INDEX

Chairmans statement

03

CEOs report

05

Operational review

08

Corporate governance

12

Annual financial statement for the year ending 31 March 2009

15

Directors responsibilities and approval of the annual finance statements

16

Report of the independent auditors to the members

17

Company secretarys certificate

18

Directors report

19

Balance sheets

21

Income statements

22

Statements of change in equity

22

Cash flow statements

23

Accounting policies

23

Notes to financial statements

26

Success story

44

Corporate social investment

45

CHAIRMANS REPORT

Chairmans statement
On behalf of the board of directors, I am pleased to present the
Trust for Urban Housing Finance (TUHF) 2009 Annual Report.

Performance overview

Deputy Chair:
Cas Coovadia
Managing Director:
The Banking Association
of South Africa

... our competitive position as a distinctive,

commercial, property finance company remains
strong.
In spite of a challenging economic and competitive environment,
2008 proved to be a year of significant achievement. While we
are headed for increasingly challenging times in terms of the
conditions affecting our economy and that of the international
arena, our competitive position as a distinctive, commercial,
property finance company remains strong.
In the fiscal year under review the group loan book grew from
R375.5 million to R606.4 million in advances (a growth of 61%)
while operating profit, after the restatement of accounts,
decreased from R849 221 to R468 963. This margin decrease
was a result of a significant increase in the TUHF loan loss
reserve (increased to 2.3%), and a substantial investment in
internal capacity, particularly the MIS platform. Consequently, by
leveraging internal capacity, TUHF is poised to reap the benefit of
substantial economies of scale.

TUHF was pioneered by several leading South African based

development organisations dedicated to providing effective, costefficient solutions to the inner city improvement challenge. Since
our inception in 2003 our business continues to help individuals
who understand, and believe in the business potential of inner
city rejuvenation, to become profitable property entrepreneurs.
Our policy of assisting local residents to become hands-on
property owners in their own neighbourhoods is actively changing
ownership demographics. Historically, the majority of inner city
property owners were predominantly white, often absentee
landlords, with black tenants mostly from working or middle class
backgrounds. By contrast, the majority of our property owners
and landlords come from previously disadvantaged groups.

Making a difference
... not just to develop but to improve inner city
communities.

Taffy Adler
Chief Executive
Officer: Johannesburg
Housing Company

Mandu Mamatela
Assistant Executive:
Private/Public
Projects NHFC

A shared vision
Powered by an urban regeneration model that
works ... we have become the market leader in
our sector.

Powered by an urban regeneration model that works we have

become the market leader in our sector. Inner city dwellers now
recognise the TUHF logo on our refurbished buildings as the
brand to trust for property financing in their areas - proving that
we best understand the market we serve.

Jill Strelitz
Executive Director
Operations: National
Urban Reconstruction and
Housing Agency

Paul Jackson
Chief Executive
Officer: TUHF

Although we are an independent finance company, we retain vital

links with the financial services sector. We are a participant in (and
provide complimentary investment to) Johannesburg City and
JDA led development programs. As an affiliate of POMA (Property
Owners and Managers Association - an association of landlords),
JICBC (Johannesburg Inner City Business Coalition), NASHO
(National Association of Social Housing Organisations) among
others, we take seriously our responsibility as a community
bank seeking to not just develop but to improve inner city
communities. By remaining true to our founding mandate, we
are committed to making markets work for property enterprise
in South Africa, to effect local economic development in all its
forms.

Acknowledgements

On behalf of the board, I would like to express my gratitude for

his exceptional contribution since TUHFs inception. We wish him
every success in his new role.

Looking ahead
...TUHF is favourably positioned for considerable
growth in the coming year.
Our core brand is synonymous with the rejuvenation of
Johannesburg but, based on the success of our inner city
development projects in Johannesburg and the broader Gauteng
Province, we are confident that our model is transferable to
derelict inner city areas throughout South Africa. From humble
beginnings, where we formerly concentrated on red-lined
areas in Johannesburg only, our regeneration model could soon
become the prototype of a National Urban Regeneration Fund.
In spite of the uncertain economic outlook, TUHF is favourably
positioned for considerable growth in the coming year. To this
end, we intend to reinforce our competitive advantage, to
implement a strong brand strategy to leverage our position
further, and to keep generating value for all our stakeholders.
Our clients, our people and our funding partners are the decisive
factors by which we measure our performance, and I look forward
to meeting the challenges of 2010 together.

... the combined effort of all stakeholders ...

drives TUHFs increasingly impressive track
record of viable and sustainable inner city
development.
A collaborative approach, the combined effort of all stakeholders,
in no small part drives TUHFs increasingly impressive track
record of viable and sustainable inner city development.
For their continued commitment to TUHFs development
initiatives in helping us to achieve our goals, I wish to express
our appreciation to our principal sponsor, the National Housing
Finance Corporation (NHFC), and other major investors namely
Future Growth, Standard Bank, and the Development Bank of
Southern Africa (DBSA).
Moreover, I would like to extend my appreciation to our customers,
our dedicated and talented staff, my fellow board members for
their hard work, invaluable insights, and untiring support. In
particular, I wish to thank Paul Jackson, our chief executive officer
(CEO) for his outstanding leadership.
Mr Taffy Adler has resigned from the board of directors to take up
the position of CEO at the Housing Development Agency (HDA).

Samson Maroba
Chairman (CEO:NHFC)

CEOS REPORT

Market overview
... providing a socially responsible investment
backed by prudent business thinking ...
The Trust for Urban Housing Finances (TUHF) performance
in the year 2009 reflects the continuation of a track record of
resilience and growth. From our inception as a not for loss
company in 2003, by the end of 2004, we had already emerged
as a profitable and financially sound enterprise, and have grown
exponentially ever since. With firm foundations in a pioneering,
entrepreneurial culture we have retained our market ethos as
a good business doing good and have established a clearly
defined market niche inner city areas and rental housing. We
stand firm in the belief that we are providing a socially responsible
investment backed by prudent business thinking and we are
confident in that positioning.
When TUHF entered the market it was distressed. We undertook
to critically examine the various causes of market failure - legally
and institutionally - to formulate strategies which have since
proven instrumental in halting (or helping to correct) market
failure, in order for us to introduce the expertise and liquidity
essential to enable positive market change. Since then, our
urban regeneration model has consistently produced impressive,
quantifiable results, and healthy commercial returns.
When we become actively interested in a particular area, we
engage with the people on the ground - with individuals who
have intimate knowledge of their neighbourhoods. We actively
seek out landlords with exceptional customer service skills and
firm credit control abilities. Our street level approachability
provides unique insight into the behaviour of this market. Coupled
with our logistical and financial expertise, we are able to take
aggressive lending positions, consistently meeting the needs
of our clients in terms of the accessibility and affordability of
our financial solutions. Furthermore, by focussing on quality
as opposed to the more traditional quantity deals, thereby
minimising the risk of bad debt, we are able to sustain and create
ongoing lines of credit to ensure that our business practices are
executed profitably.

Financial performance
... TUHF grew the loan book by 63% and
disbursed a record amount of R275 million
In spite of a difficult year - with the world economy in turmoil,
South Africa in recession, and a lack of liquidity in the local market
- TUHFs operating profit before accounting restatement and
loan loss provisions grew to R9.5 million against a budget of

R8 million (and R5 million previously reported in 2008). Operating

profit after the restatement of accounts was R468, 963, marginally
down from the 2008 levels of R849, 221, in spite of increasing
group loan loss reserves which increased to 2.3%.

The matter has become the subject of extensive litigation which

is likely to result in: either the sale being set aside, or the security
in the form of TUHFs mortgage bond leaving our loan exposure
unsecured.

Having allocated a significant sum of more than R4 million

to improve our internal capacity and IT systems, we are
developing a sizeable, internal economies of scale. An increase of
6 employees (both administrative and professional) has ensured
additional capacity to initiate and support loan origination,
maintain and enhance client service, and assist with financial
administration. As such, IT investment constitutes more than
R4 million over a two year period and will ensure that we achieve
a world-class loan workflow and an integrated loan financial
administration system, ultimately ensuring that TUHF can
deliver on its real-time reporting mandate by March 2010.

Subsequently, this unusual event has resulted in a 155% increase

of the loan impairment provision, from R3.1 million in 2008 to
R7.9 million in 2009.

While many commercial banks have withdrawn from the inner

city investment arena, TUHF has not experienced a discernable
increase in arrears. The demand for housing in inner city areas
in Gauteng remains strong and we are steadfast in our belief
in the viability of inner city regeneration and the investment
opportunities created for multi-unit residential entrepreneurs.
We will, therefore, continue to position ourselves as the leader
in providing specialised financial services and support to our
clients based on our in depth market knowledge, operational
efficiency, appetite for risk and street level approachability.

Change in accounting policy

A change in international financial reporting standards resulted
in the restatement of prior year figures concerning the way we
deal with fee income earned on new loans originated. In the
past, all fee income was reflected as earned in the same year that
the loan featured on TUHFs books - as more than 80% of these
fees including valuation and other professional fees (which are
charged to the client) related to costs incurred upfront.
Consequently, the prior and current year fee income of R3.6
million and R3.8 million respectively, has been deferred over
the average life of the loan, a period of nine years, rather than
being earned in the year in which the loan was originated. This is
in accordance with International Financial Reporting Standards
and accepted market practice. After tax, this adjustment reduced
income by a further R2.8 million in the prior year and R2.1 million
in the current year.

Provision for loan loss

Strengthening our position

In 2007, TUHF received an application to fund the purchase and

renovation of a building called Angus Mansions. Further to
TUHF attending to the requisite internal audit, the application
was approved, and the property transfer proceeded in customary
fashion. The transferring attorneys administered the transfer of
the immovable property from the original owner to our client
and, only once vacant occupation of the immovable property
was established, did we instruct our bond attorneys to pay the
purchase price to the transferring attorney.

Our ability to deliver this kind of value is the

reason people continue to choose the TUHF
brand

It is important to point out that vacant occupation took a

considerable amount of time and was, in fact, only obtained in
October 2007 several months after the transfer had occurred.
In December 2007, a mere two to three months after the issuing
of an eviction order and once the funds for payment had been
released; the immovable property was forcibly invaded and
unlawfully re-occupied. Subsequent to the finalisation of the
transaction, the possibility arose that a fraud had been perpetrated
on the original owners, and that a fraudulent approval to sell the
building had transpired.

Nonetheless, TUHF has successfully financed more than 14 000

units in less than six years, of which more than 90% qualify as
low to moderate income housing, as defined in the Financial
Services Charter (FSC). Our capacity to secure market related
financing and our progressive lending approach creates a
platform for ordinary people to enter the residential property
market and, coupled with TUHFs expert advice on all aspects of
running a successful real estate business, to develop successful
rental housing practices. By encouraging the client to start with
smaller buildings (increasing the size of their respective property
portfolio in order to acquire the necessary confidence to become
a skilled residential real estate manager) we benefit individuals
with a talent for real estate development while allowing for a
relatively effortless passage from part-time to full-time property
entrepreneurship. However, we only finance projects that are
economically sustainable to generate sufficient income to
repay the necessary loans and make a profit.

Our ability to successfully engage this market, progressively

appeals to other financial institutions, seeking to align themselves
with the transformation objectives as set out in the FSC. Our
objective, in addition to the creation of affordable housing
and inner-city regeneration, is to change the complexion of
ownership. Presently, 55% of TUHFs projects are by definition
PDI. This triggers major interest from financial institutions eager
to do business with us and our newly creditworthy borrowers.
Our business is about creating opportunity and generating
wealth for emerging property entrepreneurs, to encourage
further economic activity, in order to build healthy and
sustainable inner city communities. Our ability to deliver this kind
of value is the reason people continue to choose the TUHF brand
and one of the primary reasons our business remains resilient in
spite of an unstable economic climate.

Pursuing a growth strategy

... significant investment in order to fuel the
growth of our brand and establish an even
stronger and more relevant presence.
There has been significant investment in order to fuel the
growth of our brand and establish an even stronger and more
relevant presence. With our set-up phase complete, and having
established ourselves as a substantial commercial enterprise,
we are set to take full advantage of the economies of scale
as a result of significant investment in our internal capacity.
While most organisations are radically curtailing spending and
investment, TUHF is looking to expand its reach, with TUHF
becoming recognised throughout the Gauteng Province as a
community bank, the brand to trust for community finance and
services.
While we are primarily an investment business, as a community
bank we appreciate the value of co-operative relationships
with the likes of JDA (Johannesburg Development Agency),
Johannesburg Metro, and the Johannesburg Inner City Business
Coalition, among others. Moreover, we recognise the importance
of precinct development essential to local economic
development and the growth of our business. There is little doubt
that, when an increasing number of buildings are refurbished,
the neighbourhood becomes more appealing and, the desired
type of tenant is attracted to the area - the spin-off being the
development of a stable and civic-minded society. As individual,
refurbished buildings accumulate to become precincts, these
precincts expand into districts, which in turn, act as magnets for
further investment.

We recognise that like any organisation, we face a number of

risks. Recognising risk as a business reality, we are secure in the
notion that we have an experienced management team who
practice strict control while investing for growth only spending
on resources when absolutely necessary. TUHF will, in the coming
year, continue to make considerable investments in line with
economies of scale in order to leverage the brand and grow
the business, but we will do so in a considered and disciplined
way. Staying in the lower to middle income market niche, we will
continue to improve profitability while focussing primarily on
BEE clients.

Fully aware that a solid, hands-on after sales service engenders

trust and brand loyalty, we conduct regular client visits and
building inspections, both of which will alert us to the early
warning of potential problems that could precipitate loan defaults.
To this end, TUHF appoints individuals who understand property
related finance, who are thoroughly familiar with the inner city
property market, and who are demographically representative of
South Africas inner city communities. Our core resource is our
competent people.

