beginning of the year Net point sales for the year Balance at the end of the year These funds will only be distributed to the members in the event of the sale of the holiday accommodation, or the termination of the Club. 8. ACCUMULATED SURPLUS Balance beginning of the year Net surplus for the current year Balance at the end of the year NON-DISTRIBUTABLE RESERVE Balance at the beginning of the year Revaluation current year - - Balance at the end of the year Surplus on revaluation of holiday accommodation Page 21

23 Notes to the for the Year Ended NON-CURRENT LIABILITIES R R Interest bearing borrowings The repayment of these liabilities is the responsibility of Sandton Sales. (Proprietary) Limited in lieu of points received in. The liabilities are repayable in monthly instalments and interest is charged at current mortgage bond rates. Some of these liabilities are registered in wholly owned dormant companies (refer to note 4). 11. AUDITORS' REMUNERATION Audit fees - current year INTEREST PAID Stock finance creditors Other Banks LEVIES PAID Levies are paid to resorts in which the Club owns, leases or have usage rights. 14. MANAGEMENT FEES Management fees are the costs of administering the Club. These include the reservation of members holiday bookings, collection of the annual subscriptions and paying of the levies for the Club's properties. These costs include salaries and payroll burden, rent, telephone and office expenses. Certain of these expenses are split between the developer, Sandton Sales (Proprietary) Limited and the Club Page 22

24 Notes to the for the Year Ended 15. TAXATION R R S.A. Normal taxation Effective rate of taxation 28% 28% South African normal rate of taxation 28% 28% 16. NOTES TO THE CASH FLOW STATEMENT Reconciliation of net surplus before tax to cash generated from operating activities. Net surplus before interest paid and tax Adjustment for non-cash items: Depreciation Interest received ( ) ( ) Operating surplus before changes in working capital ( ) ( ) Changes in working capital Decrease/(increase) in accounts receivable ( ) ( ) Decrease/(increase) in inventory (1 702) 310 (Decrease)/increase in accounts payable Decrease/(increase) in prepayments ( ) Page 23

25 Detailed Income Statement for the Year Ended Actual Budget Actual R R R INCOME Subscriptions received OTHER INCOME Interest received Other Rentals received EXPENDITURE Accounting fees Advertising Auditors' remuneration AGM expenses Bank charges Computer expenses Depreciation Exchange fees Interest paid Levies paid Management fees and cost recoveries Market securities tax and transfer fees Outside services Postage Printing and stationery Rentals paid Reservations incentive fees Telephone Travelling and accommodation NET SURPLUS BEFORE TAXATION Less: Income tax NET SURPLUS FOR THE YEAR Page 24

26 Notes to the for the Year Ended - continued ANALYSIS OF HOLIDAY ACCOMMODATION - RESORTS/WEEKS OWNED The majority of accommodation is acquired by purchasing shares in various share block companies. The exceptions are: # - where has freehold title to - where has sectional title to accommodation NORTH COAST CLOSEST TOWN Breakers Resort Umhlanga Rocks Cabana Beach Umhlanga Rocks Chakas Rock Chalets Chakas Rock Club Ten Ballito La Lucia Sands Umhlanga Rocks La Rochelle St Lucia Mtunzini Forest Lodge Mtunzini Nibela Lake Lodge Hluhluwe Perna Perna Umdloti Umdloti Sobhengu Hluhluwe Sodwana Bay Lodge Sodwana Umhlanga Cabanas Umhlanga Rocks Umhlanga Sands Umhlanga Rocks Zimbali Coastal Resort Ballito Other Various TOTAL DRAKENSBERG Alpine Heath - # Bergville Castleburn Underberg Champagne Sports Winterton Drakensberg Sun Winterton Midlands Saddle & Trout Mooi River Qwantani Harrismith Kiara Lodge Clarens Other Various TOTAL MPUMALANGA Burchell's Bush Lodge Kruger Park Doornkop Fish & Wildlife - # Carolina Jackalberry Ridge Marloth Park Jackalberry Ridge - Campsite Marloth Park Kruger Park Lodge Hazyview Millstream Dullstroom Mount Sheba Pilgrims Rest Pinelake Lifestyle Resort White River Sabie River Sun Hazyview Sanbonani Spa Hazyview Waterberry Hill Hazyview Mjejane Bush Camp Malelane Other Various TOTAL Page 25

