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ANNUAL R E P O R T 2 0 1 6 / 1 7
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expandingour vision of economy growth
The tree, a symbol of life, sustainability, growth and positivity represents the
economy of Gauteng accelerating upward towards the African Sun.
The tree’s growth is guided by the strength of its developing roots, represented by the
five regions of Gauteng.
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ANNUAL REPORT 2016/17
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Gauteng - accelerating growth and development
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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ANNUAL REPORT 2016/17
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TABLE OF CONTENTS
PART A: GENERAL INFORMATION 06
PUBLIC ENTITY’S GENERAL INFORMATION 07
LIST OF ABBREVIATIONS/ACRONYMS 08
MEC’S FOREWORD 10
CHAIRMAN’S STATEMENT 12
CEO’S OVERVIEW 14
STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT
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STRATEGIC OVERVIEW 25
VISION
MISSION
VALUES
LEGISLATIVE AND OTHER MANDATES 26
NATIONAL AND PROVINCIAL POLICY MANDATES 26
ORGANISATIONAL STRUCTURE 27
PART B: PERFORMANCE INFORMATION 28
PREDETERMINED OBJECTIVES 31
SITUATIONAL ANALYSIS
ORGANISATIONAL ENVIRONMENT 34STRATEGIC OUTCOME ORIENTED GOALS 35
PROGRAMME 1: GGDA HOLDINGS 36PROGRAMME 2: AUTOMOTIVE INDUSTRY DEVELOPMENT CENTRE (AIDC) 56PROGRAMME 3: THE INNOVATION HUB (TIH) 68PROGRAMME 4: GAUTENG INDUSTRIAL DEVELOPMENT ZONE (GIDZ) 84PROGRAMME 5: CONSTITUTION HILL (CONHILL) 94
PROGRAMME 6: GREATER NEWTOWN DEVELOPMENT COMPANY (GNDC) 102PART C: GOVERNANCE 106
GOVERNANCE REPORT 107
PART D: HUMAN RESOURCE MANAGEMENT 120
HR REPORT 121
PART E: FINANCIAL INFORMATION 128
REPORT OF THE Auditor-General 136
ANNUAL FINANCIAL STATEMENTS 149
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SUBMISSION OF THE GAUTENG GROWTH AND DEVELOPMENT AGENCY ANNUAL REPORT TO THE EXECUTIVE AUTHORITY
THE ACCOUNTING AUTHORITY OF THE GAUTENG GROWTH AND DEVELOPMENT AGENCY
(GGDA) HEREBY PRESENTS IN TERMS OF SECTION 65 OF THE PUBLIC FINANCE MANAGEMENT
ACT, 1999, THE GGDA ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2017 TO THE
EXECUTIVE AUTHORITY.
SIGNED ON__________________ON BEHALF OF THE GGDA BOARD.
MR MOGOPODI MOKOENA
GROUP CHAIRMAN OF THE BOARD
GAUTENG GROWTH AND DEVELOPMENT AGENCY
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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PART A: GENERAL INFORMATION
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ANNUAL REPORT 2016/17
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ANNUAL REPORT 2016/17
PUBLIC ENTITY’S GENERAL INFORMATION
REGISTERED NAME: Gauteng Growth and Development Agency SOC LTDREGISTRATION NUMBER: 2003/021743/30PHYSICAL ADDRESS: 124 Main Street Johannesburg 2001POSTAL ADDRESS: PO BOX 10420 Marshalltown 2107TELEPHONE NUMBER/S: +27 11 085 2321EMAIL ADDRESS: [email protected] WEBSITE ADDRESS: www.ggda.co.zaEXTERNAL AUDITORS: Auditor-General of South Africa BANKERS: First National Bank GROUP COMPANY SECRETARY: MJ Mulaudzi
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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LIST OF ABBREVIATIONS/ACRONYMS
AGSA Auditor-General of South Africa
AIDC Automotive Industry Development Centre
APP Annual Performance Plan
ASP Automotive Supplier Park
BBBEE Broad-Based Black Economic Empowerment
BID Business Improvement District
BPO Business Process Outsourcing
CEO Chief Executive Officer
CIC Climate Innovation Centre
CFO Chief Financial Officer
CoJ City of Johannesburg
CoT City of Tshwane
ConHill Constitution Hill
EHWP Employment Health and Wellness Programme
DBSA Development Bank of Southern Africa
DoH Department of Health
DoL Department of Labour
DST Department of Science and Technology
EIA Environmental Impact Assessment
EMC Ekurhuleni Metropolitan Council
EMS Emergency Medical Services
EPMO Enterprise Project Management Office
FDI Foreign Direct Investment
FY Financial Year
GALC Gauteng Automotive Learning Centre
GBCF Gauteng Business Consultative Forum
GDED Gauteng Department of Economic Development
GDP Gross Domestic Product
GGDA Gauteng Growth and Development Agency
GIC Gauteng Investment Centre
GIDZ Gauteng Industrial Development Zone
GIFA Gauteng Infrastructure Finance Agency
GNDC Greater Newtown Development Company
GPG Gauteng Provincial Government
IA Internal Audit
ICAS Independent Counselling and Advisory Services
ICN Incubation Centre Nissan
IDC Industrial Development Corporation
JDA Johannesburg Development Agency
JMP Jewellery Manufacturing Precinct
MEC Member of the Executive Council
MMA Maxum Media Accelerator
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LIST OF ABBREVIATIONS/ACRONYMS
MTEF Medium Term Expenditure Framework
NEDP National Exporters Development Plan
NEF National Empowerment Fund
NSA Nissan South Africa
OEM Original Equipment Manufacturer
OHSA Occupational Health and Safety Act
OSS National One Stop Shop
PIC Public Investment Corporation
PERO Provincial Economic Review and Outlook
PFMA Public Finance Management Act
PGM Platinum Group Metals
PPP Public Private Partnership
PRT Professional Resource Team
PWD People with Disability
R&D Research and Development
RIS Regional Innovation System
RPIW Rapid Process Improvement Workshop
SABPP South African Board for People Practices
SACEEC South African Capital Equipment Export Council
SADPMR South African Diamonds & Precious Metals Regulator
SARB South African Reserve Bank
SARS South African Revenue Services
SCM Supply Chain Management
SCOPA Standing Committee on Public Accounts
SDT State Diamond Trader
SEZ Special Economic Zone
STIP Science, Technology and Innovation Park
SMME Small Medium and Micro Enterprise
the dti Department of Trade and Industry
TER Township Economic Revitalisation
TIA Technology Innovation Agency
TIH The Innovation Hub
TIHMC The Innovation Hub Management Company
TIRE Trade, Investment and Regulatory Enablement
TMR Transformation, Modernisation and Industrialisation
TR Treasury Relations
UNCTAD United Nations Conference on Trade and Development
WEH Winterveldt Enterprise Hub
WIR World Investment Report
YTD Year To Date
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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MEC’sFOREWORD1.
“Gauteng remains an economic and dynamic leader on the African continent, showcasing capabilities in innovation, transformation and sustainable investment.”
Throughout the year under review the Gauteng Growth and Development Agency has continued to uphold its mandate in prioritising and enhancing trade and investment. This focus has seen Gauteng benefit in terms of reputation, growth and strategic value, continuing in its move to becoming a vital part of the South African economy and the African continent as a whole.
Gauteng remains an economic and dynamic leader on the African continent, showcasing capabilities in innovation, transformation and sustainable investment. The projects that the GGDA has undertaken over the past year, and those that have continued their successful run throughout the year, have excelled in achievement and scope and the 2017 Gauteng Growth and Development Agency (GGDA) Integrated Annual Report showcases these initiatives perfectly.
We continued our work with strategic partners to reinforce the ethics of partnership, responsibility and growth, and to strengthen the focus on Africa’s
reindustrialisation. Our strategic programmes are designed to manifest this goal through revitalising township economies, supporting the eleven identified sectors, building new knowledge-based industries, ensuring the efficient use of resources and supporting the provision of strategic economic infrastructure.
Part of our investment development saw us handle a total of 173 investment queries, and 2 732 businesses were assisted to access regulatory departments with 13 international delegations hosted by African trade agencies. These included Germany, Gujarat, Delhi, Portugal, India, Nevada, Washingon, Enterprise Florida, Italian Chamber, Thai Trade and Texas. These steps have been further enhanced by our focus on trade and export development that saw us provide training to 247 companies, closely collaborate with agencies such as the Department of Trade and Industry, and facilitate a cumulative total value of R325 million in trade deals
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It is the third year of operation for the successful Gauteng Investment Centre which is located in the economic heart of Africa – Sandton. The agency provides a one-stop-shop with an impressive service offering and connections with relevant investors and importers. The Gauteng Investment Centre continues to remain focused on aligning itself with strategic partners that deliver results and relationships of key value to the area. These include the Department of Trade and Industry, the Department of Home Affairs and South African Revenue Services, among others.
The GGDA is set to continue its work in promoting Gauteng, driving its economic ability and stability, and delivering on its mandate and 2018 will showcase the results of this work as effectively as 2017.
I wish to thank the Board of the GGDA for their stewardship over the Agency and for steering it towards another clean Audit outcome.
Lebogang Maile – Member of the Executive CouncilEconomic Development, Environment, Agriculture and Rural Development
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GROUP CHAIRMAN’sSTATEMENT2.
“The Gauteng Growth and Development Agency has a clear mandate to support the Gauteng Department of Economic Development through leadership, facilitation and the management of sustainable job creation.”
As we table the 2017 Gauteng Growth and Development Agency (GGDA) Integrated Annual Report to the Member of Executive Council (MEC), the Board of Directors remains committed to providing stewardship to the GGDA group of companies. This annual report for the year under review provides stakeholders with a clear and accurate account of the work done, the issues faced and overcome, and the potential for the future. It has been a significant year with notable successes and insightful challenges. Where goals have not been met, lessons have been learned and relevant solutions implemented.
The Gauteng Growth and Development Agency has a clear mandate to support the Gauteng Department of Economic Development through leadership, facilitation and the management of sustainable job creation. In addition, we are focused on inclusive economic growth and development in the Gauteng City Region, entrusted with investment facilitation and promotion. To this end, we have focused extensively on improving Gauteng Province’s ability to attract and retain investments, both through Foreign Direct Investment and Domestic Direct Investment.
The 2017 Gauteng Growth and Development Agency (GGDA) Annual report shows how our commitment to these goals is paying dividends. Our performance continues to show year-on-year improvement as we manage our spend more effectively, tying it in with actual performance and deliverables. We spent 85% of our budget which saw us achieve 87% of performance goals. This was significantly influenced by our infrastructure projects and how they are impacting positively on the economy. The Gauteng Industrial Development Zone (Gauteng IDZ), the Automotive Industry Development Centre (AIDC), The Innovation Hub (TIH) and Constitution Hill (ConHill) are the four primary infrastructure projects that sit under the GGDA umbrella, and each one has delivered a measurable return on investment. It is note worthy to state that the Group together with all its Subsidiaries received a clean Audit from the Auditor-General.
It is note worthy to state that the Group together with all its Subsidiaries received a clean Audit outcome from the Auditor-General.
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I would like to extend my appreciation to the MEC, Mr Lebogang Maile, the Board of Directors and the Group CEO, Mr Saki Zamxaka, for their hard work, strategic leadership and exceptional guidance over the past year. In addition, I would like to thank the GGDA employees for their continued belief in the work we do and the goals we have set out to achieve. The commitment of the GGDA staff, the oversight of the Boards of the GGDA and it Subsidiaries and the focus of the Group CEO have all led us to a strong position and future growth in the region.
Mr Mogopodi Mokoena – Group Chairman of the BoardGauteng Growth and Development Agency
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GROUP CEO’sOVERVIEW
“For the year under review, we have managed to maintain success and improve our performance in a number of key performance areas.”
I am pleased to submit the Annual report to the Board of Directors and the MEC as prescribed by the Public Finance Management Act.
The Gauteng Growth and Development Agency continues on its mission to become the premier catalyst of innovation, sustainable growth and socio-economic development within the Gauteng and the southern African region. To this end, we have upheld our mission and mandate in creating an enabling environments for growth through targeted investment facilitation, strategic infrastructure development and social transformation. We continue to position Gauteng as a world-leading global city, leading the way in innovation, transformation and sustainable investment through our targeted projects and strategic planning.
GGDA targeted to attract 12 investment projects for the year and managed to successfully facilitate 26 investments, 20 of which were foreign direct investments (FDI) and six were domestic investments. We managed to facilitate foreign direct investments to the value of R2 billion, and domestic investments to the value of R1 billion. A total of 173 investment enquiries were handled with 24% achieving the status of considered prospective investments with the potential of being converted into a project further down the line.
The Gauteng IDZ, have introduced a new tenant with a focus on food processing and food packaging. This tenant is not only adding value to the infrastructure, but has significant downstream opportunities in employment, local food produce growth and development. This investment forms part of our focus on programmes that radically reindustrialise Gauteng’s economy and will increase the value of exports from the province.
To further our goals in revitalising township economies, we have placed an emphasis on investment into township industrial hubs. The influence that they can have on the Industrial Hubs will go a long way towards redefining and correcting historical, spacial and economic imbalances.
The AIDC saw a 100% achievement on the total KPIs for the year. TIH achieved 88% of its KPIs for the year, followed by ConHill at 80% while Holdings achieved an impressive 92%. Some of the most notable achievements across the subsidiaries include:• The AIDC worked with Nissan South Africa to
develop an Incubation Centre that was completed in October 2016
• The Innovation Hub’s Maxum Business Incubator exceeded its annual target by 10 companies
• The eKasiLabs flagship programme in the townships exceeded its expectations significantly – 100 entrepreneurs were expected, but popularity saw 245 companies provided with assistance and 153 recruited into the programme.
ConHill was formally declared a National Heritage Site during March 2017 and has held exhibitions, undertook educational programmes and public programmes throughout the year to achieve an impressive footfall of 185 404.
We have made the economic development mandate into a practical and achievable goal. In this province, we have focused on services and manufacturing and examined how we can improve these to deliver tangible results. To this end, we have partnered with experts and organisations that have the expertise, position and insights required to further our goals and growth. The impact of this commitment can be seen in our results and achievements over the past year.
3.
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Some partnerships have yielded excellent results. These include a partnership with the South African Capital Equipment Export Council (SACEEC) on revitalising the Capital equipment sector, Harambee on the ICT and BPS Sectors as well as with Academia like GIBS on the Gauteng Business Consultative Forum (GBCF), and the GCRO on the cost of doing business research work. In addition, GGDA is working with both local and international partners to support skills development and vocational training. The first of our vocational training centres is set for Soweto and will be using the Nordic system which focuses on both practical and theoretical training. The goal is for graduates to emerge from training with exceptional, hands-on skills they can use in that role immediately.
During the past year, we have focused on increasing funding into infrastructure and projects that drive business in the sector, and at attracting and enhancing the interest of international markets. Our economic strategy is to look outward, creating new opportunities for South African companies and creating capability through export workshops. We work with the dti and other provinces to ensure that businesses receive the assistance and support they need, and that the provinces work together to benefit the whole country. We have enhanced the capacity and capability of the GIC to provide entrepreneurs and businesses with a one stop shop to achieve their goals - assuring of an effective and efficient solution with the right tools and support.
GGDA has also led international missions to numerous markets to increase Gauteng Trade with Africa. The goal is to create a platform on which companies from Gauteng can use to access regional markets through direct contacts with potential partners, and to identify opportunities that would benefit South African businesses. We undertook missions to Kenya, Rwanda, Ghana and Namibia and each mission delivered measurable results and saw us develop key relationships across the continent.