While we continue to engage with entrepreneurs who are

passionate about the inner city property development business,
we are resolute in our commitment to monitoring credit
compliance, ensuring strict adherence to building regulations.
To this end, we will deal more harshly with those in breach of
the aforementioned, in order to create safer and better living
conditions for all.

... grow and further define TUHF as a significant

brand ...

Although the demand for finance on the part of our clients has
not abated, TUHF has with the economic downturn, experienced
some delays with regard to negotiating funding lines necessary
to maintain and expand our business. However, we have never
defaulted on our commitments in the past and we remain
confident in our quality relationships with all our funders. With
TUHFs strategy to develop multiple funder relationships, as part
of our expansion programme, we are in the process of negotiating
a key funding partnership with The Cadiz Group to assist with
our Durban expansion initiatives. While development finance
institutions such as the Development Bank of Southern Africa
(DBSA), the National Housing Finance Corporation (NHFC), and
the Socially Responsible Investment investor Futuregrowth,
continue to support our immediate funding requirements, a
multiple funder strategy is currently underway to secure long
term funding arrangements.

Strengthening our core business

... different from our competitors when it
comes to loan servicing methodology and the
implementation thereof.
Both the prospective property and potential client are formally
assessed. Each ensuing transaction enters the conventional cycle
of origination, appraisal, closing, and servicing. Practicing strict
project assessment, we do not finance projects that we suspect
may be inappropriately used for anti-social or criminal purposes.
We are different from our competitors when it comes to our
loan servicing methodology and the implementation thereof.
TUHF concentrates on a clearly defined geographic area and,
while our loan servicing costs are marginally higher, this is offset against significantly lower bad debt which means greater
financial security for investors and better support to our clients.

Towards a sustainable future

Echoing the chairmans acknowledgements and vision, the

year ahead will be driven by a strong, strategic business
development strategy with explicit priorities and objectives, and
defined, measurable outcomes to grow and further define TUHF
as a significant brand. We are constantly re-energising our efforts
to boost our competitive product range to accommodate the
diverse financial requirements of our clients.
Continued market penetration using the business model that
has successfully driven our inner city development initiatives
in Johannesburg and the greater Gauteng Province, makes
sound business sense. Expansion into other major cities
begets new investors along with new buyers. Innovating for
greater competitiveness we will, in all new areas, replicate
our Johannesburg Sales and Marketing operations, to increase
productivity, efficiency, and responsiveness while managing
central strategic services such as IT from our head office in
Johannesburg.
It is crucial to reflect on where we have come from in order to fully
appreciate our ongoing journey to success. We are consistently
striving to raise the performance of our business and we
continue to work hard to enhance our offering. The fact that we
have delivered a solid performance year on year is verification
of our operational capacity and a mature understanding of our
business. We are confident that the year ahead will be one of
significant achievement and continued excellence for TUHF.

OPERATIONAL REVIEW
Rebuilding inner cities

Competitive advantage

... each loan is carefully tailored to meet the

unique requirements of a particular client and
project.

Mortgage finance

Our core business is concerned with financing the acquisition of

properties in defined urban areas. Applicable to entrepreneurs
and entrepreneurial businesses, the value of each loan and the
awarding thereof is based on the individual merit of a projects
ability to sustain debt (debt cover) and provide security (loan
to value). We are, therefore, not a debt equity financier offering
the standard 70% to 30% split. Rather, each loan is carefully
tailored to meet the unique requirements of a particular client
and project.
As an intermediate financial services company, TUHF is different
from commercial banks. We do not distinguish between purchase
loans and refurbishment loans. Loan applicants can obtain up
to 80% of the purchase price and 100% of the refurbishment
cost, with repeat clients (at our discretion) being eligible for
loans which could cover 100% of new project costs. The project
purchase price is, therefore, crucial to the ultimate success of the
loan, and a fundamental axiom of our business.
Undoubtedly, property development and the ongoing
management thereof is primarily a cash flow proposition. The
property must service itself from the outset. To this end, we offer
a 15 year repayment period - exceeding the 10 year industry
standard for commercial property projects.
As a leading commercial property financier in the rental housing
industry, our clients have come to expect a comprehensive service
offering, to effectively meet their diverse property-related financial
requirements. Accordingly, we offer a competitive product range
- mortgage finance, bridging finance, construction loans, and
equity finance.

Loan approvals for the financial year ending

March 2009 were R395.25 million against an
annual target of R360 million (109% of annual
target).
In the period under review, TUHF reported more than 300 active
loans on its books. Loan approvals for the financial year ending
March 2009 were R395.25 million against an annual target of
R360 million (109% of annual target). Loan disbursements for
the same period were R246.27 million against a target of
R270 million (91.2% of target).
While most of TUHFs development projects are situated in the
urban development zone (UDZ) of Johannesburg, we have more
recently extended our reach in Gauteng to include Springs,
Brakpan, Alberton, Benoni, Rosettenville, and Primrose. We have
also finalised a significant number of loans in Pretoria - a rapidly
growing inner city development area from TUHFs perspective.
Additionally, loans have been successfully concluded as far afield
as Durban to the extent that in July of this year, in response to
an expanding market, a dedicated representative is in place to
support numerous existing deals, and to further leverage TUHFs
brand presence in this region.

Primarily a mortgage financing company, more than 90% of our

business consists of TUHF mortgage products offered for the
following types of projects:

Rates clearance certificates (RCC)

the purchase and refurbishment of apartment blocks

the conversion of office and other buildings to

residential rental units
the purchase of the controlling participation quota in
sectional title apartment blocks

Ranging from a minimum of R50 000 to a maximum of

R25 million our loan size comfort range is approximately
R3 million to R5 million. We are capable of funding amounts
larger than R25 million but this is considered on a syndicated
basis only.
In summary, we only finance viable inner city development
projects guaranteed to yield sufficient income to repay the
respective loan with interest and make a healthy profit for the
owner. We work in close co-operation with the client to ensure
that the project is feasible; the purchase and refurbishment or
building conversion price is reasonable; and that market rentals
are achievable. In effect, all TUHF clients, large or small, benefit
from our timeous decision-making and expert advice on all
aspects of the real estate business.

Bridging finance

... TUHF has secured additional funds based on

the success of this product.
Our primary mortgage financing service is supported by the
innovation of bridging finance - a value-add product introduced
in May 2006. An effective financial instrument and a direct
function of mortgage finance, it allows for quick access to
liquidity.
Risk evaluation is based on the probability of an identified exit
being realised. Such exits are:

profit due to a seller - from the sale of a property

registration of a bond - where the mortgage loan

makes provision for funds that were due
before registration.

The application of this simple concept means that risk is kept to

a minimum.

a client whom, having sold a property, requires their

share of the purchase price, prior to registration or
transfer

a situation where the seller cannot afford to pay for the

RCC
an instance where the purchaser wishes to offset the
RCC payment against the building purchase price

In the period under review bridging performance was slightly

lower than anticipated. Bridging approvals of R56, 482, 816
against a target of R65 million with bridging advances at
R40, 076, 786 were recorded.
The recent state of the residential mortgage market in which
most of TUHF Bridges competitors are situated caused a
significant slump in the demand for the bigger bridging
finance institutions. However, as specialists in the inner city
property development environment, coupled with our unique
understanding of the inner city market, we anticipate a sturdy,
sustainable future for TUHF Bridge. Our competitive rates, agility,
and ability to secure additional funds based on the success of this
product, continues to make the TUHF bridging finance product
an enticing option for investors.
Setting demanding but tenable bridging finance goals for
2009/2010, we believe that our unique understanding of the
inner city market will enable TUHF Bridge to carve out a sizeable
percentage of the bridging finance market share.

Construction loans

... an opportunity for the developer intent on

the short-term, to acquire property, pre-sell,
convert/refurbish and transfer units at a profit.
Although our core business proposition is based on long-term
ownership or residential stock our construction loan product
provides an opportunity for the developer intent on the shortterm, to acquire property, pre-sell, convert/refurbish and transfer
units at a profit. The construction loan product is ideally suited
to borrowers/developers who are experienced inner city
developers with construction, sectional title and marketing
skills. Designed specifically for the refurbishment or conversion
of sectional title units for onward sale to a third party purchaser,
once the construction risk is over long-term loans can be raised.

Bridging finance is applicable to:

TUHF finances the following sectional title developments:
Balance of purchase price

a client that needs to raise funds quickly specifically

one who wishes to utilise the profits from a property
already sold, to purchase another property at an auction

new buildings
the conversion of commercial/industrial buildings
the conversion of former rental flats

Equity finance

Lending criteria and approvals

...Unique to TUHF, Intuthuko ... focuses on

previously disadvantaged individuals (PDIs) ...

... choice landlords who ... maintain buildings at

high standards ... provide exceptional customer
service and uphold a strict but courteous credit
control.

TUHF strives to empower emerging property entrepreneurs

by facilitating entry to the rental housing property industry.
Accordingly, the Intuthuko Equity Fund (Pty) Ltd (Intuthuko) was
created in 2005, in collaboration with the Gauteng Partnership
Fund (GPF) to assist individuals - who lack the necessary funds to
obtain a TUHF loan to acquire residential investment property for
rental to third parties. All funds for this product are provided
by the Gauteng Partnership Fund (GPF).
Unique to TUHF, Intuthuko is aimed at individuals who live and/
or work in the inner city and focuses on previously disadvantaged
individuals (PDIs) such as: emerging landlords (caretakers and
artisans) from the construction and property management
industries; the safety and security industry (police and fireman);
and the Health and Education sector (nurses and teachers)
among others.
Provided that certain conditions are met, Intuthuko will contribute
the deposit amount or part thereof to secure a TUHF loan
approval. Conditions include (among others) that the individual
ought to be willing to contribute earnest money (savings) and
must be familiar with the inner city, particularly the area in which
they wish to invest.
At the outset, GPF granted a R2 million loan to Intuthuko. These
funds have been fully utilised and, by the end of the period under
review, Intuthuko had 10 existing property deals to the value of
R2.2 million, of which R2.14 million was disbursed. More recently,
GPF approved an additional loan of R8 million and, as a result
of the increase in value/cost of property in the inner cities of
Gauteng, the loan limit was increased from R200 000 to
R500 000 per individual.
Intuthuko contributes to financially viable rental property
ventures only and therefore permits a maximum loan period
of seven years with no more than two loans per applicant. The
objective is that these property investment initiatives become
sustainable and profitable. If a property investment, after servicing
mortgage commitments to TUHF, yields a profit, and TUHF can
refinance the loan, the emergent property entrepreneur enjoys a
successful property business and will, therefore, no longer qualify
or require support from Intuthuko. The relationship between the
buyer and Intuthuko is such that it supports the growth of the
business, while helping to correct the historic imbalance in
inner city property ownership.

All loan applications are evaluated against TUHFs policies more specifically according to the terms of our character based
lending and regeneration mandates. Translated, this means that
loan approval is extended to choice landlords who will maintain
buildings at high standards, who will endeavour to provide an
exceptional customer service and uphold a strict but courteous
credit control. Each loan applicant is assessed against TUHFs debt
cover and loan-to-value criteria to determine optimum loan size
and loan structuring.
Similar to other mainstream financiers, the customary background
credit checks apply. However, we place particular emphasis
on personally interviewing each applicant to gather crucial
character information that paper submissions may not provide.
Individuals who apply for inner city finance typically have
different requirements to the more orthodox property investors.
Accordingly, our experienced loan officers can swiftly distinguish
between the suitable and the risky candidates.
TUHF currently grants loans of up to R25 million, with a larger
loan option provided through joint financing or syndicated
lending mechanisms. All loan applications are considered at
weekly management committee meetings. Loan applications
of between R5 million and R15 million are forwarded to TUHFs
Loan Committee while larger loans are subject to approval by the
TUHF Board.

Loan management

... professionally qualified, expert loan officers ...

Our professionally qualified, expert loan officers are responsible
for their respective property portfolios and for the cultivation
and maintenance of enduring client relationships. Systems
generated and externally prepared reports assist our officers in
the monitoring of loan performance and client adherence to
particular loan conditions. Moreover, our officers are expected
to regularly inspect the properties within their allotted
portfolios in order to obtain accurate and regular feedback from
tenants and landlords.

CORPORATE GOVERNANCE

Property owners and landlords

... we take our commitment to uplift the areas

in which our TUHF rental properties are situated
seriously.
Although, more than 55% of the TUHF customer base is BEE, our
clients come from various social backgrounds. Ranging from
artisans and caretakers, with smaller four-apartment properties in
Yeoville to our most successful self-made property entrepreneurs
with buildings consisting of more than 1700 units, we service a
diverse range of clients. Working in partnership with the likes
of the Johannesburg City Council, we take our commitment to
uplift the areas in which our TUHF rental properties are situated
seriously.

Customer service and deal-making

... significantly faster than our competitors ...

TUHF has, since its inception, built up invaluable expertise,
coupled with a deep and insightful understanding of our market.
We know precisely what prices should be paid for properties:
from the refurbished, to the run-down, to the derelict. We make it
our business to know the rates and taxes in specific areas, and we
are able to promptly assess the approximate refurbishment costs
of a given project.

When a deal is imminent, we conduct a detailed feasibility study

in close association with the client and often the property seller
until all parties reach a consensus with regard to the terms of the
deal. TUHFs swift decision-making process (significantly faster
than our competitors) is thus a crucial element in respect of
vital accountability principles. The speed of our process enables
smaller scale entrepreneurs to compete in the property market
as almost cash buyers. The fast-acting, yet prudent integrity of
our service continues to prove instrumental in encouraging new
entrants into the property market (catapulting them from parttime to fully-fledged) ultimately becoming full-time landlords of
multiple properties.

