Estate Agency Affairs Board
ANNUAL REPORT AND FINANCIAL STATEMENTS
2013/2014
Bryan Chaplog (CEO)
Silence Mmotong (CFO)
Nikita Sigaba (CRO)
PRESENTATION OVERVIEW
Mandate
Vision & Mission
Organizational Structure
Corporate Governance Report
Operational Report
Integrated Human Capital Report
Annual Financial Statements
Performance Information Report
Audit Report
Year Ahead
MANDATE
Primary Mandate of EAAB
 Regulate, maintain and promote the standard of conduct of estate
agents having due regard to the public interest;
 Issue fidelity fund certificates to qualifying applicants;
 Prescribe the standard of training of estate agents;
 Investigate complaints against estate agents and institute disciplinary
proceedings against offending estate agents where required; and
 Manage and control the Estate Agents Fidelity Fund.
Secondary mandate
 The EAAB is the Supervisory Body of the estate agency profession
pursuant to the Financial Intelligence Centre Act and is obliged to
take all steps required to prevent; alternatively, identify and report
on, anti-money laundering and terrorist financing activities
VISION & MISSION
VISSION
To be a world class regulator that is responsive to
and surpass its stakeholder expectation
MISSION
To ensure that the integrity of the transaction
between the estate agent and consumer is of a high
standard by regulating, protecting, guiding and
enhancing the conduct of real estate agents’
profession in South Africa.
Executive
Authority
DHS
Board
Members
Chief Executive Officer
Business Operation
Executive
Legal
Technical
Analyist
Chief Risk Officer
Company Secretary
Internal Audit (outsourced)
Executive Compliance
Claims
Litigation
and
Recoveries
Registration
Disciplinary
Audit
Complaince
Executive Inspections
Inspections 9
Regional
Offices
Transformation Manager
Executive Corporate
Services (CFO)
Executive Education and
Training
Estate Agents
Education and
Training
Knowledge
Centre and
Library
Professional
Body
Human
Resources
Information
Technology
Finance and
Administration
Marketing and
Publications
Property
Consumer
Awareness
Customer
Relations
Agents
CORPORATE GOVERNANCE REPORT
BOARD COMPOSITION
• Executive Authority = Department of Human
Settlements
• Accounting Authority = Board (15 Board Members)
 5 members representing estate agents industry
 5 members from civil society representing the
interest of consumers
 5 members from related professions and
institutions such as legal, financial, property
owners
CORPORATE GOVERNANCE REPORT
BOARD COMMITTEES
•
•
•
•
•
•
•
•
Chairman’s committee (10 members)
Audit and Risk Committee (6 members)
Finance Committee (5 members)
HR and Remunerations Committee (6 members)
Education & Training Committee (6 members)
Legal and Claims Committee (6 members)
Social and Ethics Committee (6 members)
Transformation Committee (7 members)
Draft and Confidential
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Draft and Confidential
9
Draft and Confidential
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Draft and Confidential
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Draft and Confidential
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Draft and Confidential
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OPERATIONAL OVERVIEW
INSPECTIONS STATISTICS
NON-COMPLIANCE: INSPECTION CONTRAVENTIONS 2013/14
Gauteng
Western
Cape
Limpopo
Free StateEastern KwaZulu Mpumalanga Total
Cape
