South African Local Government Association
Schedule 3A public entity i.t.o. the Public Finance Management Act, 1999 and recognised i.t.o. the
Organised Local Government Act, 1997
Annual Financial Statements for the year ended 31 March 2017
Notes to the Annual Financial Statements
2017
Figures in Rand
31.
2016
Commitments (continued)
This committed operational expenditure relates to expenditure where purchase orders were issued
and handed-over to suppliers as at year end. All these commitments will be realised in the normal
operating cycle of SALGA and are funded from internal resources.
Operating leases - as lessee (expense)
Minimum leases payments due
- within one year
- in second to fifth year inclusive
38 301 095
79 319 029
117 620 124
35 272 750
93 290 761
128 563 511
SALGA has ten operating leases for office accommodation across all provinces. Operating lease
payments represent rentals payable by SALGA for its administrative office accommodation.
Leases are negotiated for an average term of five years. The average extension period is 2.1 years
(2016: 1.5 years). The average escalation rate is 9%.
All leases, except for those in Gauteng have extension options included in the contracts. Four of
the lease contracts (national office, KwaZulu-Natal, Northern Cape and North West) have extension
options that are subject to negotiation between SALGA and the lessors at the end of the current
contracts. SALGA normally enters into negotiations to extend lease contracts at least six months
before the termination of the lease.
Operating leases - as lessor (income)
Minimum leases payments due
- within one year
- in second to fifth year inclusive
- later than five years
81 756
183 656
-
265 412
75 700
265 412
-
341 112
SALGA leases a portion of its property in KwaZulu-Natal to a cellular phone operator for a cellular
phone mast. The lease period upon integration of SALGA KwaZulu-Natal into the SALGA fold was 96
months. The annual escalation is 8% and the remaining lease period is 36 months.
223
SALGA ANNUAL REPORT
2016/17