Our pledge
... good corporate governance is about more
than conformance to standards and codes.
The Trust for Urban Housing Finance (TUHF) remains committed
to the application of the principles specified in the King Code of
Corporate Practices and Conduct. These principles determine
standards for the group and, in alignment with the group, the
respective governance frameworks of our subsidiary companies.
Annually reviewed and updated, the TUHF corporate governance
framework is concerned with the:

role of respective members / shareholders

Board of directors - leadership responsibility /

accountability
separate responsibilities of the chairperson and chief
executive officer (CEO)
terms of reference of TUHFs board committees

objectives, appointments, meetings, duties,
scope of authority

The board is chaired by Samson Moraba, an independent, nonexecutive director, while Paul Jackson, Group CEO, is tasked with
the running of the business and the implementation of strategies
and policies adopted by the board. Apart from the CEO, all other
directors, Cas Coovadia, Taffy Adler, Mandu Mamatela, and Jill
Strelitz, are independent and non-executive. Although certain
of our directors are board members of other companies that
have granted wholesale funding facilities to the group, their
independence is not compromised. Hailing from the industry
and, sharing a common vision for viable and sustainable inner
city regeneration, the directors in question, together with the
rest of the board have, in accordance with the groups obligations
to its shareholders, acted with integrity and diligence in the
execution of their duties and exercise of powers.
Non-executive directors are currently not remunerated and
no additional fees are paid in respect of membership of board
committees. Given that the group intends to consolidate and
enhance its commercial profile, this status will be monitored and
reviewed.

Conforming to a sound governance framework, the group

aims to reduce the risk of fraud and mismanagement but we
are mindful that good corporate governance is about more than
conformance to standards and codes. It is also about adopting
best practices to improve the functioning of TUHF to enhance
company performance and increase shareholder value.

While, an induction programme for new directors is still to be

finalised, the boards collective experience and invaluable
industry expertise remains unquestionable. The current board
cumulatively share a sound understanding of the group, and of
the specialist business environment, and market, in which the
group operates.

Board of directors

With expected positive growth prospects, the board intends to

intensify resources by introducing additional banking and financial
skills to its profile. As a result of the adoption and implementation
of best practices for the group, the board maintained a healthy
balance between conformance and performance in the year
under review.

... sharing a common vision for viable and

sustainable inner city regeneration ...
Ultimately responsible for corporate governance within
regulatory risk parameters, the board of directors (the board)
schedules a minimum of six meetings per year, (with additional
ad hoc meetings as required).
Functions of the board include:

the approval of strategic plans

the monitoring of managements implementation of
strategic plans
the delegation of powers and duties to management
the establishment of policy processes to ensure the
integrity of management and related internal controls.

The management process

... overall accountability to shareholders for
determining strategy, and for the conduct of the
business as a group.
To facilitate prompt and efficient decision-making in the
execution of its duties, the board is authorised to institute relevant
committees to oversee constituent elements of the management
process, and to review the respective committee minutes and
reports. However, these committees do not absolve the board
of their overall accountability to shareholders for determining
strategy, and for the conduct of the business as a group.

To this end, the board delegates explicit responsibility to

five committees (loan committee, remuneration committee,
finance and audit committee, risk management committee, and
management committee). Day-to-day group financial affairs
(including annual audits) are managed by the company secretary
who ensures that TUHF complies with relevant legislation
and regulation and keeps the board informed of their legal
responsibilities.

Loan committee
Meeting monthly, the primary mandate of the loan committee
is to:

review and recommend changes to the groups credit

and loan policy
provide guidance on all aspects of
project development (including procedures for
project preparation and approval)
evaluate and approve financing and guarantees of
projects - within the established value band delegated
to the committee by the board
recommend to the board projects above the

established value band

Members: Paul Jackson (committee chairman and CEO), Cas

Coovadia (board member), Jill Strelitz (board member), Mandu
Mamatela (board member), Ilona Roodt (financial manager)

Finance and audit committee

Management committee

Established in 2008 the Finance and Audit Committees meets

two to three times a year to:

Weekly meetings serve to:

review group accounting policy and practice and,

when necessary recommend changes
review group financial, operational and internal control
systems and, when required, to make
recommendations to the board
monitor managements compliance with statutory
and board-imposed regulations, and to
ensure managements comprehensive reporting to the
board
evaluate the groups audit, and review all external audit
reports and management letters
review annual financial statements, interim statements
and, for consideration and approval by the board,
notices to members.

Members: Cas Coovadia (committee chairman and board

member), Ilona Roodt (financial manager) Mandu Mamatela
(board member), Paul Jackson (CEO), Samson Moraba (group
chairman)

Risk management committee

By invitation: Loan Officers - Nano Makwela, Rekwele Mmatli,

George Chauke, Lusanda Mbeje, Med Kwesiga, Andre Van Rooyen,
Khumbelani Chikomo, Belinda Cooke (loan administration
manager), Mark Labuschagne (mortgage manager), Rose Valloo
(accountant)

The group recognises that the effective management of group

risk is fundamental to our business. Accountable to the board,
the risk management committee meets monthly to monitor
and control risk exposure. The careful design, implementation,
monitoring and review of the group risk management process
helps to ensure that all subsidiary companies operate within
defined parameters and objectives.

Remuneration committee

Major group risks:

Meeting a minimum of twice a year, the main directive of the

remuneration committee is to:

review employee earnings (including benefits) to

maintain best practices and ensure competitive
remuneration packages
review, recommend and approve, on an individual
basis, executive remuneration packages
review, recommend, and approve salary and

performance increments
review and recommend annual incentive bonuses.

Members: Samson Moraba (committee chairman and group

chairman), Cas Coovadia (board member), Mandu Mamatela
(board member), Taffy Adler (board member)
By invitation: Ilona Roodt (financial manager), Sally Blaine (human
resource consultant)

credit
liquidity
market
operational
compliance
investment management
business
solvency

Members: Ilona Roodt (committee chairperson and financial

manager), Belinda Cooke (loan administration manager), Mark
Labuschagne (mortgage manager), Paul Jackson (CEO), Rose
Valloo (accountant)
By invitation: Loan Officers - Nano Makwela, Rekwele Mmatli,
George Chauke, Lusanda Mbeje, Med Kwesiga, Andre Van Rooyen,
Khumbelani Chikomo

evaluate and approve, within board approved value

bands, project financing and guarantees
recommend to the loan committee viable projects that
exceed established value bands
assess the effectiveness of the groups loan and credit
policy
assess all operational aspects of projects, financing,
development and implementation including
procedures for project preparation and approval

Members: Paul Jackson (committee chairman and CEO), Ilona

Roodt (financial manager), Mark Labuschagne (mortgage
manager), Rose Valloo (accountant), Belinda Cooke (loan
administration manager), Antoinette Bosch (loan administrator),
Justine Saloman (loan administrator), and loan officers - Nano
Makwela, Rekwele Mmatli, George Chauke, Lusanda Mbeje, Med
Kwesiga, Andre Van Rooyen, Khumbelani Chikomo

Moving forward
... apply accountable and principled business
practices throughout the group ...
With effect from December 2007, the Corporate Laws Amendment
Act has impacted on the functioning and composition of the
audit committee. The Act requires that the audit committees
composition constitutes a minimum of two non-executive
members, none of whom should be board members.
Although we are not bound by these requirements at present,
the more recent Companies Bill stipulates that this, and all other
issues of non-compliance, must be addressed by 2010. This
is particularly relevant to the TUHF group given the proposed
changes to its structure.
In the formulation of our governance framework, we will
continue to apply accountable and principled business practices
throughout the Group, thereby encouraging the ethical
behaviour and decision making of the board, our managers
and our employees, at all levels.

Annual financial statements

Directors responsibilities

for the year ended 31 March 2009

and approval of the annual financial statements

ANNUAL FINANCIAL STATEMENTS FOR THE YEAR

ended 31 March 2009

Country of incorporation and domicile

Nature of business

Directors

Republic of South Africa

A development finance organisation providing finance for the purchase, construction, conversion and improvement of residential
property within South African inner city precincts

S Moraba (Chairman)*
T Adler*
C Coovadia*
P G N Jackson (CEO)
M Mamatela*
J S Strelitz*
Non-executive director*

Secretary
Business address

I Roodt

First Floor
UCS House
209 Smit Street
Braamfontein
2001

Postal address

P O Box 30872
Braamfontein
2017

Bankers

The Standard Bank of

South Africa Limited

Auditors

BDO Spencer Steward (Johannesburg) Inc.

Chartered Accountants (SA)
Registered Auditors

Attorneys
Company registration number

Contents

Cliffe Dekker Hofmeyr Inc

1993/000217/08

Page

Report of the independent auditors

17

Report of the directors

19

Balance sheets

21

Income statements

22

Statement of changes in equity

22

Cash flow statement

23

Accounting policies

23

Notes to the financial statements

26

In accordance with Companies Act requirements, the directors

are responsible for the preparation of the annual financial
statements which conform with International Financial Reporting
Standards (IFRS) and which, in accordance with those standards,
fairly present the state of affairs of the company and the group
as at the end of the financial year, and the net income and cash
flows for that period.

It is the responsibility of the independent auditors to report on
the fair presentation of the financial statements.

The directors are ultimately responsible for the internal controls.
Management enables the directors to meet these responsibilities.
Standards and systems of internal control are designed and
implemented by management to provide reasonable assurance
as to the integrity and reliability of the financial statements in
terms of IFRS and to adequately safeguard, verify and maintain
accountability for group assets. Accounting policies supported by
judgements, estimates and assumptions which comply with IFRS,
are applied on a consistent and going concern basis. Systems and
controls include the proper delegation of responsibilities within:
a clearly defined framework, effective accounting procedures
and adequate segregation of duties.

Systems and controls are monitored throughout the group.
Greater detail of such, including the operation of the risk
management function, is provided in the corporate governance
section and the risk management section of this report.

Based on the information and explanation given by management,
the directors are of the opinion that the controls are adequate and
that the financial records may be relied upon for preparing the
financial statements in accordance with IFRS and maintaining the
groups assets and liabilities. Nothing has come to the attention
of the directors to indicate that any breakdown in the functioning
of these controls, resulting in material loss to the group, has
occurred during the year and up to the date of this report.

The directors have a reasonable expectation that the company
and the group have adequate resources to continue in
operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the
financial statements.

The company and the group financial statements prepared in
accordance with IFRS which appear on pages 19 to 43, were
approved by the board of directors on 28 July 2009 and signed
on its behalf by

____________

S MORABA
Chairman

_____________
P JACKSON
CEO

report of the independant auditors to the members

Company secretarys certificate

Trust for Urban Housing Finance

TO THE MEMBERS OF THE TRUST FOR URBAN

HOUSING FINANCE

(Association incorporated under Section 21)

Report on the financial statements

We have audited the accompanying financial statements and
group financial statements of the Trust for Urban Housing
Finance, which comprise the balance sheets as at 31 March 2009,
and the income statements, statements of changes in equity and
cash flow statements for the year then ended, and a summary of
significant accounting policies and other explanatory notes set
out on pages 19 to 43.

An audit also includes evaluating the appropriateness of

accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.

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

Managements responsibility

Opinion

Management is responsible for the preparation and fair

presentation of these financial statements in accordance with
International Financial Reporting Standards (IFRS) and in the
manner required by the Companies Act of South Africa. 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.

In our opinion, the financial statements present fairly, in all

material respects the financial position of the Trust for Urban
Housing Finance and of the group as of 31 March 2009, and of
their financial performance and their cash flows for the year then
ended in accordance with the IFRS and the Companies Act of
South Africa.

In accordance with the provisions of the Companies Act,

1973 (the Act), I certify that in respect of the year ended 31
March 2009, the company has lodged with the Registrar of
Companies all returns prescribed by the Act and that all such
returns are true, correct and up to date.

Auditors 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 and disclosures in the financial statements.
The procedures selected depend on the auditors judgment,
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 control
relevant to the entitys 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 entitys internal
control.

BDO Spencer Steward (Johannesburg) Inc

Registered Auditors
Johannesburg
Tuesday, 28 July 2009
13 Wellington Road, Parktown
2193

_____________________
I Roodt
Johannesburg
Tuesday, July 28, 2009

DIRECTORS REPORT
DIRECTORS REPORT (continued)

DIRECTORS REPORT
To the members of

TRUST FOR URBAN HOUSING FINANCE

Your directors submit their report for the year ended 31 March 2009

Nature of activities

The company and its subsidiaries are development finance organisations that provide
short and long term finance to landlords, social housing institutions and tenant based
collectives for the purchase, construction, conversion and improvement of property
within South African inner city precincts, where the objective is the supply of rental
housing. The company and its subsidiaries offer loan funding for such projects by way of
different products secured by the property asset or approved exit structures.

Securitisation

The company's current financing structure is a number of single negotiated lines of

credit, each with a respective value and specific conditions and procedures. The growth
of approved loans reduces the efficiency and flexibility of this structure as well as not
meeting volume needs.
It has become clear to the directors that at this point in the company's growth the
financing structure needs to be reviewed in order to establish:
flexible volume of wholesale funds
decreased average cost of wholesale financing
financial efficiency

Trading results

The results are fully disclosed in the attached financial statements

Loan impairment

It is the opinion of management that the realisable values of collateral held in respect
of advances exceed the book value of such advances. Advances always contain certain
balances, that although not yet identified as a problem, will prove to be irrecoverable.
Similarly certain clients and advances may display certain triggers such as late or non
payment and an assessment of the project collateral must be considered. The group
does not have sufficient historical data to estimate with any degree of accuracy what
these losses may be. Management has conservatively, based on risk profiles, estimated
the potential impairment of advances on a collective basis. Applying management's
methodology a loan impairment of R 7 933 070 (2008 - R 3 098 232) for the year under
review has been raised. A risk rating of certain projects has resulted in the impairment
of individual loans being increased to R 5 795 612 (2008 - R965 000) for mortgage loans
and an amount of R 954 641 (2008 R 301 793) being provided for bridging finance loans.
Refer to Note 28 for additional information regarding these impairments and on how the
group manages credit risk.