Natal
ESTATE AGENCIES OPERATING
ILLEGALLY
24
36
0
10
15
31
9
210
PRINCIPALS - NO FIDELITY FUND
CERTIFICATE
40
48
0
9
9
31
21
168
NON-PRINCIPALS AND INTERNS NO FIDELITY FUND CERTIFICATE
79
2
0
26
7
24
19
157
PRIMARY TRUST ACCOUNT
CONTRAVENTIONS
40
49
1
30
12
20
20
83
SECONDARY/INVESTMENT
ACCOUNT CONTRAVENTIONS
22
25
0
17
10
37
9
118
INTEREST EARNED ON TRUST
MONEY - NOT PROPERLY DEALT
WITH
7
15
0
19
1
11
2
55
OPERATIONAL OVERVIEW
INSPECTIONS STATISTICS
NON-COMPLIANCE: INSPECTION CONTRAVENTIONS 2013/14
Gauteng
Western
Cape
Limpopo
Free
State
Eastern KwaZulu Mpumalanga Total
Cape
Natal
RETENTION OF TRUST MONIES AND 3
PAYMENTS FROM THE TRUST
ACCOUNT
4
0
5
5
4
6
27
INSUFFICIENT ACCOUNTING
RECORDS OF TRUST ACCOUNT
33
24
0
17
6
6
9
95
IMPROPER ADMINISTRATION OF
TRUST ACCOUNT
17
43
2
26
4
11
9
114
ACCOUNTING RECORDS
IMPROPERLY MAINTAINED
11
47
0
2
18
9
17
104
CONTRACTS COMPLETED BY
UNQUALIFIED PERSONS
0
21
0
12
7
17
2
59
6
0
8
5
26
14
63
CONTRAVENTIONS OF THE CODE OF 4
CONDUCT IN RESPECT TO
CONTRACTS GENERALLY
OPERATIONAL OVERVIEW
INSPECTIONS STATISTICS
NON-COMPLIANCE: INSPECTION CONTRAVENTIONS 2013/14
Gauteng
Western
Cape
Limpopo
Free StateEastern KwaZulu Mpumalanga Total
Cape
Natal
CONTRAVENTIONS OF THE CODE 10
OF CONDUCT IN RESPECT TO SOLE
MANDATES
4
0
9
2
21
1
47
CONTRAVENTIONS OF THE CODE 3
OF CONDUCT IN RESPECT TO LEASE
AGREEMENTS
3
1
9
0
6
0
22
CONTRAVENTIONS OF THE CODE 2
OF CONDUCT IN RESPECT TO SALE
AGREEMENTS
1
0
8
0
17
2
30
CESSATION OF PRACTICE WITHOUT 0
NOTIFYING THE EAAB
1
1
15
0
3
3
23
NON-EXISTANT ESTATE AGENCIES
0
0
0
0
3
0
3
0
OPERATIONAL OVERVIEW
INSPECTIONS STATISTICS
NON-COMPLIANCE: INSPECTION CONTRAVENTIONS 2013/14
Gauteng
Western
Cape
Limpopo
Free StateEastern KwaZulu Mpumalanga Total
Cape
Natal
NON-COMPLIANCE WITH THE FIC 18
ACT iro DUTY TO IDENTIFY CLIENTS
AND KEEP RECORDS
1
1
30
11
4
3
68
NON-COMPLIANCE WITH THE FIC 0
iro CASH THRESHOLD REPORTING
IN TERMS OF TRANSACTIONS
EXCEEDING R25000
2
0
20
6
2
1
31
NON-COMPLIANCE WITH THE FIC
iro INTERNAL RULES
47
23
1
46
11
12
10
150
NON-COMPLIANCE WITH EAAB
EDUCATION REQUIREMENTS
0
28
4
35
37
7
0
111
FAILURE TO UPDATE GENERAL
INFORMATION WITH THE EAAB
96
101
0
6
7
15
3
225
TOTAL CONTRAVENTIONS
456
484
11
359
173
317
160
1960
TOTAL INSPECTIONS
208
200
56
64
52
143
38
761
OPERATIONAL OVERVIEW
EDUCATION AND TRAINING
EQUIVALENCY EXEMPTION APPLICATIONS ASSESSED AND GRANTED
Equivalency exemptions for
NQF Level 4
Equivalency exemptions for
NQF Level 5
Equivalency exemptions for
NQF Levels 4 and 5
OPERATIONAL OVERVIEW
EDUCATION AND TRAINING
CONSOLIDATED EXAMINATION ENROLMENTS
2000
1800
1600
1400
1200
1000
800
600
400
200
0
Candidates who wrote the
examination
Candidates who passed the
examination
Candidates who failed the
examination
PDE 4
PDE 5
2014
PDE 4
PDE 5
2013
INTEGRATED HUMAN CAPITAL REPORT
Employment and vacancies
Programme
2012/13
No. of employees
2012/14 Approved
posts
2013/14
No. of employees
2013/14
Vacancies
CEO’s Office
3
9
7
2
Compliance
29
45
34
11
7
7
7
0
35
30
25
5
74
91
73
18
Education and Training
Corporate Services
Total
INTEGRATED HUMAN CAPITAL REPORT
Employment equity status (Male)
AFRICAN MALE
Skills level
COLOURED MALE
EE Target
Employee
WHITE MALE
Employee
EE Target
Top
Management
4
5
1
1
0
0
1
1
Senior
Management
3
3
0
0
0
0
0
1
Professional
Qualified
3
3
0
0
0
0
0
1
Skilled
6
5
0
1
0
1
0
0
Semi-skilled
8
12
0
1
0
1
0
0
Unskilled
2
0
0
0
0
0
0
0
26
28
1
3
0
2
1
3
Total
