2015/16 - moseskotaneinstitute.com...moses kotane institute 05 annual report: 2015/16 director and...

ANNUALREPORT2015/16

ENHANCING ECONOMIC ACTIVITY THROUGH SCIENCE, TECHNOLOGY, ENGINEERING AND MATHEMATICS

ENTITY OF:

ENHANCING ECONOMIC ACTIVITY THROUGHSCIENCE, TECHNOLOGY, ENGINEERING AND MATHEMATICS

Moses Kotane House, Lakeside Unit 14, Derby Downs, University Road, Westville, Durban 4001 | Tel: 031 266 1777/92/98 | Fax: 031 266 1780www.moseskotane.com

PROGRAMME: STEM EDUCATION, ACADEMIC DEVELOPMENT AND SUPPORT

SUB PROGRAMME: STEM LEARNER ACADEMIC DEVELOPMENT AND SUPPORTSUB PROGRAMME: STEM GRADUATE DEVELOPMENT

SUB PROGRAMME: EDUCATOR PROFESSIONAL IMPROVEMENTSUB PROGRAMME: SECTOR RESEARCH DEVELOPMENT

PROGRAMME: SKILLS DEVELOPMENT PARTNERSHIPS IN SET(SCIENCE, ENGINEERING AND TECHNOLOGY)

SUB PROGRAMME: INTERNSHIPS AND OCCUPATIONALLY DIRECTED SKILLSSUB PROGRAMME: APPRENTICESHIPS, LEARNERSHIPS AND ARTISAN DEVELOPMENT

SUB PROGRAMME: GOVERNANCE AND LEADERSHIP DEVELOPMENT

VISIONNurturing thought leaders through focused Science, Technology, Engineering, Mathematics and Leadership interventions.

MISSIONTo develop well rounded MKI ‘graduates’ who will serve as role models in their respective communities, capable of

strong leadership in the quest to make science maths and technology accessible to all.

VALUESThe Moses Kotane Institute is founded on a value system that places the needs of the people first, where consultation with government

and STEM stakeholders is of paramount importance in decision making. MKI as an institution values:

• Ubuntu (compassion and empathy)• Egalitarianism

• Political rectitude• World class standards

• Responsibility, accountability, and sustainability

MOSES KOTANE INSTITUTE ANNUAL REPORT: 2015/1601


SECTION A


CONTENTSFOREWORD BY MEMBER OF EXECUTIVE COUNCIL 04

CHAIRPERSON’S REMARKS 05

CHIEF EXECUTIVE OFFICER’S STATEMENT 06

SECTION A: STRATEGIC OVERVIEW 07

1. Background 07

02. Vision 07

03. Mission 07

04. Mandate 07

05. Response to Economic Development 07

06. Structure 09

07. Legislative Framework 10

08. Policies 10

09. Strategic Goals 10

10. Strategic Objectives 11

11. Overall Performance 11

12. Aim of Voted Funds 12

13. Overview of Service Delivery 12

14. Overview of Organisational Environment 12


FOREWORD BY MEMBER OF EXECUTIVE COUNCIL

As government we have found comfort in the general national and global good-will towardsScience,Technology, Engineering and Mathematics (STEM) initiatives. The biggest concernand focus has always been matching the demand for the STEM graduates against our output.The quality of such graduates and active economic participation remains the ultimate gamechanger, for it is these trades that will influence the overall South African economy. Skillsdevelopment efforts in the country are highly fragmented and have not reached the scaleand quality desired or required, as a result South Africa imports skilled workers from othercountries to operate sophisticated machinery instead of training locals. Skills Developmentis a catalyst to economic development, there for focus on youth that have fallen throughthe cracks on our system to be channeled back and trained in scarce skills for job creationis of paramount importance.

Moses Kotane Institute’s mandate (MKI) is mandated to implement Goal 2 on Human Resource Development, of theProvincial Growth & Development Plan (2015) in the areas of STEM. It is for every individual and organisation to join handsand partner in this movement to ensure that our youth in particular is relevant to the job market. It is against thisunderstanding that Moses Kotane Institute together with Samsung South Africa have formed partnership in the establishmentof a Samsung Moses Kotane Institute Youth Development Electronics Academy. The first group of candidates will receivetraining on Air-Conditioning and Refrigeration Training. Thereafter the training academy will look into adding more trades.This partnership assures MKI a good attempt at unlocking participation of young people in economic developmentopportunities linked to strategic sectors within the KwaZulu-Natal Province; which are:

(a) Supply of skills development intervention aligned to industry and economic sectors; and(b) Industry or Work Base skills development opportunities(c) Enhancing entrepreneurship opportunities.

We acknowledge Samsung’s investment towards training our youth but practically speaking,Samsung cannot absorb allthe graduates hence another partnership with Massmart Group to set aside a portion of their warrantees repairs for therest of the trainees that would have not found employment from Samsung and/or Professional Independent Contractorsis also in place for year2016/17. The institute’s mantra is in facilitating that learners from disadvantaged backgrounds areafforded financial assistance to study STEM. In the infamous “Fees must Fall Campaign 2015” students raised concernsabout the accessibility of quality higher education i.e. university level. This campaign went to support the arguments thatit is not that those students from disadvantaged communities lack intelligence or ability to study STEM and other disciplinesfor that matter, but it is due to social challenges such as funds that the majority of our people do not have the qualificationand the necessary skills. The Department of Economic Development, Tourism and Environmental Affairs(EDTEA) which fundsMKI, strategically established these small pockets of excellence (entities) which we believe can better focus on the needsof our society. This poses a challenge to the leadership at MKI and beyond, leaders must take stock of their lives and askthemselves if they have been able to deliver what they are mandated to do, or if they have been able to change lives. Theability to change lives comes with the ability to take bold decisions some welcome by many and some not so popular.

Over the past year I have seen MKI steadily emerging with projects that will change the landscape of the province, if itwas not for bold decision making such progress would only be a dream. Information and Communication Technology willchange the way people stay knowledgeable. It will change the way people look for jobs which is critical for economicparticipation. Sad reality is our people still have limited access to resources, limiting their chances of knowledge andemployability.This year we charge MKI with the responsibility to increase access in these areas. My gratitude goes to theCEO and the Board of Directors at Moses Kotane Institute for their leadership that has taken the institute to new greaterheights. The same leadership that saw MKI revising its programme offering to stay relevant to the needs of our academicfraternity as well as out of school youth by creating practical opportunities for them to realise their dreams irrespective oftheir backgrounds. The institute can be assured of our continued support in enhancing access to economic activity throughskills development and STEM disciplines.

____________________________Mr. Sihle Zikalala, MPLMEC: Economic Development Tourism and Environmental Affairs (EDTEA)


DIRECTOR AND ADMINISTRATIVE REPORT

CHAIRPERSON’S REMARKS

I am privileged to report on the year under review as it marks the historical repatriation ofour patron, Moses Mauwane Kotane. He laid buried in Russia, Moscow, for many years untilhis fatal remains were repatriated back to South Africa. He was re-buried in his home soil, inPella North West on 14 March 2015. It is also the year in which we have paid more focus onskills development and private sector funding. This is by no means a change in our mandate,it is however an acknowledgement that we are indeed in the decade of the “Artisan. Withheavy hearts we also report on a great loss and mourn the sudden passing away of our belovedand most esteemed leader, outstanding resource and board member, Dr. Donald Mkhwanazi.He kindled new hope of black empowerment through his creative vision and practices, as aresult the institute has established a Dr. Don Mkhwanazi Legacy Bursary Fund to carry forwardthe black empowerment struggles to which he dedicated his entire life. On behalf of the MosesKotane Institute (MKI) Board of Directors we wish to thank him for his support and contributionas we bid his departed soul internal peace.

The global economy remained fragile, while the statistics in black qualified and certified engineers remained shocking to saythe least. It is against this background that MKI poised itself in ensuring that we increase the quality and quantity of skillssupply by our marginalized group. This very same fragile economy puts more pressure in institutions like ourselves to not onlyensure academic development but rather ensuring that skills development and training lead to full economic participation.We therefore challenged ourselves to have an impact and increase our footprint. As a not for profit state owned entity this isa challenge we could not tackle on our own. It necessitated that we approach like-minded organisations to partner with usin a fight to increase the skills output. The support of other government departments, SETA’s and private sector has been keyto the success we are reporting on to date. Key to our response to critical and scarce skills challenge we are proud to havefostered partnerships with the following organisations:

1. Samsung South Africa2. National Skills Fund3. Local Government SETA4. TETA5. European Union6. Global Softech Solutions7. Services SETA

The above achievements could not have been attainable if it was not for the current leadership. We have had a smoothleadership transition, growth and stability. As the board it is our responsibility among others to ensure practice of good corporategovernance, this leadership has made that responsibility an easy one. MKI is not immune to the current budget constraints,but we have managed to achieve more through our partners. We have also managed to ensure value for money and resourcesat our disposal. I find comfort in realizing that Science, Technology and Innovation are slowly getting the recognition it deservesas key sources of economic growth. South Africa can still do better in terms of investment in these disciplines. Gradually ouryouth is not looking at being offered employment but they are venturing in creating their own sustainable businesses. Wehave in all of us the ability to contribute towards economic growth. We need to move STEM higher in our priorities for it’sthe answer if we want to compete on an equal footing with our global counterparts. Our country has natural endowment ofrich resources and mineral, so how do we find ourselves struggling so hard to use these to our economic gains, the answerlies in import labour. This would not be the case if South Africa as a whole increased its investments in scarce skills development.I am humbling myself in a call for increased collaborations and support in increasing the market for skilled specialized labour.

I would like to thank our shareholder, the Department of Economic Development, Tourism and Envoronmental Affairs for thecontinued support. My sincerest gratitude to the CEO and CFO for the clean audit outcome and wish to encourage MKI staffto stay committed to the MKI mandate and service delivery.

_______________________Mr. Sakhile NgcoboChairperson: Moses Kotane Institute



CHIEF EXECUTIVE OFFICERS’S STATEMENT

Let me first take this opportunity to welcome our Honorable MEC for Economic Development,Tourism and Environment Affairs (EDTEA), Mr. Sihle Zikalala. As an MKI team and the Board,under your leadership, we would like to affirm commitment to your vision and we promiseto make you proud.

Since 2015, the Institute has made and continues to make considerable strides to not onlyimprove service delivery to the youth of the province, but also to take its rightful place inthe implementation of Goal Two (2) of the Provincial Growth and Development Plan in theareas of Science, Technology, Engineering and Mathematics.

The strategic role of Moses Kotane Institute in the education and skills development of youth can no longer be disputed.Following its strategic repositioning in 2014-15 financial year, where a vision and plan were put in place, managementand the board guided and supported by the leadership of our honorable MEC for Economic Development, Tourism andEnvironmental Affairs, began its earnest task of implementing Moses Kotane Vision 2020. As part of Vision 2020, our effortsas management and the board will be focused on the implementation of the following strategic goals, against which thisfinancial year’s Annual Performance Plan has been focused:

• Improved access to and success in Science, Technology, Engineering and Mathematics (STEM) opportunities toenhance Talent Supply Pipeline and research capability.

• Contribute to availability of entry to high level STEM skills align to economy to service the growth and developmentneeds of the provinces.

• Continually position the Institute as a preferred partner in the funding and the execution of youth STEM education andskills development interventions aligned to economy.

In 2015-16, our focus was building strategic partnership in support of an improved service delivery footprint in Science,Technology, Engineering and Mathematics education and skills development for both learners, students and unemployedyouth and graduates. We started by reconfiguring MKI programmes and interventions across the board. We established aSTEM INNOVATION FUND aimed at supporting access and success in STEM within peri-urban and rural communities. TheSTEM Innovation Fund helped MKI to increase grade 12 learners’ academic development and support, increase educatorsprofessional development, increases funding and financial assistance to needy youth from historically disadvantagedcommunities to access education and training at higher education institutions and to commence with the promotion ofScience. This year MKI will continue to accelerate the implementation of the aforementioned intervention as part of theInstitute’s role and contribution in the implementation of KZN Education Turnaround Plan.

In the financial 2016-17, the Institute introduced as part of its mandate, education and skills development programmesin Science, Engineering and Technology (SET) aimed at unemployed youth and graduate, that are funded through SectorEducation and Training Authorities, National Skills Fund and private sectors partnership. Various Apprenticeships, Learnershipsand Occupationally Directed Short Skills Programme aimed at unemployed youth and graduatse have already started, andwe will continue to do so as part of Vision 2020.

There is a growing recognition of the need for clean governance in government owned entities in order to build citizensconfidence in their role in the radical economic transformation. I am satisfied of the improvement and progress being madeby the Institute in as far as corporate governance is concerned. However, there is still room for improvement. We can dobetter than we are at the moment. As the Accounting Officer of the Institute I am committed to transparency and goodgovernance.

_______________________Mr. Sibusiso MpungoseChief Executive Officer



SECTION A

Strategic Overview

1. Background

The Moses Kotane Institute-NPC was incorporated on 28 November 2008, however, commenced trading on 1 January2009. It is involved in the conceptualisation, facilitation and implementation of programs and interventions aimed atachieving a high level of skills in all areas of STEM (Science, Technology, Engineering and Mathematics).

2. Vision

Our vision is to nurture thought leaders through focused Science, Technology, Engineering, Mathematics and Leadershipinterventions

3. Mission

Our mission is to develop well rounded MKI “graduates” who will serve as role models in their respective communities,capable of strong leadership in the quest to make science, maths and technology accessible to all.

4. Mandate

The Moses Kotane Institute is mandated to ensure the development of skills in Science, Technology, Engineering andMathematics (STEM) is sufficient and appropriate to service the economic growth and development needs of the province.

5. Response to Economic Development

The Institute builds human capital in order to give support to economic growth by nurturing and producing thought leadersthrough focused STEM and leadership interventions. This is achieved through four pillars as depicted overleaf.


NURTURING ANDPRODUCING THOUGHT LEADERS THROUGH

FOCUSED STEM AND LEADERSHIP INTERVENTIONS

BUILDING HUMAN CAPITAL TO SUPPORT ECONOMIC GROWTH

Business SustainabilityStrategies

STEM Learner academicdevelopment & support

Strengthening Governance &Oversight

Responsiveness to MillenniumDevelopment Goals

Human Resource CapabilityDevelopment Strategies

STEM Graduate DevelopmentInterventions

Fostering Effective Monitoring& Evaluation of policy

outcomes

Promoting Integrated andInter-Sectoral Approaches to

Developmental Priorities

Organisational strategies, policies& systems

Research & Innovation Participating in Strategic

HRD & SkillsDevelopment Networks

Capacity Building to promotesuccess of

Industrial & Economic Plans

HR Performance ManagementScience, Engineering & TechnologyLearnerships Programmes

Stakeholder Engagementand Management

Awareness promotion of growth and development

initiatives

Performance Monitoring &Evaluation

Science, Engineering & TechnologyArtisan Development Programmes

Effective utilisation of the strategicrole of SETAs, NSF and Donors

Integrating Global, Continental,Regional, National and Provincial

programmes for capacity development

Knowledge & InformationTechnology Management

Science, Engineering & TechnologyApprenticeships Development

Alignment with National andprovincial

policy frameworks & guidelines NDP, HRDSA, NSDS III, PGDP,

KZN HRD IDPs

Talent Attraction, Retention andDevelopment

STEM Educator ProfessionalDevelopment Programmes

Strengthening strategy andpolicy alignment

ORGANIZATIONAL SUPPORTINITIATIVES

PILLAR TWO

CAPACITY BUILDINGINITIATIVES

PILLAR ONE

GOVERNANCE &INSTITUTIONAL

DEVELOPMENT INITIATIVESPILLAR THREE

ECONOMIC GROWTH ANDDEVELOPMENT INITIATIVES

PILLAR FOUR

LEGISLATIVE FRAMEWORK AS A FOUNDATION

10 CORE PRINCIPLES INFORMING IMPLEMENTATION OF HRD STRATEGY

4 PILLARS OF KEY INITIATIVES FOR HIGH PERFORMANCE THROUGH SKILLS DEVELOPMENT & HRD

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DIRECTOR AND ADMINISTRATIVEREPORT



6. Structure

KZN ProvincialGovernment

MEC for EconomicDevelopment, Tourism

and EnvironmentalAffairs

Board ofDirectors

Chief ExecutiveOfficer

Skills DevelopmentPartnerships in SET

STEM: Education andAcademic Support

CorporateServices

Finance & Supply ChainManagement



7. Legislative Framework

The Moses Kotane Institute is an NPC governed by (not limited to):

• Companies Act• Company Regulations• Public Finance Management Act (PFMA)• Treasury Regulations• BBBEE Act• PPPFA• Constitution (Schedule 4)• Constitution (Chapter 10)

8. Policy Alignment

• National Development Plan• Human Resource Development Strategy of SA• National Skills Development Strategy• National Youth Development Strategy and Plan• National Accord: Youth Development• HRD Strategic Framework for Public Service Vision 2015• Provincial HRD Strategy• Provincial Growth Development Plan: Goal 2• Provincial Youth Development Strategy• KZN BEE Strategy

9. Strategic Goals

a) To provide overall strategic leadership, management and administrative policy coordination and compliance activitiestowards the execution of the institute s legislative, policy mandate and strategy

b) To improve awareness of and access to Science, Technology, Engineering and Mathematics (STEM) careers, occupationsand research

c) To establish and implement systems, policies and procedures to ensure effective management and efficient utilisationof MKI s resources

d) Position MKI as a preferred partner in the funding and execution of education and skills development, by proactivelytargeting and engaging with potential partners, donors and funding agencies

e) Establish organisational capability to enable effective financial management, governance, risk management and internalcontrol frameworks

Underpinning this science and technology oriented developmental approach with a clear understanding of the historicalperspective of poverty, lack of knowledge, lack of skills and associated underdevelopment through continuous and relevantpolitical education and philosophy of good governance.