All companies within the GGDA Group achieved clean audits thanks to the commitment and dedication of the GGDA staff, the oversight of the Board of Directors and all those who play a role in the success of GGDA.
I would like to thank the GGDA staff for continuing to believe in the work we are doing, and in excelling in what they do, every day. I would also like to extend my appreciation to the Board of Directors and the Chairman for your guidance and strategic leadership, and to MEC, for keeping us on track in delivering on the mandate of the Gauteng provincial government.
Mr Saki Zamxaka – Group CEOGauteng Growth and Development Agency
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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MEMBERS OFBOARD
GAUTENG GROWTH AND DEVELOPMENT AGENCY
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Mr M MokoenaGroup Chairman
Mr Z MaleleDeputy Chairman
Ms D DondurNon-Executive Director
Mr N BaltonNon-Executive Director
Mr P MafojaneNon-Executive Director
Ms Q GungubeleNon-Executive Director
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Mr T SetiloaneNon-Executive Director
Dr N MsomiNon-Executive Director
Dr P JourdanNon-Executive Director
Mr S ZamxakaGroup Chief Executive Officer
Mr S NicolaouNon-Executive Director
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BOARD MEMBERSPROFILE
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MR M MOKOENA GROUP CHAIRMAN
Date Appointed: 1 June 2012
Qualifications: B Com Hons (UNISA)
Area of Expertise:Public management; Financial management and auditing; Infrastructure and urban development; and Trade and Investment Promotion
Board Directorships (Other):• Gauteng IDZ Development Company• Nedwater• Clinix Lesedi Private Hospital• Nareli Investment Holdings• INCA Portfolio Managers• INCA Capacity Building Fund• Dipogomo Investments• Mokwena and Mokoena
Other Committees or Task Teams: Remuneration Committee and Trade and Investment Committee
MR Z MALELEDEPUTY CHAIRMAN
Date Appointed: 25 September 2012
Qualifications: B.Sc(UoL), BAP, MAP(WBS)
Area of Expertise:ICT, Economic development, Marketing, Financial management, Sales management, HR, Operations management, Strategic Management, Risk Management, Governance and Project management
Board Directorships (Other):• Sec-Itech • Meadow Star Investments 28• Stanford Estates • State Information Technology Agency
Other Committees or Task Teams: GGDA Group Audit and Risk Committee
MS D DONDUR NON-EXECUTIVE DIRECTOR
Date Appointed: 14 March 2013
Qualifications: B Acc, B Compt Honours, MBA, CA (SA), WITS and London Business School, International Executive Development Program, University of Nevada, Reno Executive Development Programme, Post Graduate Certificate in Labour Relations, Fellow member at the IoDSA, Member of the Institute of Internal Auditors South Africa and Member of the SA Institute of Chartered Accountants
Area of Expertise:Finance, Business Administration, AuditingAccounting, IT Governance, Enterprise Risk Management, Corporate Governance and Labour Relations and HR Board Directorships (Other):• SA Civil Aviation Authority• Joburg Market• Gautrain Management Agency• South African National Blood Service• Basil Read Holdings• PPS
Other Committees or Task Teams:GGDA Group Audit and Risk Committee, Social and Ethics Committee
GAUTENG GROWTH AND DEVELOPMENT AGENCY
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MR P MAFOJANE NON-EXECUTIVE DIRECTOR
Date Appointed: 1 October 2015
Qualifications: B. AdminB.Econ Honours, Diploma Program in International and Education
Area of Expertise:Developmental EconomicsProject Management Board Directorships (Other):• Constitution Hill Development Company
Other Committees or Task Teams:Remuneration Committee
MR S NICOLAOUNON-EXECUTIVE DIRECTOR
Date Appointed: 1 June 2012
Qualifications: B.Pharm (WITS) FPS(SA)
Area of Expertise:Trade, Manufacturing and Pharmaceuticals
Board Directorships (Other):• Brand SA• Proudly SA• Aspen Polska• Aspen France• BRICS Business Council• Business Unity South Africa• Public Health Enhancement Fund• PHARMISA• Sifiso Nxasana Paediatrics Fund for Children
Other Committees or Task Teams:Trade and Investment Committee
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
MR N BALTON NON-EXECUTIVE DIRECTOR
Date Appointed: 01 June 2012
Qualifications: Bachelor of Arts in Education (B.Ed), Master of Science (M.Sc.): Public Management and Finance
Area of Expertise:Education, Public Management and Finance Board Directorships (Other):• Ahmed Kathrada
Foundation• Greater Newtown
Development Company• Constitution Hill
Development Company
Other Committees or Task Teams:Group Audit and Risk Committee, Social and Ethics Committee
MS Q GUNGUBELE NON-EXECUTIVE DIRECTOR
Date Appointed: 1 February 2015
Qualifications: BIuris. LLM in Labour Law
Area of Expertise:Labour Law and Corporate Governance
Board Directorships (Other):• Kumaka Board
Other Committees or Task Teams:Remuneration Committee, Social and Ethics Committee
DR P JOURDAN NON-EXECUTIVE DIRECTOR
Date Appointed: 01 June 2012
Qualifications: B.Sc.; B.A; M.Sc.(Eng) x2; Ph.D. (Leeds University)
Area of Expertise:Resource-based and spatial development Board Directorships (Other):• Coega Development
Corporation • Gauteng IDZ Development
Company
Other Committees or Task Teams:Social and Ethics Committee
BOARD MEMBERSPROFILE (continued)
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DR N MSOMINON-EXECUTIVE DIRECTOR
Date Appointed: 1 October 2015
Qualifications: PhD, International Executive Development and Diploma in Finance
Area of Expertise:Innovation, Corporate Finance and Entrepreneurship
Board Directorships (Other):• Board of Governors-ICGEB• The Innovation Hub
MR T SETILOANENON-EXECUTIVE DIRECTOR
Date Appointed: 1 October 2015
Qualifications: Dip. Mash. Mech and BSc Mechanical Engineering
Area of Expertise:Engineering and Marketing Board Directorships (Other):• African Holding Renaissance
Holdings Limited• Oppenheimer Memorial
Trust• Heating Ventilation and Air-
Conditioning (Pty)Ltd• Oro Group (Pty) Ltd• University of Cape Town• Supplier Park Development
Company
MR S ZAMXAKA EXECUTIVE DIRECTOR
Date Appointed: 1 March 2016
Qualifications: B. Admin, B.Econ Honours, Diploma Program in International Education
Area of Expertise:Developmental Economics, Project Management Board Directorships (Other):• Greater Newtown Development Company• Constitution Hill
Development Company• GIDZ Development
Company• The Innovation Hub• Supplier Park Development Company
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EXECUTIVEMANAGEMENT
FROM LEFT TO RIGHTMr Saki Zamxaka (Group Chief Executive Officer), Ms Nondumiso Madlala CA (SA) (Group Chief Financial Officer), Mr Jameel Chand (Chief Operations Officer), Mr John Mpfariseni Mulaudzi (Group Executive: Legal Advisory and Company Secretary), Ms Naledi Ndlovu (Group Executive: Marketing and Communication) Mr Mothibedi Matshele (Acting Group Executive: Enterprise Project Management Office).
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FROM LEFT TO RIGHTMr Sipho Mhlongo (Group Executive: Business Intelligence and Planning), Ms Priscila Mvana (Manager: Risk Management) Mr Stewart Molalabangwe (Group Executive: Human Capital), Ms Zanele Fakude (Head: Office of the CEO),Mr Ntsastsi Rapoo (Head: Internal Audit), Ms Maidei Matika (Acting Executive: Strategic Partnerships) andMr Itumeleng Mogorosi (Group Executive: Monitoring, Evaluation and Organisation Performance).
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STATEMENT OFRESPONSIBILITY
STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY OF THE ANNUAL REPORT
To the best of my knowledge and belief, I confirm the following:
All information and amounts disclosed in the annual report are consistent with the annual financial statements audited by the Auditor-General.
The annual report is complete, accurate and free from any omissions.
The annual report has been prepared in accordance with the guidelines on the annual report as issued by the National Treasury.
The Annual Financial Statements (Part E) have been prepared in accordance with the PFMA and accounting standards applicable to the public entity.
The accounting authority is responsible for the preparation of the annual financial statements and for the judgements made in this information.
The accounting authority is responsible for establishing, and implementing, a system of internal control to provide reasonable assurance as to the integrity and reliability of the performance information, the human resources information, and the annual financial statements.
The external auditors are engaged to express an independent opinion on the annual financial statements.
In our opinion, the annual report fairly reflects the operations, the performance information, the human resources information and the financial affairs of the public entity for the financial year ended 31 March 2017.
Yours faithfully
Group Chairperson of the BoardMR MOGOPODI MOKOENA
4.
Group Chief Executive OfficerMR SAKI ZAMXAKA
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VISION
To be the premier catalyst of innovative and sustainable growth and socio-economic development within the southern African region.
MISSION
To create an enabling environment for growth through targeted investment facilitation, strategic infrastructure development and social transformation, thus positioning Gauteng as a leading Global City Region.
VALUES
In working towards the achievement of the vision and mission, the GGDA subscribes to the following internal values which are in line with the “Batho Pele” principles:
STRATEGICOVERVIEW
We value each other’s opinion regardless of rank and we respect one another across culture, religion, gender and race.
We share information and knowledge and encourage a culture of learning and we provide an open, safe and responsive environment.
We encourage and facilitate personal and professional development in order to promote an efficient and successful organisation.
INTEGRITY
TRANSPARENCY
EMPOWERMENT
GGDA PEOPLE VALUES
GGDA PERFORMANCE
VALUES
We strive for creative and continuous improvement through an innovative attitude to achieve high performance.
We deliver on clearly defined objectives through a well co-ordinated effort in an effective and efficient manner.
We consistently perform with integrity and are accountable.
CREATIVE EXCELLENCE
GOAL DRIVEN
PROFESSIONALISM
5.
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NATIONAL AND PROVINCIAL LEGISLATIVE MANDATES
GGDA was created through an amendment to the Blue IQ Investment Holdings Act No. 1 of 2012. The amendment enabled the change of name from Blue IQ to Gauteng Growth and Development Agency (GGDA) and incorporated the mandate and objectives of the former Gauteng Economic Development Agency (GEDA).
Numerous other Acts, both National and Provincial, inform the work of the GGDA, including but not limited to:
NATIONAL LEGISLATION
• Public Finance Management Act, No.1 of 1999• Companies Act, No.7 of 2008, • Promotion of Access to Information Act, No. 2 of
2000• Intergovernmental Relations Framework Act,
No. 13 of 2005• Preferential Procurement Policy Framework Act,
No. 5 of 2000 (as amended)• Employment Equity Act, No. 55 of 1998• Basic Conditions of Employment Act, No. 75 of 1997
• Labour Relations Act, No. 66 of 1995• Occupational Health and Safety Act, No. 88 of
1995• Prevention and Combating of Corrupt Activities
Act, No. 12 of 2004• Skills Development Act, N.o 98 of 1998• World Heritage Convention Act, No. 49 of
1999• Business Act, No. 71 of 1991• National Environmental Management Act, No.
107 of 1998• Township Planning and Township Ordinance Act,
No. 15 of 1986• Development Facilitation Act, No. 67 of 1995• Broad-Based Black Economic Empowerment Act,
No. 53 of 2003• Promotion of Investment Act, No. 22 of 2015
PROVINCIAL LEGISLATION
• Amendments to the Blue IQ Investment Holdings Act, No.1 of 2012
• Gauteng Tourism Act, No.10 of 2001• Gauteng Unfair Business Practices Act, No. 7 of
1996
LEGISLATIVE AND OTHER MANDATES6.
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GOVERNANANCE STRUCTURE
AIDC Greater Newtown Board
AIDC Board Greater Newtown BoardConhill BoardGIDZ BoardTIH Board
GGDA Holdings
GIDZ ConhillTIH
ORGANISATIONAL STRUCTURE
Group Company Secretary
Risk and Internal Audit
GGDA Board of Directors
GGDA Group CEO
Chief OperationsOfficer
Executive:Trade and InvestmentRegulation
Executive:Enterprise Project
Management
Executive:Chief Financial
Officer
Executive:Legal Advisory
Executive:Strategic
Partnerships
Head:Risk
Management
GGDA Board
Gauteng Department of Economic Development
Office of the CEO
Executives:Human Capital
Executives:Operations
Executives:Macro BusinessIntelligence and
Planning
Executives:Strategic Promotions
and Marketing
Executives:M&E
performance
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PART B: PERFORMANCE INFORMATION
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Total KPI’s duefor reporting
No. of KPI’s achieved
No. of KPI’s not achieved
45
39
6
GROUP OVERALL PERFORMANCE % ACHIEVEMENT PER PROGRAMME
92%
100%
50%
80%
Hol
ding
s
AID
C
TIH
IDZ
Con
Hill
New
tow
n
88%
0%
GROUP JOB CREATION
Holdings ConstructionAIDCTIH
3 000
4 462
446
95 90
0
179
337
Year Target Year Actual
GROUP EXTERNAL TRAINING
Holdings IDZAIDCTIH
Year Target Year Actual
200 210
762
15 15
247
3 4633 591
87% GROUP ACHIEVEMENT
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Newtown
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PART B:PERFORMANCE INFORMATION
PREDETERMINED OBJECTIVES
The AGSA currently performs the necessary audit procedures on the performance information to provide reasonable assurance in the form of an audit conclusion. The audit conclusion on the performance against predetermined objectives is included in the report to management, with material findings being reported under the Predetermined Objectives heading in the Report on other legal and regulatory requirements section of the auditor’s report.
Refer to Page 136 of the Report of the Auditors Report, published in Part E: Financial Information.
SITUATIONAL ANALYSIS
GLOBAL OVERVIEW (AS AT 2016)
After a lacklustre outturn in 2016, economic activity is projected to improve in 2017 and 2018, especially in developing economies. However, there is a wide dispersion of possible outcomes around the projections given uncertainty surrounding the policy stance of the current U.S. administration and its global ramifications.
The outlook for advanced economies will improve in 2017–18 due to stronger activity in the second half of 2016, as well as a projected fiscal stimulus in the United States. Growth prospects have marginally worsened for emerging markets and developing economies where financial conditions have generally tightened. Near-term growth prospects were revised upwards for China due to expected policy stimulus, but were revised downwards for a number of other large economies, most notably India, Brazil, and Mexico.
Geopolitical risks and a range of other non-economic factors continue to weigh heavily on the outlook of various regions – civil wars and domestic conflict in
parts of the Middle East and Africa, the tragic plight of refugees and migrants in neighbouring countries and in Europe, and acts of terror. If these factors intensify, they will deepen the hardship in affected countries. Increased geopolitical tensions and terrorism could also take a large toll on global market sentiment and economic confidence. Brazil and Russia, on the other hand, are in recession currently and may not be viable destinations for exports.
REGIONAL OVERVIEW
In Africa, there is a contraction in both projected and current growth mainly because of the worsening demand for commodities. Despite this development, Gauteng, as a manufacturing province, should target to export value added products to the region. In addition, non-oil exporting countries such as Ethiopia, Kenya, Ivory Coast, Uganda, Mozambique and Zambia are experiencing modest growth and infrastructure development; hence these countries are viable targets for investment and export drives that target both services and consumables.
Domestically, jobs are being lost in the utilities and manufacturing sectors, both in Gauteng and nationally. Incentives should aim at revamping the water, electricity and road infrastructure by targeting renewable energy, water harvesting processes and energy efficiency products. This will eventually reverse job losses in other sectors such as transport and trade.