Taxation

In consultation with financial advisors, these objectives will be achieved by the

securitisation of the mortgage finance business. Negotiations are well advanced, with the
demand for participation high and many reputable companies indicating a willingness to
participate. The current credit crunch and lack of liquidity in the market is impacting on
the implementation of the securitisation structure which remains under consideration.
The company has appointed Mettle to conclude the securitization transaction following
a change in Futuregrowth Asset Management's transaction focus from arranger to
potential investor.

Support programme for social housing

In terms of an agency agreement entered into in July 2004 the company was appointed by
the National Housing Finance Corporation as its agent and representative to manage the
implementation and operations of the support programme for social housing, funding
of which originated from the Commission of the European Community amounting to
R23.1 million. The company's duties of agent terminated on 6 June 2007, but negotiations
are in progress to renew the agency agreement with additional funds. The risks related
to advances from these funds are ring fenced and have no influence on the company's
operations. For this service the company is paid a monthly fee out of the interest received
from the advances in projects and money markets.

Equity funding

One of the principles of the company's lending approach is to support emerging

entrepreneurs and black economic empowerment. To assist in the financial gearing
of their projects, the company provides emerging entrepreneurs, who qualify for debt
support, equity type finance in the form of variable interest subordinated loans.

In terms of section 10(1)(cc) of the Income Tax Act, the company is exempt from taxation.
However, with the introduction of section 30, the company needed to re-apply for
exemption as a public benefit organisation.

The company has submitted such an application. The South African Revenue Services
(SARS) has advised that exemption will be granted in terms of paragraph 3(f ) subparagraph (a) and (b) of the Ninth Schedule of Income Tax Act. However this exemption is
subject to conditions prescribed by the Minister of Finance which to date have not been
promulgated. Not withstanding this advice, the company has been in contact with the
SARS' Tax Exemption Unit to seek further clarification on the company's status concerning
its changed business operations since the application was submitted in October 2003.
We await final confirmation from SARS as to the requirements for compliance.

The directors, however, believe that it would be prudent to provide for tax where the
company has taxable income. To this end, an increase of R 2 829 689 has been provided
for the year taking the full accrual to R 7 468 534 (2008 - R 4 638 845). Assessable losses
were incurred in the years ended March 2004 and March 2005. For the year under
review the company has provided taxation of R 2 829 689. The company's subsidiaries,
Intuthuko Equity Fund (Pty) Ltd and TUHF Bridge (Pty) Ltd, provided normal taxation of
R 24 695 ( 2008 - R 5 587) and R 369 667 (2008 - R 19 440) respectively. TUHF Properties
(Pty) Ltd provided deferred tax only in the current year of R 1 472 and had an assessable
loss of R 59 777 for 2008.

Funding

increased commercial independence

During the year under review, the company and a subsidiary secured the following
funding facilities:

The initial R2 million received from the Gauteng Partnership Fund for this purpose has
been fully committed and drawn down. Negotiations have commenced to facilitate
additional funds for this product. An agreement for an additional R 8 million has been
approved.

Directors and secretary

Details of the directors and secretary of the company are given on page 3 and page 18
respectively.

Auditors

The groups auditors are BDO Spencer Steward (Johannesburg) Inc.

Members' funds

There are no members' funds.

Members' guarantee

The company is an Association without share capital incorporated under Section 21 of the
Companies Act and limited by guarantee. In terms of the Memorandum of Association,
each member of the company guarantees to contribute R 1 (one rand) in the event of the
company being wound up. At the balance sheet date the guarantee value amounted to
R 12 (2008 - R 12).

Subsidiary companies

Information regarding the company's interest in its wholly owned subsidiaries are given
in Note 29.

Prior period adjustment

The company has changed the accounting treatment for non interest income. Income
is no longer recognised upfront but is deferred over the average life of the loan to
approximate the effective yield. Accounting policies Note 12 contains further information
about the accounting treatment.

R 50 million from Momentum Group Limited repayable in full by February 2022.

R 80 million from Momentum Group Limited repayable in full by August 2009. TUHF are
currently negotiating that this facility be converted into a 15 year long term loan.
An additional R 100 million facility from the National Housing Finance Corporation was
approved in June 2009.
An additional R 200 million facility from the Development Bank of South Africa is
currently under negotiation.
An additional R 50 million facility from Cadiz Group is currently under negotiation.

During 2009 non interest income of R 3 814 269 was deferred (2008 R 3 618 929). The after
tax effect on retained earnings in the current period was a decrease in the current and
prior period of R 2 172 833 (2008 R 2 605 629).

Future additional funding will mainly be sourced through the securitisation structure
dealt hereunder in this report.

Refer to Notes 11 and 17 for further disclosure as to the amount of income deferred in
current and prior periods and the tax effect thereof.

Subsequent events

The company is planning a new corporate commercial structure and will sell its loan book
to the new group companies already formed.

BALANCE SHEETS

Income statements
INCOME STATEMENTS

BALANCE SHEETS at 31 March 2009

GROUP
2009
Note

2008

for the year ended 31 March 2009

COMPANY
2009

GROUP

2008

2009

Note

Assets
Cash and bank current accounts

418,460

589,789

396,036

378,649

Money market assets

37,845,560

55,896,662

33,363,903

34,931,778

Advances

606,391,753

375,508,909

577,806,256

361,932,316

Other assets

2,078,024

1,739,404

1,984,032

1,738,550

Deferred taxation

24

5,347,386

2,796,286

4,722,763

2,478,574

Subsidiary companies

37,555,689

34,210,163

Equipment and intangible assets

2,558,290

1,127,853

2,558,290

1,127,853

654,639,473

437,658,903

658,386,970

436,797,883

7,845,773

4,629,982

7,468,534

4,638,845

916,924

650,064

909,422

647,533

Total assets

Liabilities
Taxation

12

Other liabilities

Deferred taxation

24

Equalisation of rental

Accruals

10

Subsidiary companies

Non-interest bearing borrowings

Interest bearing borrowings

36,189

36,189

1,192,240

332,502

1,192,240

332,502

5,585,818

249,987

13

11,350,102

10,792,683

10,000,092

9,527,405

14

611,365,051

402,134,084

611,365,051

402,134,084

Total liabilities

632,706,278

418,539,315

636,557,345

417,530,356

6,636,753

3,618,929

6,636,753

3,618,929

COMPANY
2008

2009
R

2008
R

Interest income

19

89,947,798

48,783,254

87,871,996

Interest expenses

20

66,520,131

34,991,144

66,688,262

35,373,289

23,427,667

13,792,110

21,183,734

14,158,591

372,125

1,425,480

471,682

1,062,593

372,125

1,062,593

471,682

1,062,593

7,933,069

3,098,232

6,634,612

3,062,558

15,122,472

9,268,398

14,077,440

10,033,440

3,520,317

3,483,878

3,831,284

2,893,213

Net interest income

Notional interest on present valuing of
financial assets and liabilities
Present valuing financial assets

49,531,880

362,887

Present valuing financial liabilities

Loan impairment

21

Income from lending activities

Non-interest income

22

Operating income
Operating expenditure

18,642,789

12,752,276

17,908,724

12,926,653

23

18,173,827

11,903,055

17,778,949

11,522,602

468,963

849,221

129,775

1,404,051

24

673,182

777,481

585,502

802,113

(204,220)

71,740

(455,727 )

601,938

Profit before taxation

Taxation
Net profit for the year

Deferred income
Deferred income

11

Equity capital and reserves

Members funds
Reserves
Total liabilities, deferred income and reserves

15,296,441

15,500,659

15,192,871

15,648,598

654,639,473

437,658,903

658,386,970

436,797,883

statements of change in equity

STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2009

GROUP

COMPANY

15,428,922

15,046,660

2,677,368

3,207,567

Balance at 31 March 2008 - as previously reported

18,106,290

18,254,227

Prior year adjustment

(2,605,629)

(2,605,629)

Balance at 31 March 2008 - restated

15,500,661

15,648,598

(204,220)

(455,727)

15,296,441

15,192,871

Balance at 31 March 2007

Net profit for the year

Net profit for the year

Balance at 31 March 2009

Cash flow statement

Cash, bank current accounts and money market assets:

CASH FLOW STATEMENT

for the year ended 31 March 2009

GROUP

COMPANY

2009
Note

2008

2009

2008

Cash flows from operating activities

Interest received
Interest paid

92,199,832

44,995,794

87,048,574

45,744,420

(69,159,791)

(31,002,906)

(66,644,107)

(31,385,051)

Grants Received

76,754

76,754

910,321

2,033,891

910,321

2,033,891

(19,090,477)

(11,277,494)

(16,663,216)

(11,437,791)

4,859,883

4,826,039

4,651,572

5,032,221

(232,313,281)

(170,410,221)

(215,433,028)

(191,486,334)

(1,430,437)

(1,073,284)

(1,430,437)

(1,073,284)

(258,137,563)

(211,769,998)

(243,128,659)

(186,336,250)

27,254,719

42,433,061

27,254,719

13,681,491

1,871,350

(17,758,291)

209,230,967

207,444,461

209,230,967

207,144,461

Cash received from clients

Cash paid to suppliers and employees

Net cash inflow from operating activities

27

Cash flows (utilised)/generated by investing

activities
Acquisition of equipment
Cash advances, net of repayments
Advance settlements received
(Increase)/Decrease in investments

Cash flows from financing activities

Increase in interest bearing borrowings

278,390,758

238,447,367

275,875,074

238,529,512

Repayment of interest bearing borrowings

(69,159,791)

(31,002,906)

(66,644,107)

(31,385,051)

(18,222,431)

41,860,279

(1,550,489)

20,690,348

Net increase/(decrease in cash resources

for the year)
Cash and cash equivalents at beginning of the year

Cash and cash equivalents at end of the year

56,486,451

14,626,172

35,310,429

14,620,079

38,264,022

56,486,451

33,759,939

35,310,427

Cash equivalents are short term highly liquid investments that are readily convertible to known
amounts of cash and are subject to insignificant risk in changing value.
Cash and cash equivalents are measured at fair value. Money market assets are disclosed separately
and not included in cash.
Cash held in trust are funds deposited into the groups attorneys trust account to facilitate the issue
of purchase guarantees and payment of the purchase price to the property seller on the bond and
transfer registration.
Cash and cash equivalents held in trust are initially measured at fair value and subsequently measured
at amortised cost.
Advances and receivables:
Advances and receivables are measured at initial recognition at fair value, and are subsequently
measured at amortised cost using the effective interest rate method.
Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss. Refer to
accounting policy on impairment.
A hybrid loan exists in advances made by Intuthuko Equity Fund (Pty) Ltd where variable interest rates
are based on the calculated yields of the borrowers own equity. This yield determines the interest
payable by the borrowers on the equity element of the contract and is recognised as interest on
investments in the income statements. Where this yield is negative the equity investment element of
the loan has no value and the loan element is recognised at amortised cost.
Loans to (from) subsidiary companies:
These loans are recognised initially at fair value plus direct transaction costs. Subsequently these loans
are measured at amortised cost using the effective interest rate method, less any impairment loss
recognised to reflect irrecoverable amounts.
Trade and other payables and borrowings:
Trade payables are initially measured at fair value, and are subsequently measured at amortised cost,
using the effective interest rate method.
Fees earned on financial assets are recognised in accordance with the loan agreements.
These are capitalised to the value of the loan and credited to non-interest income as the fee is earned.
Derecognition :
A gain or loss arising from a change in financial asset or liability is recognised as follows:
Financial assets and financial liabilities carried at amortised cost:
A gain or loss is recognised in profit or loss when the financial asset or liability is derecognised or
impaired, and through the amortisation process.
Financial assets are derecognised when the rights to receive cashflows expire or are transferred together
with risks and rewards of ownership.
Financial liabilities are derecognised when the groups obligation specified in the contract is discharged,
cancelled or has expired.
Offset :

Made up as follows:
Cash and bank current accounts

418,460

589,789

396,036

378,649

Money market assets

37,845,560

55,896,662

33,363,903

34,931,778

38,264,022

56,486,451

33,759,939

35,310,427

When a legally enforceable right of offset exists for financial assets and liabilities, and there is an
intention to settle the liability and realise the asset simultaneously or to sell on a net basis, all related
financial effects are offset.

7. Impairment - financial assets

Loans and advances:

accounting policies
1. Accounting Convention
The company is registered under the Companies Act 1973, as an Association not for gain and as such no
part of its income or property shall be distributed or transferred to its members directly or indirectly. All
reserves of the company are therefore non-distributable.

2. Principal accounting policies

The financial statements have been prepared in accordance with International Financial Reporting
Standards, and in the manner required by the Companies Act in South Africa. The financial statements
are prepared under the historical cost convention as modified by the application of fair value to financial
assets and liabilities where applicable.
Unless otherwise specifically stated in Accounting Policy Note 12, this basis is consistent with that of
the previous year.

3. Basis of consolidation

The group financial statements include those of the company and its subsidiaries. Subsidiaries are
companies in which the group, directly or indirectly, has the power to exercise control. Control is
achieved where the group has the power to govern the financial and operating policies of an entity so
as to obtain benefits from its activities. Where a subsidiary is a newly registered company, the results are
included from the date of incorporation. Inter-group balances, inter-group transactions and resulting
profits are eliminated on consolidation. There are no minority interest shareholders in the group.

4. Equipment

The cost of an item of equipment is recognised as an asset when:

It is probable that future economic benefits associated with the item will flow to the company;
and the cost of the item can be measured reliably.
Costs include costs incurred initially to acquire equipment and costs incurred subsequently to add to
and replace part of it. Equipment is stated at cost less accumulated depreciation and any impairment
losses.
Depreciation is calculated on the straight line method to write off the cost of assets to their residual
values over their estimated useful lives at the following rates:-

Computer hardware
-
25% per annum
Office furniture
-
20% per annum
Office equipment
-
25% - 33.33% per annum

The residual value and the useful life of an asset are reviewed on an annual basis and should
expectations differ from previous estimates, changes are accounted for as a change in accounting
estimates in accordance with IAS 8.
The gain or loss arising from the derecognition of an item of equipment is included in the income
statements. The gain or loss arising from the derecognition of an item of equipment is determined as
the difference between the net disposal proceeds, if any, and the carrying amount of the item.