10. Strategic Objectives

The Institute’s work and mandate focuses on the below strategic pillars within the province, which are:

(i) Provision of STEM skills for economic development and service delivery to members of society through recognisedschool intervention programmes, further and higher education and training career paths to facilitate migration intoareas of economic potential;

(ii) Facilitation of access to STEM careers at higher education through graduate development programmes to enhanceparticipation in the mainstream economy;

(iii) Enhancement knowledge and skills of educators, leadership and governance capacity and capabilities for governmentdepartments, municipalities and traditional authorities to enhance service delivery and rapid economic transformationand development; and

(iv) Provision of continuous strategic political education underpinned UBUNTU, good governance, developmental stateapproach and embedding a historical perspective of poverty, lack of knowledge, lack of skills and associatedunderdevelopment.

11. Overall Performance

Voted Funds (‘000)

MainAppropriation

41 236

Responsible MEC

Administering Department

Accounting Author i ty

Chief Executive Officer

AdjustedAppropriation

49 577

MEC for Economic Development, Tourism and Environmental Affairs: KwaZulu-Natal

Department of Economic Development, Tourism and Environmental Affairs (EDTEA):KwaZulu-Natal

The Board

Mr. Sibusiso Mpungose

Committed

2 769

Actual AmountSpent

46 808



12. Aim of Voted Funds

The aim of the voted funds payable was to be utilised by MKI for the purposes of the Annual Performance Plan as set out.This includes utilisation of funds according to projected cash flows and third party agreements.

13. Overview of Service Delivery 2015/16

At the end of 2014, the entity revised its strategic plan to focus more on STEM (Science, Technology, Engineering andMathematics) related activities. The strategy was followed by organisational realignment. MKI focused more on LearnerSupport and Matric Intervention Programmes through Saturday, Winter and Spring Classes as well as Educator Developmentthrough educator development workshops on content, bursaries for tertiary education for students and research and skillsdevelopment programmes in the form of artisanship and learnerships towards the goal of skills development.

14. Overview of Organisational Environment for 2015/16

Despite the successes, we were faced with a challenge of uplifting our standard in terms of performance, particularly inprojects and finances. We were also faced by few investigations of internal members as part of resolving irregularities thatfaced the entity in previous years. Treasury also announced a ‘no filling of vacancies’ statement during the year, which leftthe institute operating with only 43% staff compliment – meaning we had a 57% vacancy rate, owing to resignations,dismissals and new positions.


SECTION B


CONTENTSSECTION B: PROGRAMME PERFORMANCE 15

1. Introduction 15

2. Programme 1: Corporate Administration 15

2.1 Office of the Chief Executive Officer 15

2.2 Human Resources, Administration and Information Technology 16

2.3 Employment Equity 17

2.4 Business Development 17

2.5 Finance 18

2.6 Quality Assurance, Monitoring and Evaluation (QAME) 18

3. Programme 2: Skills Development Partnership in SET 19

4. Programme 3: STEM Education and Academic Development 20

4.1 Introduction 20

4.2 STEM Schools 20

4.3 STEM Educator Professional Improvement 21

4.4 Graduate Development 21

4.5 Sector Research and Development 22

5. Social and Ethics Report 22



SECTION BProgramme Performance

1. Introduction

This section highlights performance against strategic goals of MKI for the year 2015/16.

The activities of Moses Kotane Institute are categorised in the following programmes:

Programme 1: Corporate Services and AdministrationProgramme 2: Skills Development Partnerships in SETProgramme 3: STEM Education, Academic Development and Support

2. Programme 1: Corporate Services & Administration

The purpose of this programme is to provide overall leadership, managerial and administrative policy coordination andcompliance activities towards the execution of legislation, policy mandate and strategy. The programme houses the officeof the Chief Executive, human resources, finance and supply chain, legal, and company secretary.

2.1 Office of the Chief Executive Officer

The objective of this office is to provide leadership, management and administrative policy coordination and complianceactivities towards the execution of MKI’s mandate and strategy. This office leads in the quadrants below.

POLICYSTRATEGY

GOVERNANCE& RISK

MANAGEMENT

STAKEHOLDERRELATIONS &

PARTNERSHIPS

FUNDRAISING& PROGRAMME

IMPLEMENTATION



2.2 Human Resources, Administration and Information Technology

The purpose of this division is to manage the utilisation of human resources efficiently and effectively in accordance withthe organisational strategy. Human Resources committed itself to excellence in the provision of HR services, and strive toattract, retain and develop talented and diverse individuals in line with MKI’s mission. This division also oversees theadministrative functions and manages outsourced Information Technology service providers.

MKI provided study assistance to 5 staff members with the aim of improving their academic qualifications and acquiringnew skills. In 2015/16 there were challenges regarding staffing and high attrition rate owing to resignations, dismissalsand a moratorium from Treasury which instructed that positions could not be filled without the approval of the Premier.MKI has been operating with staff numbers that are far below planned total compliment for the past three years. In2015/16 the situation worsened as more staff members were lost in one of the core departments STEM AcademicDevelopment and Support. In 2015/16 MKI had a 43% filled posts (vacancy of 57%) against the planned compliment of28 based on the approved structure? The table below highlight the staff levels and the comparison drawn is based on 3financial years.

2015

/16 Actual

Target

2014

/15 Actual

Target

2013

/14 Actual

Target

Educators

Temps /Learnership

MKI Staff

3

3

3

3

3

3

0

0

0

0

2

0

12

28

17

17

32

32

0 5 10 15 20 25 35 35

Human Capital



2.3 Employment Equity

In 2015/16 over 75% of staff members at MKI were females made up of Africans 75%, Indians 17% and Coloureds 8%.The areas of major concern are the fact that MKI does not have white personnel and people with disability employed. Thecurrent national target on people with disability is 2% and MKI strives to achieve such a target. The table below depictsthe current situation on employment equity levels.

Employment Equity

90

80

70

60

50

40

30

20

10

0

76 76 75

African

18 18 17

Indian

06 06 08

Coloureds

0 0 0

Whites

71

65

75

Females

0 0 0

People withDisability

2013/14 Actual % 2014/15 Actual % 2015/16 Actual %

2.4 Business Development Unit

This unit was established in 2015/16 with the purpose of positioning the Institute as a preferred partner in the fundingand execution of STEM and skills development interventions by effectively targeting and engaging with potential donorsand funding partners. During 2015/16, the unit successfully established the STEM Innovation Fund. The shareholder, theDepartment of Economic Development, Tourism and Environmental Affairs (EDTEA) contributed seed funding to establishthe fund and in September 2015, the unit increased the base of the fund through various partners that attended the MKIFundraising Gala Dinner

The institute wishes to express its gratitude to the Gala Dinner Title Sponsor Liparm Corporation, associates Milpark, UmsoConstruction, NestLife Assurance Corporation, Integrity Forensic Solutions, South African Sea Ways, YNF Engineering,SAGE, Radio Gagasi, Sizwe Ntsaluba Gobodo and SUNBIRD – who generously contributed to the fund to assist disadvantagedlearners to pursue careers in STEM. In attendance was the Moses Kotane family, the institute’s founder, Dr Zweli Mkhize,former MEC EDTEA Mr Michael Mabuyakhulu, and other distinguished guests.



2.5 Finance

The purpose of this division is to establish and maintain organisational capability to enable effective financial management,governance, risk management and internal control frameworks.The institute achieved the tax exemption status from SARSwhich will benefit funders and partners greatly. Governance and systems were strengthened with the objective of obtaininga clean audit. The division of course was challenged by lack of human resources capacity due to moratorium of not fillingthe positions in the province, however there were achievements despite that. Achievements also include development ofa number of policies to enhance operations, strengthened finance and audit and risk committees, expenditure withinbudget, smooth internal and external audit processes, development of risk management plan and policy, and implementationof sound financial controls including strengthened supply chain management unit. This division also oversees the functioningof the outsourced company secretariat and legal aspects. Great progress has been made under this division’s turnaroundstrategy, moving the organisation from a qualified audit in 2013/14, to an unqualified audit opinion with findings in2014/15 and achieving a clean audit in 2015/16.

2.6 Quality Assurance, Monitoring and Evaluation (QAME)

The institute established the QAME unit during 2015/16. The purpose of this unit is to develop, implement and maintaina Quality Management System and Monitoring & Evaluation strategy in line with the service delivery strategic goals andobjective. During the year, this unit developed the Monitoring and Evaluation strategic framework, trained employees onhow to use the Monitoring and Evaluation and Quality Management Systems tools. It also centralised all portfolio ofevidence and reporting to external stakeholders.



3. PROGRAMME 2: SKILLS DEVELOPMENT PARTNERSHIPS IN SET

This programme is aimed at establishing and implementing skills development funding partnerships to rollout skillsprogrammes aligned to economy in areas of Science, Engineering and Technology (SET). This is achieved through continuousprofiling of the Institute and engaging strategic partners and stakeholders through various channels and platforms. Thisprogramme therefore manages funding partnerships by facilitating learnerships, artisans, apprenticeships and internshipprogrammes.

During the year under review, an additional 46 learners were funded to continue with Information Technology NCVprogramme delivered through partnerships with Elangeni TVET College. One hundred and fifty (150) youth were absorbedinto the Technician, Apprenticeship and Artisan Development Initiatives.

FOR

CHANGE

PARTNERSHIPS

ARTISANSHIP

APPRENTICESHIPS

LEARNERSHIPS

INTERNSHIPS



4. PROGRAMME 3: STEM EDUCATION ,ACADEMIC DEVELOPMENT AND SUPPORT

4.1 Introduction

This division provides Science, Technology, Engineering and Mathematics (STEM) academic, development and supportthrough a range of recognised interventions to enhance participation and success. This is done with a vision of increasingskills for economic development through various intervention programmes, further and higher education and training careerpaths and to facilitate migration into areas of economic potential. This is achieved through support of obtaining formalqualifications.

During the year under review, MKI had four focus areas which were STEM schools, STEM Educator Professional Improvement,Graduate Development and Sector Research and Development.

4.2 STEM Schools

The institute has partnerships with four historical schools in the province. MKI financially supported 118 learners in boardingfacilities within these schools and they are places as follows: Adams College (50 learners) Dlangezwa High School (25learners), Mlokothwa High School (18 learners) and Ohlange High School (25 learners). In addition, support in the formof extra tuition was provided to 80 875 learners in the areas of Mathematics, Life Science, Physical Science and EnglishFirst Additional Language, through matric intervention that takes place in Winter and Spring Breaks, and Saturday Classes.

Matric Intervention

100 000

80 000

60 000

40 000

20 000

0

2 680

80 875

Target Achievement



4.3 STEM Educator Professional Improvement

In addition to learners, MKI also extends its support to Maths and Science Educators in addition to learners. During theyear under review, MKI trained 12 967 educators in order to improve their skills and subject matter knowledge in Mathematicsand Science.

Educator Professional Improvement

14 000

12 000

10 000

8 000

6 000

4 000

2 000

0

150

12 962

Target Achievement

4.4 STEM Graduate Development

A number of learners are assisted with bursaries each year to study at tertiary institutions across the country. In 2015/16,the institute had budgeted to provide bursaries to 108 students, and through STEM Fund contributions from donors, wewere able to achieve numbers higher than originally targeted.

Graduates (Bursaries)

112

111

110

109

108

107

106

108

111

Target Achievement



4.5 Sector Research and Development

The purpose of this sub-programme is to facilitate targeted research and innovation related to education and skillsdevelopment interventions in the areas of Science, Technology, Engineering and Mathematics. In 2015/16, an IndigenousKnowledge Systems (IKS) strategy for the province was developed. The purpose of the strategy is to provide a gatewayfor mobilising people of the province to use their inherited wealth of indigenous knowledge to create basis of their economicparticipation in the provincial, national, continental and global economy.

Further to the IKS strategy, the institute developed UBUNTU as a public policy. “This is a practical initiative aimed atreframing public policy by basing it on Ubuntu principles and in which there is a powerful normative impetus to seriouslytake the ideals of caring, compassion, social cohesion, justice and freedom” Mkondo (2015). This policy redirects thethinking of other policy makers towards thinking ethically when making policies.

5. Social and Ethics Report

The Social and Ethics Committee was established in 2015, with the mandate to advise, oversee and monitor the Company’sactivities with regard to social and economic development, ethics, transformation, Broad-based Black Economic Empowermentobjectives, sustainability, corporate citizenship, environmental, health, safety, stakeholder relationships, labour andemployment matters. The Committee composition complies with the requirements of the Companies Act, 71 of 2008 (asamended). The Committee comprises of three non-executive directors. The executive directors include the Chief Executiveand Chief Financial Officers who attend meetings by invitation.

Composition and Number of Meetings

During the 2015/16 financial year, the Committee comprised of the following members and held three meetings as setout in the table below.

Members

Meeting dates

Dr E V Nzama

Dr B D Mkhwanazi

Ms S Sangweni, CA (SA)

Mr S B Mpungose

Ms TP Ellenson

Social and Ethnics Committee

18 September 2015 5 November 2015 4 March 2016 Total meetings

2

3

3

3

3

Table 1: Social and Ethnics Committee Meetings



Focus areas of the Social and Ethics Committee

During the 2015/16 financial year, the committee, among other matters:

• Reviewed Social and Ethics Charter

• Reviewed the 2015/16 Annual Work Plan;

• Noted the upcoming King IV Report

During the 2016/17 financial year, the Social and Ethics Committee will focus on monitoring the Institute’s activities inrelation to:

• Social and economic development

• Employment Equity as per the Employment Equity Act (Act 55 of 1998

• Broad-Based Black Economic Empowerment Act (Act 53 of 2003)

• Good corporate citizenship, including the institute’s promotion of equality, prevention of unfair discrimination, andreduction of corruption;

• Record of sponsorship and donations

• The institute’s employment relationships and its contribution toward the educational development of its employees;

• Development of compliance framework and policy


SECTION CA N N U A L F I N A N C I A L

S T A T E M E N T S F O R T H EY E A R E N D E D

3 1 M A R C H 2 0 1 6


ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2016

CONTENTS PAGE

DIRECTOR AND ADMINISTRATION REPORT 26

STATEMENT OF DIRECTORS’ RESPONSIBILITY 28

CORPORATE GOVERNANCE STATEMENT 29

REPORT OF THE AUDIT AND RISK COMMITTEE 36

REPORT OF THE AUDITORS 37

REPORT OF THE DIRECTORS 40

STATEMENT OF FINANCIAL POSITION 43

STATEMENT OF FINANCIAL PERFORMANCE 44

STATEMENT OF CHANGES IN NET ASSETS 45

CASH FLOW STATEMENT 46

STATEMENT OF BUDGET AND ACTUAL INFORMATION 47

ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTS 49

NOTES TO THE ANNUAL FINANCIAL STATEMENTS 70

APPENDIX A : DIRECTORS EMOLUMENTS 91

APPENDIX B : PROPERTY, PLANT AND EQUIPMENT 92



Date of Incorporation

The institute was incorporated on 28 November 2008, however, commenced trading on 1 January 2009.