DOMESTIC OVERVIEW
In the 2016/17 - 2018/19 Medium Term Expenditure Framework (MTEF) period, slowing global and domestic economy prices have put pressure on the fiscal authority to reduce budget allocations. The most adversely affected department is the dti as its budget has been cut in nominal terms. The dti’s budget will decrease by an estimated 3.1% annually for the next three years from R10.3 billion in 2016 to R8.6 billion in 2018.
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PART B: PERFORMANCE INFORMATION (continued)
The macroeconomic outlook is mixed, with both the Rand and inflation registering positive news. The Rand strengthened to a 20-year high of R12.40 to the US dollar in March, and thereafter reversed the gains after the cabinet reshuffle and rates downgrade in April to trade at R13.36 to the US dollar. The unexpected inflation rate slowdown of 6.3% prompted the Reserve Bank to leave the repo rate unchanged at 7%. However, South Africa registered a - 3% GDP growth rate in January 2017 which implies that the country must work hard to wooinvestors, especially on the back of the rates downgrade that will make it hard for government and public enterprises to attract long-term investment funds for development.
TRADE OUTLOOK
For the first time in 15 years, global trade grew more slowly than the world economy. However, Chinese exports rose year-on-year for the first time in ten months in January 2017. South Korean shipments also increased for three months in a row. Data reveals strong export value chains in Japan, Singapore and Taiwan while healthy order books for Asia’s manufacturers bode well for global trade and the global economy. Data from the Statistics Bureau of China shows that production, led by the steel industry, jumped 6.3% in January and February of 2017. To this end, the demand for iron in China has led to a rebound of exports from Africa, Australia and Canada, among others.
STRONG RAND HURTING EXPORTS
The strengthening of the Rand through 2016 reduced export revenues and made imports more competitive. As a result, despite growing manufactured exports in dollar terms, Rand revenues from exports dropped. Overall, South Africa ended the year with a surplus on the balance of payments, after running trade deficits from the end of the commodity boom through
2012. The trade surplus picked up in the final quarter of the year. The appreciation of the Rand has meant that the trends diverged in dollar and constant Rand terms. Both imports and exports increased in dollars, although more slowly than at the start of the year. Rand imports dropped while exports flattened out. The increase in manufacturing exports was mostly due to higher revenues from metals, mainly because of increased prices. Ferro-alloys showed a significant recovery in sales after several years of stagnation. In terms of manufactured imports, autos and capital machinery accounted for almost all the decline. That, in turn, mainly reflected the overall slowdown in the economy.
GAUTENG TRADE OUTLOOK
Gauteng’s trade outlook has worsened more than South Africa’s trade outlook given that the province trades more with China, Africa and the EU than any other province. Import data shows that, like SA, the EU is a dominant supplier of goods to Gauteng. China, Africa, USA and then India respectively rank as the second, third, fourth and fifth important suppliers of goods to Gauteng.
Exports from Gauteng to the continent also largely resemble the national ones, but there is one striking difference - although since 2009, exports from the province to the continent have been on the exponential rise, they dipped between 2013 and 2014 of the same period. Exports to China were decreasing, which indicates the reliance of Africa on China for growth and emphasises its vulnerability. Nevertheless, Africa has emerged as the most important destination for Gauteng goods and, given that Gauteng mainly exports manufactured goods and food to Africa, the importance of the African market in supporting the economic development of Gauteng cannot be over emphasised.
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FDI OUTLOOK
The latest figures show that global FDI flows were expected to decline in both developed and developing economies during 2016, with UNCTAD forecasting that FDI flows were likely to contract by between 10% and 15%. However, FDI inflows to Africa were expected to return to a growth path in 2016, increasing from $55-billion to $60-billion. This increase became apparent in announced green-field projects in the first quarter of 2016, particularly in North Africa, but also in Mozambique, Ethiopia, Rwanda and the United Republic of Tanzania. FDIflows were also expected to increase in Kenya and Tanzania - both countries now allow 100% foreign ownership of companies listed on their stock exchanges. Privatisation of state-owned commodity assets in countries such as Algeria and Zambia could also provide a boost to inflows.
According to the latest World Investment Report (WIR16) FDI inflows to South Africa slumped to a ten-year low of only $1.8-billion in 2015, a 69% decline. The country’s FDI outflows also fell 30% last year to $5.3-billion, from $7.7-billion in 2014. There is a trend of falling FDI inflows to South Africa from 2014 to the current year.
South Africa is still the continent’s largest home grown investor, but China overtook it as the largest investor in Africa from a developing country. Developed economies, led by the UK, the US and France, remained the largest investors on the continent. According to SARB data, South African FDI flows into the rest of the world were 83.2 billion in 2014 and R68.3 billion in 2015. This demonstrates the entrepreneurial qualities inherent in South African business, but it is also an indication of a lack of confidence in the domestic economy. Since 2014, we have seen a trend of SA companies choosing to invest overseas rather than domestically.
GAUTENG INVESTMENT PERFORMANCE
The following countries are important sources of FDI inflow that target manufacturing and retail sectors: USA, UK, Germany, France, Japan and India. China’s significance as an investment source seems to have declined in the last three years. However, the real estate sector is a target for Chinese investments worldwide with most of their investments in real estate directed to the UK.
While currently Gauteng may not be able to compete at international level in the exports of finished manufactured products, it is recommended that it encourages exports of product components that are used in the assembling of finished products. This way it will benefit from the global product manufacturing value chain like countries in South East Asia, such asIndonesia, Malaysia, Thailand and Taiwan.
Due to the decline in the budget allocation to the dti, it has become imperative for the Gauteng government to consider devising incentive packages, and to partner with municipalities and metro to help reduce the cost of doing business in Gauteng.
EMERGING DEVELOPMENTS IMPACTING ON
THE OUTLOOK
The economy is stuck in a low-growth trap with low confidence levels among businesses and households holding back spending and investment. The downgrade from a second of the major international credit rating agencies will extend the period of low confidence and low growth for longer. This environment will be negative for employment prospects and economic growth.
Low growth will also result in a negative cycle relating to tax revenue: lower revenues will result in a cycle of ever-increasing taxes for households and corporates
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PART B: PERFORMANCE INFORMATION (continued)
in order to finance the expenditure plans of government, ending in further depressing economic growth. If the currency weakens, it will drive inflation through imports and make foreign-currency debt even more expensive for government.
Treasury has already revised the GDP growth forecast for the next two years downwards from 1.2% and 2.0% to 1.0% and 1.7% in 2017 and 2018 respectively, reflecting South Africa’s new realities. The possibility of sliding into a recession has increased and, shouldthis happen, it may be the case that the portfolio investment fund managers begin to sell off the local bonds and shares they hold.
ORGANISATIONAL ENVIRONMENT
The performance of the GGDA group is directly aligned to the DED’s Programme 2 Integrated Economic Development Services, Programme 3 Trade and Sector Development, and the governance element of Programme 4 Business Regulation and Governance. The GGDA Group will collaborate with, and assist, the DED’s Programme 5 which is responsible for Economic Planning.
In terms of this model, the GDED is responsible for strategy, policy and oversight, and the agency is responsible for the implementation of approved initiatives. This is done within a framework of control and governance that provides Gauteng with a mechanism with which to encourage the development of existing economic activity, as well as the creation of new opportunities in order to grow the base of sustainable employers and employment opportunities and the overall economy of Gauteng.
Therefore, GDDA’s strategic programmes seek to give practical manifestation to radically transforming, modernising and reindustrialising Gauteng’s economy. This will be realised through strategically shifting and enhancing the GGDA’s role and function, which entails:
• Initiator and Project Manager – This is for key projects focused on: o revitalising township economies;o supporting and growing identified sectors;o building new, smart knowledge-based
industries; ando supporting the provision of strategic
economic infrastructure.
• Facilitator and Implementer – For combined and aligned initiatives with national and local government.
• Funder – For identified strategic key projects and especially strategic economic infrastructure projects.
• Promoter – For domestic and foreign investment into the key projects and focus areas of the province.
• Analyst – For key economic and sectorial data (business intelligence), in order to best facilitate and implement the key projects designed to achieve the outcomes of the new strategic and socio-economic development directives of the current government.
STRATEGIC OUTCOME ORIENTED GOALS
The performance delivery environment of the GGDA for the 2016/17 financial year is significantly informed by the strategic positioning of its sole shareholder - the Gauteng Department of Economic Development - and its role within this positioning, which is to serve as Gauteng’s major institutional driving force of radically transforming, modernising and reindustrialising Gauteng’s economy.
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STRATEGIC OUTCOME ORIENTED GOALS
• Gauteng’s economy radically transformed.• Gauteng’s economy reindustrialised and modernised.• GGDA capacitated to deliver and implement efficiently and effectively.
PROGRAMME 1: GGDA HOLDINGS
The TIRE sub-programme works toward the following strategic objectives:• Facilitate investment that supports the modernisation and reindustrialisation of Gauteng’s economy.• Increased global trade activities from Gauteng.
The EPMO sub-programme works toward the following strategic objectives:• Revitalised and modernised township economies reflecting radical transformation and the reindustrialisation of the Gauteng economy.• Strategic economic infrastructure that supports and facilitates radical economic transformation and the reindustrialisation of Gauteng.
PROGRAMME 2: AUTOMOTIVE INDUSTRY DEVELOPMENT CENTRE – AIDC
Automotive Industry Development Centre – AIDC works toward the following key strategic objectives:• Revitalised and modernised township economies reflecting radical transformation and reindustrialisation of Gauteng’s economy.• Appropriately skilled human resources and businesses to radically transform and reindustrialise Gauteng’s economy.• Revitalised and modernised industries reflecting the reindustrialisation of Gauteng’s economy.
PROGRAMME 3: THE INNOVATION HUB
TIH works toward the following strategic objectives: • Radically transforming the Gauteng economy through a new smart, knowledge-based economy.• Green industries contributing to energy security to radically transform and reindustrialise Gauteng’s economy.• Appropriately skilled human resources and businesses to radically transform and reindustrialise Gauteng’s economy.• Facilitate and support innovations in building new smart, knowledge-based industries and the local economy.
PROGRAMME 4:GAUTENG INDUSTRIAL DEVELOPMENT ZONE – GIDZ
GIDZ works toward the following strategic objectives:• Stimulate employment-led growth and development through the facilitation of strategic economic infrastructure interventions.• Facilitate the development of the sector-specific skills required to meet the needs of the jewelery economic sector. economic sector.
PROGRAMME 5: CONSTITUTION HILL - CONHILL
ConHill works toward the following strategic objectives:• Foster inclusive development and social transformation through the Heritage, Education and Tourism programmes.• Strategic economic infrastructure that supports and facilitates radical economic transformation and the reindustrialisation of Gauteng’s economy.
PROGRAMME 6: GREATER NEWTOWN
GREATER NEWTOWN works toward the following strategic objectives:• Effective facilities and financial management over the Greater Newtown Development Company (GNDC).• Winding down of the GNDC.
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PROGRAMME 1: GGDA HOLDINGS
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DESCRIPTION OF PROGRAMME 1: GGDA HOLDINGS
Programme 1 contributes directly to Strategic Goal 3: GGDA capacitated to deliver and implement efficiently
and effectively; and supports delivery of Strategic Goal 1: Gauteng’s economy radically transformed; and
Strategic Goal 2: Gauteng’s economy reindustrialised.
ADMINISTRATION PROGRAMME
PURPOSE FUNCTIONS
Provide strategic and operational leadership,support and transversal business solutions.
• Accounting Authority in terms of Section 51 of the PFMA• The scope of authority includes:
o GGDA Holdingso AIDCo TIHo GIDZo CONHILLo NEWTOWN
• Strategic Management of the GGDA Group• Operational Management of the GGDA Group• Financial Management• Management Accounting• Supply Chain Management• Risk Management• Human Resource Management• Communication, Marketing and Destination Promotion• Auxiliary and Legal Services• Information and Communication Technology
BUSINESS INTELLIGENCE PLANNING
Provide Business Intelligence planning supportservices.
• Provide research-based information to support planning, decision making and optimal resource utilisation in respect of radical economic transformation and
reindustrialisation interventions• Strategic projects that contribute to spatial economic transformation• Integrated and holistic planning• Knowledge management
TIRE
Facilitate trade and investment towards radical transformation, modernisation and the reindustrialisation of Gauteng’s economy.
To drive economic growth and job creation through the value-added facilitation of targeted investment in strategic sectors and delivering trade linkages globally through:• Gauteng Investment Centre• Trade facilitation and export development• Investment attraction and facilitation and• Business Expansion, Retention and Aftercare
EPMO
Provide project management support for strategiceconomic infrastructure projects.
Provide transversal services in respect of the centralised and coordinated management of capital infrastructure projects, such as project management support functions along the project cycle to:• Establish the Gauteng ICT Park SEZ• Refurbish and upgrade Township Industrial Parks
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PROGRAMME 1: GGDA HOLDINGS
PROGRAMME 1: GGDA HOLDINGS
The purpose of the GGDA Holdings is to provide strategic and operational leadership, along with support and transversal business solutions.
The programme is structured into the following sub-programmes:1.1 Trade, Investment and Regulatory Enablement (TIRE)1.2 Business Intelligence and Planning1.3 Enterprise Project Management Office 1.4 Administration
TRADE, INVESTMENT AND REGULATORY ENABLEMENT (TIRE)
The objectives of the sub-programme are to:• Facilitate industry development programmes to grow key identified sectors• Facilitate investment that supports modernisation
and the reindustrialisation of Gauteng’s economy• Increased global trade activities from Gauteng
The sub-programme has the following functional areas: a) Investment attraction and facilitationb) Trade facilitation and export developmentc) Business Expansion, Retention and Aftercare
INVESTMENT ATTRACTION AND FACILITATION
GGDA had planned to facilitate 12 investments projects and managed to successfully facilitate 26investments. Twenty of these were FDIs and six were domestic investments.
FOREIGN DIRECT INVESTMENT (FDI)
During the period, GGDA achieved its R2 billion planned FDI target by successfully facilitating 20 foreign investments. Included in the R2 billion is an amount of R475 million, or 24%, which comprises FDI expansions.
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The following are the companies assisted to achieve the planned target:
NAME OF PROJECT
COUNTRY OF ORIGIN DESCRIPTION SECTOR LOCATION GGDA ROLE
Adeo South Africa (Pty) Ltd
France Establishmentof an onlineDIY and homeimprovementstore. Adeo has73,500employees in561 stores in13 countries.
Retail /DIY Ekurhuleni Identification ofsuitable land. Facilitatemeetings withSARS regardingcustoms issues.SABS regardinghomologationprocess. Meetings with the Dti regarding BBBEErequirements.
Fortune Steel
India Melting of scrap metals andbeneficiation ofthose metals into steel.
Manufacturing/Steel
Nigel / Ekurhuleni
Waste ManagementLicense. Supportwith VAT issuesand regulatoryand compliancematters.
Zendai Residential project
China Development of residential estate within Zendai.
Construction and Property development
Modderfontein/ Ekurhuleni
Facilitation with Permanent Residence and work visas.
Dezhou Jida Import and Export Co. Ltd.
China Manufactureres of agricultural equipment such as irrigation, planters and tractors.
Manufacturing/Agriculture
Kempton Park/ Ekurhuleni
Multiple entryfacilitation ofvisas.
Junotrax/Sinotruck
China The projectinvolved theassembly ofparts for trucksand busses.
Manufacturing/Automotive
Westrand Assist in sourcingfunding, (NEFand IDC)introductions tostakeholders,such as the Dtifor incentives,AIDC andGDARD for EIA,Meetings with theDti regardingBBBEErequirements.
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NAME OF PROJECT
COUNTRY OF ORIGIN DESCRIPTION SECTOR LOCATION GGDA ROLE
China Trade Centre
China The project involved the assembly of parts for trucks and busses.