Employee
INDIAN MALE
EE Target
Employee
EE Target
INTEGRATED HUMAN CAPITAL REPORT
Employment equity status (Female)
AFRICAN FEMALE
Skills level
COLOURED FEMALE
Employee
INDIAN FEMALE
EE Target
Employee
WHITE FEMALE
Employee
EE Target
EE Target
Employee
EE Target
Top
Management
1
2
0
0
0
0
0
0
Senior
Management
3
4
0
0
0
0
1
0
Professional
Qualified
2
3
0
0
1
0
1
1
Skilled
3
11
0
2
0
0
0
1
Semi-skilled
27
19
3
2
0
0
1
4
Unskilled
22
0
0
0
0
0
0
0
Total
38
39
3
4
1
1
3
6
ANNUAL FINANCIAL STATEMENTS
INCOME STATEMENT
Income
Revenue - FFC
Revenue - Management Fee
Revenue - Examinations
Other Income
Expenses
Operating Expenditure
Depreciation and Impairments
Auditors Remuneration
Employee Costs
Operating Surplus (Deficit)
Investment Income
Finance Costs
Net Surplus/(Deficit)
2013/14
2012/13
R'000
R'000
R
Change
R’000
%
Change
80 512
16 279
52 253
2 541
9 439
(74 612)
(34 243)
(2 348)
(1 461)
(36 560)
5 900
2 879
-
83 059
18 662
52 983
751
10 663
(93 538)
(41 516)
(366)
(1 666)
(49 990)
(10 479)
5 771
(3)
(2 547)
(2 383)
(730)
1 790
(1 224)
18 926
7 273
(1 982)
205
13 430
16 379
(2 892)
3
-3%
-13%
-1%
238%
-11%
-20%
-18%
542%
-12%
-27%
-156%
-50%
-100%
8 779
(4 711)
13 490
-286%
ANNUAL FINANCIAL STATEMENTS
TRENDS
Income
 Revenue from issue of FFC declined due to some
estate agents still battling with complying with audit
report requirements
 Revenue from exams increased due to more estate
agents enrolling for exams to meet the regulations
deadline
ANNUAL FINANCIAL STATEMENTS
TRENDS
Expenditure
 Operating expenditure decreased due to less
inspections performed
 Staff costs decreased due to recoupment/reversal of
the losses in the pension fund scheme
ANNUAL FINANCIAL STATEMENTS
BALANCE SHEET
Property, Plant and Equipment
2013/14
2012/13
R'000
%
R'000
R'000
Change
Change
73 377
1 738
71 639
4122%
2 055
1 963
92
5%
364
165
199
121%
21 868
17 580
4 288
24%
Financial Assets/Investments
1 355
27 450
(26 095)
-95%
Trade and other Receivables
3 940
1 428
2 512
176%
33 935
85 099
(51 164)
-60%
Total Assets
136 894
135 423
1 471
1%
Capital and Reserves
104 990
96 211
8 779
9%
23 681
18 593
5 088
27%
8 223
20 619
(12 396)
-60%
136 894
135 423
1 471
1%
Intangible Assets
Inventories
Loan Fund - Fidelity Fund
Bank and Cash
Current Liabilities
Non-current Liabilities
Total Equity and Liabilities
ANNUAL FINANCIAL STATEMENTS
RATIOS
RATIO ANALYSIS
2013/14
Return on net Assets (%)
2012/13
8%
(5%)
2
6
Debt collection rate (Days)
18
6
Creditors Payment rate (Days)
51
17
23%
29%
Current Ratio
Gearing/Financial Leverage
ANNUAL FINANCIAL STATEMENTS
FIDELITY FUND
2013/14
2012/13
Net Asset Value (NAV)
R571 Million
R580 Million
Claims Approved
Claims approved as a percentage
of NAV
R5.8 Million
R0.288 Million
1%
0.05%
KEY PERFORMANCE ANNUAL TARGETS –
PROGRAMME 1: COMPLIANCE
Strategic Objectives

To improve compliance with the Estate Agency Affairs Act.
SUB
OUTPUTS
Actual
Planned
Actual
PROGRAMMES
Achieveme Targets
Achievemen
nts
2013/2014
ts
2012/2013
2013/2014
Deviation from
planned target to
Actual Achievement
for 2013/2014
(under)/over
performance
Comment on deviations below
target.
Disciplinary
Number of
1028
complaints
received
investigated
and resolved
1100
634
(466)
The enforcement department was
only adequately resourced in the
1st Quarter. The enforcement
department was focused on late
or no audit report submission
prosecutions instead of complaints
in the 4th Quarter.