Nature of Activities

The Moses Kotane Institute-NPC is involved in the conceptualisations, facilitation and implementation of programs andinterventions aimed at achieving a high level of skills in all areas of STEM (Science, Technology, Engineering and Mathematics).

Function and Reporting Currency

Function and reporting currency of the Institute is the South African Rand.

Directors

The directors of the Institute during the period 31 March 2016 and to the date of this report were:

Name Appointment date Reappointed

Mr. S G Ngcobo (Chairman) 25 February 2011 01 January 2014

Prof. M S Maharaj 25 February 2011 01 January 2014

Dr. I Z Machi 25 February 2011 01 January 2014

Dr. E V Nzama 25 February 2011 01 January 2014

Mr. B D Mkhwanazi 25 February 2011 01 January 2014

Ms. M P Myeni 01 December 2011 01 January 2014

Ms. S Sangweni 01 January 2014 01 January 2014

Mr. S B Mpungose* 13 October 2014

Ms. T P Ellenson* 01 October 2014

Director marked (*) is the executive director.

Annual Financial Statements

The company’s directors were responsible for the preparation and fair presentation of these Annual Financial Statementsin accordance with Generally Recognized Accounting Practice (GRAP), Public Finance Act No.1 of 1999 (PFMA) and inthe manner required by the Companies Act No.71 of 2008 of South Africa. The Annual Financial Statements were preparedby the office of the Chief Financial Officer.



Company Secretary

Statucor served as the Company Secretary for the year under review

Business Address Postal Address

14 Lakeside Unit P.O Box 2357Derby Downs Office Park Westville1 University Road 3630Westville, 3634

Bankers Auditors

First National Bank Auditor-General of South Africa5 Old Main Road Block B, 460 Townbush RoadHillcrest, 3650 Cascades, Pietermaritzburg, 3201


MOSES KOTANE INSTITUTE NPC STATEMENT OF DIRECTOR'S RESPONSIBILITYFOR THE YEAR ENDED 31 MARCH 2016

The Directors acknowledge that they are required by the Companies Act No.71 of 2008 to prepare Annual FinancialStatements each year, that fairly present the state of affairs, results and cash flow for the year under review and that theindependent auditors’ responsibility is limited to reporting on these Annual Financial Statements. The external auditorsare engaged to express an independent opinion on the Annual Financial Statements.

It is the responsibility of the Directors to ensure that the Moses Kotane-NPC Institute (“the Institute”) maintains a systemof internal control designed to provide reasonable assurance that the Institute’s assets are safeguarded against materialloss or unauthorized use, and that transactions are properly authorised and recorded. The control system includes writtenaccounting and control policies and procedures with clearly drawn lines of accountability and delegation of authority.

All employees are required to maintain the highest ethical and integrity standards in ensuring that the Institute’s businesspractices are conducted in a manner which, in all reasonable circumstances, is above reproach. The concept of reasonableassurance recognises that the control procedures should not exceed expected benefits. The Institute maintains its internalcontrol system through management review. Nothing has come to the attention of the Directors to indicate any breakdownin the functions of these controls during the period under review, which resulted in any material loss to the Institute.

The Annual Financial Statements have been prepared on the basis of accounting policies applicable to a going concern.The Board of Directors have adopted this basis of accounting after having made enquires of management and given dueconsideration to information presented to the Board, including budgets and cash flow projections for the period aheadand key assumptions and accounting policies relating thereto. Accordingly, the Directors have no reason to believe thatthe Institute will not continue as a going concern in the foreseeable future.

The external auditors were given unrestricted access to all financial records and related data. The Directors believe thatall representations made to the independent auditors during the audit were valid and appropriate.

External auditors’ responsibility is to audit and report on these Annual Financial Statements. The independent auditorshave audited the Annual Financial Statements for the year ended 31 March 2016.

The Annual Financial Statements for the year ended 31 March 2016 set out on pages 43 to 93 were reviewed by the Auditand Risk Committee on 11 May 2016 and subsequently approved by the Board on 16 May 2016. The Annual FinancialStatements were submitted to the independent auditors for auditing in terms of section 55(1) © of the Public FinanceManagement Act of 1999.

Directors’ Approval of Unaudited Annual Financial Statements for the year ended 31 March 2016

The Annual Financial Statements for the year ended 31 March 2016, as set out on pages 43 to 93 were approved by theBoard on 16 May 2016 and are signed on their behalf.

_________________ ___________________Mr. Sakhile G. Ngcobo Mr. Sibusiso B. MpungoseChairman of the Board Chief Executive Officer


MOSES KOTANE INSTITUTE NPC CORPORATE GOVERNANCE STATEMENTFOR THE YEAR ENDED 31 MARCH 2016

The Moses Kotane Institute-NPC (“the Institute”) continues to operate in a manner that is in line with governance bestpractices and, in particular, with regards to accountability, transparency, fairness and responsibility.

The Board of Directors (“the Board”) is responsible for conducting the affairs of the Institute with integrity and in accordancewith the Public Finance Management Act (PFMA) and General Recognized Accounting Practices (GRAP). Management isresponsible and accountable to the Board for designing, implementing and monitoring the policies and systems approvedby the Board and for integrating them into the day-to-day operational activities.

We are committed to integrity, ethical values and professionalism in all our structural activities that will ensure that theInstitute’s business remains sustainable in the long term. An essential part of this commitment is our Board’s support forthe highest standards of corporate governance.

Shareholder Compact

The Moses Kotane Institute-NPC was established as a Non-Profit company in terms of the Companies Act, Act No. 71 of2008. The Department of Economic Development, Tourism and Environmental Affairs is the Shareholder and has authorityover the Institute in terms of the Public Amendment Act 30 (2007), which has an objective to introduce governmentcomponents as a new institutional form within the public delivery, through a focused, ring-fenced, separate entity underthe direct control of the Minster or other executive authority.

Each year, the Moses Kotane Institute-NPC enters into an annual funding agreement with The KwaZulu-Natal Departmentof Economic Development, Tourism and Environmental Affairs (“EDTEA”) and agrees on its performance objectives,measures and indicators in line with government treasury regulations under the Public Finance Management Act, 1999(PFMA). The annual targets are annexed to a list of principals agreed between the Moses Kotane Institute-NPC and itsshareholder and regular reports are provided. The performance of the Institute against the performance objectives isindicated in the annual funding agreement.

Board of Directors

The Board is the accounting authority of the Institute as outlined in the PFMA. It is required to meet at least quarterly.The Board met at least once per quarter and ensured that quarterly meetings are held. The Board meetings are scheduledannually in advance. Special meetings are convened as necessary to address specif ic issues.

The Board directs the Institute’s risk assessment, resource management, strategic planning, financial and operationalmanagement to ensure that obligations to shareholders and other stakeholders are understood and met. Major responsibilitiesof the Board include the review of business plans, budgets, monitoring of performance, approval of major policy decisionsand the appointment of the Chief Executive Officer and the Chief Financial Officer. Certain functions are delegated tocommittees consisting of non-executive directors as detailed within this section.

Good corporate governance requires that the composition of the Board be reviewed on a regular basis. The rotation ofdirectors at regular intervals is accepted as standards practice since it ensures that the Board remains dynamic and doesnot become stagnant in terms of thinking and abilities. However, it is important that the process is managed in such away that the rotation of directors does not lead to a disruption in the operations of the business and that the Board iswell-balances in terms of skills, expertise and demographics (race, gender and people with disabilities).



Delegation of Authority

The political authority of the Institute is the MEC for Economic Development, Tourism and Environmental Affairs in KwaZulu-Natal, Mr.Sihle Zikalala, MPL. The Board has the authority to assist with leadership on the strategic business of the institute,including the authority to delegate its powers. The Board aims to ensure that the Institute remains sustainable and viable.The Board’s responsibilities are facilitated by a well-developed governance structure through its sub-committees and acomprehensive delegation of authority framework.

Board Evaluation and Performance

A performance evaluation of the Board and individual directors is conducted at the end of the financial year. Any shortcomingsare addresses and areas of strength consolidated. The performance of Board committees is evaluated against their termsof reference.

Board and Committee Meeting Attendance

Number of meetings held during the year are as follows:

Members

Number of meetings held

Special Meetings

Total Meetings

Board

4

2

6

Audit & RiskCommittee

4

1

5

FinanceCommittee

4

0

4

Education &SkillsDevelopmentCommittee

4

0

4

HumanResourcesCommittee

4

0

4

Social &EthicsCommittee

3

0

3


The table below reflects attendance of the membership of the Board and Senior Management.

Board Committees

Board committees assist the Board in carrying out its responsibilities. Committees’ recommendations and reports to theBoard ensure transparency and full disclosure of committee activities. Each committee operates within terms of referencethat defines the composition, role, responsibilities and delegated authority of the committee. The Board, from time to time,sets up committees for specific (ad hoc) purposes. Committee meeting attendance is reflected above. These are the standingcommittees during the period under review. In addition to the terms of reference, a Board committee exercises its delegatedauthority in accordance with specific policies approved by the Board from time to time.

Members

Mr S G Ngcobo

Prof M S Maharaj

Dr I Z Machi

Dr E V Nzama

Ms M P Myeni

Dr B D Mkhwanazi

Ms S Sangweni

Mr M Zakwe

Mr B Gutshwa

Mr S B Mpungose

Ms T P Ellenson

Board

6

6

5

5

5

4

6

-

-

6

6

Audit & RiskCommittee

-

5

-

-

5

-

5

4

4

3

5

FinanceCommittee

-

4

-

4

4

-

4

-

-

1

4

Education &SkillsDevelopmentCommittee

-

4

4

4

-

-

-

-

-

4

4

HumanResourcesCommittee

-

-

4

4

-

4

-

-

-

4

4

Social &EthicsCommittee

-

-

-

3

-

3

3

-

-

3

3




Audit and Risk Committee

The Audit and Risk Committee comprises of two independent persons external to the Institute, the chief executive officer(“executive director”), chief financial officer (“executive director”) of the Institute and the non-executive directors of theBoard of the Institute. The committee monitors the internal control systems to protect the Institute’s interests and assets.This committee also reviews any accounting and auditing concerns raised by internal and external audit, the AnnualFinancial Statements and the interim reports.

The Audit and Risk Committee ensures that an effective internal audit function is in place and that the roles and functionsof external audit and internal audit are sufficiently clarified and coordinated to provide an objective overview of theoperational effectiveness of the Institute’s system of internal control, risk management, governance and reporting. Thisincludes overseeing the IT risks and fraud risks as they relate to financial reporting and the internal financial controls, andreporting to the board on the effectiveness thereof.

The Committee also has to assess the performance of the internal audit function, and the adequacy of available internalaudit resources. In addition, the Audit and Risk Committee considers and appropriately deals with any complaints receivedrelating to the Annual Financial Statements, accounting practices or internal audit, whether from within or outside of theInstitute.

The Audit and Risk Committee considers and makes recommendations on the appointment and retention of the auditorsand ensures that such appointments comply with legislation, the fees paid and the terms of engagement; pre-approvesthe nature and extent of any non-audit services and evaluates their independence, objectivity and effectiveness. Auditorshave unrestricted access to the chairperson of the Audit and Risk committee and the chairperson of the Board. Thecommittee reviews the accuracy, reliability and creditability of statutory financial reporting.

It also reviews the Annual Financial Statements of the Institute, as presented by management prior to Board approval.The Audit and Risk Committee meetings were held during the review period. The Committee had the following members:

• Prof. M. Maharaj (Board member and chairperson)• Mr. M. Zakwe (Independent, external)• Mr. B. Gutshwa (Independent, external)• Ms. M.P. Myeni (Board member)• Ms. S. Sangweni (Board member)

Permanent Invitees

• Chief Executive Officer• Chief Financial Officer• Internal Auditors• External Auditors



Compliance with the PFMA, GRAP, Companies Act and King III Report

The Board is the accounting authority in terms of the PFMA and the Institute is a deemed public entity. The Institute hasadhered to the statutory duties and responsibilities imposed by the Companies Act as augmented by the PFMA and GRAP.The Institute’s system and processes are regularly reviewed to ensure that compliance is monitored in this regard. Inaddition, the Institutes is also guided on best practices by the King reports on Corporate Governance for South Africa andthe Protocol on Corporate Governance in the Public Sector-2002.

The PFMA regulates financial management and governance. The Institute ensures that all directors and employees areaware of the provisions of the PFMA, through regular correspondence and induction programs. Directors comply with theirfiduciary duties as set out in the PFMA. The Board’s responsibilities are also specified in the PFMA.

Integrated Risk Management

The effective management of risk is central to the achievement of the Institute’s vision. By understanding and managingrisk, we can provide greater certainty and security for our employees, our customers and stakeholders.

The Institute’s Board, through the Audit and Risk committee, acknowledges its overall accountability for ensuring aneffective results-driven, internal risk management process. Management committee strives to implement a risk monitoringsystem that enables management to respond appropriately to all significant risks that could impact on business objectives.

Responsibility for the management of risk resides with line management of the Institute. Those accountable for themanagement of risks also ensure that the necessary controls remain in place and are effective at all times. Controleffectiveness focuses on improving our ability to manage risk effectively, so that we can quickly and confidently act onopportunities to improve and sustain the quality and continuity of supply, create value and achieve sustainable growth.

The Institute strives to perform risk management at all levels to ensure that risk is reported upwards. After consolidationof these integrated risk reports, Management committee and the Audit and Risk committee review and evaluate the riskprofile to determine the major operational, strategic and business continuity risks.

Ethical Business Conduct

Good corporate governance is about effective ethical leadership, which requires leadership that demonstrates ethics indecision making, leads by example and oversees the management of ethics within the Institute. The Institute’s Board isaccountable for the Institute’s ethics management program and the operational responsibilities lie with Executive Committee(“EXCO”). The Executive Committee assists the Chief Executive Officer in setting the framework, rules, standards andboundaries for ethical behaviour, and provides ethics training and an advisory service to employees, assisting them indealing effectively with ethical dilemmas in the workplace.



Internal Control

Management is responsible for establishing an effective internal control environment, which is developed and maintainedon an ongoing basis to provide reasonable assurance to the Board regarding:

• The integrity and reliability of the Annual Financial Statements• The safeguarding of the Moses Kotane-NPC Institute’s assets• Economic and efficient use of resources• Compliance with applicable legislation and regulations• Verification of the accomplishment of established goals and objectives, and• Detection and minimization of fraud, potential liability, loss and material misstatement

These controls are contained in the Institute’s policies and procedures, structures and approval frameworks, and theyprovide direction, establish accountability and ensure adequate segregation of duties. They each contain self-monitoringmechanisms.

The Board ensures that an effective internal control framework is established and maintained. The internal audit functionmonitors the operation of the internal control system and report’s findings and recommendations for improvement tomanagement and the audit committee.

The audit committee monitors and evaluates the duties and responsibilities of management and of internal and externalauditors to ensure that all major issues reported have been satisfactorily resolved. Finally, the audit committee reports allimportant matters considered necessary to the Board.