Manufacturing /Automotive
Westrand Assist in sourcing funding, (NEFand IDC)introductions tostakeholders,such as the Dtifor incentives,AIDC and GDARD for EIA, SARS, and SABS.Support in theidentification ofsuitable premises.
SalenManufacturing (Pty) Ltd.
China Manufacturers of washing powder soap. Supply towholesalers in SA and Sub-Saharan Africa.
Manufacturing /Chemicals.
CrownMines /CoJ
Assisted withvisas and workpermits.
NationalSprings
Italy Manufacturers of springs and coils for trucks and busses.
Manufacturing / Automotive
Sedibeng/Midvaal
Assisted withpartnerships withthe AIDC, meetings with the Dti and the SA Embassy in Italy. SARS issues still pending.
QK Meats Ireland Meat processingplant as well ascold storage facilities. Producehamburger patties and pizzas. Supplyto SA and globally.
Agro processing City Deep/CoJ /Centurion/ CoT
Assisted withapproval processof building plansand the connection ofutilities with CoT.
PROGRAMME 1: GGDA HOLDINGS (continued)
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NAME OF PROJECT
COUNTRY OF ORIGIN DESCRIPTION SECTOR LOCATION GGDA ROLE
Linkquest India Establishmentof Telecommunications/ infrastructure in South Africa.
Telecommunica-tions/ICT
Centurion/ CoT
Assisted withletters of invitation andwork permits.
China TradeCentre
China Exhibition venue for companies and owners ofChinese businessoutlets.
Retail Langlaagte/ CoJ
Assisted withvisas and workpermits.
Atha Africa India Mining of coal. Mining /Minerals
CoJ Assisted withvisa andimmigration issues.
New Hope China Animal feed production for fish, chickens, cows. Supply to supermarketsand farms and export to Chinaand Africa.
Agro processing/metals
Alberton/Ekurhuleni
Assisted withvisas, permanentresidence permits and regulatorymatters.
Reef Lords China Property developmentfor clusters andhousing.
Construction/ PropertyDevelopment
Midrand/ CoJ
Assisted with theidentification ofland, visas andwork permits.
Ibert Austria Converting biowaste intogreen energy.
Energy CoJ Assisted withvisa relatedmatters.
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NAME OF PROJECT
COUNTRY OF ORIGIN DESCRIPTION SECTOR LOCATION GGDA ROLE
ActionGroup
India Mining of coaland other minerals.
Mining /Minerals
Centurion/ CoT
Assisted withaudits through DoL and permanentresidence permits.
FujiFilm Japan Manufacturingof x-ray film forhospitals.
Manufacturing/Health care
CoJ Assisted withimmigrationmatters.
Africa Steel& Tube
China Manufacturersof steel tubesand steelfabricatedreinforcedmaterials.
Manufacturing / Metals
Alrode/Ekurhuleni
Assisted withGDARD matters.
Adega Mozambique/Botswana
Restaurantchain. Foodfranchise whichis being purchased byforeign andlocal entities.
Food &Beverage
CoJ(H/O)
Assisted withregulatory andcomplianceissues.
GalataBakery
Turkey Turkish stylebakery andcoffee shop.
Food /Beverage
Braamfontein/CoJ
Fast tracking ofissuing letter with CoJ.
SA AsiaCable
China Manufacturingof high voltagecables. Suppliers to Eskom andother majorelectricalcompanies.
Manufacturing / Energy
Selby/ CoJ Critical skillsvisas.
PROGRAMME 1: GGDA HOLDINGS (continued)
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DOMESTIC DIRECT INVESTMENT (DDI)
Six domestic direct investments valued at R1 billion were successfully facilitated. This amount includes R36 million or 4% of investment expansions. The following are the companies assisted and the corresponding investment values realised:
NAME OF PROJECT
COUNTRY OF ORIGIN DESCRIPTION SECTOR LOCATION GGDA ROLE
Waterfall Park
RSA Mixed-use ingrastructure development
Construction /Development
Midrand/ CoJ
Rates and taxes issues.
Savanah City Development
RSA Developmentof a new residential and retail complex with supporting community services in the Midvaal area.
Construction /Development
Midvaal /Sedibeng
Water uselicense.Introduction tostakeholders.
Sky rink studio development
RSA This project involves the development of film and television studios and aims to be a provider ofinfrastructure to theentertainment and tourism industry.
Creative Industries
CBD/ CoJ Funding and Incentives
MonyetlaPhase 4bProgramme
RSA Training andplacing of BPO individuals.
BPO All Metros Support the Dti in holding theMonyetlaRoadshow in
Marce RSA Manufacturingand assembling offire fighting vehicles and the providersof technology for these vehicles.
Manufacturing/ Automotive
Centurion/CoT
Assisted withvisas andregulatorymatters.
Makhamisa RSA Production ofsauces and pickledvegetables. Supply to retail outlets.
Agroprocessing
Booysens/CoJ
Access to local markets.
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SECTOR COMPOSITION OF INVESTMENTS
Investments facilitated were in line with the sectoral composition of the provincial economy which is dominated by the tertiary sector. Investment into the manufacturing sector reflects the province’s ambitions of reindustrialisation and increasing manufacturing output in the province.
SECTOR AMOUNT R’M% SHARE OFTOTAL INVESTMENTS
Primary 64.8 2,1
Manufacturing 1.400 46.0
Tertiary 1.600 51.9
Manufacturing sector
Within the manufacturing sector, most investment was into steel products followed by the manufacturing of animal feed and food processing. The latter confirming the province’s competitive advantage in agro-processing.
SECTOR AMOUNT R’M% SHARE OF MANUFACTURING
% SHARE OF TOTAL INVESTMENTS
Manufacturing 388 46 0
Steel 447 32 15.0
Detergents 50 4 2.0
Animal Feed 250 18 8.0
Auto 36 3 1.0
Food and Beverage 236 17 8.0
Waste to energy 15 1 0
Fire hydrants 5 0 0
Film Manufacturing 200 15 7.0
Cable Manufacturing 150 11 5.0
Tertiary sector
SECTOR AMOUNT R’M% SHARE OF TERTIARY SECTOR
% SHARE OF TOTAL INVESTMENTS
Services 567 51.9 0
Telecommunications R46 3.0 2.0
Property Development 266 80.0 42.0
Retail R26 2.0 1.0
Film Studios 230 15.0 8.0
PROGRAMME 1: GGDA HOLDINGS (continued)
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Investment by source country
As outlined in the details of companies that invested in the province, 20 or 45% of the FDC’s claimed originates in China. This massive share of investment flow is followed by domestic investment hence the justification for the barriers detention and expansion time flow within the GGDA.
COUNTRY AMOUNT R’M % SHARE OFTOTAL INVESTMENTS
RSA 1 002 33.0
Botswana/Moz R11 0.4
China 1 349 45.0
EU 261 9.0
India 183 6.0
Japan 200 7.0
Total 3 000 100
INVESTMENT DESTINATION BY CORRIDOR
Consistent with the corridor share of the provincial economic activity and as articulated in the Provincial Treasury’s PERO, the central corridor received 55% of investments followed by EMC and the CoT. The district economies received only 9% of the R3 billion in facilitated pointing to the need for a concerted effort to create an enabling environment for these areas so they can become more attractive to investments.
CORRIDOR INVESTMENT R’M% SHARE OFTOTAL INVESTMENTS
GDPR
EMC 802 27.0 19.3
West rand 22 1.0 4.6
Mid Vaal (Sedibeng) 248 8.0 4.0
CoT 267.8 9.0 30.4
CoJ 1 652.7 55.0 41.7
Gauteng wide 28 1.0
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INVESTMENT DEVELOPMENT
A total number of 173 investment enquiries were received, of these 41, or 24%, were considered prospects with a high probability of being converted into projects in the pipeline.
In addition, 2 732 businesses were assisted to access regulatory departments and entities through the GIC, and 13 international delegations were jointly hosted with African trade agencies. These engagements included Germany, Gujarat, Delhi, Portugal, India, Nevada, Washington, Enterprise Florida, Italian Chamber, Thai Trade, Texas and the G20 young business.
TRADE FACILITATION AND EXPORT DEVELOPMENT
The unit is responsible for undertaking export development and promotion and does this by facilitating trade opportunities for Gauteng companies to ensure that value added products are exported. The activities that the unit undertakes includes assisting companies to access incentives and to ensure local companies participate in trade missions and national pavilions.
The exporter development training was provided to 247 companies against a planned target of 200. The target was achieved due to a closer collaboration with the dti and municipalities implementing the National Exporters Development Plan (NEDP).
A total of 80 trade deals were successfully facilitated against a planned target of 40 trade deals which realised a value amounting to R325 million against a planned target of R300 million.
PROGRAMME 1: GGDA HOLDINGS (continued)
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PROGRAMME 1: GGDA HOLDINGS (continued)
BUSINESS RETENTION, EXPANSION
AND AFTERCARE
The unit developed a visitation programme to ensure that the GGDA has a better understanding of challenges facing Gauteng businesses and developed an engagement programme with otherintermediaries who can assist the unit to reach out to more prospects.
These intermediaries included business chambers of commerce and industry in the different municipalities and foreign chambers. The portfolio of companies assisted is diversified and includes several manufacturing subsectors, as well as the services sector. Expansion investments successfully facilitated amounted to R511.5 million or 17% of the R3 billion investments facilitated. This comprised R36.5 million or 4% DDI and R475 million or 24% FDI respectively, as reported above.
GAUTENG INVESTMENT CENTRE (GIC)
The Gauteng Investment Centre (GIC) has entered into its third year of operation and the need for a one stop shop in the Gauteng Province is as strong today as it was at inception. The GIC is considered to be the province’s key differentiator - this is evident in the service offering to potential investors and exporters. The GIC is strategically positioned to provide investment and export facilitation through our partnerships with provincial government departments, national departments, state-owned agencies, and companies in the private sector.
KEY SERVICES
The GIC’s services services include:• Business retention• Export development• Environmental licenses• Taxation and business permits and Visa
applications• Economic data research• Provision of financial and non-financial support
of Gauteng SMME’s• Support services relating to investments in
Municipalities
STRATEGIC PARTNERS
The GIC continues to align itself with strategic partnerships that bring synergy in the promotion of the province as a preferred investment destination. These partnerships have elevated the profile of the agency and we are now able to expand on our services. Our key strategic partners include:• The Department of Trade and Industry (the Dti)• The Department of Home Affairs (DHA)• Gauteng Department of Agriculture and Rural
Development (GDARD)• Gauteng Enterprise Propeller (GEP)• Brand South Africa (BSA)• South African Revenue Services (SARS)• Mercantile Bank of Portugal• Visa and Permit Facilitation Centre (VFS Global)• Municipalities in Gauteng• Ernst & Young (EY)
HIGHLIGHTS
The GIC has created a platform for local businesses to interact with their international counterparts. The platform has been extended through our partnership with Trade Invest Africa (TIA), an initiative of the Dti. This initiative is aimed at informing the Gauteng business community about the support services offered by TIA in facilitating trade and investment with the rest of Africa.
In 2016, the Presidency announced that the Dti will lead and coordinate the establishment of the National One Stop Shop for investors as an integrated approach towards addressing the key problems facing investors. In Gauteng, the GGDA through the GIC will partner with the Dti on this initiative. The National One Stop Shop (OSS) will be the focal point of contact in government for all investors. The OSS will coordinate and facilitate the relevant government departments involved in regulatory roles, registration, permits and licensing.
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SECTOR SUPPORT
GAUTENG BUSINESS CONSULTATIVE FORUM
The Gauteng Growth and Development Agency (GGDA) has been tasked with the role of deliveringthe Gauteng Business Consultative Forum (GBCF). The GBCF was launched by the Premier in 2016 and is intended to be a mechanism through which a dialogue can be entered between the private sector, government and academia with the intention of building a working relationship aimed at increasing trust and confidence amongst all stakeholders.
The GBCF meets on a quarterly basis with representatives from the sectors that have been identified as high priority in the recently adopted Economic Development Plan. These sector sessionsare chaired by the MEC and a quarterly meeting of the GBCF is chaired by the Premier.
A sectoral approach allows for the opportunity to address sector specific issues, develop close working relationships between government and business at a sector level, and allows the provincial government to appoint a sector champion, who will use the opportunity to further enhance sector engagement.
The Gordon Institute of Business Science, (GIBS), the business school of the University of Pretoria, is the delivery partner for the GGDA in hosting the various sessions of the GBCF at the it’s campus in Illovo.To date four sector sessions have been held. These include: Tourism, Capital Equipment, Mineral Beneficiation and Automotive.
A) TOURISM
High-level delegates from the tourism and hospitality industry gathered at GIBS on 27 October 2016 for an explanatory and exploratory session of the Gauteng Business Consultative Forum (GBCF).
Key touch-points
Unpacking the potential areas of dislocation during a discussion on the challenges and opportunities in the sector, the assembled gathering outlined the following five points as crucial to moving forward:• A lack of trust• Transformation and SMME development• A lack of (or fragmented) government coordination• Communication, data and intelligent sharing• The need to define roles and a shared vision.
B) CAPITAL EQUIPMENT
On 26 November 2016, GIBS hosted the first Gauteng Business Consultative Forum (GBCF) which saw several stakeholders within the capital equipment sector come together to discuss constructive ways in which to take the sector forward.
To drive and enhance the business competitiveness of Gauteng province, and indeed South Africa, capital equipment has been identified as a key area of growth. During the forum, both government and the private sector highlighted key challenges and opportunities facing the sector and outlined action steps to address both private and public-sector concerns.
The partnership between the capital equipment sector and government has already developed an implementation plan to drive the sector forward. SACEEC outlined the strategy, which focused on the following:• Job creation and stemming job losses• Skills development• Developing a supply chain management
programme to boost local procurement• The development of black industrialists• The establishment of a trade-hub with Zambia
to develop markets for export
PROGRAMME 1: GGDA HOLDINGS (continued)
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Government has committed to backing this strategy and, in collaboration with industry, has set up a task team to ensure cooperation between all stakeholders. The task team’s objectives include: • Synergising interventions and initiatives• Identifying opportunities for R&D• Facilitating partnerships within the sector• Developing a working plan to implement
SACEEC’s strategy• Monitoring and evaluating the strategy
C) MINERAL BENEFICIATION
The Mineral beneficiation sector session was hosted on 22 February 2017. Attendees at the Mineral Beneficiation GBCF included: provincial government representatives of the Gauteng Growth and Development Agency (GGDA); the Department of Economic Development, and the Office of the MEC. From the industry delegates included: Impala Platinum, Akapo Jewel, Grant Thornton, Michael Ellis, Abstral Diamonds, HyPlat, De Beers, the South African Diamond & Precious Metals Regulator, and the Automotive Industry Development Centre.
Priority areas
Delegates outlined the following priority areas toopen up beneficiation opportunities:• The need to develop meaningful partnerships
and have frank discussions• Skills development and addressing issues of
productivity• The need to invest in technology• The importance of diversifying beneficiation
efforts beyond minerals like gold, platinum and diamonds• A need to focus on developing a beneficiation
strategy for each mineral, based on its unique properties and potential• Concerns around regulation, policy and
implementation misalignment• Improved access to market for finished products.
D) AUTOMOTIVE SECTOR
On 22 March 2017, GIBS hosted a number of players from across the industry for a Gauteng Business Consultative Forum focused specifically on the automotive sector. The purpose of the forum was to enable dialogue between the Gauteng Provincial Government and the private sector. Issues raised revolved around three key areas:
Skills
• Assessing the skills people are being trained for against the actual skills needed in industry;
• Making the industry interesting for new entrants to create a skills pipeline;
• A focus on primary skills, with mention being made of minimum wage;
• Keeping up with industry innovation;• The need to drive and grow entrepreneurial skills• Knowledge transfer to enable transformation and
support SMMEs.