27 Notes to the for the Year Ended - continued ANALYSIS OF HOLIDAY ACCOMMODATION - RESORTS/WEEKS OWNED The majority of accommodation is acquired by purchasing shares in various share block companies. The exceptions are: # - where has freehold title to - where has sectional title to accommodation CLOSEST TOWN NORTHWEST PROVINCE Bakubung Sun City Dikhololo Brits Kwa Maritane Sun City Mabalingwe Bela-Bela Mabula Game Lodge Bela-Bela Manyane Resort Sun City Magalies Park Hartebeespoort Dam Mount Amanzi Hartebeespoort Dam Seasons Sport & Spa Hartebeespoort Dam Sun City Vacation Club Sun City The Kingdom Sun City Other Various TOTAL WESTERN CAPE Avalon Springs Montagu Cape Gordonia Strand Club Mykonos Langebaan Langezandt Fisherman's Village - # Struisbaai Piekenierskloof - # Citrusdal Place on the bay Camps bay Port Owen Marina Velddrif Stonehill River Lodge Swellendam Other Various TOTAL CAPE TOWN Strand Pavillion The Strand The Peninsula Cape Town The Riviera Sea Point Cape Town TOTAL GARDEN ROUTE AND EASTERN CAPE Beacon Isle Plettenberg Bay Brenton Park - # Knysna Brookes Hill - # Port Elizabeth Castleton - # Plettenberg Bay Fish River Sun Near Port Alfred Hartenbos Lagoon Resort Hartenbos Hermanus Beach Club - # Hermanus Lagoon Heads - # Knysna Oaklands on the Knoll - # Knysna Perna Perna Mossel Bay Mossel Bay Page 26

28 Notes to the for the Year Ended - continued ANALYSIS OF HOLIDAY ACCOMMODATION - RESORTS/WEEKS OWNED The majority of accommodation is acquired by purchasing shares in various share block companies. The exceptions are: # - where has freehold title to - where has sectional title to accommodation CLOSEST TOWN GARDEN ROUTE AND EASTERN CAPE (Continued) Pine Lake Marina Sedgefield Port St Francis - # St. Francis Bay Royal Wharf Cape Town Seamoles Plettenberg Bay Sunshine Bay Beach Club Jeffreys Bay Wilderness Dunes Wilderness Other Various TOTAL SOUTH COAST Caribbean Estates - # Port Edward Glenmore Sands Glenmore La Cote A'zur Margate Laguna Le Crete - # Uvongo Mont Blanc - # Margate Ramsgate Beach Club Ramsgate San Lameer - # Near Margate Suntide Hotel Margate Margate St Michael Sands St Michaels Other Various TOTAL DURBAN 10 South Durban Durban Spa Durban Palace Durban Silversands 1, 2, 3 Durban Other Durban TOTAL MOZAMBIQUE Archipelago Sun Vilancoulos Bilene Club Lodge Bilene Paradise View Xai Xai TOTAL GAUTENG Waterfront Guest House - # Randburg Mount Savannah - # Sterkfontein TOTAL INTERNATIONAL Overseas Various GRAND TOTAL Page 27

29 Draft Minutes of Annual General Meeting DRAFT MINUTES OF THE DREAM VACATION CLUB, HELD AT THE BRYANSTON COUNTRY CLUB ON 29 th November 2016 AT 17:00 Present: R.W. Dickson D.I. Gordon Members as per attendance register Staff of Leisure Options (Pty) Ltd & Notice of Meeting: The Chairman welcomed all attendees to the meeting. Proper notice had been given and a quorum being present, the Chairman declared the meeting duly constituted. Apologies: Apologies were received from F.J. Swanepoel (Trustee), the Auditors representative and Members apologies were listed and noted. Proxies were received and recorded. Approval of the Minutes from the previous Annual General Meeting held on the 29 th July 2015: There were no comments, amendments or objections received to the previous Minutes, they were proposed, seconded and accepted as a true record of the meeting. These Minutes are available on the Website. Receive a report from the Chairman of the Board of Trustees: The Chairman informed members present at the meeting that the Annual for 2015 were included in the report, that was handed out at the meeting, starting from pages 12 to 24. The Chairman then gave an overview of the Trustees report that included: The nature of our business; Review of Activities; The re-branding of the Group to Dream Hotels & Resorts; A rundown of the acquisition of The Vic 1906 Hotel in Montagu; Short update on happenings at Piekenierskloof Mountain Resort and Mjejane Bush Camp over the past year; The Chairman announced the re-launch of Finfoot Lake Reserve ; Reported that Sandton Sales (Pty) Ltd has taken over as developer and manager of Bilene Lodge, Mozambique; Chicuanga Resort (formerly Paradise View) re-opened in December 2014 and is available to Club members; An update on the Le Franschhoek Hotel in Franschhoek, initially offered to our platinum members; The opening of the Strolla restaurant at The Peninsula All-Suite Hotel in December 2015; The Chairman reported that demand still remains very high at Avalon Springs in Montagu; Upgrades at the Blue Marlin Hotel in Scottburgh have been greatly rewarded; 6 new units have been bought and built at Kiara Lodge in Clarens for club members to utilise; 2016 Page 28