Governance and Compliance

The Board takes fraud seriously and ensures that there is minimum exposure to fraud and criminal acts. One of the measureshas been to implement the whistle-blowing policies and procedures. The Board Committees addresses these threats. Itswork covers crime prevention, detection, response and investigation. Where serious fraud, corruption and irregularitiesare suspected, forensic audit comes in to establish the acts to enable management to deal appropriately with the matterand prevent a recurrence. This is done within the whistle blowing framework.

Employment Equity

The Institute applies employment policies that are considered appropriate to the business and the market in which itoperates. They are designed to attract, motivate and retain quality staff at all levels. Equal employment opportunities areoffered without discrimination to all employees and specific affirmative processes available to historically disadvantagedindividuals.

Code of Ethics

The Institute subscribes to a code of ethics and endeavours to act with honesty, responsibility and integrity towards itsstakeholders.



Corporate Citizenship and Sustainability

The Institute’s business must be run in an ethical manner, taking into account its impact on all stakeholders. In addition,it means that the Institute needs to contribute to the realisation of the hopes and aspirations of people in Kwa-Zulu Nataland South Africa. This includes contributing to a safe working environment, environmental responsibility, promoting theshared growth initiative for the province and corporate social responsibility and improving the life of all in the provinceof Kwa-Zulu Natal.

General Review

The business and operations and the results thereof of the Moses Kotane-NPC Institute (“the Institute”) are clearly reflectedin the attached Annual Financial Statements. No material fact or circumstance has occurred between the accounting dateand the date of this report.


MOSES KOTANE INSTITUTE NPC REPORT OF AUDIT AND RISK COMMITTEEFOR THE YEAR ENDED 31 MARCH 2016

The Role of the Audit and Risk Committee is to provide oversight responsibilities in the financial reporting process, thesystem of internal control, the audit process and the entities monitoring of compliance with laws and regulations, the codeof conduct, the appointment and evaluation of qualifications and independence of the Institute’s independent auditors.This includes overseeing the IT risks and fraud risks as they relate to financial reporting and the internal financial controls,and reporting to the Board on the effectiveness thereof. The Board in turn has to report on the effectiveness of the systemof internal controls.

The Audit and Risk Committee evaluated the Annual Financial Statements of the Moses Kotane Institute-NPC for the periodended 31 March 2016, including external auditors. Based on the information provided, the Audit and Risk Committeeconsiders that the Annual Financial Statements comply, in all material respects, with the requirements of the CompaniesAct, 71 of 2008, South African Generally Recognised Accounting Practice (“SA GRAP”), and the Public Finance ManagementAct (PFMA); reviewed the appropriateness of the accounting policies and procedures of the accounting policies andpractices; concurred that the adoption of the going concern premises in the preparation of Annual Financial Statementsis appropriate; and acknowledged the emphasis of matter.

The Audit and Risk Committee recommended approval of the enclosed Annual Financial Statements for the period ended31 March 2016 by the Board.

_______________________Professor Manoj MaharajChairperson of Audit and Risk Committee


MOSES KOTANE INSTITUTE NPC REPORT OF AUDITORS FOR THE YEAR ENDED 31 MARCH 2016

Report of the auditor-general to the KwaZulu-Natal Provincial Legislature on the Moses Kotane Institute

Report on the financial statements

Introduction

1. I have audited the financial statements of the Moses Kotane Institute set out on pages 25 to 90, which comprisethe statement of financial position as at 31 March 2016, the statement of financial performance, statement of changesin net assets and statement of cash flows for the year then ended, as well as the notes, comprising a summary ofsignificant accounting policies and other explanatory information.

Accounting Authority’s Responsibility for the Financial Statements

2. The board of directors, which constitutes the accounting authority, is responsible for the preparation and fair presentationof these financial statements in accordance with the South African Standards of Generally Recognised AccountingPractice (SA Standards of GRAP) and the requirements of the Companies Act of South Africa, 2008 (Act No. 71 of2008) (Companies Act), and for such internal control as the accounting authority determines is necessary to enablethe preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor-General’s Responsibility

3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit inaccordance with International Standards on Auditing. Those standards require that I comply with ethical requirements,and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statementsin order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriatenessof accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluatingthe overall presentation of the financial statements.

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

Opinion

6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Moses KotaneInstitute as at 31 March 2016 and its financial performance and cash flows for the year then ended, in accordancewith the SA Standards of GRAP and the requirements of the Companies Act.



Emphasis of Matters

7. I draw attention to the matters below. My opinion is not modified in respect of these matters.

Irregular Expenditure

8. As disclosed in note 22.2 to the financial statements, irregular expenditure of R2,85 million (2015: R7,89 million) wasincurred as a result of non-compliance with the supply chain management policy.

Additional Matters

9. I draw attention to the matters below. My opinion is not modified in respect of these matters.

Unaudited Supplementary Schedules

10. The supplementary information set out on pages 91 to 93 does not form part of the financial statements and ispresented as additional information. I have not audited these schedules and, accordingly, I do not express an opinionthereon.

Other Reports Required by the Companies Act

11.As part of my audit of the financial statements for the year ended 31 March 2016, I have read the directors’ report,the audit committee’s report and the company secretary’s certificate to identify whether there are material inconsistenciesbetween these reports and the audited financial statements. These reports are the responsibility of the respectivepreparers. Based on reading these reports, I have not identified material inconsistencies between the reports and theaudited financial statements. I have not audited the reports and, accordingly, I do not express an opinion thereon.

Report on other Legal and Regulatory Requirements

12. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general notice issuedin terms thereof, I have a responsibility to report findings on the reported performance information against predeterminedobjectives for selected programmes presented in the annual performance report, compliance with legislation and internalcontrol. The objective of my tests was to identify reportable findings as described under each subheading but not togather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on thesematters.

Predetermined Objectives

13. I did not audit performance against predetermined objectives, as the entity is not required to prepare a report on itsperformance against predetermined objectives. The entity does not fall within the ambit of the Public Finance ManagementAct of South Africa, 1999 (Act No. 1 of 1999), and the entity-specific legislation does not require reporting onperformance against predetermined objectives.



Compliance with Legislation

14. I did not identify any instances of material non-compliance with specific matters in key legislation, as set out in thegeneral notice issued in terms of the PAA.

Internal Control

15. I did not identify any significant deficiencies in internal control.

Other Reports

16. I draw attention to the following engagements that could potentially have an impact on the entity’s financial andcompliance related matters. My opinion is not modified in respect of these engagements that are in progress or havebeen completed.

Investigations

17.An independent consulting firm is performing investigations at the request of the entity, which cover the period 1 April2014 to 31 March 2016. The investigations were initiated based on allegations of misconduct and supply chainmanagement irregularities. Of the four investigations, two have been finalised.

Pietermaritzburg

29 July 2016


MOSES KOTANE INSTITUTE NPC REPORT OF THE DIRECTORS FOR THE YEAR ENDED 31 MARCH 2016

The directors have the pleasure in presenting their report for the financial period ended 31 March 2016 in terms of section299 of the Companies Act, 71 of 2008, South African Generally Recognised Accounting Practice (“SA GRAP”), and thePublic Finance Management Act (PFMA);

General Review

The business and operations and the results thereof of the Moses Kotane Institute are reflected in the attached financialstatements. No material fact or circumstance has occurred between the accounting date and the date of this report.

Nature of Business Activities

The Moses Kotane Institute-NPC, which is registered as a Non-Profit company in terms of the Companies Act, Act No.71 of 2008, is a non-profit organization whose main business is:

• Provision of STEM skills for economic development and service delivery to members of society through recognisedschool intervention programmes, further and higher education and training career paths to facilitate migration intoareas of economic potential;

• Facilitation of access to STEM careers at higher education through graduate development programmes to enhanceparticipation in the mainstream economy;

• Enhancement knowledge and skills of educators, leadership and governance capacity and capabilities for governmentdepartments, municipalities and traditional authorities to enhance service delivery and rapid economic transformationand development; and

• Provision of continuous strategic political education underpinned UBUNTU, good governance, developmental stateapproach and embedding a historical perspective of poverty, lack of knowledge, lack of skills and associatedunderdevelopment.

With these strategic goals as the framework, the Institute focuses on:

• Building a Cadre of MKI “Graduates”

The Institute focuses on developing graduates who exhibit leadership qualities and a passion to take their knowledge backto their communities. Such candidates will be informed and influences not only by the subject matter in Science, Technology,Engineering and Mathematics (STEM) that they acquire, but will also be influenced by an enrichment programme offeredin parallel to the programme specific content.



This enrichment programme is delivered in the form of MKI candidates participating in community activities and an annualUbuntu conference, where debates on issues pertaining to citizenship are debated. The enrichment program inculcates asense of history, (where we have come from) and a sense of a better future (where we are going).

• Building Research capability in the Province

In order to aid in building a proficient research capability within KZN, the Institute seeks to engage the following processes:

(i) Testing and piloting innovative project methodologies and concepts, attracting research grants and recognitionfor output

(ii) Develop a research capability with the focus on innovation

(iii) Serve as a pioneer in the application and transfer of new technologies

• Becoming a trusted knowledge leader

In becoming the trusted knowledge leader, the Institute deems the following as important:

(i) Orchestrating the multitude of STEM interventions as a neutral player, with delivery information by research,thereby attracting funds and innovative projects

(ii) Ability to deliver exceptional STEM programmes that make a difference

(iii) Identifying, establishing and orchestrating productive and collaborative arrangements with strategic partners

To be a knowledge leader, the Moses Kotane-NPC Institute seeks to underpin all its decisions and programmes with soundresearch and disseminate widely the outputs of the research. The Institute also seeks to deliberately select innovative andleading technologies, not only for the delivery of programmes, but also in the choice of media tools in its marketing andcommunication plans.

• Contributing to Economic Development in the Province

The Institute endeavours contribution to economic development in the province by:

(i) Establishing a Software Engineering Institute to attract IT investment to KZN (providing economic developmentthrough an expanded business base).

(ii) Using ventures creation as a training exit strategy to ensure self-employment options for those not employedin the formal sector (providing for poverty alleviation).



(i) Creation of a pool of advances IT talent in the Province to service the needs of vertical industries driven by ITand STEM capabilities (providing skills as a vehicle for economic development).

(ii) Creation of a pool of appropriately skilled STEM graduates capable of underpinning service delivery throughPublic and Private Partnerships (providing enhanced levels of service delivery).

(iii) Building a pool of appropriately skilled Mathematics and Science educators to overcome a key blockage in thesystem that reduces STEM capabilities in the Province.

Application of Generally Recognized Accounting Practices (GRAP)

The annual financial statements for the year ended 31 March 2016 have been prepared in accordance to GRAP.

Review of Financial Position and Results

The results of the Institute’s operations during the year under review, and the state of its affairs under review are set outin the attached annual financial statements and notes thereto.

Subsequent Events

All the subsequent events that require disclosure in annual financial statement were disclosed. There were no subsequentevents require adjustments.

Going Concern

We draw attention to the fact that for the year ended 31 March 2016 the Institute has a surplus of R3 297 000 (2015:R935 000) and that the Institute's assets exceeded its liabilities by R4 174 000 (2015: R808 000).

The Institute will be a going concern in the years ahead and as such, it adopts the going concern basis in preparing theannual financial statements. This basis presumes that funds will be available to finance future operations and that therealization of assets and settlement liabilities, contingent obligations and commitments will occur is dependent on a numberof factors. The most significant of these is that the Board continues to procure funding from the KwaZulu-Natal Departmentof Economic Development, Tourism and Environmental Affairs. Nothing has come to the attention of the directors toindicate that the Institute will not remain a going concern for the foreseeable future.

Irregular and Fruitless and Wasteful Expenditure

Irregular expenditure means expenditure incurred in contravention of, or not accordance with, a requirement of anyapplication legislation, including:

• The PFMA• Any provincial legislation providing for procurement procedures in the Institute.

Fruitless and wasteful expenditure means expenditure that was made in vain and would have been avoided had reasonablecare been excised.


ASSETS

Note 2016R’000

2015R’000

Current assets

Cash and Cash Equivalents

Receivables from Non-Exchange Transactions

VAT Receivable

Non-current assets

Property, Plant and Equipment

Intangible Assets

TOTAL ASSETS

LIABILITIES

Current liabilities

Trade and Other Payables from Exchange Transactions

Current Provisions

Current portion of Deferred Income

Non-current liabilities

Deferred Income

TOTAL LIABILITIES

Net assets

Accumulated Surplus/ (Deficit)

TOTAL NET ASSETS AND LIABILITIES

3,196

2,105

265

826

5,359

5,019

340

8,555

4,343

3,754

576

13

38

38

4,381

4,174

4,174

8,555

2,722

2,166

538

18

4,952

4,941

11

7,674

6,829

6,219

596

13

38

38

6,866

808

808

7,674

2

3

4

7

8

5

9

6

6

MOSES KOTANE INSTITUTE NPC STATEMENT OF FINANCIAL POSITIONFOR THE YEAR ENDED 31 MARCH 2016


ASSETS

Note 2016R’000

2015R’000

REVENUE

Revenue from non-exchange transactions

Government Grants and Subsidies

Revenue from exchange transactions

Interest Earned - External Investments

Public Contributions and Donations

Other Income

TOTAL REVENUE

EXPENSES

Employee Related Costs

Directors' Emoluments

Depreciation and Amortization Expense

Auditors' Remuneration

Administration Expenses

Operating Expenses

Skill Development & STEM expenses

TOTAL EXPENSES

TOTAL SURPLUS / (DEFICIT) FOR THE PERIOD NET OF TAX

49,577

49,577

797

285

308

204

50,374

(11,463)

(1,865)

(382)

(413)

(4,109)

(8,169)

(20,676)

(47,077)

3,297

38,478

38,478

70

17

-

53

38,548

(10,192)

(2,303)

(451)

(380)

(2,214)

(4,873)

(17,199)

(37,612)

936

10

11

12

13

14

15

16

17

18

19

20

MOSES KOTANE INSTITUTE NPC STATEMENT OF FINANCIAL PERFORMANCEFOR THE YEAR ENDED 31 MARCH 2016


Note AccumulatedSurplus/(Deficit)

R’000

Total NetAssets

R’000

BALANCE AT 31 MARCH 2014

Changes in accounting policy

Correction of prior period error

BALANCE AT 1 APRIL 2015

Surplus / (Deficit) for the period as per Statement of Financial Performance


Changes in accounting policy

Correction of prior period error

BALANCE AT 1 APRIL 2015

Surplus / (Deficit) for the period as per Statement of Financial Performance


(238)

0

110

(128)

936

808

0

69

877

3,297

4,174

(238)

0

110

(128)

936

808

0

0

808

3,562

4370

26

26

MOSES KOTANE INSTITUTE NPC STATEMENT OF CHANGES IN NET ASSETSFOR THE YEAR ENDED 31 MARCH 2016


Note 2016R’000

2015R’000

Cash flows from operating activities

Receipts


Interest Earned - External Investments


Other Income

Payments

Compensation of Employees

Goods and Services

Net cash flows from operating activities

Cash flows from investing activities

Purchase of Assets

Purchase of Other Intangible Assets

Net cash flows from investing activities.