Bridging and alignment between suppliers and OEMs
• Expectations versus actual entry options for SMMEs;
• Education and what is required from suppliers;• Suggestions of creating an OEM Open Day to
show SMMEs what OEMs require in terms of supply;• Understanding and appreciating workflow: is
there enough demand to justify supply?
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Localisation and transformation of supply chain
• How do we work together as an industry?• Transferring industry lessons and experience from
tier one suppliers and passing them to tier two and three suppliers;
• The need for greater policy support;• Growing output volume and becoming more
competitive as an industry. South Africa is competing globally, which raises issues of scale, cost of supply, and so forth;
• Frequency of power and water cuts which effects efficiency and competitive advantage;
• Transport infrastructure to allow factories to run 24-hour operations through three work shifts;
• Inhibitors to efficiency, including linking raw materials and beneficiation to supply the industry
• The need to transform not only the primary sector, but also secondary and retail sectors.
A task team comprising government, the private sector and academia has been established for eachsector with a specific brief to develop an implementation plan that seeks to resolve the issuesidentified at the respective sector sessions. This task team will report to the MEC and Premier and through this mechanism ensure that progress is made on the challenges and opportunities identified.
The GBCF session will also host country specific engagements with the intention of identifying and resolving bottlenecks and red tape issues which if resolved, can ease the cost of doing business in Gauteng and promote trade and investment into the province.
JOB CREATION
By the end of the reporting period, 2 285 contract jobs were facilitated by the group as follows:• TIH – 194• AIDC – 2• EPMO and GIDZ – 179• HOLDINGS – 1 910
The group had planned to facilitate 2 335 permanent jobs and managed to deliver 2 785 jobs as follows:
• AIDC 90• TIH 143• Holdings 2 552
ENTERPRISE PROJECT MANAGEMENT OFFICE (EPMO)
The purpose of this unit is to provide transversal
services in respect of centralised and coordinated
management of capital infrastructure projects. This
includes project management support functions
along the project cycle to develop and support SEZ’s
in Gauteng.
Special Economic Zone (SEZ)
The planned target was to initiate the establishment of the SEZ. At the end of the reporting period, a comparative site study was concluded and its recommendations submitted for review by the relevant authorities - the GGDA Board, the MEC, the Dti and National Treasury - for approval.
The Department of Science and Technology (DST) concluded the Regional Innovation System (RIS) Enablement Business Case, the aspect of which will be integrated as a knowledge complex (Science, Technology and Innovation Park - STIP) complementary to the broader industrial complex, being the Gauteng Science and High-Tech SEZ.
Township Industrial Parks Refurbishment
The Township Enterprise Hub programme is an intervention to address the objectives of the Township Economies Revitalisation Strategy.
The proposed refurbishment programme aims to enhance the effectiveness of the SMMEs role in stabilising the township economy through, not only creating jobs, but encouraging economic growth through entrepreneurship development.
PROGRAMME 1: GGDA HOLDINGS (continued)
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The plan for the year was to refurbish five township industrial parks. At the end of the reporting period, three sites - Vosloorus, Sebokeng and Eldorado Park - were at practical completion stages. The two other sites experienced delays. The Pennyville site had setbacks due to unusually heavy rainfall resulting in a two week delay, and the Orlando site encountered difficulties with underground water spillages affecting external works resulting in a 14-day delay.
Orlando Township Industrial Park
BEFORE
BEFORE
BEFORE
AFTER
AFTER
AFTER
Eldorado Park Township Industrial Park
Vosloorus Township Industrial Park
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PROGRAMME 1: GGDA HOLDINGS (continued)
52
GAUTENG GROWTH AND DEVELOPMENT AGENCY
PERFORMANCE INFORMATION BY ADMINISTRATIVE PROGRAMME
PROGRAMME 1: GGDA HOLDINGS
Programme 1 contributes directly to Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively. It also supports delivery of Strategic Goal 1: Gauteng’s economy radically transformed and Strategic Goal 2: Gauteng’s economy reindustrialised.
Strategic objectives, performance indicators, planned targets and actual achievements
PROGRAMME/ACTIVITY/OBJECTIVE:
STRATEGIC OBJECTIVES
ACTUAL ACHIEVEMENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVEMENT2016/2017
DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT FOR 2016/2017
COMMENT ON DEVIATIONS
Facilitate investmentsthat supports modernisation and reindustrialisation of Gauteng’s economy
R1bn - FDI R567.5m - DDI
R2bn FDI R1bn DDI
R2bn FDI R1bn DDI
None None
14 GIC Investments Facilitated
12 GIC Investments Facilitated
26 GIC Investments Facilitated
+14 Aggressive pipeline investments follow through and sterling service provision by the GIC partners
New KPI Developed GCR incentives framework approved
Developed GCR incentives framework noted for approval by the Executive Team
None None
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PROGRAMME/ACTIVITY/OBJECTIVE:
STRATEGIC OBJECTIVES
ACTUAL ACHIEVEMENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVEMENT2016/2017
DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT FOR 2016/2017
COMMENT ON DEVIATIONS
Increased global trade activities from Gauteng
R355m trade values facilitated
R300m trade values facilitated
R325m trade values facilitated
+R25m Companies could increase their export orders
424 enterprisesassisted through export readinessprogrammes
200 enterprisesassisted through exportreadinessprogrammes
247 enterprisesassisted through export readinessprogrammes
+ 47 More companiesthan anticipatedattended thetraining.
33 trade dealsfor Gauteng-based firmsfacilitated
40 tradedeals for Gautengbasedfirms facilitated
80 trade dealsfor Gauteng- based firmsfacilitated
+40 Companies thatwere supported by GGDA at thevarious tradeshows were more proactive in marketingthemselves andhence more trade deals weresecured
New KPI 12 Gauteng-based firmsexpandedoperations into Africa
12 Gauteng-based firmsexpandedoperations intoAfrica
None None
New KPI - 4 reports developed
6 infrastructure opportunities in the continent identified for Gauteng suppliers
6 infrastructure opportunities in the continent identified for Gauteng suppliers
None None
Revitalised and modernised industries reflecting reindustrialisation of Gauteng’s economy
New KPI 5 Industrial Parks refurbished
3 Industrial Parks refurbished
-2 2 sites experienced delays due to adverse weather conditions and ground water
53
ANNUAL REPORT 2016/17
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
54
PROGRAMME 1: GGDA HOLDINGS (continued)K
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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Key
per
form
ance
indic
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ctual a
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PRO
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E/A
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/OBJ
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l Val
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m+
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pani
es w
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se
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r ex
port
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rs
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ber
of in
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ties
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vy r
ainf
all
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ndo
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as
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sult
of
grou
nd w
ater
55
ANNUAL REPORT 2016/17
GGDA Staff at the Exporters Breakfast session.
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
56
PROGRAMME 1: GGDA HOLDINGS (continued)PROGRAMME 2:
AUTOMOTIVE INDUSTRY DEVELOPMENT CENTRE (AIDC)
Dr David MasondoAIDC Chief Executive Officer
Dr Sydney MufamadiChairperson of AIDC Board
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ANNUAL REPORT 2016/17
57
Dr Sydney MufamadiChairperson of AIDC Board
The table below depicts the purpose of Programme 2, its sub-programmes and their functions.
BUDGET PROGRAMME:2
PURPOSESUB-PROGRAMMES
FUNCTIONS
Automotive IndustryDevelopment Centre (AIDC)
To developthe automotivemanufacturing sector togloballycompetitivestandards ofexcellencethrough aworld-classvaluepropositionwhich enableseffective andsustainablesocio - economicgrowth.
Industry Development
• Supplier and Enterprise Development.• Township Enterprise Development.• Incubator Programmes.• SD&T (Skills, Development and Training) and ESDA.• Learning Centre with a simulator facility.• Special programmes, including Tshwane Automotive
City.• Industrial policy development support to key• Stakeholders.• Automotive export support into SADC/Africa.
Operations • Facilities maintenance and improvement planning execution.
• Construction projects.• ICT Management - also responsible for Business
Continuity Management.• SHEQMAN - Safety, Health, Environmental Quality
Management System at all AIDC sites.• Soft services – AIDC office support.• Conference venue and lapa at ASP.• Contact centre and help desk - facilities support, ICT
and SHEQ.
M&E and Risk • Strategic and Operational Planning Coordination.• Business Plan Coordination.• Enterprise Risk Management and Risk Registers.• Operations Risk Management– across all projects
and all sites.• Reporting – Performance Tracking.• Projects Monitoring.• Jobs Fund reporting (e-portal).• Overseeing M&E of operational and performance
effectiveness.• Performance Audit Evidence collection.
Business Development
• New business sourcing• Business Intelligence.• Alternative funding.• Enterprise business analysis – including township
concept development.• Marketing, Brand Management and events.• Tenants leases, relationships, and tenant pipeline..
Finance • Operations• Projects• Procurement• Payroll
Human Resources
• Recruitment and administration.• Employee wellness and relations.• Skills development and training.
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
58
PROGRAMME 2: AUTOMOTIVE INDUSTRY DEVELOPMENT CENTRE (AIDC) (continued)
Programme 2 contributes directly to Strategic Goal 1: Gauteng’s economy radically transformed and Strategic Goal 2: Gauteng’s economy reindustrialised; and supports delivery of Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively.
NISSAN INCUBATION CENTRE (NIC)
Nissan South Africa, in partnership with the AIDC, identified the need for an incubation facility in the main vehicle assembly plant which is in Rosslyn. An Automotive Incubation Centre, by definition, is a facility which is to be used to house and incubate new enterprises that would be plugged into a ‘live’ component value chain of a vehicle assembler, in this case Nissan.
The objective of the project is to design and construct a facility to be located within Nissan’s vehicle assembly plant site in an area than can accommodate eight incubates at a time. The size of the facility would be in the region of 6 500m2.
The ultimate objective of the project is to provide a facility to incubate enterprises which will subsequently support the automotive industry’s vision 2020 requirement for increased local content.
CONSTRUCTION The construction of the Incubation Centre at Nissan (ICN) officially commenced on September 2015 and was completed in October 2016.
SMME INCUBATES The selection and appointment of BBBEE SMME incubates for the AIDC’s Automotive Incubation Centre at Nissan was deferred to 2016/2017 due to the decision to postpone the manufacturing of thenew pick-up truck to FY 2017/2018. The recruitment process and a short list of potential candidates compiled on applications received from the advertisement placed in December 2015 had to berestarted and eight incubates were selected for pre-incubation by the end of the reporting period.
Incubatees were contracted in March 2017 and staff appointments continues into the 2017/2018 financial year. Procurement and installation of the equipment will be initiated in quarter one in 2017/18 financial year, with the first two commodities anticipated to be operational as of the second quarter.
FORD INCUBATION CENTRE Two incubates graduated from the Ford Incubation Centre and replacement incubates appointed. The new incubates will produce bin liners as well as press and welded assembly module commodities. During the reporting period, 151 people were trained at the centre.
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ANNUAL REPORT 2016/17
59
WINTERVELD ENTERPRISE HUB The Winterveld Enterprise Hub (WEH) is being implemented within the Township Enterprise Revitalisation Strategy with the aim of providing local SMMEs with access to external business opportunities and market access.
The hub has been set up with modern repair equip-ment, modern repair methods and Original Equip-ment Manufacturer (OEM) insurance accreditation readiness.
There are presently 10 SMMEs operating from the hub and 129 vehicles were processed, of which 102 were private vehicles and 27 were from public sector organisations. A turnover of R1 400 134,representing a 36% independence ratio, was accomplished and 80 people were trained at the hub during the reporting period.
GAUTENG AUTOMOTIVE LEARNING CENTRE The Gauteng Automotive Learning Centre (GALC) project is a partnership between Nissan SA (NSA)and the Gauteng Provincial Government. The centre was launched because of the NSA investment support programme that saw Nissan bidding to manufacture the next generation pick-up truck at their Rosslyn vehicle assembly facility. The GALC is primarily, but not exclusively, utilised by Nissan SA for all its technical and non-technical related training activities. It has successfully achieved full training service provider accreditation with merSeta for the further education training certificate: Automotive Sales and Support Services, NQF level.
The following are the companies that were graduated from the incubation centre and that are now supplying
directly to Ford:
GRADUATED COMPANY 1: RUSTICANA 170
Number of operators employed by new opportunity: 25 operators
Commodities: Windscreen Washer Water Bottle assembly, door latch assembly, the ABS Sub assembly and the Wrap Guard application process.
GRADUATED COMPANY 2: BABUTHE AUTOMOTIVE COMPONENTS
Number of operators employed by this graduated company on a new commodity:
27 operators
Commodity: Spray-on Bin Liner
Ford Production volumes:
PERIOD T6 RANGER EVEREST TOTAL
Jan 2016 - Dec 2016 85 988 2 070 88 058
Jan 2017 - Mar 2017 19 288 1 700 20 988
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
60
PROGRAMME 2: AUTOMOTIVE INDUSTRY DEVELOPMENT CENTRE (AIDC) (continued)
The centre provides services to industry in Gauteng within the following key focus areas:• OEM• Automotive component manufacturers• Dealer networks and after-market services• Informal body and mechanical repair sector• Unemployed youth and school leavers
The total number of people trained at the learning centre is 3 591 against the planned year-end targetof 3 463. Training was undertaken in the following programmes:• Mentoring and training of SMME owners and
their operators - 151• Paint and Body Repair Training - 80• Skills Mentoring and Training – 1 012• Learning Centre Utilisation – 2 070• Efficiency Improvement - 278
SUPPLIER EFFICIENCY PROGRAMME
Government plans to grow the auto sector by doubling current production capacity to 1.0 million units per annum and increasing local content from 38% to 60% by 2020. The Supplier Efficiency Programme was created by the AIDC to help address the efficiency improvement needs of over 100 companies in the period towards 2020. It aims to address key issues around quality, cost reduction, productivity improvement and manufacturing/ supplier stability.
During the year, 42 companies were signed onto the efficiency programme and have signed off on planned interventions.
Table summarizing companies that participated in the efficiency intervention
NO. COMPANY NAME LOCATIONINTERVENTION TYPE
PRODUCTS MANUFACTURED
1 Autoliv Krugersdorp TPM Seatbelts, Airbags
2 Fry’s Metals Wadeville TPM Lead recycling (automotive batteries)
3 Auto Industrial Machining
Kempton Park TPM Chassis Components (machining)
4 Supreme Spring Nigel RPIW Automotive Springs
5 DHL Silverton RPIW Delivery of components to Auto Industry
6 G&W Minerals Wadeville RPIW Barytes used for making Brake pads
7 Feltex Trim Rosslyn Rosslyn, Pretoria
RPIW non-woven textiles i.e., boot-packs, sound insulators and main floor carpets
8 Praga Rosslyn, Pretoria
RPIW Metal Pressing for Auto Industry
9 Delberg Engineering Centurion, Pretoria
RPIW Bus Accessories
10 Zinchem Benoni RPIW Produces Zinc used for making Vehicles tyres
11 Iveco SA Rosslyn, Pretoria
RPIW Bus and Truck
12 Bosal Watloo Waltloo, Silverton
LM Tube parts for Auto industry
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ANNUAL REPORT 2016/17
61
PROGRAMME 2: AUTOMOTIVE INDUSTRY DEVELOPMENT CENTRE (AIDC) (continued)
NO. COMPANY NAME LOCATIONINTERVENTION TYPE
PRODUCTS MANUFACTURED
13 Sodecia Gauteng: Automotive Incubation Centre
RPIW Welding of vehicle body parts
14 Naledi Foundry Benoni, Johannesburg
RPIW Castings and Machining
15 Johnson Controls Silverton RPIW Seat assembly
16 Horizon Global Pretoria, RPIW Tow Bars
17 Babute Automotive Gauteng: Automotive Incubation Centre
RPIW Robotic trimming of vacuformed load liners
18 ZIG Enterprise Silverton RPIW Fleet vehicles customisation
19 Ford SA Silverton RPIW Vehicle assembly (OEM)
20 Bosal Koedoespoort Koedoespoort, Pretoria
RPIW Passenger cars accessories (Tow Bars, etc)
21 Nissan SA Rosslyn, Pretoria
RPIW Vehicle assembly (OEM)
22 Mothersons Rosslyn, Pretoria
RPIW Vehicle Bumpers
23 Auto Industrial Foundry
2 Guthrie Rd, Germiston
RPIW Automotive castings – brake drums, discs
24 Kaizen Automotive Gauteng: Automotive Incubation Centre
Quality Management Systems (QMS)
Assembly of the HVAC units (Ventilation/Air conditioning units) for the Ford T6 Ranger.