Inspection
Number of
inspections
performed
Number of
new
registration
FFC issued
1008
1210
800
(410)
8296
9126
12484
3358
The inspection department was
under-capacitated for the first 3
quarters.
N/A
54152
34729
(19423)
Licensing
Number of
49238
renewals FFC
issued
EAAB was more stringent in
supplying Fidelity Fund certificates
to Estate Agents which did not
KEY PERFORMANCE ANNUAL TARGETS –
PROGRAMME 2: CORPORATE SERVICES
Strategic Objectives

To increase stakeholder awareness of the EAAB and its stakeholders

To effectively and efficiently manage the EAAB
SUB
OUTPUTS
Actual
Planned
Actual
Deviation from
PROGRAMMES
Achievements
Targets
Achievements planned target to
2012/2013
2013/2014
2013/2014
Actual Achievement
for 2013/2014
(under)/over
performance
Stakeholder
Consumer
12
16
13
(3)
awareness
awareness
campaigns
performed
Estate Agency
12
16
22
6
capacity
building
campaigns
performed
Number of
4
4
4
0
agent magazine
issued
Automation of
registration
process
Number of online
registrations
performed
364
500
311
(189)
Comment on
deviations
Lack of capacity to
perform adequate
consumer campaigns.
N/A
N/A
Inadequate
awareness in the use
of on-line
registrations.
KEY PERFORMANCE ANNUAL TARGETS –
PROGRAMME 3: FIDELITY FUND
Strategic Objectives

To improve the sustainability of the Fidelity Fund.
SUB
PROGRAMMES
Fidelity Fund
Growth
OUTPUTS
Actual
Achievements
2012/2013
Planned
Targets
2013/2014
Actual
Achievements
2013/2014
Deviation from
Comment on
planned target to
deviations
Actual Achievement for
2013/2014
Value of claims
approved
Interest received
from Estate
Agents Trust
account
R1,925,000
R3,051,254
R948,746
R10,507,000
Maximum of
R4,000,000
R20,000,000
R17,085,869
(R2,914,131)
This is due to lower
renewals than
expected.
Value of claims
recoveries
R1,925,000
R2,000,000
R0
(R2,000,000)
The Litigation &
Recoveries department
was under-capacitated
for most of the
financial year
Interest received
from
investments
R30,384,000
R32,000,000
R31,277,029
(R722,971)
Decrease in Fidelity
Fund Investments has
resulted in lower
return on investments.
Fidelity Fund
Growth
2.2% Fidelity
fund Growth
5.4% Fidelity
Fund Growth
0.014% Fidelity
Fund Growth
(5.386%)
Fidelity Fund Income
grew below
expectation and
Expenditure was higher
than expected.
N/A
KEY PERFORMANCE ANNUAL TARGETS –
PROGRAMME 4: EDUCATION AND TRAINING
Strategic Objectives
 To build capacity of key stakeholders
SUB PROGRAMMES
OUTPUTS
Actual
Planned
Actual
Achievement Targets
Achievements
s 2011/2012 2013/2014 2013/2014
Deviation
Comment on
from
deviations
planned
target to
Actual
Achievemen
t for
2013/2014
Education and Training
Number of NQF Level 4
candidates enrolled and
passed PDE 4
300
1000
1266
266
N/A.
Education and Training
Number of NQF Level 5
candidates enrolled and
passed PDE 5
100
150
337
187
N/A
Education and Training
Number of candidates
enrolled for the CPD
0
0
(1500)
The selection of
CPD system service
provider has taken
longer than
expected. The cost
1500
AUDIT REPORT
AUDIT OPINION
UNQUALIFIED AUDIT OPINION
EMPHASIS OF MATTER
NONE
LEGAL AND REGULATORY MATTERS
Reportable Irregularity – 3 disqualified
board members not vacated their office.
PREDETERMINED OBJECTIVES
They have since vacated their office
56% targets not achieved as they did not
meet the SMART criteria
Performance Information System not
Integrated with Financial and Reporting
Management Systems
AUDIT REPORT JOURNEY
2009/10 –
Unqualified
Audit
Opinion
2010/11 Unqualified
Audit
Opinion
2011/12 –
Unqualified
Audit
Opinion
2012/13 Unqualified
Audit
Opinion
2013/14
Unqualified
Audit
Opinion
YEAR AHEAD
KEY PLANS FOR 2014/2015
 Establish regional centers
 Participate in finalizing the Property Practitioners Bill
 Intensify the consumer awareness campaigns
 Increase inspections
THANK YOU
Draft and Confidential
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