Cash flows from financing activities

Net cash flows from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Effect of exchange rate movement on cash balances

Cash and cash equivalents at the end of the year

50,374

49,577

285

308

204

(49,481)

(11,463)

(38,018)

893

(954)

(615)

(339)

(954)

0

0

(61)

2,166

2,105

38,547

38,478

17

-

53

(37,113)

(10,192)

(26,921)

1,434

(575)

(567)

(8)

(575)

0

0

859

1,307

2,166

10

11

12

13

14

21

2

MOSES KOTANE INSTITUTE NPC STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2016


R’000

OriginalBudget

FinalBudget

Actual ActualExpenditure

as a % ofFinal

Budget

FinalBudget vs

ExpenditureVariance %

NotesDescription

FINANCIAL PERFORMANCE

Interest Earned - ExternalInvestments



Other Income

Roll Over 2014/2015

TOTAL REVENUE

Employee Related CostsDirectors' EmolumentsDepreciation and AmortizationExpenseAuditors' RemunerationAdministration expensesOperating ExpensesSkill Development & STEM expenses

TOTAL EXPENDITURE

SURPLUS/(DEFICIT)

50

40,248

0

0

2,044

42,342

14,3802,122

0

6002,3854,248

17,482

41,217

1,125

50

49,577

0

100

0

49,727

12,1521,782

0

4085,5997,690

25,124

52,755

(3,028)

285

49,577

308

175

0

50,345

11,2301,865

382

4134,1098,133

20,676

46,808

3,537

570%

100%

100%

175%

0%

945%

92%105%100%

101%73%

106%82%

660%

285%

-470%

0%

100%

-75%

0%

-445%

8%-5%

100%

-1%27%-6%18%

140%

-585%

33.1

33.2

33.3

33.4

33.5

33.633.733.8

33.933.1033.1133.12

MOSES KOTANE INSTITUTE NPC STATEMENT OF BUDGET AND ACTUAL INFORMATIONFOR THE YEAR ENDED 31 MARCH 2016


R’000

OriginalBudget

FinalBudget

Actual ActualExpenditure

as a % ofFinal

Budget

Final Budget vs

ActualExpenditureVariance %

NotesDescription

FINANCIAL POSITION

Property, Plant and Equipment

Motor VehiclesFurniture & FittingsOffice EquipmentComputer Equipment

Intangible assetsComputer Software

Current assetsVat Refund

TOTAL EXPENDITURE & CAPEX

LESS ADJUSTEDSURPLUS/(DEFICIT)

000

20

20

0

0

(809)

(809)

40,428

1,914

000

259

259

65

65

(938)

(938)

52,141

(2,414)

0226

4385

615

339

339

(894)

(894)

46,642

3,703

0%0%0%

149%

149%

522%

522%

95%

95%

1425%

-480%

0%0%0%

-49%

-49%

-422%

-422%

5%

5%

-325%

-120%

33.1333.14

33.15

33.16

MOSES KOTANE INSTITUTE NPC STATEMENT OF BUDGET AND ACTUAL INFORMATIONFOR THE YEAR ENDED 31 MARCH 2016


MKI NPC ACCOUNTING POLICIES TO THE ANNUAL FINANCIAL STATEMENTFOR THE YEAR ENDED 31 MARCH 2016

1. Accounting Policies

The following are the principle accounting policies used in the preparation of the annual financial statements;

1.1 Basis of Preparation

The Annual Financial Statements have been prepared on a going concern and historical basis unless otherwise stated inaccordance with the effective Standards of Generally Recognized Accounting Practices (GRAP) including any interpretations,guidelines and directives issued by the Accounting Standards Board and Public Finance Management Act (PFMA), 1999(Act No. 1 of 1999).

Standard of GRAP

GRAP 1: Presentation of Annual Financial StatementsGRAP 2: Cash Flow StatementsGRAP 3: Accounting Policies, changes in Accounting

Estimates and ErrorsGRAP 4: Effects of changes in Foreign Exchange RatesGRAP 5: Borrowing costsGRAP 9: Revenue from Exchange TransactionsGRAP 12: InventoriesGRAP 13: LeasesGRAP 14: Events after the reporting dateGRAP 17: Property, Plant and equipmentGRAP 19: Provisions, Contingent Liabilities and

Contingent AssetsGRAP 25: Employee benefitsGRAP 100: Non-Current Assets held for sale and

Discontinued operationsGRAP 102: Intangible AssetsGRAP 107: Mergers

Replaced Statement of GAAP

AC101: Presentation of Annual Financial StatementsAC118: Cash Flow StatementsAC103: Accounting Policies, changes in Accounting

Estimates and Errors

Currently the recognition and measurement principles in the above GRAP and GAAP Statements do not differ nor resultin material differences in items presented and disclosed in the Annual Financial Statements.


Standard of GRAP

GRAP 1: Presentation of Annual Financial StatementsGRAP 2: Cash Flow StatementsGRAP 3: Accounting Policies, changes in Accounting

Estimates and ErrorsGRAP 20: Related parties have been issued but is not

yet effectiveGRAP 21: Impairment of Non-Cash Generating AssetsGRAP 23: Revenue from Non-Exchange TransactionsGRAP 24: Presentation of Budget Information in the

Annual Financial StatementsGRAP 26: Impairment of Cash Generating AssetsGRAP 103: Heritage AssetsGRAP 104: Financial Instruments




Currently the recognition and measurement principles in the above GRAP and GAAP Statements do not differ nor resultin material differences in items presented and disclosed in the Annual Financial Statements.

The implementation of GRAP 1, 2 and 3 has resulted in the following changes in the presentation of the Annual FinancialStatements:

1. Terminology differences

Standard of GRAP

Statement of Financial PerformanceStatement of Financial PositionStatement of Changes in Net AssetsSurplus /DeficitAccumulated Surplus/DeficitContributions from OwnersDistributions to OwnersReporting Date




2. The Cash Flow Statement can only be prepared in accordance with the direct method.

3. Specific information has been presented separately on the Statement of Financial Position such as:

(a) Receivables from Non-Exchange Transactions.(b) Trade and Other Payables from Non-Exchange Transactions.




The principle Accounting Policies adopted in the preparation of the Annual Financial Statements are set out below andare, in all material respects, consistent with those of the previous year, except as otherwise indicated.

1.2 Currency

The Annual Financial Statements are presented in South African Rands since that it the currency in which the majority ofthe entity's transactions are denominated.

1.3 Going Concern Assumption

These annual financial statements have been prepared based on the expectation that the entity will continue to operateas a going concern for at least the next 12 months.

1.4 Significant Accounting Policies

In preparing the annual financial statements, management is required to make estimates and assumptions that affect theamounts represented in the annual financial statements and related disclosures. Use of available information and theapplication of judgement is inherent in the formation of estimates. Actual results in the future could differ from theseestimates which may be material to the annual financial statements. Significant judgements include:

1.4.1 Provisions

Provisions are measured as the present value of the estimated future outflows required to settle the obligation. In theprocess of determining the best estimate of the amounts that will be required in future to settle the provision managementconsiders the weighted average probability of the potential outcomes of the provisions raised. This measurement entailsdetermining what the different potential outcomes are for a provision as well as the financial impact of each of thosepotential outcomes. Management then assigns a weighting factor to each of these outcomes based on the probability thatthe outcome will materialize in future. The factor is then applied to each of the potential outcomes and the factoredoutcomes are then added together to arrive at the weighted average value of the provisions.

1.4.2 Depreciation and Amortization

Depreciation and amortization recognized on property, plant and equipment and intangible assets are determined withreference to the useful lives and residual values of the underlying items. The useful lives and residual values of assets arebased on management’s estimation of the asset’s condition, expected condition at the end of the period of use, its currentuse, and expected future use and the entity’s expectations about the availability of finance to replace the asset at the endof its useful life. In evaluating the condition and use of the asset informs the useful life and residual value managementconsiders the impact of technology and minimum service requirements of the assets.



1.4.3 Estimates

Estimates are informed by historical experience, information currently available to management, assumptions, and otherfactors that are believed to be reasonable under the circumstances. These estimates are reviewed on a regular basis.Changes in estimates that are not due to errors are processed in the period of the review and applied prospectively.

1.4.4 Impairments of Non-Financial Assets

In testing for, and determining the value-in-use of non-financial assets, management is required to rely on the use ofestimates about the asset’s ability to continue to generate cash flows (in the case of cash-generating assets). For non-cashgenerating assets, estimates are made regarding the depreciated replacement cost, restoration cost, or service units ofthe asset, depending on the nature of the impairment and the availability of information. Refer to accounting policy 1.9.

1.5 Revenue Recognition

1.5.1 General

Management considered the detailed criteria for the recognition of revenue as set out in GRAP 9: Revenue from ExchangeTransactions and GRAP 23: Revenue from Non-Exchange Transactions. Management is satisfied that recognition of revenuein the current year is appropriate.

Revenue is measured at the fair value of the consideration received or receivable from exchange or non-exchange transactionsin the ordinary course of the Institute’s activities. Revenue is shown net of value added tax, returns, rebates, and discounts.

The Institute recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economicbenefits will flow to the Institute and when specific criteria have been met for each of the Institute’s activities.

1.5.2 Revenue from Exchange Transactions

Revenue from exchange transactions refers to revenue that accrued to the Institute directly from interest earned oninvestments and is recognized in the Statement of Financial Performance on the time proportionate basis that takes intoaccount the effective yield on the investment

1.5.3 Revenue from Non-exchange Transactions

Revenue from non-exchange transactions refers to transactions where the Institute receives revenue from another entitywithout directly giving approximately equal value in exchange. Revenue from non-exchange transactions is generallyrecognized to the extent that the related receipt or receivable qualifies for recognition as an asset and there is no liabilityto repay the amount.

1.5.4 Government Grants

Revenue received from government grants and funding are recognized as revenue to the extent that the Institute hascomplied with any of the criteria, condition or obligations embodied in the funding requirements.



1.5.5 Deferred Income

When the inflow of cash or cash equivalents is deferred and the arrangement constitutes in effect a financing transaction,the fair value of the consideration is the present value of all future receipts determined using an imputed rate of interest.The imputed rate of interest is either the prevailing rate for a similar instrument of an issuer with a similar credit rating,or a rate of interest that discounts the nominal amount of the instrument to the current cash sales price of the goods orservices. The difference between the present value of all future receipts and the nominal amount of the consideration isinterest revenue.

1.6 Employee Benefits

1.6.1 Short-term Employee Benefits

Short term employee benefits encompasses all those benefits that become payable in the short term, i.e. within a financialyear or within 12 months after the financial year. Therefore, short term employee benefits include remuneration, compensatedabsences and bonuses.

Short term employee benefits are recognized in the Statement of Financial Performance as services are rendered, exceptfor non-accumulating benefits, which are recognized when the specific event occurs. These short term employee benefitsare measured at their undiscounted costs in the period the employee renders the related service or the specific event occurs.

The Institute treats its leave pay as a provision.

The costs of all short-term employee benefits such as leave pay, are recognized during the period in which the employeerenders the related service. The liability for leave pay is based on the total accrued leave days at year end and is shownas a provision in the Statement of Financial Position. The Institute recognizes the expected cost of performance bonusesonly when the Institute has a present legal or constructive obligation to make such payment and a reliable estimate canbe made.

1.6.2 Defined Contribution Plan

The institute contributes to the Momentum Pension Fund for all full time staff eligible for long term service payments andwhose membership is also compulsory. The fund is a defined contribution plan. The Institute contributes 7.5% of thepensionable remuneration. The employees also contribute 7.5% of their pensionable remuneration. The pension fundobligations are paid when due and are terminated when the employee's employment with the Institute is terminated.

1.7 Property, Plant and Equipment

Initial Recognition and Measurement

Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in theproduction or supply of goods or services, rental to others, or for administrative purposes, and are expected to be usedduring more than one reporting period. Property plant and equipment consist of land and buildings, computer equipment,furniture and fittings office equipment, and motor vehicles.



The cost of an item of property, plant and equipment is recognized as an asset when:

• It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and• The cost of the asset can be measured reliably.

Property, plant and equipment is initially measured at cost.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurredsubsequently to add to, replace part of, or service it. If a replacement cost is recognized in the carrying amount of an itemof property, plant and equipment, the carrying amount of the replaced part is derecognized.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or assets, or a combinationof assets and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item'sfair value was not determinable, it's deemed cost is the carrying amount of the asset(s) given up.

Major spare parts and stand by equipment which are expected to be used for more than one period are included in property,plant and equipment. In addition, spare parts and stand by equipment which can only be used in connection with an itemof property, plant and equipment are accounted for as property, plant and equipment.

Items of property, plant and equipment are initially recognized as assets on acquisition date and are initially recorded atcost where acquired through exchange transactions. However, when items of property, plant and equipment are acquiredthrough non-exchange transactions, those items are initially measured at their fair values as at the date of acquisition.

When significant components of an item of property, plant and equipment have different useful lives, they are accountedfor as separate items (major components) of property, plant and equipment. These major components are depreciatedseparately over their useful lives.

Subsequent Measurement

Items of property, plant and equipment are accounted for at historical cost less accumulated depreciation and accumulatedimpairment losses. The Institute depreciates its property, plant and equipment over the estimated useful lives of the assets,taking into account the residual values of the assets at the end of their useful lives, which is determined when the assetsare available for use. The useful lives and residual values of the assets are based on industry knowledge.

Subsequent costs are capitalized to the extent that future economic benefits associated with usage will flow to the Institute.

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. Ifthe expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

Depreciation

The depreciation charge for each period is recognized in the Statement of Financial Performance unless it is included inthe carrying amount of another asset.


Building 40 years (2.5%)

Computer equipment 3 years (33.3%)

Furniture and fittings 10 years (10%)

Office equipment 5 years (20%)

Motor vehicles 5 years (20%)


Property, plant and equipment are depreciated on the straight line basis over the expected useful lives to their estimatedresidual value, on the following bases:

Impairments

The entity tests for impairment where there is an indication that an asset may be impaired. An assessment of whether thereis an indication of possible impairment is done at each reporting date. Where the carrying amount of an item of property,plant and equipment is greater than the estimated recoverable amount (or recoverable service amount), it is written downimmediately to its recoverable amount (or recoverable service amount) and an impairment loss is charged to the Statementof Financial Performance.

Where items of property, plant and equipment have been impaired, the carrying value is adjusted by the impairment loss,which is recognized as an expense in the Statement of Financial Performance in the period that the impairment is identified.

An impairment is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount thatwould have been determined had no impairment been recognized. A reversal of the impairment is recognized in theStatement of Financial Performance.

Derecognition of Property, Plant and Equipment

The carrying amount of an item of property, plant and equipment is derecognized on disposal, or when no future economicbenefits or service potential are expected from its use or disposal. The gain or loss arising from the derecognition is includedin profit or loss when the item is derecognized. The gain or loss arising from the derecognition of an item of property, plantand equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of theitem.

1.8 Intangible Assets

Initial Recognition and Measurement

An intangible asset is an identifiable non-monetary asset without physical substance. Intangibles are non-tangible non-current assets that are held for use for administrative purposes and are expected to be used during more than one periodand consist of computer software. The entity recognizes an intangible asset in its Statement of Financial Position only whenit is probable that the expected future economic benefits or service potential that are attributable to the asset will flowto the entity and the cost or fair value of the asset can be measured reliably.



An intangible asset is recognized when:

• It is probable that the expected future economic benefits that are attributable to the asset will flow to the entity; and• The cost of the asset can be measured reliably.

Intangible assets are initially recognized at cost.

Expenditure on research (or on the research phase of an internal project) is recognized as an expense when it is incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognized when:

• It is technically feasible to complete the asset so that it will be available for use or sale.• There is an intention to complete and use or sell it.• There is an ability to use or sell it.• It will generate probable future economic benefits.• There are available technical, financial and other resources to complete the development and to use or sell the asset.• The expenditure attributable to the asset during its development can be measured reliably.

Subsequent Measurement

Intangible assets are accounted for at historical cost less accumulated amortization and impairment losses.

The cost of an intangible asset is amortized over the useful life where that useful life is finite. The amortization expenseon intangible assets with finite lives is recognized in the Statement of Financial Performance in the expense categoryconsistent with the function of the intangible asset. The useful lives of the assets are based on industry knowledge.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeablelimit to the period over which the asset is expected to generate net cash inflows. Amortization is not provided for theseintangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may beimpaired. For all other intangible assets amortization is provided on a straight line basis over their useful life.

The amortization period and the amortization method for intangible assets are reviewed every period-end.

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicatorthat the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount isamortized over its useful life. An impairment loss is recognised in the statement of financial performance to the extentthat the carrying amount of assets exceeds their recoverable amount.

Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognisedas intangible assets.

The amortisation charge for each period is recognised in the Statement of Financial Performance unless it is included inthe carrying amount of another asset.