25 Rusticana 170 Gauteng: Automotive Incubation Centre
Quality Management Systems
Assembly of front and rear bumper and grill for the Ford Ranger.
26 Jamsco Gauteng: Automotive Incubation Centre
Quality Management Systems
Assembly of Auto body panels
27 Excellence Motor Trimmers
Hatfield, Tshwane
Quality Management Systems
Retrofitting of leather to replace cloth interiors of vehicles.
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
62
NO. COMPANY NAME LOCATIONINTERVENTION TYPE
PRODUCTS MANUFACTURED
28 Diesel Line Kya Sands, Johannesburg
Quality Management Systems
Diesel pipe systems
29 Directech Kya Sands, Johannesburg
Quality Management Systems
State of the art turnkey projects and equipment for the automotive and supporting industries.
30 Feltex Trim Garankuwa
Fifth st, GaRankuwa Industrial site
Lean Manufacturing
non-woven textiles i.e., boot-packs, sound insulators and main floor carpets
31 All-Lite Rosslyn Lean Manufacturing
Powder and E Coating
32 Baires Plastics Roodepoort Lean Manufacturing
Plastic injection moulding
33 Kgabo Cars Rosslyn Lean Manufacturing
Panel beating and spray painting
34 Angelo Kater Springs Lean Manufacturing
Manufacturing and conversions for mini bus interiors
35 Xuba Krugersdorp Lean Manufacturing
Polymer manufacturing
36 B. Engineering Boksburg Lean Manufacturing
Prop shafts and ball joints
37 Ambixtra Lean Manufacturing
Full R&D of automotive ignition systems (Variable Spark Ignition)
38 Grupo Antolin Rosslyn, Pretoria
Cleaner Production
Headliner
39 HJ Bosch Hercules, Pretoria
Cleaner Production
Panelbeating (aftermarket)
40 Eagle Spring Nancefield, Johannesburg
Cleaner Production
Coils and tension springs
41 Faurecia Rosslyn, Pretoria
Cleaner Production
Car interiors
42 PSA Plastics Clayville, Cleaner Production
Plastic injection moulding
PROGRAMME 2: AUTOMOTIVE INDUSTRY DEVELOPMENT CENTRE (AIDC) (continued)
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MINI FACTORIES
AIDC has developed a mini factory concept to accommodate tenants that may not require large manufacturing floor space for their operation. The project is being implemented in phases to accommodate the current MTEF allocations.
The facility has a double volume factory space with a double-storey administration at the end of the building, with a generous parking lot. The moving and delivery areas on the outside have been optimised to cater for a diverse range of vehicles and movements in and around the building.
MINI FACTORY - PHASE 2
The factory construction commenced in October 2015 and was completed in the third quarter of FY 2016/17.
AIDC Incubation Centre at Nissan SA during construction.
AIDC Incubation Centre at Nissan SA after construction.
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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PERFORMANCE INFORMATION BY PROGRAMME (AUTOMOTIVE INDUSTRY DEVELOPMENT PROGRAMME)
POGRAMME 2: AUTOMOTIVE INDUSTRY DEVELOPMENT PROGRAMME (AIDC)
Programme 2 contributes directly to Strategic Goal 1: Gauteng’s economy radically transformed and Strategic Goal 2: Gauteng’s economy reindustrialised; and supports delivery of Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively.
Strategic objectives, performance indicators planned targets and actual achievements
PROGRAMME/ACTIVITY/OBJECTIVE:
STRATEGIC OBJECTIVES
ACTUAL ACHIEVEMENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVEMENT2016/2017
DEVIATIONFROM PLANNEDTARGET TOACTUALACHIEVEMENTFOR 2016//2017
COMMENT ONDEVIATIONS
Revitalised and modernised township economies reflecting radical transformation andreindustrialisation of Gauteng’s economy
SMMEsoperating at theWinterveldTownship Hub
100 vehiclesrepaired
129 vehiclesrepaired
+29 Support by privateusers and publicsectororganisations
22 SMMEsparticipated inthe efficiencyprogramme
40 SMMEsparticipated in the efficiencyprogramme
42 SMMEsparticipated inthe efficiencyprogramme
+2 Two SMMEs were registered to operate through the hub in the previous financial year
Appropriately skilled humanresources and businesses toradically transform and reindustrialise the Gauteng economy
1 595 Peopleskilled
3 463 People skilled
3 591 People skilled
+128 + 945 more peopletrained due tounplanned partnershipwith BMW
6 BBBEESMMEs incubated at Ford
14 BBBEESMMEs incubated atNissan and Ford
14 BBBEESMMEs incubated atNissan and Ford
None None
PROGRAMME 2: AUTOMOTIVE INDUSTRY DEVELOPMENT CENTRE (AIDC) (continued)
GAUTENG GROWTH AND DEVELOPMENT AGENCY
64
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PROGRAMME 2: AUTOMOTIVE INDUSTRY DEVELOPMENT CENTRE (AIDC) (continued)
PROGRAMME/ACTIVITY/OBJECTIVE:
STRATEGIC OBJECTIVES
ACTUAL ACHIEVEMENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVEMENT2016/2017
DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT FOR 2016/2017
COMMENT ON DEVIATIONS
Revitalised and modernisedindustries reflectingreindustrialisation of Gauteng’seconomy
Mini factory 11(Phase 2)50% complete
Mini factory 11(Phase 2)100%complete
Mini factory 11(Phase 2)100% complete
None None
50% of theconstruction ofthe incubationcentre at NissanSA completed
100% of theconstruction ofthe incubationcentre at Nissan SAcompleted
SA completed None None
New KPI 50% of theconstruction ofthree componentmanufacturingfacilities in theASP
N/A None Budget was notsecured and KPIremoved from the APP
ANNUAL REPORT 2016/17
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FESTO Representative, Mr Nico Landman with Dr. David Masondo officially opening the FESTO Authorized and Certified Training Centre.
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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PROGRAMME 2: AUTOMOTIVE INDUSTRY DEVELOPMENT CENTRE (AIDC) (continued)
GAUTENG GROWTH AND DEVELOPMENT AGENCY
Key
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ANNUAL REPORT 2016/17
WorldSkills at the AIDC GALC Open Week
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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Mr McLean SibandaTIH Chief Executive Officer
Dr Nhlanhla MsomiChairperson of TIH Board
PROGRAMME 1: GGDA HOLDINGS (continued)PROGRAMME 3:
THE INNOVATION HUB (TIH)
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Dr Nhlanhla MsomiChairperson of TIH Board
The table below depicts the purpose of Programme 3, its sub-programmes and their functions.
BUDGET PROGRAMME:3
PURPOSESUB-PROGRAMMES
FUNCTIONS
The Innovation Hub (TIH)
The Innovation Hub’s mission is to promote the socio-economic development andcompetitiveness ofGauteng in targetedsectors throughinnovation by:• creating new
business opportunities and adding value to mature companies in technology and knowledge based sectors;
• fostering entrepreneurship and incubating new innovative companies;
• providing attractive spaces for emerging knowledge companies;
• ensuring human capacity development of critical skills matching industry needs in priority sectors;
• enhancing the synergy between industry, government and academic and research institutions.
Maxum A business incubation programme that accelerates the growth of technology start-up companies byproviding business mentorship and life cycle business development support to start- up companies.
CoachLabTM Post-graduate leadership and business skills development programme whose aim is to instilbusiness principles and the value of innovative and entrepreneurial thinking amongst the participantsthrough mentorship by project sponsors.
mLab including Code Tribe Academy
A programme to support mobile technology entrepreneurs by providing them physical space where they can access the tools, platforms, laboratory expertise and support networks necessary to develop solutions and build new businesses as well as receive technical support.
Climate Innovation Centre
A centre to support and develop entrepreneurs in the climate innovation space.
GAP-Green, GAP-SmartIndustries
The purpose of this programme is to stimulate innovations in mobile applications, green technologies, health innovations and in bioeconomy.
Open Innovation Solutions Exchange (OpenIX)
The purpose of the project is to create a mechanism that will connect innovation seekers (municipalities, government departments etc.) toinnovation providers so that government can find innovative solutions to its service delivery challenges.
Biosciences ParkFacility
Biosciences Park aims to provide a nurturing environment for biotechnology start-ups to develop, thrive, and eventually become important commercial players that contribute to economic growth
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PROGRAMME 3: THE INNOVATION HUB (TIH) (continued)
Programme 3 contributes directly to Strategic Goal 1: Gauteng’s economy radically transformed andStrategic Goal 2: Gauteng’s economy reindustrialised; and supports delivery of Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively.
PROGRAMME 3: STRATEGIC OBJECTIVES
The Innovation Hub Programme Area works towards the following strategic objectives:• Radically transforming the Gauteng economy
through a new smart, knowledge-based economy;• Green industries contributing to energy security
to radically transform and reindustrialise the Gauteng economy;• Appropriately skilled human resources and
businesses to radically transform and reindustrialise Gauteng’s economy;• Facilitate and support innovations in building
new smart, knowledge-based industries and the economy.
FOCUS SECTORS
The priority sectors of The Innovation Hub (TIH) are aligned with the Provincial 10 Pillar Programme Priority Sectors, which are:• Smart Industries (ICT and Advanced Manufacturing);• Bio-economy (Health and Agro-processing); and• Green Economy (Energy, Water and Waste).
BUSINESS INCUBATIONS
TIH recognises the importance of entrepreneurship to address unemployment andthe commercialisation of innovations. TIH’s enterprise development activities include a range of incubation focused initiatives across all the priority sectors.
Maxum business incubation includes: • (Maxum Smart, Maxum Digital, Maxum Media
and mLab); • BioPark, Climate Innovation Centre (CIC)
Business Incubators, and • eKasiLabs Business Incubator in response to
Township Economy Revitalisation (TER).
There are two phases within TIH’s business incubators model to assist start-ups across the startup life cycle from pre-revenue to acceleration. These include the Factory, which is a 12 month prerevenue/commercialisation programme that focuses on assisting start-up companies with productdevelopment and market access. The focus is getting the technology ready for market testing, withfurther emphasis on supporting the start-up to generate revenue. The company is required to present evidence of sales as criteria to graduation into the next phase, a three-year post revenue/commercialisation aimed at assisting companies to scale up and grow. The focus is on market growth, both local and international, investment attraction and business linkages. Once the company has demonstrated profitability and sustainability based on scaled up operational capacity and sales – such as being able to sustain the company for at least six months - the start-up is graduated out of the Core
Programme.
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MAXUM BUSINESS INCUBATOR
TIH’s technology business incubator, the Maxum Business Incubator, focuses on early stage and start-up SMEs with a view to maximising opportunities for high-tech entrepreneurs. It provides an enabling environment whereby start-up companies operating in TIH’s priority sectors are fasttracked to compete globally. The programme seeks to increase companies operating within the knowledge sectors in Gauteng so that they contribute towards growing Gauteng’s economy, thereby reducing poverty and increasing employment.
For the period under review, The Maxum programme planned and delivered 67 and 33 companies in the pre-incubation and incubation programmes respectively. The Maxum pre-incubation programme exceeded its annual target by 10.
Maxum DigitalMaxum Digital programme is a collaboration between The Innovation Hub and Wits University and hosted at the Digital Innovation Zone in the Tshimologong precinct. The programme focuses on developing sustainable digital media enterprises and supporting unemployed Information Technology and Digital Media graduates as well as township youth in game development and digital innovations. The programme had planned and recruited 15 companies during the year.
Maxum Media AcceleratorThe Maxum Media Accelerator (MMA) is a media entrepreneurship acceleration programme that identifies, develops and supports newly formed media production companies in South Africa. The Maxum Media Accelerator (MMA) is owned by The Innovation Hub and executed by Kagiso Media’s television production facility, Urban Brew Studios. The programme had planned and recruited 10 companies.
Maxum graduationDuring the year under review, the following 7 companies demonstrated profitability and financial sustainability and were graduated from the programme:
The Innovation Hub
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Table below depicts the companies that graduated from Maxum Business Incubator
COMPANY DESCRIPTION
Morgan 3D Printer Morgan was designed to use locally available andhard-wearing materials in order to build a sturdyand reliable system that can handle the harshconditions of Africa. The aim of the start up wouldbe to supply fully assembled and tested 3D printersto the South African market, and focus on thebespoke design and manufacture of customisedproducts for customers.
Sibahle Skin Solution (Pty) Ltd Marula Skin Oil is specially formulated for the treatment of stretch marks, dry or cracked skin, eczema, skin redness, sun exposed or damaged skin, acne, wrinkle reduction, uneven skin tone, fading of scars, marks and burns.
MABU Casing Soils (Pty) Ltd The MABU Casing is an environmentally friendly substrate that is a suitable alternative to the peat soil used for the production of button mushrooms. The substrate has the potential to protect the South African mushroom industry against increased environmental concerns and peatland depletion, and against currency fluctuations.
Maru Telecoms (Pty) Ltd Maru SIP offers the perfect unified Communications Solution for business and consumer. It is built on open-source software to address the customer’s typical and extraordinary telephone requirementsthrough a cost saving model of making internet-based calls at reduced rates.
Ebukhosini Properties (Pty) Ltd EBUKHOSINI Solutions is a community-based company specialising in African-centred solutions to social, political and cultural challenges. The company specialises in education, training, knowledge production, leadership development.
Livestock Wealth (PTY) Ltd This crowd farming company enables anyone to be a livestock farmer - investing in organic beef farms and sharing in the profits of the farm. The company’s unique business model enables individuals who do not have access to land, skills and time to participate in farming and have an easy to understand savings and investments vehicle.
mHealth Studio (PTY) Ltd A smartphone application that provides a mobile health solution for the early detection of hearing loss and linkage of patients to required health services.
PROGRAMME 3: THE INNOVATION HUB (TIH) (continued)
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CLIMATE INNOVATION CENTRE
The Climate Innovation Center (CICSA) was established to provide one-stop-shop enterprise development support to Green SMMEs and researchers, and to develop, transfer and deploy advanced climate-smart/green economy technologies to meet local needs. The support provided comprises both financial and non-financial services designed to benefit and guide growth.
The CICSA met its annual target of recruiting twenty companies for incubation and incubated a total of 32 companies against a planned target of 30 companies.
BIOPARK
The BioPark@Gauteng is a Bioeconomy targeted SMME support programme that supplements and complements initiatives aimed at building the Bioeconomy industry in Gauteng. This is achieved through incubation-related activities that include promoting the creation of small businesses, linking entrepreneurs with potential funders or partners, and helping young biotechnology entrepreneurs to establish sound business management processes.