5. Intangible assets

An intangible asset is recognised when it is probable that the expected future economic benefits that
are attributable to the asset will flow to the group and the cost of the asset can be measured reliably.
Intangible assets are initially recognised at cost.
An intangible asset arising from development is recognised when:
It is technically feasible to complete the asset so that it will be available for use.
There is an intention to complete the development and an ability to use it.
It will generate probable future economic benefits.
There are technical, financial and other resources available to complete the development.
The expenditure attributable to the asset during its development can be measured reliably.
Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.
Amortisation is provided to write down the intangible assets on a straight line basis to their residual
basis as follows:
Computer software - 20% per annum

6. Financial instruments

The group classifies financial instruments on initial recognition as a financial asset or a financial liability
in accordance with the substance of the contractual arrangement. Financial assets and liabilities are
recognised on the groups balance sheet when the group becomes party to the contractual provisions
of the instrument. Financial assets and liabilities are recognised initially at fair value.

At each balance sheet date an assessment is made whether there is an indication that an asset may
be impaired. Loans and advances are stated net of impairment. Where carrying values of individual
loans and advances are less than discounted amounts realisable or net of recoveries from collateral, a
provision is made for the differences as loan impairment. Advances are subject to a risk rating evaluation
that takes into consideration inter alia the overall risk profile, collateral cover, payment record, past
experiences, customers co-operation in abiding by loan conditions and the economic climate.
Impairment losses and subsequent reversals thereof , or recoveries of amounts previously impaired, are
reflected in the income statements. Advances impaired are written off once all reasonable attempts at
collection have been made and there is no realistic prospect of recovering outstanding amounts.
Non-performing loans are impaired for doubtful debts identified during periodic evaluations of
advances. Loans and advances are considered non-performing when amounts are considered due and
unpaid for 3 months. Loans are analysed on a case by case basis taking into account any breach of
key loan conditions. The impairment of non-performing loans takes account of past loss experiences
adjusted for changes in economic conditions and the nature and level of risk exposure since the
recording of the historic losses.
When a loan carried at amortised cost has been identified as impaired, the carrying amount of the loan
is reduced to an amount equal to estimated future cashflows, including the recoverable amount of any
collateral. The carrying amount of the asset is reduced through the use of an allowance and the amount
of the loss is recognised as a credit impairment in the income statement.
If the group determines that no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, it includes the asset in the group of financial assets with
similar credit risk characteristics and collectively assesses them for impairment. Assets that are
individually assessed for impairment and for which an impairment loss is or continues to be recognised
are not included in a collective assessment for impairment.
Impairment of performing loans can only be accounted for if there is objective evidence that a loss
event has occurred after the initial recognition of the financial asset but before the balance sheet date.
In order to provide for latent losses in a portfolio of loans that have not yet been individually identified
as impaired, a credit impairment for incurred but not yet reported losses is recognised based on historic
loss patterns.
Increases in loan impairments and any subsequent reversals thereof, or recoveries of amounts previously
impaired, are reflected in the income statement. Previously impaired advances are written off once
all reasonable attempts at collection have been made and there is no realistic prospect of recovering
outstanding amounts. Any subsequent reductions in amounts previously impaired are reversed
by adjusting the allowance account and the amount of the reversal is recognised as a reduction in
impairment for credit losses in the income statement. Subsequent recoveries off previously written of
advances are recognised in the income statement.

8. Provisions
Provisions are recognised, when the group has a present legal or constructive obligation as a result of
past events, it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

The amount of a provision is the present value of the expenditure expected to be required to settle the
obligation. Provisions are not recognised for future operating losses.
Contingent assets and contingent liabilities are not recognised.

9. Significant judgements

In preparing the annual financial statements, management is required to make estimates and
assumptions that affect the amounts represented in the annual financial statements and related
disclosures. Use of available information and the application of judgement is inherent in the formation
of estimates. Actual results in the future could differ from these estimates which may be material to
the financial statements. Significant judgements are made in estimating asset impairment and the
useful lives and residual value of equipment. Management has based their judgement in estimating
the equipment and intangibles estimated useful lives and residual values on past experience and future
expectations.

10. Asset impairment - non financial assets

The group assesses at each balance sheet date whether there is any indication that an asset may be
impaired. If any such indication exists, the company estimates the recoverable amount of the asset.
If there is any indication that an asset may be impaired, the recoverable amount is estimated for the
individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the
recoverable amount of the cash-generating unit to which the asset belongs is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less costs to
sell and its value in use.
If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset
is reduced to its recoverable amount. That reduction is an impairment loss.
An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is
recognised immediately in profit or loss.
An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less
than the carrying amount of the units.
An entity assesses at each reporting date whether there is any indication that an impairment loss
recognised in prior periods for assets may no longer exist or may have decreased. If any such indication
exists, the recoverable amounts of those assets are estimated.
The increased carrying amount of an asset attributable to a reversal of an impairment loss does
not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset in prior periods.

11. Interest income and expense

Interest income and expense are recognised in the income statements for all interest bearing
instruments on an actual basis using the effective interest method. In terms of this method, interest
receipts and payments are brought into account in proportion to the balance outstanding on a time
proportional basis. Disclosed separately in the income statements is the notional interest on present
valuing financial assets and liabilities carried at amortised cost. When a loan is in arrears for 4 months
the recognition of interest income is suspended.

12. Non-interest revenue

Revenue from the provision of services is recognised on an amortising basis over the loan period to
which the service relates. The service is rendered by reference to the stage of project completion in
accordance with the substance of the relevant legal agreements. The amortising basis of calculation
approximates the recognition of interest using the effective interest rate method. If the loan is settled
early , the fee is recognised in full when settled. Agency fees, profit on sale and other non interest
revenue is recognised on an accrual basis as the service is rendered.

13.Taxation

The charge for current tax is based on the results for the year as adjusted for items of income and
expenditure which are tax free or disallowed. It is calculated using the current enacted tax rate.
Deferred taxation is accounted for using the balance sheet liability method in respect of temporary
differences arising from differences of the carrying amount of assets and liabilities in the financial
statements and the corresponding tax base used in the tax computation.
Deferred taxation liability is recognised for all taxable temporary differences. Deferred taxation assets
are the amounts of income taxes recoverable in future periods in respect of deductable temporary
differences or the carry forward of unused tax losses.
A deferred taxation asset is recognised to the extent that it is probable that future taxable profits will
be available against which the unused tax losses and/or timing differences can be utilised. The amount
of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of the asset or liability and is not discounted. Deferred tax assets are reviewed at each balance
sheet date and are reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled.
The amount of deferred tax provided is based on the expected manner of realisation or settlement of
the carrying amount of the asset or liability and is not discounted. Deferred tax assets are reviewed at
each balance sheet date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realised.

14. Operating leases office rental

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

15. Employee benefits

Short term employee benefits:

The cost of all short term employee benefits are recognised during the period in which the employee
renders the related service.
The accruals for employee entitlements to salaries, annual and sick leave represent the amount which
the Group has a present obligation to pay as a result of employees services provided to the balance
sheet date. The accruals have been calculated at undiscounted amounts based on current wage and
salary rates.
Retirement benefits:
Contributions to defined contribution funds are charged against income as incurred.

16. Standards and interpretations not yet effective

The following new standards, amendments and interpretations are not yet effective for the current
financial year. The Group will comply with the new statements from the effective date or when the
statement becomes applicable.

Notes to financial statements

ACCOUNTING POLICIES (continued)

Title

Standard/ amendment
to standard

NOTES TO THE FINANCIAL STATEMENTS

Annual period starting

on or after

for the year ended 31 March 2009

GROUP
IFRS 1 amendment : measurement of the cost of investments

New interpretation

IFRS 2 amendment : share based payment

2009

01-Jul-09

1
New interpretation

01-Jan-09

Current Accounts

New interpretation

Deposits for payment guarantees

Deposits pending property transfer registrations

01-Jul-09

New interpretation

01-Jan-09

New interpretation

01-Jan-10

All non owner changes in equity must be disclosed as a line item in the income statement or
in a statement of comprehensive income.

IAS 7 : Statement of cash flows

Classification of expenditure on unrecognised assets.

IAS 8 : Accounting policies, changes in accounting

estimates and errors

New interpretation

1,041

1,041

417,419

589,789

394,995

378,649

418,460

589,789

396,036

378,649

9,740,996

21,771,000

5,259,338

806,115

1,238,270

1,238,270

28,104,564

32,887,392

28,104,565

32,887,393

37,845,560

55,896,662

33,363,903

34,931,778

Johannesburg inner city

622,421,520

382,861,146

590,989,954

367,552,648

Loan impairment (see Note 4)

(14,493,563)

(6,560,493)

(12,254,944)

(5,620,332)

Notional interest on present valuing advances

(607,450)

(791,745)

Suspended Interest

(928,754)

(928,754)

606,391,753

375,508,909

577,806,256

361,932,316

12,066,592

Refers to specific disclosure of instrument value and liquidity risk.

IAS 1 : Presentation of financial statements

Money market assets

Call accounts

This amendment may impact the disclosure of the group's new organisational structure
which will take place in the next financial reporting period.
New interpretation

2008

01-Jul-09

Refers to specific disclosure of acquisition costs, recognition of gains and losses, increases
and decreases in ownership interests, adjustments to initial measurement.

IFRS 7 amendment : financial Instruments

2009

Cash, bank current accounts and short term assets

Cash

Refers to clarifications of vesting conditions and cancellation of share based payments.

This disclosure is expected to impact the group when the new employee share scheme is
approved and implemented.

IFRS 3 amendment : business combinations

2008

Refers to the cost of investments in subsidiaries , jointly controlled entities and associates
when adopting IFRS for the first time.

COMPANY

01-Jan-09

Advances

Status of implementation guidance

IAS 10 : Events after the reporting period

New interpretation

01-Jan-09

New interpretation

01-Jan-09

Maturity analysis

Dividends declared after the end of the reporting period.

IAS 16 : Property, plant and equipment

Within 1 year

Recoverable amount and sale of assets held for rental added.

IAS 17 : Leases

New interpretation

49,684,267

24,224,855

21,306,388

Within 2 to 5 years

117,547,930

67,758,565

115,807,988

66,189,653

Within 6 to 10 years

229,004,590

131,496,240

228,262,668

130,566,175

Within 11 to 15 years

01-Jan-10

Classification of leases of land and buildings.

IAS 18 : Revenue

New interpretation

01-Jan-09

New interpretation

01-Jan-09

Bellevue

225,612,910

158,730,228

590,989,954

367,552,648

55,920,619

41,560,844

55,631,444

39,647,934

117,284,153

83,789,188

107,890,298

80,630,413

Bertrams

2,351,581

2,770,511

2,351,581

2,111,857

Braamfontein

7,666,454

2,364,422

7,666,454

2,364,422

Doornfontein

34,102,517

20,857,135

34,102,517

20,857,135

Berea

Measurement of the cost of investments when adopting IFRS for the first time.

IAS 36 : Impairment of assets

159,416,486
382,896,146

Geographical analysis

Costs of originating a loan

IAS 27 : Consolidated and separated financial statements

226,184,733
622,421,520

New interpretation

01-Jan-09

Disclosure of estimates used to determine recoverable amount.

Fairview

1,703,800

482,781

1,652,403

482,781

Germiston

6,622,181

1,815,883

6,622,181

1,815,883

Highlands North
Hillbrow
Johannesburg CBD

744,624

2,420,711

744,624

75,487,167

84,517,895

69,729,338
56,688,950

131,880,923

58,938,423

111,531,264

Jeppestown

4,567,634

5,004,134

4,567,634

5,004,134

Joubert Park

23,537,007

17,849,748

23,139,418

17,431,122

Lorentzville

5,156,393

2,017,660

4,984,677

2,017,660

Malvern

3,109,988

3,169,370

3,109,988

3,169,370

28,715,610

15,025,424

28,715,610

15,025,424
2,975,586

Marshalltown
Orange Grove
Pretoria
Regent's Park

7,451,215

3,482,344

7,451,215

23,114,983

22,714,566

561,806

585,552

561,806

585,552

Rouxville

4,084,920

4,084,920

Selby

6,919,875

6,717,421

6,919,875

6,717,421

Troyeville

2,500,589

1,452,276

2,500,589

1,452,276

Vanderbijlpark

1,499,658

1,499,658

66,353,252

38,781,240

66,353,250

38,100,766

622,421,520

382,896,147

590,989,954

367,552,648

Balance at beginning of the year

6,560,493

3,462,260

5,620,332

2,557,774

Impairments raised during the year

7,933,070

3,098,233

6,634,612

3,062,558

14,493,563

6,560,493

12,254,944

5,620,332

Yeoville

2,420,711
84,895,651

Loan impairment

Balance at the end of the year

Refer to Note 28 for further details.