Amortisation and Impairment

Amortisation is charged to write off the cost of intangible assets over their estimated useful lives using the straight-linemethod. Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values asfollows:

Computer software 3 years (33.3%)

The amortisation period, the amortisation method and residual value for intangible assets with finite useful lives arereviewed at each reporting date and any changes are recognised as a change in accounting estimate in the Statement ofFinancial Performance.

Impairments

The entity tests intangible assets with finite useful lives for impairment where there is an indication that an asset may beimpaired. An assessment of whether there is an indication of possible impairment is performed at each reporting date.Where the carrying amount of an item of an intangible asset is greater than the estimated recoverable amount (or recoverableservice amount), it is written down immediately to its recoverable amount (or recoverable service amount) and an impairmentloss is charged to the Statement of Financial Performance.

Derecognition

Intangible assets are derecognised when the asset is disposed of or when there are no further economic benefits or servicepotential expected from the asset. The gain or loss arising on the disposal or retirement of an intangible asset is determinedas the difference between the sales proceeds and the carrying value and is recognised in the Statement of FinancialPerformance.

1.9 Impairment on Assets1.9.1 Non-Cash Generating Assets

No-cash generating assets are assets other than cash generating assets. When the carrying amount of a non-cash-generatingasset exceeds its recoverable service amount, it is impaired. The Institute assesses at each reporting date whether thereis any indication that a non-cash≠ generating asset may be impaired. If such indication exists, the Institute estimates therecoverable service amount of the asset.

The present value of the remaining service potential of a non-cash-generating asset is determined using one of the followingapproaches:

• Depreciated replacement cost approach;• Restoration cost approach; or• Service units approach

If the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount ofthe asset is reduced to its recoverable service amount. This reduction is an impairment loss. An impairment loss is recognisedimmediately in surplus or deficit. Any impairment loss of a revalued non-cash-generating asset is treated as a revaluationdecrease.



The Institute assesses at each reporting date whether there is any indication that an impairment loss recognised in priorperiods for a non-cash-generating asset may no longer exist or may have decreased. If any such indication exists, theInstitute estimates the recoverable service amount of the asset.

A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or deficit. Any reversalof an impairment loss of a revalued non-cash-generating asset is treated as a revaluation increase.

The Institute has adopted GRAP 21:Impairment of non-cash-generating assets for the first time in the 2014 Financial Statements.4

This standard does not have a material impact on the lnstitute's Financial Statements.

1.9.2 Impairment of Cash Generating Assets

Cash-generating assets are those assets held by the Institute with the primary objective of generating a commercial return.When the carrying amount of a cash-generating asset exceeds its recoverable amount, it is impaired. The Institute assessesat each reporting date whether there is any indication that a cash-generating asset may be impaired. If such indicationexists, the Institute estimates the recoverable amount of the asset if the recoverable amount of the cash-generating assetis less than the carrying amount.

If the recoverable amount of the cash-generating asset is less than the carrying amount the carrying amount of the assetis reduced to its recoverable amount. This reduction is an impairment loss. An impairment loss is recognised immediatelyin surplus or deficit. Any impairment loss of a revalued cash-generating asset is treaded as a revaluation decrease.

The Institute assesses at each reporting date whether there is an indication that an impairment loss recognised in priorperiods for a cash-generating asset may no longer exist or may have decreased. If any such indication exists, the Instituteestimates the recoverable amount of that asset.

A reversal of an impairment loss for a cash-generating asset is recognised immediately in surplus or deficit. Any reversalof an impairment loss of a cash-generating asset is treated as a revaluation increase. The Institute has adopted GRAP 26:Impairment of cash≠ generating assets for the first time in the 2014 Financial Statements. This standard does not have amaterial impact on the lnstitute's Financial Statements.

1.10 Provision

Provisions are recognised when:• The entity has a present obligation as a result of a past event;• It is probable that an outflow of resources embodying economic benefits or service potential will be required to settle

the obligation; and• A reliable estimate can be made of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligationat the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where aprovision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the presentvalue of those cash flows.



Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversedif it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required,to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flowthat reflect current market assessments of the time value of money and, where appropriate, the risk specific to the reliability.Employee entitlement to annual leave is recognised when it accrues. A provision is made on the estimated liability forannual leave as a result of services rendered by employees up to the amount of the obligation.

1.11 Financial Liabilities

Financial liability is a contractual obligation to deliver cash or another financial asset to another entity. The Institute hasthe following financial liabilities as reflected on the face of the Statement of Financial Position or in the notes thereto:

• Trade and other Payables;

Financial Liabilities at amortized cost are initially measured at fair value, net of transaction costs. These are subsequentlymeasured at amortized cost using the effective interest method, with interest expense recognized on an effective yieldbasis.

1.12 Leasing

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A leaseis classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

When a lease includes both land and buildings elements, the entity assesses the classification of each element separately.

1.12.1 Finance Leases - Lessee

Rights to assets held under finance leases are recognised as assets of the Institute at the fair value of the leased property(or, if lower, the present value of minimum lease payments) at the inception of the lease. The corresponding liability to thelessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportionedbetween finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remainingbalance of the liability. Finance charges are deducted in measuring profit or loss. Assets held under finance leases areincluded in property, plant and equipment, and depreciated and assessed for impairment losses in the same way as ownedassets.

1.12.1 Operating Leases

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference betweenthe amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability.

1.13 Cash and Cash Equivalents

Cash and cash equivalents comprise balances with local banks and cash on hand. Cash equivalents are sort-term highlyliquid investments that are held with registered banking institutions with maturities of three months or less and are subjectto an insignificant risk of change in value.



1.14 Financial Instruments

Financial assets and liabilities are recognised on the institute's statement of financial position when the institute becomesa party to the contractual provisions of the instrument. Financial instruments carried on the statement of financial positioninclude cash and cash equivalents, trade and other accounts receivable, prepayments and advances, provisions and tradeand other accounts payable. Where relevant, the particular recognition methods are disclosed in the individual policystatements associated with each item. A financial instrument is any contract that gives rise to a financial asset of one entityand a financial liability or a residual interest of another entity.

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liabilityis measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effectiveinterest method of any difference between that initial amount and the maturity amount, and minus any reduction (directlyor through the use of an allowance account) for impairment or uncollectibility.

A concessionary loan is a loan granted to or received by an entity on terms that are not market related. Credit risk is therisk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changesin foreign exchange rates.

Derecognition is the removal of a previously recognised financial asset or financial liability from an entity’s statement offinancial position.

A derivative is a financial instrument or other contract with all three of the following characteristics:

• Its value changes in response to the change in a specified interest rate, financial instrument price, commodity price,foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of anon-financial variable that the variable is not specific to a party to the contract (sometimes called the ‘underlying’).

• It requires no initial net investment or an initial net investment that is smaller than would be required for other typesof contracts that would be expected to have a similar response to changes in market factors.

• It is settled at a future date.

The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (orgroup of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevantperiod. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughthe expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of thefinancial asset or financial liability. When calculating the effective interest rate, an entity shall estimate cash flows consideringall contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not considerfuture credit losses. The calculation includes all fees and points paid or received between parties to the contract that arean integral part of the effective interest rate (see the Standard of GRAP on Revenue from Exchange Transactions), transactioncosts, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group ofsimilar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to reliablyestimate the cash flows or the expected life of a financial instrument (or group of financial instruments), the entity shalluse the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments).



Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willingparties in an arm’s length transaction.

A financial asset is:

• cash;• a residual interest of another entity; or• a contractual right to:

(i) receive cash or another financial asset from another entity; or(ii) exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable

to the entity.

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holderfor a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modifiedterms of a debt instrument.

A financial liability is any liability that is a contractual obligation to:

• deliver cash or another financial asset to another entity; or• Exchange financial assets or financial liabilities under conditions that are potentially unfavourable to the entity.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changesin market interest rates. Liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligationsassociated with financial liabilities that are settled by delivering cash or another financial asset.

Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions. Loans payable arefinancial liabilities, other than short-term payables on normal credit terms.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changesin market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changesin market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused byfactors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments tradedin the market.

A financial asset is past due when a counterpart has failed to make a payment when contractually due.

A residual interest is any contract that manifests an interest in the assets of an entity after deducting all of its liabilities.A residual interest includes contributions from owners, which may be shown as:

• Equity instruments or similar forms of unitised capital;• A formal designation of a transfer of resources (or a class of such transfers) by the parties to the transaction as forming

part of an entity’s net assets, either before the contribution occurs or at the time of the contribution; or• A formal agreement, in relation to the contribution, establishing or increasing an existing financial interest in the net

assets of an entity.



Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial assetor financial liability. An incremental cost is one that would not have been incurred if the entity had not acquired, issuedor disposed of the financial instrument.

Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial liabilities that havefixed or determinable payments, excluding those instruments that:• The entity designates at fair value at initial recognition; or• Are held for trading.

Financial instruments at cost are investments in residual interests that do not have a quoted market price in an activemarket, and whose fair value cannot be reliably measured.

Financial instruments at fair value comprise financial assets or financial liabilities that are:• Derivatives;• Combined instruments that are designated at fair value;• Instruments held for trading. A financial instrument is held for trading if:

(i) It is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term; or(ii) On initial recognition it is part of a portfolio of identified financial instruments that are managed together and

for which there is evidence of a(iii) Recent actual pattern of short term profit-taking;(iv) Non-derivative financial assets or financial liabilities with fixed or determinable payments that are designated at

fair value at initial recognition; and(v) Financial instruments that do not meet the definition of financial instruments at amortised cost or financial

instruments at cost.

Initial Recognition

The entity recognises a financial asset or a financial liability in its statement of financial position when the entity becomesa party to the contractual provisions of the instrument. The entity recognises financial assets using trade date accounting.

Initial Measurement of Financial Assets and Financial Liabilities

The entity measures a financial asset and financial liability initially at its fair value plus transaction costs that are directlyattributable to the acquisition or issue of the financial asset or financial liability. The entity measures a financial asset andfinancial liability initially at its fair value [if subsequently measured at fair value].

The entity first assesses whether the substance of a concessionary loan is in fact a loan. On initial recognition, the entityanalyses a concessionary loan into its component parts and accounts for each component separately. The entity accountsfor that part of a concessionary loan that is:

• A social benefit in accordance with the Framework for the Preparation and Presentation of Financial Statements, whereit is the issuer of the loan; or

• Non-exchange revenue, in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions (Taxesand Transfers), where it is the recipient of the loan.



Subsequent Measurement of Financial Assets and Financial Liabilities

The entity measures all financial assets and financial liabilities after initial recognition using the following categories:• Financial instruments at fair value.• Financial instruments at amortised cost.• Financial instruments at cost.

All financial assets measured at amortised cost, or cost, are subject to an impairment review.

Reclassification

The entity does not reclassify a financial instrument while it is issued or held unless it is:• Combined instrument that is required to be measured at fair value; or• An investment in a residual interest that meets the requirements for reclassification.

Where the entity cannot reliably measure the fair value of an embedded derivative that has been separated from a hostcontract that is a financial instrument at a subsequent reporting date, it measures the combined instrument at fair value.This requires a reclassification of the instrument from amortised cost or cost to fair value.

If fair value can no longer be measured reliably for an investment in a residual interest measured at fair value, the entityreclassifies the investment from fair value to cost. The carrying amount at the date that fair value is no longer availablebecomes the cost.

If a reliable measure becomes available for an investment in a residual interest for which a measure was previously notavailable, and the instrument would have been required to be measured at fair value, the entity reclassifies the instrumentfrom cost to fair value.

Gains and Losses

A gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair value isrecognised in surplus or deficit.

For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised in surplus ordeficit when the financial asset or financial liability is derecognised or impaired, or through the amortisation process.

Impairment and Uncollectibility of Financial Assets

The entity assess at the end of each reporting period whether there is any objective evidence that a financial asset or groupof financial assets is impaired.

Financial assets measured at amortised cost:

If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred,the amount of the loss is measured as the difference between the asset’s carrying amount and the present value ofestimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’soriginal effective interest rate.



The carrying amount of the asset is reduced directly or through the use of an allowance account. The amount of the lossis recognised in surplus or deficit.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively toan event occurring after the impairment was recognised, the previously recognised impairment loss is reversed directly orby adjusting an allowance account. The reversal does not result in a carrying amount of the financial asset that exceedswhat the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed.The amount of the reversal is recognised in surplus or deficit.

Financial assets measured at cost:

If there is objective evidence that an impairment loss has been incurred on an investment in a residual interest that is notmeasured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measuredas the difference between the carrying amount of the financial asset and the present value of estimated future cash flowsdiscounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.

Derecognition

Financial Assets

The entity derecognises financial assets using trade date accounting.

The entity derecognises a financial asset only when:

• the contractual rights to the cash flows from the financial asset expire, are settled or waived;• the entity transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or• the entity, despite having retained some significant risks and rewards of ownership of the financial asset, has transferred

control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to anunrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictionson the transfer. In this case, the entity :(i) derecognise the asset; and(ii) Recognise separately any rights and obligations created or retained in the transfer.

The carrying amounts of the transferred asset are allocated between the rights or obligations retained and those transferredon the basis of their relative fair values at the transfer date. Newly created rights and obligations are measured at theirfair values at that date. Any difference between the consideration received and the amounts recognised and derecognisedis recognised in surplus or deficit in the period of the transfer.

If the entity transfers a financial asset in a transfer that qualifies for derecognition in its entirety and retains the right toservice the financial asset for a fee, it recognise either a servicing asset or a servicing liability for that servicing contract.If the fee to be received is not expected to compensate the entity adequately for performing the servicing, a servicingliability for the servicing obligation is recognised at its fair value. If the fee to be received is expected to be more thanadequate compensation for the servicing, a servicing asset is recognised for the servicing right at an amount determinedon the basis of an allocation of the carrying amount of the larger financial asset.



If, as a result of a transfer, a financial asset is derecognised in its entirety but the transfer results in the entity obtaining anew financial asset or assuming a new financial liability, or a servicing liability, the entity recognise the new financial asset,financial liability or servicing liability at fair value. On derecognition of a financial asset in its entirety, the difference betweenthe carrying amount and the sum of the consideration received is recognised in surplus or deficit.

If the transferred asset is part of a larger financial asset and the part transferred qualifies for derecognition in its entirety,the previous carrying amount of the larger financial asset is allocated between the part that continues to be recognisedand the part that is derecognised, based on the relative fair values of those parts, on the date of the transfer. For thispurpose, a retained servicing asset is treated as a part that continues to be recognised. The difference between the carryingamount allocated to the part derecognised and the sum of the consideration received for the part derecognised is recognisedin surplus or deficit.

If a transfer does not result in derecognition because the entity has retained substantially all the risks and rewards ofownership of the transferred asset, the entity continue to recognise the transferred asset in its entirety and recognise afinancial liability for the consideration received. In subsequent periods, the entity recognises any revenue on the transferredasset and any expense incurred on the financial liability. Neither the asset, and the associated liability nor the revenue,and the associated expenses are offset.

Financial Liabilities

The entity removes a financial liability (or a part of a financial liability) from its statement of financial position when it isextinguished — i.e. when the obligation specified in the contract is discharged, cancelled, expires or waived.

An exchange between an existing borrower and lender of debt instruments with substantially different terms is accountedfor as having extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantialmodification of the terms of an existing financial liability or a part of it is accounted for as having extinguished the originalfinancial liability and having recognised a new financial liability.

The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferredto another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognisedin surplus or deficit. Any liabilities that are waived, forgiven or assumed by another entity by way of a non-exchangetransaction are accounted for in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions(Taxes and Transfers).

Presentation

Interest relating to a financial instrument or a component that is a financial liability is recognised as revenue or expensein surplus or deficit.

Dividends or similar distributions relating to a financial instrument or a component that is a financial liability is recognisedas revenue or expense in surplus or deficit.

Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as revenue orexpense in surplus or deficit.