The BioPark supports start-up companies, university / science council spin-offs and SMMEs in the Bioeconomy sector. The BioPark has exceeded the annual target of 5 by 2, its success is attributed to the improved speed of execution in contract handling from the GAP Biosciences and medical winners. Furthermore, the provision of virtual incubation and approval to appoint more mentors gave room to recruit more companies.
COACHLAB
CoachLab® is TIH’s flagship leadership and skills development programme that aims to develop human capability in engineering, information and communication technology (ICT) post-graduate students. The programme is sponsored by industry partners, as well as the Media, Information and Communication Technologies Sector Education and Training Authority (MICT SETA).
CoachLab provided 37 graduates with work exposure through placement in sponsoring companies and other various IT companies against a target of 30 graduates. Meanwhile, 20 learners completed the Coachlab Green Programme and 86 interns were successfully placed with host employers, exceeding the planned target of 70.
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PROGRAMME 3: THE INNOVATION HUB (TIH) (continued)
CODETRIBE ACADEMY
Code Tribe is a full bursary programme aimed at training youth to develop applications for Android, backend and cloud using Scrum Agile methodologies and native software development kits. During the year, the plan was to recruit 120 interns, however only 80 could be recruited due to delays in completing the establishment of the new eKasiLab in Mohlakeng and Thembisa.
EKASILABS
The goal of the eKasiLab programme is to take innovation to the people by establishing co-creation and innovation spaces in the townships where the community can access the services and facilities on offer at The Innovation Hub.
TIH, through the eKasiLabs, aims to address the problems of access and seeks to reindustrialise the community and unemployed youth so that employment is created in their area of residence through skills and enterprise development.
The eKasiLabs, TIH flagship programme in the townships sought to reach 100 entrepreneur through start-up weekend and boot-camp initiatives, however, due to its popularity a total of 245 individuals were provided with assistance by the programme and 153 entrepreneurs were recruited into the programme.
OPEN INNOVATION SOLUTION EXCHANGE
The Open Innovation Solutions Exchange (OpenIX) platform is a TIH initiative aimed at finding solutions to overcome the challenges posed by regional innovation seekers (government, academia, large and small business and community), while also providing a window for innovations looking for markets.
Four community-based challenges were matched with solutions. The annual target of 15 has been exceeded by 27%, which is largely due to the availability of funds and the strategic partnerships with industry and universities.
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THE FOLLOWING IS A SELECTION OF SOME OF THE CHALLENGES MATCHED WITH SOLUTIONS.
Meanwhile, the programme exceeded its plan to pilot, develop and assess the feasibility to implementnine projects.
CHALLENGE DESCRIPTION SOLUTIONS MATCHED
OpenIX technical challenge TIH-C00026-NovelApplications of Earth Observation Data
Drone Clouds, a farm mapping technology
OpenIX technical challenge TIH-C00028 -Energy, Water and Waste Innovations forEducation and Health Infrastructure in Gauteng
Ebukhosini Properties - recycling toilet and Michaelangelo Technologies/ Eco-V – GreenTower
OpenIX technical challenge TIH-C00035 -Water and Green Economy Innovations in theCity of Tshwane: Council for Scientific &Industrial Research (CSIR) - ColiSpot, CSIR -Adsorbent Technology, and ZingCo – Zingbike
Swift UAS Geospatial, Ebukhosini Properties – MoWash
OpenIX light challenge - Water ResearchCommission WADER
Five high priority (green) candidates were identified as having solutions relevant to Gauteng industry or government partners, and follow up discussion were held with Microfoodlab and Improchem
OpenIX light challenge with Maxum BusinessIncubator – Tata Consulting Services (TCS)
CarbonTRACK was selected by TCS for further engagement and a first meeting was held in July 2016
OpenIX light challenge with GAP Green, Maxum& Climate Innovation Centre – Schneider Electric(SE) / GreenWave (GW).
Following initial selection and invitation of candidates topresent, SE and GW have indicated interest in engagingfurther with six of the candidates.
Advanced Orebody Knowledge. Proposals wereinvited for innovative technologies that canreliably give advanced knowledge of the orestructure and grade for various ores in SouthAfrica.
1. Cambridge Consultants proposed the design, from first principles, of technology to ‘see through the rock face’.
2. Adrok have developed a proprietary technology – Atomic Dielectric Resonance (ADR).
3. Terracore Geo proposed the use of hyperspectral imaging of the drill core.
4. Sightpower proposed using a combination of directional drilling and / or micro-tunnelling to create relevant data.
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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CHALLENGE DESCRIPTION SOLUTIONS MATCHED
Responsive cities challenge. A challenge waslaunched with the City of Tshwane to findinnovative ways to use open data to reducecable theft.
1. Vizibiliti Insight - proposed a predictive modellingsoftware to reduce copper theft.
2. Slyza Tsotsi - technology focussed on the integrtion of open data and live streaming data from surveillance sensors to combat cable theft.
3. CSIR proposed an integrated information system for Tshwane’s cable theft problem to attract and inform decision making.
Responsive cities challenge. A challenge waslaunched with the City of Ekurhuleni to findinnovative ways to use open data to assistresidents that are at risk.
1. My City - a location aware mobile application that improves communication between the municipality and the city residents.
2. Apex - a business intelligence solution with a spatial component (spatial intelligence) that not only provides the City of Ekurhuleni with the means to accurately capture location data and medical information of indigent residents, but also provides them with tailored analysis of said data.
3. ITechub SA - a smart water monitoring and management service available on the web and as a mobile app (Android and iOS).
Responsive Cities Challenge. A challenge waslaunched with the eThekwini Municipality to findinnovative ways to use open data to betterconnect government to citizens.
Three solutions were matched:1. Sanebelle Ebrahim - The technology comprises an
annual Book & Design Fair Durban event and an app that enables users to easily access reading plat-forms in the City.
2. Keith Ngcongo – The technology is focused on Durban rich heritage and culture through use of open data.
3. Mabangiso Mabaso – The technology focuses on providing an alternative energy solution based on open data from weather satellites.
Responsive Cities Challenge. A challenge waslaunched with the Sol Plaatje Municipality to findinnovative ways to use open data to improve themonitoring, maintenance and scheduling ofpublic water infrastructure.
4. AguaContada – the solution proposes a smart metering and water leakage detection capability.
5. Moringa Barkly – The S-Watering System is developed to help monitor the use of water which is used on our crops, at the same time it collects different data from different sensors to help with the visualisation of how the environment is being used.
6. Nyakallo Motsoari – the project is a device that senses leakages in pipes using an external sensing point that canbe plugged into and out of the device. Once it senses theleakage, it alerts the owner and indicates the exact pipethat is leaking.
PROGRAMME 3: THE INNOVATION HUB (TIH) (continued)
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CHALLENGE DESCRIPTION SOLUTIONS MATCHED
Angel investor challenge with the City ofJohannesburg (CoJ) for their “What WouldJoburg Look Like”/Angel Investor/CoJCampaign to help generate interest from AngelInvestors to invest in innovative start-ups.
Rock Water Media - using augmented reality on dilapidated buildings to link an Angel Investor to an SMME.
Street trading challenge with the City ofJohannesburg to achieve its informal tradingobjectives of providing cost effective andaesthetically acceptable informal tradinginfrastructure.
Display Aluminium Products - mobile aluminium vendor stalls.
GAP Green Award Ceremony
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PERFORMANCE INFORMATION BY PROGRAMME 3(THE INNOVATION HUB)
PROGRAMME 3: THE INNOVATION HUB (TIH)
Programme 3 contributes directly to Strategic Goal 1: Gauteng’s economy radically transformed and Strategic Goal 2: Gauteng’s economy reindustrialised; and supports delivery of Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively.
Strategic objectives, performance indicators, planned targets and actual achievements:
PROGRAMME/ACTIVITY/OBJECTIVE:
STRATEGIC OBJECTIVES
ACTUAL ACHIEVEMENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVEMENT2016/2017
DEVIATIONFROM PLANNEDTARGET TOACTUALACHIEVEMENTFOR 2016//2017
COMMENT ONDEVIATIONS
Radically transforming
the
Gauteng economy
through a new smart,
knowledge based
economy
61 Companies
and innovations
commercialised
398 Companies
and innovations
commercialised
563 Companies
and innovations
commercialised
+165 Support by private
users and public
sector
organisations
Green industries
contributing to
energy security to
radically transform
and reindustrialise
Gauteng economy
30 Green
companies
incubated
30 Green
companies
incubated
30 Green
companies
incubated
None None
Appropriately skilled
human resource
and businesses to
radically transform
and reindustrialise
Gauteng’s economy
100 Youth
programmes
implemented
340 Youth
programmes
implemented
468 Youth
programmes
implemented
+128 None
Facilitate and support
innovations in
building new smart,
knowledgebased
industries and the
economy
New KPI 100% level of
construction of
Bio Park phase 2
83% level of
construction of
Bio Park phase 2
-17% Level of
construction
None
GAUTENG GROWTH AND DEVELOPMENT AGENCY
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Key performance indicators, planned targets and actual achievements
STRATEGIC OBJECTIVE: RADICALLY TRANSFORMING THE GAUTENG ECONOMY THROUGH NEW, SMART, KNOWLEDGE BASED ECONOMY
PERFORMANCE INDICATOR
ACTUAL ACHIEVEMENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVEMENT2016/2017
DEVIATIONFROM PLANNEDTARGET TOACTUALACHIEVEMENTFOR 2016//2017
COMMENT ONDEVIATIONS
Radically transforming
the
Gauteng economy
through a new smart,
knowledge based
economy.
4 6 7 +1 The number of
graduation is
expected to increase
with continuous
scaling
up support provided
to the companies in
Maxum Core.
Number of new
companies incubated
at Maxum Core.
20 33 33 0 None
Number of
companies in the
Maxum preincubation
programme.
27 57 67 +10 None
Number of innovation
commercialised.
18 27 33 +6 The
commercialisation
team has put in
place monitoring
and evaluation
tools to monitor
action items.
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PROGRAMME 3: THE INNOVATION HUB (TIH) (continued)
Interior of The Innovation Hub (TIH)
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PROGRAMME 3: THE INNOVATION HUB (TIH) (continued)
GAUTENG GROWTH AND DEVELOPMENT AGENCY
80
PROGRAMME/ACTIVITY/OBJECTIVE:
PERFORMANCE
INDICATOR
ACTUAL
ACHIEVEMENT
2013/2014
ACTUAL
ACHIEVEMENT
2014/2015
ACTUAL
ACHIEVEMENT
2015/2016
PLANNED TARGET
2016/2017
ACTUAL
ACHIEVEMENT
2016/2017
DEVIATION FROM
PLANNED TARGET
TO ACTUAL
ACHIEVEMENT FOR
2016/2017
COMMENT ON
DEVIATIONS
Number of
companies in
Maxum Core
graduated
N/A New KPI 4 6 7 +1 The number of
graduations is
expected to increase
with continuous
scaling up support
provided to the
companies in Maxum
Core
Number of new
companies in
the Maxum core
incubated
16 23 20 33 33 None None
No of new
companies in
the Maxum
pre-incubation
programme
31 41 27 57 67 +10 The successful
pitching sessions and
recruitment from the
GAP competitions
enabled a larger pool
of applicants into the
programme. Hence,
the annual target of
fifty seven (57) was
exceeded by ten (10).
Number of
innovation
commercialised
10 12 18 27 33 +6 Commercialisation
team has put in
place monitoring and
evaluation tools to
monitor action items
OpenIX solutions
with feasibility
or pilot projects
initiated
N/A N/A New KPI 9 9 None None
Number
of openIX
challenges
matched with
solutions
N/A N/A New KPI 15 19 +4 Solutions from
challenges matched
provided a pipeline
of pilot projects
Number
of green
companies at
CIC incubated
CIC
construction
completed
35 20 34 32 +2 The financial support
from DBSA has
enabled the CIC to
market its offerings
to a wider group and
thus attracting more
companies.
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PROGRAMME 3: THE INNOVATION HUB (TIH) (continued)
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PROGRAMME/ACTIVITY/OBJECTIVE:
PERFORMANCE
INDICATOR
ACTUAL
ACHIEVEMENT
2013/2014
ACTUAL
ACHIEVEMENT
2014/2015
ACTUAL
ACHIEVEMENT
2015/2016
PLANNED TARGET
2016/2017
ACTUAL
ACHIEVEMENT
2016/2017
DEVIATION FROM
PLANNED TARGET
TO ACTUAL
ACHIEVEMENT FOR
2016/2017
COMMENT ON
DEVIATIONS
Number of
entrepreneurs
into eKasiLabs
programme
recruited
N/A New KPI 32 150 153 +3 The Annual target was
exceeded as a results
of intensified activities
such as: Bootcamps,
Start-Up weekends.
Number of
graduates
through the
CoachLab
programme
opportunities
exposed
N/A N/A 118 30 37 +7 The Coachlab
programme secured
additional funding
from external funders
enabling an increased
number of graduates
to be accomodated
Number of
learners in the
coachlab green
programmes
completed
New KPI New KPI 20 20 20 None none
Number of
interns with host
employers from
the internship
programme
placed
77 129 New KPI 70 86 +16 There was huge
demand from industry
for experienced
learners and the
funding we also
secured enabled the
targets to fly.
Number of
interns in the
CodeTribe
academy
recruited
N/A N/A New KPI 120 80 -40 The Code Tribe
recruitment target
was not met
due to the delays
experienced by
the eKasiLabs in
acquiring site
approvals. The
delays in acquiring
facility in terms of
bandwith, power
supply in eKasiLabs
delayed Code Tribe
recruitment activities.
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PROGRAMME/ACTIVITY/OBJECTIVE:
PERFORMANCE
INDICATOR
ACTUAL
ACHIEVEMENT
2013/2014
ACTUAL
ACHIEVEMENT
2014/2015
ACTUAL
ACHIEVEMENT
2015/2016
PLANNED TARGET
2016/2017
ACTUAL
ACHIEVEMENT
2016/2017
DEVIATION FROM
PLANNED TARGET
TO ACTUAL
ACHIEVEMENT FOR
2016/2017
COMMENT ON
DEVIATIONS
Number of
entrepreneurs
through the
bootcamps
and start-up
weekends
reached
N/A N/A New KPI 100 245 +145 The investment
in marketing the
programme yielded
results
Establishment of
phase 2 of the
biosciences park
facility at the TIH
constructed
New kpi Phase 1 -
completed and
launched in
Oct 2014
Contractor
appointed with
construction to
commence in
FY 2016/17
100% completion
of Bio park phase 2
construction
83%
construction
completed
-17% Adverse weather
conditions lead to the
delay
Number of
indigenous
knowledge
system
entrepreneurs in
BioPark recruited
N/A N/A N/A 5 7 +2 Adverse weather
conditions lead to the
delay.
Number of new
companies in
Maxum media
accelerator
incubated
N/A N/A New KPI 10 10 None None
Number of new
companies in
the Maxum
digital
programme
incubated
N/A N/A New KPI 15 15 None None
PROGRAMME 3: THE INNOVATION HUB (TIH) (continued)
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ICT Technician
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Ms Seipati MangadiGIDZ Chief Executive Officer
Dr Paul JourdanChairperson of GIDZ Board
PROGRAMME 1: GGDA HOLDINGS (continued)PROGRAMME 4:
GAUTENG INDUSTRIAL DEVELOPMENT ZONE (GIDZ)
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Dr Paul JourdanChairperson of GIDZ Board
The Table Below depicts the purpose of Programme 4, its sub-programmes and their functions.
BUDGET PROGRAMME:4
PURPOSESUB-PROGRAMMES
FUNCTIONS
Gauteng IndustrialDevelopment Zone(GIDZ)
To manage thedevelopment of theIndustrial DevelopmentZone at the OR Tambo International Airport.