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 March 2009 (continued)

for the year ended 31 March 2009 (continued)

GROUP
2009
R
5

COMPANY
2008

2009

GROUP
2008

2009

Other assets

13

Staff receivables
Interest receivable
Other receivables

57,374

16,964

57,374

16,964

1,901,667

1,722,440

1,809,310

1,557,989

117,348

163,597

1,739,404

1,984,032

1,738,550

33,960,176

15,170,695

3,595,512

19,039,468

37,555,689

34,210,163

118,983
2,078,024

Terms: Amounts receivable are current

Subsidiary companies
Opening Balance: amount owing by subsidiaries
Acquisition of subsidiaries
Advances to subsidiaries

Advance from subsidiaries

Net amount owing by subsidiaries (Note 28)

(5,585,818)

(249,987)

31,969,871

33,960,176

Equipment
Group & company

Group & company

Group & company

Office furniture
and equipment

intangible assets

hardware

Total

Year ended 31 March 2009

Net book value at 1 April 2008

130,415

668,154

329,283

1,127,852

400,332

722,696

797,789

1,920,817

Accumulated depreciation

(269,917)

(54,542)

(468,505)

(792,964)

Additions during the year

380,927

1,269,317

207,992

1,858,237

Cost

Depreciation for the year

(89,247)

(213,139)

(125,413)

(427,799)

Net book value at 31 March 2009

422,095

1,724,332

411,863

2,558,290

Cost
Accumulated depreciation

781,259

1,992,013

1,005,781

3,779,053

(359,164)

(267,681)

(593,918)

(1,220,763)

138,622

150,438

289,060

341,774

505,758

847,532

(203,152)

(355,320)

(558,472)

Year ended 31 March 2008

Net book value at 1 April 2007
Cost
Accumulated depreciation
Additions during the year

58,558

722,696

(430,665)

350,589

Depreciation for the year

(66,765)

(54,542)

(113,184)

(234,491)

Net book value at 31 March 2008

130,415

668,154

329,284

1,127,853

Cost
Accumulated depreciation

400,332

722,696

797,789

1,920,817

(269,917)

(54,542)

(468,505)

(792,664)

Other liabilities
VAT control

114,590

114,590

Trade payables

802,334

650,064

794,832

647,533

916,924

650,064

909,422

647,533

36,189

36,189

36,189

36,189

Bonus remuneration

784,300

255,132

784,300

255,132

Leave pay

407,940

77,370

407,940

77,370

1,192,240

332,502

1,192,240

332,502

6,636,753

3,618,929

6,636,753

3,618,929

7,845,773

4,629,982

7,468,534

4,638,845

Accounts payable are payable within 30 days of invoice date.

Equalisation of rental
3 year operating lease with Apex-hi

10

11

Accruals

Deferred income
Raising fees deferred over 15 year loan period

12

Taxation
Amount owing to revenue authorities

2008
R

2009

2008

Non interest bearing borrowings

The loan from the National Housing Finance Corporation (NHFC)
which has a nominal value of R 10 million is unsecured and is
currently interest free. The capital is repayable on 28 July 2013.

10,000,000

10,000,000

10,000,000

10,000,000

The loan from the Gauteng Partnership Fund (GPF) which has a
nominal value of R 2 million is unsecured and interest free and to
be repaid by February 2015. The facility is to fund low collateral
projects identified by the company where emerging entrepreneurs
are involved.

2,000,000

2,000,000

12,000,000

12,000,000

10,000,000

10,000,000

(649,898)

(1,207,317)

92

(472,595)

11,350,102

10,792,683

10,000,092

9,527,405

The loan of R 5 million from the National Urban Reconstruction

and Housing Agency (NURCHA) is used to finance jointly with the
company, projects identified by the company and approved by
NURCHA. Interest and capital repayments are as set out in the loan
agreement entered into with the end users and benefits in and
risks associated with the projects are shared equally.

737,040

810,384

737,040

810,384

"The loan of R 10 million from NURCHA is a fixed credit facility.

Interest is at prime minus 2%. Repayment of capital and capitalised
interest commenced on 10 August 2006 with the last repayment
date being 10 August 2011.The loan is secured by a cession of all
the rights, title and/or interests the company holds in connection
with the end user agreements which have been financed from this
facility.

2,322,565

3,096,511

2,322,565

3,096,511

The loan of R 50 million from the National Housing Finance

Corporation is at an interest rate of prime minus 2%. Interest and
capital is repaid over the remaining term. The loan is secured by a
cession of all the rights, title and/or interests the company holds
in connection with the end user agreements which have been
financed from this facility.

42,317,317

45,087,833

42,317,317

45,087,833

Notional interest on present valuing financial liabilities

14

COMPANY

Interest bearing borrowings

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 March 2009 (continued)

for the year ended 31 March 2009 (continued)

GROUP
2009
R

COMPANY
2008

2009

GROUP
2008

2009

R
15

The loan of R 50 million from the National Housing Finance

Corporation is at an interest rate of prime minus 2%. Interest and
capital is repaid over the remaining term. The loan is secured by a
cession of all the rights, title and/or interests the company holds or
which it may acquire in future, arising out of, or in connection with
the end user agreements which are financed from this facility.

47,496,838

The loan of R 150 million from the Standard Bank of South Africa
Limited is at an interest rate of prime minus 1.5%. Draw downs
from the facility are made as and when the collateral security in
respect of the project is registered. The loan is to be repaid in full by
15 May 2020 with a repayment profile that matches that imposed
on the end users to whom this facility has been onward lent. The
loan is secured by a cession of all the rights, title and/or interests
the company holds or which it may acquire in future, arising out of,
or in connection with the end user agreements which are financed
from this facility.

149,957,557

The loan of R 50 million from the Development Bank of South Africa

Limited is at an interest rate of prime minus 2.0%. Draw downs from
the facility are made as and when the collateral security in respect
of the project is registered. Interest and capital is payable on the
remaining balance over the remaining term and must be repaid in
full by 30 September 2022. The loan is secured by a cession of all
the rights, title and/or interests the company holds or which it may
acquire in future, arising out of, or in connection with the end user
agreements which are financed from this facility.

42,675,658

The loan of R 100 million from the Development Bank of South

Africa Limited is at an interest rate of prime minus 1.5% in respect of
the first R50 million and prime plus 0.5% in respect of the remaining
R50 million. Draw downs from the facility are made as and when
the collateral security in respect of the project is registered. Interest
and capital is repaid over the remaining term and must be repaid
in full by 31 March 2023. The loan is secured by a cession of all
the rights, title and/or interests the company holds or which it may
acquire in future, arising out of, or in connection with the end user
agreements which are financed from this facility.

93,172,108

The loan of R 100 million from Future Growth Asset Management

is at an interest rate of prime minus 1.5% in respect of the first R70
million and prime plus 0.5% in respect of the remaining R30 million.
Drawdowns are made as and when the collateral security in respect
of the project is registered. Interest is payable on the 15th of each
month. Capital is repaid by February 2022. The loan is secured by a
cession of all the rights, title and/or interests the company holds or
which it may acquire in future, arising out of, or in connection with
the end user agreements which are financed from this facility.

91,433,683

The loan of R 100 million from the National Housing Finance

Corporation is at an interest rate of prime minus 2%. Draw downs
from the facility are made as and when the collateral security in
respect of the project is registered. Interest & capital repayments
are made over the remaining term. The loan is secured by a cession
of all the rights, title and/or interests the company holds or which it
may acquire in future, arising out of, or in connection with the end
user agreements which are financed from this facility.

101,351,535

The loan of R 30 million from the Gauteng Partnership Fund is at an

interest rate of prime minus 4.0% Interest payments commence on
15 September 2008 . Capital is to be repaid on 10 September 2013.
The facility may only be invested in bridging finance projects.

29,775,854

50,345,987

47,496,838

2008

As the liquidation applicant and only secured creditor, the company

is liable for the costs of administration of the insolvent estate of
Seven Building Company (Pty) Ltd. All rates and taxes together
with utility accounts form part of such administration costs.

50,345,987

A draft copy of the First Liquidation and Distribution Account

reflects a deficit payable by the company of R 506,506.
139,206,561

45,836,818

149,957,557

42,675,658

139,206,561

In May 2007, an application was submitted to the High Court of

South Africa requesting that the liquidation be rescinded. This
application did not succeed and further litigation to finalise the
matter has been set for November 2009..

Phalanx Ma Africa, the previous owner of the Angus Mansions

property are contesting the sale of the property to one of TUHF's
clients. There is a risk that the sale may be set aside and that the
funds advanced may not be returned to TUHF. Should attempts to
recover monies from the borrower not succeed TUHF may suffer
a loss. An amount of R 4.8 million has been provided under the
loan impairment under Note 4. Should actual loss be suffered the
company will institute action against the transferring attorney.

45,836,818

16

Post balance sheet events

The sale of TUHF's business to a new company that has been
formed, TUHF (Pty) Ltd is likely to be implemented during the
2010 financial year. The sale is dependent upon various conditions
being complied with.

33,009,908

93,172,108

33,009,908

17

Prior year adjustments

The treatment of non interest income has changed in comparison
to previous years. Non interest income is recognised over the
average life of the loan, which is 9 years.
In prior years this income was recognised in income immediately,
as it was a recovery of general project costs. The new method of
recognising income is consistent with the effective interest rate
method.

56,563,162

91,433,683

56,563,162

18

Retained Income as previously stated:

18,106,290

18,254,227

Adjustment passed (net of tax) - raising fees deferred

(2,605,629)

(2,605,629)

Restated retained income

15,500,660

15,648,598

104,888,847

Commitments
Advances

101,351,535

Advances for refurbishment of buildings.

Advances pending contractual compliances

50,043,347

104,888,847

45,357,607

208,680,580

229,175,808

208,680,580

228,433,246

258,723,927

334,064,655

254,038,187

333,322,093

Operating leases

28,176,920

29,775,854

Office rental payable within 1 year

545,805

448,200

545,805

448,200

Office rental payable between 2 to 5 years

760,335

2,042,088

760,335

2,042,088

1,306,140

2,490,288

1,306,140

2,490,288

82,649,499

44,589,684

77,422,248

41,467,375

5,291,746

4,992,383

Interest on guarantee deposits

4,598,094

2,613,377

4,505,736

2,612,002

Interest on call deposits

2,700,205

1,580,193

652,266

460,120

89,947,798

48,783,254

87,871,996

49,531,880

28,176,920

19

Interest income
Interest on advances

10,124,897

10,124,897

611,365,051

402,134,084

611,365,051

402,134,084

Repayable within 12 months

36,411,145

15,543,026

36,411,145

15,543,026

Repayable 1 to 3 years

53,009,280

31,152,971

53,009,280

31,152,971

Repayable 3 to 5 years

53,456,077

34,170,176

53,456,077

34,170,176

468,363,652

321,267,911

468,363,652

321,267,911

611,365,051

402,134,084

611,365,051

402,134,084

Repayable >5 years

2009

Contingencies

Interest on advances to subsidiaries

The loan of R 10 million from SPSH is repayable on demand.

2008

Interest bearing borrowings (continued)

COMPANY

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 March 2009 (continued)

for the year ended 31 March 2009 (continued)

GROUP
2009

2008

R
20

COMPANY
2009

GROUP
2008

2009

Interest on borrowings

24
66,518,416

34,989,851

Interest on advances from subsidiaries

Interest on overdrafts

66,518,416

34,972,823

168,131

399,173

1,715

1,293

1,715

1,293

66,520,131

34,991,144

66,688,262

35,373,289

South African normal tax - current

22

2,463,491

2,829,689

19,440

(2,551,099)

(1,705,450)

(2,244,187)

(1,655,793)

(2,612,581)

(1,705,450)

(2,294,716)

(1,655,793)

61,482

50,527

673,182

777,481

585,502

802,113

Profit before tax

468,963

849,220

129,775

1,184,033

Tax at 28% on the above

131,310

246.274

36,337

343,370

South African deferred tax:

Current

1,501,478

1,505,614

1,501,478

1,505,614

753,659

746,105

Deferred tax attributable to timing differences

391,276

154,035

310,576

99,995

1,730,417

1,637,373

1,287,725

426,321

Permanent differences

450,199

319,620

478,066

358,748

(299,603)

57,552

(239,477)

673,182

777,481

585,502

802,113

Management and incentive fees

Research grant

76,754

76,754

Profit on sale of property trading stock

125,348

Sundry income

2,457,906

Reconciliation between expected tax charge to actual tax charge :

Non-interest income

Raising fee

Loan impairment

Agency fee

2008

3,224,281

Prior year adjustments

See Note 7 of Accounting Policies and the Directors' Report and

Note 28.3 of the Notes to the Financial Statements.

2009

Taxation

Arising from change in taxation rate

21

2008

Interest expenses

COMPANY

288,422

138,789

288,422

138,419

3,520,317

3,483,878

3,831,284

2,893,213

Factors affecting the tax rate:

Unutilised tax losses

Actual tax current charge

The movement of deferred tax is as follows:

23

Operating expenditure
Auditors remuneration

374,050

268,000

318,250

236,800

Balance at beginning of the period

2,796,286

1,090,836

2,478,574

822,780

Audit fees

374,050

268,000

318,250

236,800

Deferred taxation timing differences

2,612,581

1,705,450

2,294,716

1,655,794

Other fees

(61,482)

(50,527)

5,347,386

2,796,286

4,722,763

2,478,574

Rate change
Creation/(utilisation) of tax losses

Depreciation

427,799

234,491

427,799

234,491

Computer equipment

125,413

113,184

125,413

113,184

Intangible assets

213,139

54,542

213,139

54,542

Comprising:

89,247

66,765

89,247

66,765

Deferred taxation asset / (liability)

236,999

186,510

236,999

186,510

1,300,320

1,211,295

1,300,320

1,211,295

Office furniture and equipment

Balance at end of period

Provisions
Information technology costs

Directors emoluments - executive director in respect of services

rendered
- bonus

139,320

186,300

139,320

186,300

- cash component

784,455

729,380

784,455

729,380

- pension

259,320

265,717

259,320

265,717

- other

117,225

29,898

117,225

29,898

9,079,513

4,643,877

9,079,513

5,702,352

599,599

322,509

599,599

322,509

6,155,547

3,977,899

5,816,469

3,628,645

18,173,827

6,979,055

17,778,949

11,522,602

Staff costs

Office rental

Other expenses

350,114

109,393

337,153

96,426

Accelerated depreciation

(511,774)

(191,086)

(511,773)

(191,086)

Loan impairment

3,639,825

1,802,405

3,079,482

1,559,934

10,133

10,133

1,858,295

1,013,300

1,858,295

1,013,300

(61,482)

(50,527)

62,275

62,275

5,347,386

2,796,286

4,722,763

2,478,574

1,211,990

742,950

1,211,990

742,950

Rental equalisation
Deferred income
Rate change
Assessable taxation losses carried forward

25

Employee benefits
The company has a defined contribution provident plan governed
by the Pensions Act, 1956, as amended, to which all permanent
employees are required to join.