A financial asset and a financial liability are only offset and the net amount presented in the statement of financial positionwhen the entity currently has a legally enforceable right to set off the recognised amounts and intends either to settle ona net basis, or to realise the asset and settle the liability simultaneously. In accounting for a transfer of a financial assetthat does not qualify for derecognition, the entity does not offset the transferred asset and the associated liability.

1.15 Offset

Financial assets and financial liabilities are only offset if there is a legal right to offset and there is an intention either tosettle on a net basis or to realize the asset and settle the liability simultaneously.

1.16 Taxation

The Institute is a public benefit organization as described by the section 30 of the Income Tax Act No. 58 of 1962 whichwas formed and incorporated under section 21 of the Companies Act, 1973 (Act No.71 of 2008). The institute operateson funds derived from government grants. The institute's receipts and accruals are therefore exempt from income tax interms of section 10(1) (cN) of the Income Tax Act No. 58 of 1962.

1.17 Unauthorised Expenditure

Unauthorised expenditure is expenditure that has not been budgeted, expenditure that is not in terms of the conditionsof an allocation received from another sphere of government or organ of state and expenditure in the form of a grant thatis not permitted in terms of the Public Finance Management Act. Unauthorised expenditure is accounted for as an expensein the Statement of Financial Performance and where recovered, it is subsequently accounted for as revenue in the statementof financial performance.

1.18 Irregular Expenditure

Irregular expenditure as defined in section 1 of the PFMA is expenditure other than unauthorised expenditure, incurredin contravention of or that is not in accordance with a requirement of any applicable legislation, including -(a) this Act; or(b) the State Tender Board Act, 1968 (Act No. 86 of 1968), or any regulations made in terms of the Act; or(c) any provincial legislation providing for procurement procedures in that provincial government.

National Treasury practice note no. 4 of 2008/2009 which was issued in terms of sections 76(1) to 76(4) of the PFMArequires the following (effective from 1 April 2008):

Irregular expenditure that was incurred and identified during the current financial and which was condoned before yearend and/or before finalisation of the financial statements must also be recorded appropriately in the irregular expenditureregister. In such an instance, no further action is also required with the exception of updating the note to the financialstatements.

Irregular expenditure that was incurred and identified during the current financial year and for which condonation is beingawaited at year end must be recorded in the irregular expenditure register. No further action is required with the exceptionof updating the note to the financial statements.



Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financialyear, the register and the disclosure note to the annual financial statements must be updated with the amount condoned.

Irregular expenditure that was incurred and identified during the current financial year and which was not condoned bythe National Treasury or the relevant authority must be recorded appropriately in the irregular expenditure register. Ifliability for the irregular expenditure can be attributed to a person, a debt account must be created if such a person is liablein law. Immediate steps must thereafter be taken to recover the amount from the person concerned. If recovery is notpossible, the accounting officer or accounting authority may write off the amount as debt impairment and disclose suchin the relevant note to the financial statements. The irregular expenditure register must also be updated accordingly. Ifthe irregular expenditure has not been condoned and no person is liable in law, the expenditure related thereto mustremain against the relevant programme/expenditure item, be disclosed as such in the note to the financial statements andupdated accordingly in the irregular expenditure register.

1.19 Fruitless and Wasteful Expenditure

Fruitless and wasteful expenditure is expenditure that was made in vain and would have been avoided had reasonablecare been exercised. Fruitless and wasteful expenditure is accounted for as expenditure in the Statement of FinancialPerformance, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.

1.20 Recovery of Unauthorised, Irregular, Fruitless and Wasteful Expenditure

The recovery of unauthorised, irregular, fruitless and wasteful expenditure is based on legislated procedures, and isrecognised when the recovery thereof from the responsible officials is probable. The recovery of unauthorised, irregular,fruitless and wasteful expenditure is treated as other income.

1.21 Related Parties

The entity operates in an economic sector currently dominated by entities directly or indirectly owned by the South AfricanGovernment. As a consequence of the constitutional independence of the three spheres of government in South Africa,only entities within the provincial sphere of government are considered to be related parties.

Management are those persons responsible for planning, directing and controlling the activities of the entity, includingthose charged with the governance of the entity in accordance with legislation, in instances where they are required toperform such functions.

Close members of the family of a person are considered to be those family members who may be expected to influence,or be influenced by, that management in their dealings with the entity.

Related parties are disclosed in terms of GRAP 20.

1.22 Commitments

Items are classified as commitments when an entity has committed itself to future transactions that will normally resultin the outflow of cash.



Disclosures are required in respect of unrecognised contractual commitments.

Commitments for which disclosure is necessary to achieve a fair presentation should be disclosed in a note to the financialstatements, if both the following criteria are met:

• Contracts should be non-cancellable or only cancellable at significant cost (for example, contracts for computer orbuilding maintenance services); and

• Contracts should relate to something other than the routine, steady, state business of the entity – therefore salarycommitments relating to employment contracts or social security benefit commitments are excluded.

1.23 Prior Year Comparative

When the presentation or classification of items in the annual financial statements is amended, prior period comparativeamounts are also reclassified and restated, unless such comparative reclassification and / or restatement is not requiredby a Standard of GRAP. The nature and reason for such reclassifications and restatements are also disclosed.

Where material accounting errors, which relate to prior periods, have been identified in the current year, the correction ismade retrospectively as far as is practicable and the prior year comparatives are restated accordingly. Where there hasbeen a change in accounting policy in the current year, the adjustment is made retrospectively as far as is practicable andthe prior year comparatives are restated accordingly.

1.24 Budget Information

Entities are typically subject to budgetary limits in the form of appropriations or budget authorisations (or equivalent),which is given effect through authorising legislation, appropriation or similar.

General purpose financial reporting by entity shall provide information on whether resources were obtained and used inaccordance with the legally adopted budget.

The approved budget, which covers the fiscal period under review, is prepared on a cash basis and presented by economicclassification linked to performance outcome objectives.

The annual financial statements and the budget are on the same basis of accounting therefore a comparison with thebudgeted amounts for the reporting period have been included in the Statement of Comparison of Budget and Actualamounts.



1.25 Events After Reporting Date

Events after reporting date are those events, both favourable and unfavourable, that occur between the reporting dateand the date when the financial statements are authorised for issue. Two types of events can be identified:• Those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date);

and• Those that are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting

date).

The entity will adjust the amount recognised in the financial statements to reflect adjusting events after the reporting dateonce the event occurred.

The entity will disclose the nature of the event and an estimate of its financial effect or a statement that such estimatecannot be made in respect of all material non-adjusting events, where non-disclosure could influence the economicdecisions of users taken on the basis of the annual financial statements.


1,778

327

2,105

2,124

1,778

2,124

1,778

10

89

10

89

32

239

32

239

2,105

2,124

42

2,166

682

2,124

682

2,124

21

10

21

10

604

32

604

32

2,166

2016R’000

2015R’000

2 Cash and Cash Equivalents

Cash and cash equivalents consist of the following:

Cash at bank

Call deposits

Total Cash and cash Equivalents

The Institute has the following bank accounts:

Current account:

First national Bank, Hillcrest, Account Number 6220 790 1176

Cash book balance at beginning of the year

Cash book balance at end of the year

Bank statement balance at beginning of the year

Bank statement balance at end of the year

Deposits on call (Money Market):






Investment account (7 day interest plus):






Cash on hand

Total cash and cash equivalents

MOSES KOTANE INSTITUTE NPC NOTES TO THE ANNUAL FINANCIAL STATEMENTFOR THE YEAR ENDED 31 MARCH 2016


2016R’000

2015R’000

3 Receivables from Non-Exchange Transactions

Deposits

Prepayments

Expenses paid on behalf of TETA

Other receivables

Total Receivables from Non-Exchange Transactions

4 VAT Receivable

VAT Receivable

5 Trade and Other Payables from Exchange Transactions

Trade creditors

Other payables

Total Trade and Other Payables from Exchange Transactions

6 Deferred Income

Arising from government grant

Less: Current portion of transferred to current

Non-current unspent conditional grants and receipts

213

20

0

32

265

826

2,374

1,380

3,754

51

13

38

213

2

323

0

538

18

2,110

4,109

6,219

51

13

38



7 Property, Plant and Equipment

AccumulatedDepreciation& Impairment

Cost

Reconciliation of Carrying Value

2016 2015

CarryingValue

Cost CarryingValue


R’000

(625)

(150)

(339)

(67)

(280)

(1,461)

R’000

4,350

187

1,128

115

701

6,481

R’000

3,725

37

789

47

421

5,019

R’000

4,350

187

1,270

149

6,930

12,887

R’000

3,833

75

852

76

103

4,940

R’000

(517)

(112)

(418)

(73)

(6,827)

(7,947)

Buildings

Vehicles

Furniture & Fittings

Office Equipment

Computer Equipment

Total



CarryingValue

ClosingBalance

R’000

3,725

37

789

47

421

5,019

Buildings

Vehicles


Office Equipment

Computer Equipment

Total

Prior YearErrors

R’000

0

0

0

2

68

70

Revaluation

R’000

0

0

0

0

0

0

Impairment

R’000

0

0

0

0

0

0

Depreciation

R’000

(108)

(38)

(116)

(20)

(92)

(374)

Transfers

R’000

0

0

0

0

0

0

Disposals

R’000

0

0

(173)

(15)

(44)

(232)

Additions

R’000

0

0

226

4

385

615

CarryingValue

OpeningBalance

R’000

3,833

75

852

76

104

4,940

7.1 Reconciliation of Property, Plant and Equipment - 2016

7.2 Reconciliation of Property, Plant and Equipment - 2015

CarryingValue

ClosingBalance

R’000

3,833

75

852

76

104

4,940

Buildings

Vehicles


Office Equipment

Computer Equipment

Total

Prior YearErrors

R’000

0

0

75

2

26

0

Revaluation

R’000

0

0

0

0

0

0

Impairment

R’000

0

0

0

0

0

0

Depreciation

R’000

(118)

(37)

(127)

(20)

(133)

(435)

Transfers

R’000

0

0

0

0

0

0

Disposals

R’000

0

0

0

0

0

0

Additions

R’000

0

0

481

56

31

568

CarryingValue

OpeningBalance

R’000

3,951

112

423

38

180

4,704



8 Intangible Assets


Cost

Reconciliation of Carrying Value

2016 2015

CarryingValue

Cost CarryingValue


R’000

(109)

(109)

R’000

449

449

R’000

340

340

R’000

110

110

R’000

10

10

R’000

(100)

(100)

Computer Equipment

Total

*Refer to Appendix B for an Analysis of Intangible Assets



CarryingValue

ClosingBalance

R’000

340

340

Computer Equipment

Total

Prior YearErrors

R’000

0

0

Revaluation

R’000

0

0

Impairment

R’000

0

0

Depreciation

R’000

(9)

(9)

Transfers

R’000

0

0

Disposals

R’000

0

0

Additions

R’000

339

339

CarryingValue

OpeningBalance

R’000

10

10

8.1 Reconciliation of Intangible Assets - 2016

CarryingValue

ClosingBalance

R’000

10

10

Computer Equipment

Total

Prior YearErrors

R’000

(2)

(2)

Revaluation

R’000

0

0

Impairment

R’000

0

0

Depreciation

R’000

(16)

(16)

Transfers

R’000

0

0

Disposals

R’000

0

0

Additions

R’000

7

7

CarryingValue

OpeningBalance

R’000

21

21

8.2 Reconciliation of Intangible Assets - 2015



9 Current Provisions

9.1 Reconciliation of Movement in Current Provisions - 2016

PerformanceBonus

Provisionfor leave

TotalOtherprovisions

R’000

0

0

0

R’000

210

(41)

169

R’000

596

(20)

576

R’000

386

21

407

Opening balance

Amounts used

Closing balance

9.2 Reconciliation of Movement in Current Provisions - 2015

PerformanceBonus

Provisionfor leave

TotalOtherprovisions

R’000

550

(550)

0

R’000

302

(92)

210

R’000

1,018

(422)

596

R’000

166

220

386

Opening balance

Amounts used

Closing balance



2016R’000

2015R’000

10 Government Grants and Subsidies

Revenue from non-exchange transactions

Other government grants and subsidies

Total Government Grants and Subsidies

11 Interest Earned - External Investments


Bank

Total Interest Earned

12 Public Contributions and Donations


Public contributions and donations

Total Public Contributions and Donations

13 Other Income


Deferred income realized income

Other cost recoveries

Sundry income

Recovery of unauthorized, irregular, fruitless and wasteful expenditure

Total Other Income

14 Employee Related Costs

Employee related costs - Salaries and Wages

Employee related costs - contribution for UIF, Pensions and Medical Aid

Travel, motor car, accommodation, subsistence and other allowances

Bursaries and training

Overtime payments

Performance and other bonuses

Other employee related costs

Total Employee Related Costs

49,577

49,577

285

285

308

308

0

0

4

200

204

8,628

1,118

676

65

1

762

213

11,463

38,478

38,478

17

17

0

0

13

40

0

0

53

7,717

1,080

666

148

9

575

(3)

10,192



2016R’000

2015R’000

Remuneration of the Chief Executive Officer

Annual Remuneration



Contribution for UIF, Pensions and Medical Aid

Remuneration of the Chief Finance Officer

Annual Remuneration




Remuneration of an Executive Manager*

Annual Remuneration




*The Executive manager was employed from 1 April 2015 to 31 December 2015.

15 Directors' Emoluments

Executive directors

Included in employee related costs

Non-executive directors

Directors emoluments

External independent directors

Directors' other expenses

Directors Emoluments and Other Expenses

Refer to Appendix A for a breakdown of Directors’ emoluments

16 Depreciation and Amortization Expense

Property, plant and equipment

Intangible assets

Total Depreciation and Amortization

972

81

211

147

1,411

861

73

107

74

1,115

600

84

55

74

813

3,339

1,694

42

1,736

129

1,865

373

9

382

896

169

154

104

1,323

391

27

52

41

511

747

144

110

80

1,081

2,915

2,007

54

2,061

242

2,303

435

16

451



2016R’000

2015R’000

17 Auditors' Remuneration

External auditors

Total Auditors' Remuneration

18 Administration Expenses

Bank charges

Bad debts

Electricity

Insurance

Interest and penalties

Rental of office equipment

Recruitment expenses

Other rentals

Printing and stationery

Facilities

Security services

License renewals

Total Administration Expenses

19 Operating Expenses

Cleaning

Communications

Conferences and delegations

Consulting and professional services

Internal auditors

Meals and refreshments

Travel and subsistence

Office restructuring and security upgrade

Loss on disposal of assets

Motor Vehicle Expenses

General expenses and consumables

Total Operating Expenses

413

413

15

0

127

129

0

392

0

645

111

212

2,440

38

4,109

41

620

0

4,508

387

39

981

1,036

232

18

307

8,169

380

380

17

37

111

129

99

359

511

657

59

197

5

33

2,214

2

909

27

2,810

530

83

347

0

0

8

157

4,873



2016R’000

2015R’000

20 Skill Development & STEM Expenses

20.1 Programme 2: Strategic Partnerships and Business Development

20.1.1 Business Development

Moses Kotane week

Marketing and communication

Total Business Development

20.1.2 Sector Skills Development

Conference & workshops

Consulting & professional services

Infrastructure cost

Learner materials

Learner meals and accommodation expense

Meals and refreshments

Other programme costs

Training costs

Travel and subsistence

Total Sector Skills Development

Total Programme 2: Strategic Partnerships and Business Development

20.2 Programme 3: STEM Education and Academic Development

20.2.1 STEM Education & Professional Improvement

Awards and Ceremonies

Consulting & professional services

Learner materials

Learner tuition

Learner transport

Learner meals and accommodation expense

Matric Intervention teachers stipend

Travel & subsistence

Total STEM Education & Professional Improvement

591

1,422

2,014

0

0

0

73

4,448

0

0

0

0

4,521

6,535

0

0

78

324

0

4,295

452

12

5,162

1,990

27

2,017

227

150

150

300

3,620

582

57

75

239

5,400

7,417

154

9

350

2,154

974

922

0

95

4,658



2016R’000

2015R’000

20.2.2 STEM Graduate Development

Learner tuition

Infrastructure cost

Learner materials

Total STEM Graduate Development

20.2.3 Sector Research and Development

Research and development

Learner tuition

Meals and Refreshments

Travel & subsistence

Other programme costs

Total Sector Research and Development

Total Programme 3: STEM Education and Academic Development

Total Programme expenses

21 Cash Flows from Operating Activities

Surplus/(deficit) for the year from:

Adjustment for:-

• (Gain) / loss on sale of tangible Assets

• Contribution to provisions - current

• Depreciation and amortization

• Other non-cash item

Operating surplus before working capital changes:

(Increase)/decrease in trade and other receivables

(Increase)/decrease in VAT receivable

Increase/(decrease) in trade and other payables

Net Cash Flows from Operating Activities

8,818

0

0

8,818

162

0

0

0

0

162

14,141

20,676

3,297

232

(20)

383

0

3,892

273

(808)

(2,465)

893

3,566

199

36

3,801

794

519

0

3

8

1,324

9,783

17,199

936

-

(422)

451

(11)

954

(112)

298

294

1,434



22 Fruitless, Wasteful Expenditure, Irregular Expenditure and Deviations

22.1 Fruitless and Wasteful Expenditure

Reconciliation of fruitless and wasteful expenditure

Opening balance -

Fruitless and wasteful expenditure current year 2015/2016

Condoned or written off by Board 2014/2015


Transfer to receivables for recovery

Fruitless and wasteful expenditure closing balance

22.2 Irregular Expenditure

Reconciliation of irregular expenditure

Opening balance

Irregular expenditure current year 2015/2016




Transfer to receivables for recovery – not condoned

Irregular expenditure awaiting condonement

The amount of R1 828 772 is also included under Irregular expenditure as this

amount was considered to be both irregular and wasteful expenditure.