Payments to the provident plan are charged as an expense as they

fall due.

The company has no obligations for post-retirement health.

26

Borrowing capacity
In terms of the company's articles of association the borrowing
powers of the company are unlimited.

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 March 2009 (continued)

for the year ended 31 March 2009 (continued)

GROUP
2009
R
27

COMPANY
2008

2009

GROUP
2008

2009

2008

Cash generated from operations

COMPANY
2009

2008

Risk management (continued)

Reconciliation of profit before tax to cash

generated from operations :
Profit for the period

468,963

849,221

129,775

1,184,033

The following represents the maximum exposure, at balance sheet

date, to credit risk taking into account any collateral held and is
stated after the allowance for impairment.

Adjusted for :
Bad Debts

162,673

166,211

Depreciation of equipment

427,799

234,491

427,799

234,491

Notional interest

372,125

1,425,480

471,682

1,062,593

Loan impairment

7,933,069

3,098,233

6,634,612

3,062,558

859,740

332,502

859,740

332,502

Unearned raising fees

3,017,824

3,618,929

3,017,824

3,618,929

Other non cash items

(8,987,790)

(4,275,665)

(7,397,230)

(3,839,835)

4,254,403

5,283,190

4,144,202

5,821,482

Working capital changes

605,480

(457,151)

507,371

(789,261)

Increase / (Decrease) in accounts receivable

338,620

(228,568)

245,482

(554,366)

Increase in accounts payable

266,860

(228,583)

261,889

(234,895)

4,859,883

4,826,039

4,651,573

5,032,221

Provisions

Operating profit/(deficit) before working capital changes

Cash generated/(utilised) by operating activities

28

28.1

Balances with local banks

Cash and short term assets (Note 1)

Call funds with local banks
Deposits for payment guarantees
Deposits held in attorneys trust

9,740,996

21,771,000

5,259,338

806,115

1,238,270

1,238,270

28,104,565

32,887,393

33,363,903

34,931,778

Loans and advances to clients

622,421,520

382,861,147

590,989,954

367,552,648

Loan impairment

(14,493,563)

(6,560,493)

(12,254,944)

(5,620,332)

(1,536,204)

(791,745)

(928,754)

606,391,753

375,508,909

577,806,256

361,932,316

Interest on guarantees and other

Other assets (Note 5)

57,374

16,964

57,374

16,964

2,020,650

1,722,440

1,926,658

1,721,586

2,078,024

1,739,404

1,984,032

1,738,550

37,555,689

34,210,163

Gross amount owing : subsidiary companies (Note 6)

Total assets subject to credit risk
Assets not subject to credit risk

Credit risk:

Total assets

Credit risk is the suffering of financial loss should any of the Group's
customers, clients or market counterparties fail to fulfil their
contractual obligations to the group.

646,733,797

433,734,764

651,105,917

433,191,456

7,905,678

3,924,139

7,281,055

3,606,427

654,639,475

437,658,903

658,386,972

436,797,883

Undrawn commitments (Note 18)

Advances for refurbishment of buildings

The credit risk that the group faces arises mainly from commercial
loans and advances. The Group has policies, procedures and
processes dedicated to controlling and monitoring risk from all
such activities.

A system based loan workflow process is used to facilitate the loan

approval process. The granting of credit is considered on a project
by project basis and various hurdle rates are considered in terms of
our loan and credit policy, fully compliant with the NCA.

378,649
378,649

32,887,392

Staff receivables

The responsibility for risk management resides at all levels, from

members of the board to individuals throughout the Group.
Overall risk management policies and risk appetite are established
on a comprehensive, organisation-wide basis by senior
management and, reviewed with and where appropriate, approved
by the board of directors.

The granting of credit is one of the group's major sources of income

and is therefore one of the most significant risks, and the Group
dedicates considerable resources to controlling it effectively.

396,036
396,036

55,896,662

Advances (Note 3)

The approach followed by the Group to manage risk is to ensure

that all significant risks are identified and managed. On the highest
level, these risks are identified in the risk matrix which is reported
to the Board.

589,789
589,789

28,104,564

Notional interest and other interest adjustments

Financial Risks:

418,460
418,460

37,845,560

Money market assets (Note 2)

Risk management

While credit exposures principally arise in loans and advances ,

the Group can be exposed to other credit risks. These exposures
comprise loan commitments and contingent liabilities. The risks
are managed in a similar way to those loans in loans and advances,
and are subject to the same or similar approval and governance
processes.

Assets : credit exposures

Advances pending contractual compliances

28.2

26,032,044

104,888,847

21,346,403

104,888,847

208,680,580

229,175,808

208,680,580

228,433,246

234,712,624

334,064,655

230,026,983

333,322,093

Financial assets subject to credit risk - group : 2009

For the purpose of the group's disclosure regarding credit quality
the exposure to credit risk has been analysed as follows:
Cash and short
term assets
Neither past due nor impaired

Money market

Advances

Other assets

418,460

37,845,560

560,318,999

2,078,024

Past due but not impaired

43,510,079

Impaired

15,520,034

418,460

37,845,560

620,885,316

2,078,024

Less: impairment allowance

Identified impairments

6,750,253

Identified individual

6,750,253

Identified collective

Unidentified impairments

7,743,310

418,460

37,845,560

606,391,753

2,078,024

Carrying value before impairment

Carrying value of financial assets per Note 28.1

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 March 2009 (continued)

for the year ended 31 March 2009 (continued)

GROUP
2009

COMPANY
2008

2009

GROUP
2008

2009

Risk management (continued)

Money market

Advances

589,789

55,896,662

1,739,404

Past due but not impaired

Impaired

863,049

9,917,613

589,789

55,896,662

382,069,402

1,739,404

Less: impairment allowance

Identified impairments

831,816

Identified individual

831,816

Identified collective

Carrying value of financial assets per Note 28.1

5,728,677

589,789

55,896,662

375,508,909

1,739,404

Cash and short

term assets

Money market

Advances

396,036

33,363,903

535,292,178

1,984,032

43,510,079

Impaired

12,187,697

396,036

33,363,903

590,989,954

1,984,032

Less: Impairment allowance

Identified impairments

5,795,612

Identified individual

5,795,612

Identified collective

Unidentified impairments

6,459,332

396,036

33,363,903

577,806,256

1,984,032

Cash and short

term assets

Past due but not impaired

Impaired
Carrying value before impairment

Money market

Advances

Other assets

Total

34,931,778

360,467,727

1,738,550

7,084,921

378,649

34,931,778

367,552,648

1,738,550

Identified impairments

965,000

Identified individual

965,000

Identified collective

Unidentified impairments

4,655,332

378,649

34,931,778

361,932,316

1,738,550

488,532

319,198

1,744,806

2,552,536

292,982

215,514

354,553

863,049

The mortgage loan amounts past due but not impaired relate to
the overdue instalment portion in respect of loans amounting
to R 36 676 720. The loan balances have not been impaired or
renegotiated as clients are part paying amounts and the value of
the collateral exceeds the loan balance.

Financial assets that are past due but not impaired - group 2008
There were no arrears in the prior year within the group.

28.3

Analysis of assets
At each balance sheet date an assessment is made whether there is
an indication that an asset may be impaired.
Loans and advances are stated net of impairment. Where carrying
values of individual loans and advances are less than discounted
amounts realisable or net of recoveries from collateral, a provision
is made for the differences as loan impairment. Advances are
subject to a risk rating evaluation that takes into consideration
inter alia the overall risk profile, collateral cover, payment record,
past experiences, customers co-operation in abiding by loan
conditions and the economic climate. For further details regarding
the companys accounting policy refer to accounting policy Note 7.

a.

378,649

Less: Impairment allowance

Carrying value of financial assets per Note 28.1

> 90 days

Financial assets that are past due but not impaired - group 2009

Financial assets subject to credit risk - company : 2008

Neither past due nor impaired

60 days

There are no financial assets or advances to customers that have

been re-negotiated. Funds received are first applied to any past
due amounts.

Other assets

Past due but not impaired

Carrying value of financial assets per Note 28.1

30 days

Financial assets renegotiated

Financial assets subject to credit risk - company : 2009

Carrying value before impairment

Financial assets neither past due nor impaired are considered to

be fully recoverable.

Mortgage loans

Neither past due nor impaired

2008

Other assets

371,288,740

Unidentified impairments

2009

Credit Risk Exposures relating to assets

Cash and short
term assets

Carrying value before impairment

2008

R
Risk management (continued)

Financial assets subject to credit risk - group : 2008

Neither past due nor impaired

COMPANY

Analysis of assets individually assessed as impaired

Group - 2009

Carrying amount

Impairment

Revised carrying
amount

Mortgage loans

12,187,697

5,795,612

6,392,085

Bridging finance

3,332,337

954,641

2,377,696

15,520,034

6,750,253

8,769,781

Mortgage loans

7,084,921

965,000

6,119,921

Bridging finance

2,832,692

301,793

2,530,899

9,917,613

1,266,793

8,650,820

12,187,697

5,795,612

6,392,085

12,187,697

5,795,612

6,392,085

7,084,921

965,000

6,119,921

7,084,921

965,000

6,119,921

Group - 2008

Company - 2009
Mortgage loans

Company - 2008
Mortgage loans

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Reconciliation of total impairments (identified and unidentified)

Valuation of collateral

for the year ended 31 March 2009 (continued)

for the year ended 31 March 2009 (continued)

b.

Group - 2009

Opening balance

Impairment

Closing balance

The Group follows the principle of registering a mortgage bond to

the value of 150% of the loan facility amount (previously 120%). In
addition, another 30% of this amount is provided for legal costs in
the total bond registered. The amounts stated below are stated
exclusive of the legal costs provided for in the registered mortgage
bond.

Mortgage loans
Identified individual
Unidentified collective

965,000

4,830,612

4,655,332

1,804,000

5,795,612
6,459,332

5,620,332

6,634,612

12,254,944

Group
Loans and advances

2009

2008

Mortgage loans - registered mortgage bond

Bridging finance
Identified individual

301,793

652,848

954,641

Unidentified collective

593,651

641,902

1,235,553

895,444

1,294,750

2,190,194

784,813,745

514,540,828

- loans past due and not impaired

52,212,095

21,815,749

- loans individually impaired

14,625,236

15,523,957

851,651,076

551,880,534

Bridging finance loans - unsecured lending

1,200,000

1,200,000

Deferred sale loans - value of property held

9,365,046

10,627,917

862,216,122

563,708,451

Deferred sale loans

Identified individual

Unidentified collective

44,717

3,708

48,425

44,717

3,708

48,425

Total (per Note 28.1)

6,560,493

7,933,070

14,493,563
Equity - risk borne by Gauteng Partnership Fund

Group - 2008

Carrying amount

Impairment

Revised carrying
amount

Total

Mortgage loans
Identified individual

434,977

530,023

965,000

Identified collective

2,122,798

2,532,534

4,655,332

2,557,775

3,062,557

5,620,332

Bridging finance
Identified individual

301,793

301,793

Identified collective

879,423

(285,772)

593,651

879,423

16,021

895,444

Deferred sale loans

Identified individual

Identified collective

25,063

19,654

44,717

Total (per Note 28.1)

Company - 2009

25,063

19,654

44,717

3,462,261

3,098,232

6,560,493

Carrying amount

Impairment

Revised carrying
amount

Mortgage loans
Identified individual

965,000

4,830,612

Identified collective

4,655,332

1,804,000

6,459,332

Total (per Note 28.1)

5,620,332

6,634,612

12,254,944

Company - 2008

Carrying amount

Impairment

5,795,612

Revised carrying
amount

28.4

Market risk:
The group does not have exposure to currency risk as all
transactions are rand denominated. Money market assets do not
bear price risk as they include mainly cash, call funds and deposits
in interest bearing accounts.
TUHF is exposed to cashflow interest rate risk on both loan
advances and interest bearing borrowings that are linked to the
prime interest rate. Loans and advances, cash and cash equivalents
and money market assets as well as interest bearing liabilities are
stated at amortised cost derived from a fair rate of return or fair
cost of borrowings.

Analysis of loan book advances interest rate risk exposure

The market risk exposure relates to the potential adverse effect of

interest rate movements on net interest income.
The market risk exposure is further exacerbated by the fact that
some loan advances have six monthly fixed interest rate periods
delaying the impact of a change in interest rates on the positive
margin. The group has tried to match this exposure in its loan
profile.

Group
Interest rate sensitivity : group

Increase in basis points

2009

2008
100

100

315,713

387,170

Mortgage loans
Identified individual

434,977

530,023

965,000

Identified collective

2,122,797

2,532,535

4,655,332

Total (per Note 28.1)

2,557,774

3,062,558

5,620,332

Sensitivity of annual net interest income

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

Risk management (continued)

Risk management (continued)

for the year ended 31 March 2009 (continued)

28.5

for the year ended 31 March 2009 (continued)

Liquidity risk:

28.6

Group : 2009

The board is responsible for the management of the liquidity risk

of the group but they have delegated the day to day responsibility
to the financial manager. The key focus in managing this risk is the
use of a cash flow model that monitors loan and funders cashflows
for a 18 month window period.

Financial assets

Loans and
receivables

Cash and short terms assets

Money market assets
Loan advances

A summary of the undiscounted liquidity profile is reflected in the

following tables:

28.5.a.

Classification of assets and liabilities

Liquidity risk is the risk that the group is unable to meet its payment
obligations when they fall due and to replace funds when they are
withdrawn, the consequences of which may be the failure to meet
obligations to repay commitments to funders.