22.3 Deviations

Reconciliation of deviation expenditure

Opening balance

Deviation expenditure current year 2015/2016


Transfer to receivables for recovery – not condoned

Irregular expenditure awaiting condonement

2016R’000

2015R’000

104

83

0

(187)

0

0

2,595

2,825

0

(766)

(2,825)

0

1,829

0

0

3,154

0

3,154

1,979

560

(606)

0

(1,829)

104

6,955

7,899

(4,815)

(7,444)

0

0

2,595

0

0

0

0

0



23. Retirement Benefit Information

Defined Contribution Plan

The institute contributes to the Momentum Pension Fund for all full time staff eligible for long term service payments andwhose membership is also compulsory. The fund is a defined contribution plan. The Institute contributes 7.5% of thepensionable remuneration. The employees also contribute 7.5% of their pensionable remuneration. The pension fundobligations are paid when due and are terminated when the employee's employment with the Institute is terminated.

24. Risk Management

Maximum Credit Risk Exposure

The lnstitute's financial instruments consist primarily of deposits with banks, trade accounts receivable and payable. Tomanage the credit risk that the institute is exposed to as a result of holding these classes of financial assets the followingsteps are generally taken:

• The entity only deposits cash with major banks with high quality credit standing• The entity limits exposure to any one counter-party.

Financial instruments are carried at fair value or amounts that approximate fair value.

In the normal course of operations, the Institute is exposed to credit risk, interest rate risk, liquidity risk and foreign currencyrisk.

24.1 Financial Assets carried at Amortized Cost

The financial assets carried at amortized cost expose the entity to credit risk. The value of the maximum exposure to creditrisk are as follows for each of classes of financial assets at amortized cost:

2016R’000

2015R’000

2,105

235

2,166

538

24.2 Financial Assets liabilities at Amortized Cost

The financial liabilities carried at amortized cost expose the entity to credit risk. The value of the maximum exposure tocredit risk are as follows for each of classes of financial liability at amortized cost:

Trade and other payables 3,754 6,219

Cash and cash equivalents

Trade and other receivables from exchange transactions



24.3 Foreign Currency Risk Management

The Institute is exposed to foreign currency risk on sales and purchases that are denominated in a currency other thanthe functional currency of the Institute i.e. South African Rand.

There is no foreign currency denominated monetary assets and liabilities as at the reporting date.

24.4 Liquidity Risk

The entity’s risk to liquidity is a result of the funds available to cover future commitments. The entity manages liquidityrisk through an ongoing review of future commitments and credit facilities. Prudent liquidity risk management impliesmaintaining sufficient cash resources and ensuring the availability of funding through an adequate amount of creditfacilities. The Institute aims to maintain flexibility by monitoring cash flow forecast, good working capital managementand ensuring adequate borrowing facilities are maintained.

There is no foreign currency denominated monetary assets and liabilities as at the reporting date. The table below analysesthe entity’s financial liabilities into relevant maturity groupings based on the remaining period at the Statement of FinancialPosition to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

2016 Not later than onemonth

Later than one monthand not later thanthree months

Later than threemonths and not laterthan one year

Later than one yearand not later than fiveyears

Trade and other payables - - - 3,754

2015 Not later than onemonth

Later than one monthand not later thanthree months

Later than threemonths and not laterthan one year

Later than one yearand not later than fiveyears

Trade and other payables - - - 6,219

24.5 Interest Rate Risk

The Institute is exposed to interest rate risk as a result of interest bearing bank accounts. At year end, financial instrumentsexposed to interest rate risk were as follows:

Call deposits: With the exception of South African Government bonds, the rand-denominated financial assets and liabilitiesof the Bank respectively earn and bear interest at rates linked to South African money-market rates. The level of theserates is closely linked to the Bank’s repurchase (repo) rate, which is set by the Monetary Policy Committee (MPC). There-pricing of these assets and liabilities, therefore, occurs at approximately the same time as changes to the repo rate areannounced by the MPC.

Notice deposits: The Bank is exposed to interest rate risk in respect of its foreign investments. The risk tolerance and returnexpectations in respect of these financial instruments are embodied in the strategic asset allocation approved by theReserves Management Committee (Resmanco) and the risk budget approved by the GEC.



Finance lease obligations: The majority of the finance leases entered into by the public entities is subject to variableinterest rates linked to the prime rate of interest in South Africa. Long term loans: These loans are obtained from a varietyof sources and consist of a mixture of variable interest rate loans and fixed rate loans. This mixture of fixed and variablerate loans are intended to offset the overall exposure to variability in interest rates on an entity-by-entity basis.

Bank overdraft: These borrowings are obtained exclusively at variable interest rates from the major banks in South Africa.

The lnstitute's investments in fixed-rate debt securities and its fixed-rate borrowings are exposed to a risk of change intheir fair value due to changes in interest rates. The lnstitute's investments in variable rate debt securities and its variable-rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Investments in equitysecurities and short-term receivables and payables are not exposed to interest rate risk. The Institute adopts a policy ofregularly reviewing interest rate exposure, and maintains floating rate borrowings.

24.6 Interest Rate Sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates at the end date and thestipulated change taking place at the beginning of the financial year and held constant in the case of variable rateborrowings.

2016R’000

2015R’000

8 2

If interest rates had been 25 basis points higher and all other variables held constant, the

institute’s surplus would increase or decrease by:

24.7 Credit Risk Management

Management has a credit risk policy in place and the exposure to credit risk is monitored on an ongoing basis. Creditevaluations are performed on all customers requiring credit over a certain amount. Trade receivables comprise a widecustomer base. At year end there were no significant concentrations of credit risk. The maximum exposure to credit riskis represented by the carrying amount of each financial asset in the statement of financial position, grossed up for anyallowances for losses. Refer to note 10. The Institute does not have customers that it grants credit to.

25 Related Party Transactions

The following related party transaction was incurred during the period under review:

2016R’000

2015R’000

49,577 38,478

The Department of Economic Development, Tourism and Environmental Affairs is the sole

shareholder of Moses Kotane - NPC Institute


The Institute received grant funding from Department of Economic Development, Tourism and Environmental Affairs duringthe 12 month period under audit.

Transactions with related parties are conducted on an arm's length basis and on the same payment terms as thosetransacted with third parties. None of the balances are secured. The institute therefore has a related party relationshipwith its sole shareholder.

25.1 Transactions with related parties

The following transactions were carried out by the Institute with related parties:

Grant funding received

Natal Sharks Board

25.2 Amounts due to related parties

KZN Natal Sharks Board

26 Correction of Error

The comparative amount(s) relating to the Statement of Financial Performance have

been restated as follows:

Depreciation: Computer equipment

Depreciation: Office equipment

Depreciation: Furniture and Fittings

Amortisation: Computer software

Communication: Telephones

Interest and penalties

Net effect on surplus/(deficit) for the year

The comparative amount(s) relating to the Statement of Financial Position have been

restated as follows:

Accumulated depreciation


Intangible assets

Deposits

Accruals

Accumulated Funds

Net effect on Statement of Financial Position

2016R’000

2015R’000

49,577

(1)

49,576

0

0

0

0

0

0

0

0

0

69

0

0

0

0

(69)

0

38,478

(160)

38,318

(160)

(160)

14

1

12

5

2

0

34

0

105

(2)

7

(1)

1

110



The comparative amount(s) relating to the Statement

of changes in Net Assets has/have been restated as follows:

Accumulated Surplus/(Deficit)


Intangible Assets

Deposits

Net Effect on Statement of changes in Net Assets

27 Commitments

Mthabane Plant Hire

Intandoyethusonke Professional Property Maintenance

Services

Red Alert Security

Elangeni College

28 Operating Lease Commitments

Lessee

At the reporting date the entity had the following outstanding

commitments under non-cancellable operating leases, which

fall due as follows:

28.1 Office rentals - Embassy Building

28.1.1 Office rentals - Embassy Building

Amounts payable under operating leases

Within one year

Within two to five years

Total future minimum lease payments

Less: Amount due for settlement within 12 months (current

portion)

2016R’000

2015R’000

0

0

0

0

0

8

98

743

988

1,837

2016

Future finance

charges

0

0

0

0

0

(238)

105

(2)

7

(128)

0

0

0

0

0

Present value of

future minimum

operating lease

payments

471

0

471

0

471

Future

minimum

operating lease

payments

471

0

471

0

471



28.1.2 Office rentals - Embassy Building


Within one year




portion)

28.2 Office rentals - Office Equipment

28.2.1 Office equipment


Within one year




portion)

28.2.2 Office equipment


Within one year




portion)

2015

Future finance

charges

0

0

0

0

0

2016

Future finance

charges

0

0

0

0

0

2015

Future finance

charges

0

0

0

0

0

Present value of

future minimum

operating lease

payments

627

471

1,098

627

471

Present value of

future minimum

operating lease

payments

713

1,461

2,174

713

1,461

Present value of

future minimum

operating lease

payments

548

1,265

1,813

548

1,265

Future minimum

operating lease

payments

627

471

1,098

627

471

Future minimum

operating lease

payments

713

1,461

2,174

713

1,461

Future minimum

operating lease

payments

548

1,265

1,813

548

1,265



33.1

33.2

33.3

33.4

33.5

33.6

33.7

33.8

33.9

33.10

33.11

33.12

33.13

33.14

33.15

33.16

LINE ITEMS

Interest earned - external investments

Government grants and subsidies

Public contributions and donations

Other income

Roll over

Employee related costs

Directors' emoluments

Depreciation & amortization expenses

Auditors' remuneration - external

Administration expenses

Other operating expenses

Programme expenses

Office Equipment

Computer Equipment

Computer software

Vat refund

COMMENT

Better utilization of investment accounts thereby increasing

interest earned

Increased appropriation due to STEM fund and security

cost requests by MKI

Sale of tables at MKI fundraising dinner

Recoveries and sale of database forms

Approved funding utilized for prior year commitments

Unfilled positions resulting in a reduced actual cost

Implementation of Treasury remuneration circular

Line item not budgeted for as not required

Within the norm

Increase in security expenses during current financial year

Within the norm

Difference resulting from accrued expenses in prior year

Within the norm

Purchase of new server and computers

Purchase of new accounting programme and licenses’

Within the norm



Executive directors

Mr S B Mpungose (CEO)

Mr V Cele (Acting CEO)

Ms T P Ellenson (CFO)

Non-Executive directors

Prof M S Maharaj

Dr I Z Machi

Mr S G Ngcobo (Chairman)

Mr M Zakwe*

Dr E V Nzama

Ms N P Myeni

Mr B D Mkhwanazi

Ms S B Sangweni

Mr B H Gutshwa

Details of directors emoluments

Salaries

1,833

972

0

861

1,692

267

185

346

40

227

289

147

190

0

Bonuses

154

81

0

73

0

0

0

0

0

0

0

0

0

0

Other

539

358

0

181

44

0

7

0

1

0

15

0

20

1

Total

2,526

1,411

0

1,115

1,736

267

192

346

41

227

304

147

210

1

1,834

574

749

511

2,061

270

187

509

54

235

401

214

191

0

2016 2015

R’000 R’000

Details of directors' service contracts:

No directors have service contracts with notice periods in excess of one year and with provisions for pre-determined compensationon termination of the contracts exceeding one year's salary and benefits in kind.

MOSES KOTANE INSTITUTE NPC APPENDIX AFOR THE YEAR ENDED 31 MARCH 2016


Additions

R’000

0

0

615

0

226

4

385

0

0

0

615

CarryingBalance

R’000

3,725

3,725

1,294

37

789

47

421

0

0

0

5,019

Land and Buildings

Land and buildings

Other Assets

Motor Vehicles


Office Equipment

Computer Equipment

Finance lease assets

Office equipment

Other assets

ClosingBalance

R’000

(625)

(625)

(1,037)

(150)

(339)

(68)

(480)

0

0

0

(1,661)

Disposals

R’000

0

0

6,626

0

189

23

6,414

0

0

0

6,626

OpeningBalance

R’000

(517)

(517)

(7,396)

(112)

(411)

(71)

(6,802)

0

0

0

(7,913)

ClosingBalance

R’000

4,350

4,350

2,330

187

1,127

115

901

0

0

0

6,680

Disposals

R’000

0

0

(6,823)

0

(369)

(38)

(6,416)

0

0

0

(6,823)

OpeningBalance

R’000

4,350

4,350

8,538

187

1,270

149

6,932

0

0

0

12,888

Analysis of Property, Plant & equipment

2016

R

Cost/Revaluation Accumulated Depreciation

Depreciation

R’000

(108)

(108)

(267)

(38)

(116)

(20)

(92)

0

0

0

(374)

MOSES KOTANE INSTITUTE NPC APPENDIX BFOR THE YEAR ENDED 31 MARCH 2016


CarryingBalance

R’000

3,833

3,833

1,109

75

854

76

104

0

0

0

4,942

Land and Buildings

Land and buildings

Other Assets

Motor Vehicles


Office Equipment

Computer Equipment

Finance lease assets

Office equipment

Other assets

ClosingBalance

R’000

-517

-517

-7,429

-112

-416

-73

-6,828

0

0

0

-7,946

Disposals

R’000

0

0

0

0

0

0

0

0

0

0

0

OpeningBalance

R’000

-399

-399

-7,216

-75

-366

-55

-6,720

0

0

0

-7,615

ClosingBalance

R’000

4,350

4,350

8,538

187

1,270

149

6,932

0

0

0

12,888

Disposals

R’000

0

0

0

0

0

0

0

0

0

0

0

OpeningBalance

R’000

4,350

4,350

7,970

187

789

93

6,901

0

0

0

12,320

Depreciation

R’000

-118

-118

-213

-37

-50

-18

-108

0

0

0

-331

Additions

R’000

0

0

568

0

481

56

31

0

0

0

568

Analysis of Property, Plant & equipment

2015

R

Cost/Revaluation Accumulated Depreciation

MOSES KOTANE INSTITUTE NPC APPENDIX BFOR THE YEAR ENDED 31 MARCH 2016


NOTES

Moses Kotane HouseLakeside Unit 14Derby DownsUniversity Road, WestvilleDurban 4001Tel: 031 266 1777/92/98Fax: 031 266 1780www.moseskotaneinstitute.com

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ANNUALREPORT2015/16

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