Other assets

Contractual maturity of financial liabilities - undiscounted

Within 1 year

1 to 5 years

5 years

Discounting

Liabilities : Group 2009

Non interest bearing liabilities

Interest bearing liabilities

Total liabilities per balance sheet

Fair value

418,460

418,460

418,460

37,845,560

37,845,560

606,391,753

606,391,753

606,391,753

2,078,024

2,078,024

2,078,024

646,733,797

646,733,797

646,733,797

Other categories
of IAS 39

Total carrying
amount

7,845,773

7,845,773

953,113

953,113

953,113

1,192,242

1,192,242

1,192,242

Fair value

Financial liabilities
Taxation

Other liabilities and accruals

Total carrying
amount

37,845,560

Amortised cost

Total

Other categories
of IAS 39

9,991,127

9,991,127

10,000,000

1,350,102

11,350,102

105,400,669

392,838,361

564,757,838

(451,631,817)

611,365,051

115,391,796

402,838,361

566,107,940

(468,363,652)

632,706,280

Other liabilities
Accruals
Non interest bearing liabilities
Interest bearing liabilities

7,845,773

11,350,102

11,350,102

11,350,102

611,365,051

611,365,051

611,365,051

632,706,280

632,706,280

632,706,280

Other categories
of IAS 39

Total carrying
amount

Liabilities : Group 2008

Group : 2008
Other liabilities and accruals
Non interest bearing liabilities
Interest bearing liabilities

Total liabilities per balance sheet

5,612,548

5,612,548

9,527,405

1,265,278

10,792,683

69,183,569

263,770,407

489,405,076

(420,224,968)

402,134,084

74,796,117

273,297,812

490,670,354

(420,224,968)

418,539,315

Loans and
receivables
Financial assets
Cash and short terms assets
Money market assets
Loan advances

Liabilities : Company 2009

Other assets
Other liabilities and accruals

9,606,386

Subsidiary companies

5,585,818

5,585,818

Non interest bearing liabilities

10,000,092

10,000,092

Interest bearing liabilities

Total liabilities per balance sheet

9,606,386

105,400,669

392,838,361

564,757,838

(451,631,817)

611,365,051

115,007,055

408,424,271

564,757,838

(451,631,817)

636,557,347

Liabilities : Company 2008

5,618,880

5,618,880

Subsidiary companies

249,987

249,987

Non interest bearing liabilities

9,527,405

9,527,405

Interest bearing liabilities

Total liabilities per balance sheet

69,183,569

263,770,407

489,405,076

(420,224,968)

402,134,084

74,802,449

273,547,799

489,405,076

(420,224,968)

417,530,356

589,789

589,789

589,789

55,896,662

55,896,662

55,896,662

375,508,909

375,508,909

375,508,909

1,739,404

1,739,404

1,739,404

433,734,764

433,734,764

433,734,764

Other categories
of IAS 39

Total carrying
amount

Amortised cost

Fair value

Financial liabilities
Taxation

4,629,982

4,629,982

4,629,982

Other liabilities

650,064

650,064

650,064

Accruals

332,502

332,502

332,502

10,792,683

10,792,683

10,792,683

402,134,084

402,134,084

402,134,084

418,539,315

418,539,315

418,539,315

Non interest bearing liabilities

Other liabilities and accruals

Fair value

Interest bearing liabilities

NOTES TO THE FINANCIAL STATEMENTS

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 March 2009 (continued)

for the year ended 31 March 2009 (continued)

Risk management (continued)

GROUP
2009

Company : 2009

R
Loans and
receivables

Other categories
of IAS 39

Total carrying
amount

Fair value

29

Money market assets

Loan advances
Other assets
Subsidiary companies

396,036

396,036

396,036

33,363,903

33,363,903

33,363,903

577,806,256

577,806,256

577,806,256

1,984,032

1,984,032

1,984,032

37,555,689

37,555,689

37,555,689

651,105,916

Amortised cost

Other categories
of IAS 39

651,105,916

Total carrying
amount

651,105,916

TUHF Holdings (Pty) Ltd

Indebtedness

2008

2009

2008

(4,235)

TUHF Properties (Pty) Ltd

100

100

1,895,171

1,787,049

Intuthuko Equity Fund (Pty) Ltd

100

100

(364,806)

(249,987)

TUHF Bridge (Pty) Ltd

100

100

30,443,441

32,422,814

301

300

31,969,570

33,959,876

31,969,871

33,960,176

(4,235)

Total investment and indebtedness

(Refer to note 6)

7,468,534

945,611

945,611

Accruals

1,192,242

1,192,242

1,192,242

* Property deferred sales

Subsidiary companies

5,585,818

5,585,818

5,585,818

** Equity funding

10,000,092

10,000,092

10,000,092

611,365,051

611,365,051

611,365,051

636,557,347

636,557,347

636,557,347

Interest bearing liabilities

2009

The company owns 100% of the issued share capital of:

945,611

Non interest bearing liabilities

2008

Investments in subsidiaries

7,468,534

Other liabilities

Fair value

Financial liabilities
Taxation

2009

Investment in shares

Financial assets
Cash and short terms assets

COMPANY
2008

7,468,534
Nature of business:

*** Bridging funding

TUHF Holdings (Pty) Ltd

Interest is charged at call rates

Company : 2008

Repayable within 12 months

Loans and
receivables

Other categories
of IAS 39

Total carrying
amount

Fair value

378,649

378,649

378,649

34,931,778

34,931,778

34,931,778

361,932,316

361,932,316

361,932,316

Repayable more than 12 Months

Financial assets
Cash and short terms assets
Money market assets
Loan advances
Other assets
Subsidiary companies

1,738,550

1,738,550

1,738,550

34,210,163

34,210,163

34,210,163

433,191,456

433,191,456

433,191,456

Other categories
of IAS 39

Total carrying
amount

Amortised cost

Interest is charged at variable rates

Repayable within 12 months
Repayable more than 12 Months

Repayable within 12 months

Repayable more than 12 Months

4,638,845

4,638,845

4,638,845

647,533

647,533

647,533

Accruals

332,502

332,502

332,502

TUHF Bridge (Pty) Ltd

Subsidiary companies

249,987

249,987

249,987

Interest on amounts owing - market call rates

9,527,405

9,527,405

9,527,405

402,134,084

402,134,084

402,134,084

Interest bearing liabilities

417,530,356

417,530,356

1,895,171

1,787,049

417,530,356

(364,806)

(249,987)

(364,806)

(249,987)

30,443,441

32,422,814

Interest on amounts receivable - Prime plus 10%

Repayable within 12 months
Repayable more than 12 Months

Total liabilities

1,787,049

Intuthuko Equity Fund (Pty) Ltd

Other liabilities

Non interest bearing liabilities

1,895,171

Interest paid at market call rates

Fair value

Financial liabilities
Taxation

TUHF Properties (Pty) Ltd

30,443,441

32,422,814

Success Story

NOTES TO THE FINANCIAL STATEMENTS

for the year ended 31 March 2009 (continued)

GROUP
2009
R
30

COMPANY
2008

2009

2008

Growing potential from the ground up

Related parties :

... a fine example of what determination, handson knowledge of the inner city environment and
a collaborative business relationship with TUHF
can achieve.

Subsidiary companies as disclosed in Note 29

Amount due to and from related parties:

Subsidiary companies as disclosed in Note 29

Related parties transactions:

TUHF Holdings Group (Pty) Ltd
Interest paid

TUHF Properties (Pty) Ltd

Interest received

(269,335)

(220,525)

44,155

37,310

(5,022,411)

(4,771,858)

Intuthuko Equity Fund (Pty) Ltd

Interest paid

TUHF Bridge (Pty) Ltd

Interest received
Interest paid
Management fees
Incentive fees

Key management :
All members of the board are considered key management. For
remuneration refer to Note 23.
S Moraba, a directors of the company, is the chief executive officer
of the National Housing Finance Corporation Ltd. This company
has granted the company wholesale loan facilities amounting to
R 210 million (2008 R 110 million)
J S Strelitz, a director of the company, is an executive director of
NURCHA. This company has wholesale loan facilities of
R 3 059 605 (2008 R 3 906 895) outstanding.

123,976

361,863

(753,659)

(632,829)

(113,276)

Central to our purpose is balancing the ownership demographics

of rental property in the inner cities of Johannesburg. To this
end we have increased our funding target for previously
disadvantaged individuals (PDIs) to 55% of TUHFs client base.
Our character-based lending approach and our hands-on
guidance creates the ideal platform to discover and develop
emerging property entrepreneurs.
This year we highlight the success story of Simon Mkhize: a
modest, polite, softly-spoken hardware store assistant with little
formal education. Simon is a fine example of what determination,
hands-on knowledge of the inner city environment and a
collaborative business relationship with TUHF can achieve.
He has lived in Mabel Court (a six unit building in Bellevue East
which adjoins Yeoville) since 1994. In 2001, the owner who was
becoming increasingly frustrated with property management
problems offered Simon and the other residents the opportunity
to purchase Mabel Court. Funding was declined by the banks
however, as Bellevue East falls within the red-lined area of the
inner city.
Tireless in his effort to obtain funding of R250 000 to secure the
investment, Simon sought the advice of a relative, Mr Thabethe,
in 2005. Mr Thabethe had heard of TUHF and in spite of Simons
inexperience and a profile that labelled him unbankable in the
mainstream market, we approved the project. The transfer of
Mabel Court in Simons name took place in 2006.
Envious of his success and perceiving that his empowerment was
at their expense, Simons tenants withheld rental payments and
a legal battle ensued. He had continued to live in the building
which exacerbated the situation further. A resolute Simon
persevered and succeeded in having the tenants evicted. He
proceeded to refurbish the building and lease the units to new
tenants.

Simon Mkhize and Paul Jackson

Having realised the importance of letting to employed people;

establishing appropriate criteria, including the number of tenants
per unit; obtaining signed leases; and developing hands-on
management skills, with assistance from TUHF, Simon was well
on his way to becoming a competent property entrepreneur.
TUHF recognises hands-on management as a crucial element
for success. Accordingly, experiential learning is the best method
for emerging landlords to develop competent skills in the real
estate business. We encourage our clients to become firstrate landlords and to provide an excellent quality of service to
tenants. Moreover, we strongly advocate the concept of a client
purchasing more properties close to their existing development
projects. This promotes precinct development which directly
contributes to regeneration and rejuvenation and benefits
local economic development.
Simon has translated his very modest means into a further 4
properties - houses opposite his building - which were derelict
and poorly managed. In these, his latest property endeavours, we
are very proud to have assisted him via the Intuthuko Equity Fund
(Intuthuko) which is a specialised subsidiary of TUHF. Intuthuko
targets emerging rental housing property entrepreneurs by
assisting with the equity required to secure a TUHF loan.
With every intention of growing his business further Simon plans
to empty the houses in question and to renovate and let them to
responsible tenants. He no longer works at the hardware store
and concentrates on managing his properties full-time. Lauded
for his willingness to take a risk, his determination, inner city
knowledge and hard work, Simon Mkhize is a prime example of
the attributes we seek in our emerging entrepreneurs.

Corporate social investment

Purposeful and effective corporate social
investment (CSI)
... making a tangible, positive impact on inner
city communities.

Khumbulani Chikomo
Portfolio Manager

Andr van Rooyen

Bridging Finance Officer

Rekwele Mmatli
Portfolio Manager

Antoinette Herandien
Loan Administrator

Ilona Roodt
Financial Manager

Tony Mitchell
Consultant

Portia Gxabuza
Filing Clerk

Tryphinah Dakana
General Assistant

Med Kwesiga
Portfolio Manager

Pressage Nyoni
Liaison Officer

Belinda Cooke
Loan Administration Manager

Lusanda Mbeje
Portfolio Manager

Paul Jackson
CEO

Kekeletso Tsotsotso
Temp

Connie Masoga
Bookkeeper

Roselyn Valloo
Accountant

Charmaine Meth
Receptionist

Nano Makwela
Portfolio Manager

George Chauke
Portfolio Manager

Chevaughn Parsons
Operations PA

Justine Saloman
Loan Administrator

Mark Labuschagne
Mortgage Manager

Desmond Kalamer
Programme Administrator

Delrie Coetzee
PA to CEO

TUHF strives to respond to development needs in a purposeful

and considered way. We take seriously the transfer of the relevant
industry skills and knowledge to our landlords, encouraging the
sustainability of rental housing property projects, while making a
tangible, positive impact on inner city communities.
In January 2009, TUHF in collaboration with professional trainers
- Cornerstone Consultants - and the International Finance
Corporation (IFC) and Shorebank to whom we are extremely
thankful for programme funding, embarked on a six month pilot
training initiative for landlords. The specific aim of the initiative
is to train and empower mainly prospective, but also existing
landlords, to take ownership of the buildings / units they own or
are planning to purchase.
Most of the participants were selected from the TUHF database
with some additional word-of-mouth applicants. Of the 20 course
participants, 15 individuals graduated in July of this year, after
completing the various modules prescribed for the programme
and writing a final examination. Some of the graduates are
building caretakers who seek to purchase a unit or two with the
aim of renting to tenants in the future. Others are owners of units
or small duplexes who wish to increase their knowledge of good
landlord business practice.
Based on the success of the pilot programme we have every
intention implementing the course as a permanent annual
offering. Participation on the part of prospective landlords,
although voluntary, will be strongly advocated.

Managing profitably but also responsibly is

central to TUHFs success. Delighted with the
enthusiastic response to the landlord training
programme and the positive result we also wish
to extend our appreciation to IFC and Shorebank
for their assistance in funding the programme.

Paul Jackson (CEO)

Tel: 011 276 1440 | Fax: 011 339 1784

e-Mail: info@tuhf.co.za | Web: www.tuhf.co.za
Address: 1st Floor, UCS House, 209 Smit Street, Braamfontein, 2001
Postal address: P O Box 30872, Braamfontein, 2017