Skills development
• Increased jewellery sector skills
Infrastructuredevelopment
• Development master plans• Spatial development plans• Construction plans• Construction monitoring • Facilities and operations management
Investor attraction andmanagement
• Development concept and model • Investor attraction value proposition and
strategy• Investor contract negotiation and close • Investor retention • Stakeholder liaison and management• Programme monitoring and evaluation
Mineral beneficiation
• Beneficiation concept identification and feasibility
• Beneficiation development planning and implementation
Programme 4 contributes directly to Strategic Goal 1: Gauteng’s economy radically transformed andStrategic Goal 2: Gauteng’s economy reindustrialised; and supports delivery of Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively.
PROGRAMME 4: STRATEGIC OBJECTIVES
The GIDZ Programme Area will work towards the following three strategic objectives:1. To stimulate employment-led growth and
development through the facilitation of strategic economic infrastructure interventions;2. To facilitate the development of the sector-
specific skills required to meet the needs of the jewellery economic sector.
INFRASTRUCTURE DEVELOPMENT
The GIDZ is presently developing the Jewellery Manufacturing Precinct (JMP) on land identified forsuch purposes within the OR Tambo International
IDZ. Bulk infrastructure construction for this green field development is already underway and the total progress to date is 70% complete, with site handover anticipated to be conducted by the second quarter of 2017/18.
The infrastructure development programme will result in the availability of the basic infrastructure required to facilitate the roll-out of top structure development at the IDZ. Concurrently, the programme is contributing to employment creation as well as the necessary skills development of individuals from the Ekurhuleni Metropolitan Municipality.
The GIDZ is looking at creating another access through privately owned land, and a land valuationprocess is underway to inform this process. The process is to make an offer to the landowner basedon the valuation amounts. An issue affecting the development, which has been discussed with key stakeholders, is community objection to the entrance to the site.
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PROGRAMME 4: GAUTENG INDUSTRIAL DEVELOPMENT ZONE (GIDZ) (continued)
For the year under review the project reached a 70% milestone which includes a delivery of the following:• Earthworks – 100%• Attenuation Pend – 75%• Earth Retaining System – 94%• Services – 68%• Internal Road Works – 51.6%• External and BMS Installations – 5%
INVESTOR ATTRACTION
Investor attraction is a key component of the IDZ programme as is required in terms of the OperatorPermit Conditions.
In line with the strategic mandate of the GIDZ to enhance the beneficiation of pre-selected minerals in South Africa and in support of the project defined for design and operationalisation at OR Tambo IDZ(viz. the JMP), the GIDZ’s investor attraction process is centred around the attraction of jewellery, diamond, and broader mineral beneficiation and the other applicable support companies required to facilitate the development of an efficient and effective Mineral Beneficiation Zone.
The GIDZ also aims to attract broader high value low mass and / or light manufacturing companies into the Zone, provided that they do not take away from the GIDZ’s primary objective of developing a Mineral Beneficiation IDZ.
The GIDZ has developed an Investor Attraction Plan to ensure the effective management and implementation of investor attraction. The plan, amongst others, provides for local as well as international engagements - the latter is undertaken based on countries or markets identified as key areas of focus for investment attraction. It is the objective of the GIDZ to, through this plan, ensure the attraction of tenants that will assist in facilitating the roll-out of top structure development. In this regard, focus during 2016/2017 was on tenancy required for both the Super Block and Shared Services Hub, as well as the broader Manufacturing Precinct.
Anticipated impact relates to the operationalisation of an efficient IDZ with the appropriate critical mass to ensure a successful IDZ that contributes to the growth of the Gauteng economy through exports.
The GIDZ concluded a memorandum of understanding with an anchor company in the food sector. The development of a factory from where food products will be processed and packaged for exports. Engagements with other companies forming part of the tenant pipeline are proceeding.
To this end, GIDZ seeks to ascertain the status of the PPP application process, given the potential longevity of this process and the impact it may have on the timeous delivery of the Super-Block. This could potentially result in a negative impact on the JMP’s tenant pipeline given that the Regulator is a key draw-card for tenants wanting to locate at the Zone.
Construction of the Jewellery Manufacturing Precinct (JMP) at OR Tambo
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JMP’s Design@50 workshop.
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PROGRAMME 4: GAUTENG INDUSTRIAL DEVELOPMENT ZONE (GIDZ) (continued)
Specific to international investment attraction missions undertaken during 2016/2017, the following can be reported in respect of follow up issues identified:
COUNTRY OUTCOME & STATUS
Hong Kong &China
The China mission agreed on a follow up incoming visit to South Africa by the China Chamber of Commerce for Jewellery. The visit, which was initially proposed for November 2016 was rescheduled to April 2017. A site visit took place to determine further interests by the China Chamber of Commerce on their potential to set up operations at the JMP. In addition to this, a follow up mission to China took place visiting a fruit processing facility invested into by Orient Bangxin, one of the companies that GIDZ engaged with during its visit to China in June 2016, which was undertaken in April 2017. The visit, which included a delegation of the GIDZ tenant was aimed at identifying the potential of the Chinese company investing into OR Tambo IDZ.
USA The mission identified interest from the New York Diamond Business Improvement District to visit South Africa, subject to co-funding from the country. Pursuant to the mission, a request to facilitate the visit of the BID was submitted to the Dti by the NY office of the Dti – in line with funding provided by the Dti for potential investors to visit South Africa. The GIDZ is working with the Dti to explore other avenues for potential funding which can assist in coordinating the visit. This includes engagements with the Economic Consul at the US Embassy.
Italy The mission identified potential interest on the establishment of a metal waste recycling facility, specifically for the export of said materials to Italy. Pursuant to the mission, research was conducted by GIDZ on metal waste recycling done in the country and a potential link to an opportunity identified at Mintek for e-waste recycling has been identified. Follow up engagements are being pursued with the identified Italian company on the outcome of the research and the potential to set up such a facility inSouth Africa.
India Political intervention on issues of security of supply were identified during the mission. The mission also identified the potential of securing semiprecious stones from Mozambique; a visit to Mozambique forms part of the 2017/2018 IR Plan for GIDZ.
Namibia andBotswana
Visits to these countries have been identified as part of the objective of securing supply of raw materials, specifically diamonds. This visit will be undertaken during the 2017/2018 financial year.
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JEWELLERY SECTOR SKILLS DEVELOPMENT
This target is linked to the JMP programme and is aimed at ensuring the availability of appropriate skills to ensure the effective implementation of the Zone. In this regard, a skills development studio viz. Design @50 has been established with the aim of increasing the technical proficiency of skilled jewellery designers. This will be done in conjunction with manufacturers to contribute to developing the South African jewellery market by producing high quality products that will follow and set fashion trends, be well marketed and be able to compete locally and in the global market. The anticipated impact is to increase skills in the jewellery manufacturing sector, specifically in respect of commercial jewellery design.
During April 2016, 15 students commenced their training in Commercial Jewellery Design. The programme completed end of March 2017 and the students graduated on 18 May 2017. The project covered the following aspects:• Design and development of signature jewellery
collections appropriate for specific target markets;
• Developing original design concepts;• Developing a commercial product range based
on design concepts and individual market research;
• Developing a marketing and sales strategy for the product range;
• Developing an approach to take the product to the market
In respect of achievements, two of the Design@50 graduates were selected to collaborate with Jenna Clifford on the Lux campaign celebrating women with fine design and inspiration drawn from nature.
Design@50 exhibited student and graduate work at Jewellex Africa held from 25 – 27 September 2016 at Gallagher Estate in Johannesburg. Furthermore, the students participated in the 2016 Jewellery Council of South Africa Collection Awards.
Design by Karen Bhengu
Design by Francis Nare
Design by Benigna Mokoatedi
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PROGRAMME 4: GAUTENG INDUSTRIAL DEVELOPMENT ZONE (GIDZ) (continued)
The finalists and winners of the CAD Category of the 2016 Jewellery Council Collection Awards Design competition are as follows:
EXPANSION PHASE
The target is aimed at identifying an expansion programme for the GIDZ for implementation.
In line with the GIDZ’s mandate, focus is on the mineral beneficiation sector, broader light manufacturing, and high value low mass manufacturing. The latter is linked to the air freight value chain in lieu of the location of the GIDZ’s Phase 1 - OR Tambo IDZ.
The anticipated impact is to enhance beneficiation of products for export, resulting in increased contribution of the GIDZ to Gauteng’s economy and the GDP of South Africa.
The following activities were undertaken in the period under review:
• Finalisation of the PGM Value-Add SEZ Market attractiveness study on the establishment of a PGM SEZ in Springs.
• Conclusion of a Heads of Agreement between GIDZ and Impala.
• Finalisation of an integrated strategy to guide the GIDZ’s strategic positioning, inclusive of the identification of investment opportunities or areas that GIDZ must consider for its expansion phase.
POSITION NAME INSTITUTION
1. Winner Karen Bhengu Design @ 50
2. Second Place Francis Nare Design @ 50
3. Finalist Bengina Mokoatedi Design @ 50
4. Finalist Refilwe Mokwatedi Design @ 50
5. Finalist Silindile Mbelu Design @ 50
3D Model of the GIDZ
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PERFORMANCE INFORMATION BY PROGRAMME 4 (GAUTENG INDUSTRIAL DEVELOPMENT ZONE)
PROGRAMME 4: GAUTENG INDUSTRIAL DEVELOPMENT ZONE (GIDZ)
Programme 4 contributes directly to Strategic Goal 1: Gauteng’s economy radically transformed and Strategic Goal 2: Gauteng’s economy reindustrialised; and supports delivery of Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively.
Strategic objectives, performance indicators, planned targets and actual achievements:
PROGRAMME/ACTIVITY/OBJECTIVE:
STRATEGIC OBJECTIVES
ACTUAL ACHIEVEMENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVEMENT2016/2017
DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT FOR 2016/2017
COMMENT ON DEVIATIONS
To stimulateemployment-led growth and development through the facilitation of strategic economic infrastructureinterventions
50% completion of bulkinfrastructureconstruction
Phase 2 bulkinfrastructureat Airport City IDZconstructed
70% of thebulk infrastructureconstructioncompleted
Bulk infrastructureconstruction notcompleted
Delays due to disputes around the entrance tothe park and investor requirementsnecessitated the redesign of the site plan
To facilitate thedevelopment of sectorspecific skills required tomeet the needs of the jewellery economic sector
15 jewellerymanufacturingand designstudents trained
15 jewellerymanufacturingand designstudents trained
15 jewellerymanufacturingand designstudents trained
None None
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PROGRAMME 4: GAUTENG INDUSTRIAL DEVELOPMENT ZONE (GIDZ) (continued)
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Key performance indicators, planned targets and actual achievements
PROGRAMME/ACTIVITY/OBJECTIVE:
PERFORMANCE INDICATOR
ACTUAL ACHIEVEMENT 2013/2014
ACTUAL ACHIEVEMENT 2014/2015
ACTUAL ACHIEVEMENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVEMENT2016/2017
DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT FOR 2016/2017
COMMENT ON DEVIATIONS
Phase 2 JMPbulk infrastructure atthe Airport City IDZ constructed.
Master plan for the JMP site completed
Procurement process initiated
Construction of bulk earthworks, attenuation damand setting of platforms
Construct phase 2JMP bulk infrastructure at the ORT Airport IDZ
70% Bulk InfrastructureConstruction not completed
Redesign of bulk requirements for identified tenants necessitated the redevelopmentof the site developmentplan. The accompanyingapprovals delayed the delivery of the project.
Number of young peoplegraduating from a one-yearjewellery design and manufacturing course.
15 young people graduating
15 students trained
15 students 15 students 15 students None None
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Pictured from left to right
Dr Paul Jourdan, Ms Lorna Lloyd, Mr Chris van Rensburg, Mr Frank Kunene, Mr Saki Zamxaka and Ms Seipati Mangadi
at the Design@50 Student Graduation
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Ms Dawn RobertsonConHill Chief Executive Officer
Mr Prince MafojaneChairperson of ConHill Board
PROGRAMME 1: GGDA HOLDINGS (continued)PROGRAMME 5:
CONSTITUTION HILL (CONHILL)
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Mr Prince MafojaneChairperson of ConHill Board
The table below depicts the purpose of Programme 5, its sub-programmes and their functions.
BUDGET PROGRAMME:5
PURPOSESUB-PROGRAMMES
FUNCTIONS
Constitution Hill (ConHill)
Become Gauteng’s most accessible, engaging and vibrant cultural heritage institution.
Education and Public Programmes
• Strengthen and deepen ConHill’s essential audience, community relationships and engagements to establish ConHill as a leading partner in human rights education.
Exhibitions • Execute the new programmes and exhibitions strategies with a focus on fewer, higher-impact multi-disciplinary initiatives.
• Make the exhibitions come alive through creative installations and the development of new interpretive tools.
• Develop new exhibition-based programmes that will engage new audiences and enhance visitor experiences at the museum.
Facilities Management
• Make the much-needed investment into the preservation of our heritage assets, our facilities, operations and technological infrastructure, communications, security, cleaning and asset management.
Venue Hire • Deliver the diverse, dynamic and awe- inspiring conferencing experience visitors expect.
Tourism (Visitors) • Expand our range of tours and introduction of personalised experiences.
Constitution Hill, a subsidiary of Gauteng Growth and Development Agency (GGDA), is home to the Constitutional Court of South Africa. This iconic site, situated in the Johannesburg CBD, includes the Old Fort Prison Complex where South Africa’s leading political activists.
Constitution Hill has been declared a National Heritage Site, with the declaration made formal by its publication in the Government Gazette on 10 March. The declaration includes the Old Fort, the Women’s Jail, the Constitutional Court, and the Number Four and Five prisons.
WHAT WE DO:
• Urban regeneration: As a multi – media, mixed – use heritage precinct, one of Constitution Hill’s fundamental mission is engage with its environment and contribute to the Gauteng City Region and the Johannesburg inner city
regeneration.
• Civic growth through historical perspective: By physically animating the values of the Constitution within the heritage precinct, it is expected that Constitution Hill can allow visitors to draw on and engage with lessons learnt from the past to fulfil the dreams for the future.
EXHIBITIONS
Exhibitions are the core of the museum as they are places where the public encounter the material culture being preserved. ConHill’s exhibition spaces are where the past becomes tangible, and the experience offered is an unforgettable one. They are an essential element of the site, as they provide a platform for Constitution Hill to showcase its ideals to the public.
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PROGRAMME 5: CONSTITUTIONAL HILL (CONHILL) (continued)
A total of eight (8) thematically arranged exhibitions were hosted during the financial year against a target of six (6).1. Basha Uhuru Exhibition 2. Unveiling the Hijabi3. Mandela-Gandhi Exhibition4. Post it Exhibition5. Woman Hold up Half the sky6. Woman of Spirit Exhibition7. My Constitution 8. Weight and Measures
EDUCATIONAL PROGRAMMES
Educational programmes promote constitutional education in schools through activities aimed at citizens. During the financial year, six educational programmes were planned for, and achieved. These included:1. Bill of Rights workshops2. Thand’ Umzansi workshops3. Pre-Election Roundtable Discussion4. Constitution Hill Debating Tournament5. Commemorating International Children’s Day6. Children’s Room Workshops
PUBLIC PROGRAMMES
Public programmes promote active citizenry, nation building and social cohesion through engagementin the public programmes. Through programmes we seek to become:• a global beacon for human rights, democracy
and reconciliation, driven by public participation;• a vantage point which gives us an understanding
of our society in transition;• a lekgotla where we meet to talk to each other
and celebrate our diversity.It is through twelve themes linked to constitutionalism, democracy and human rights that the site becomes an extroverted, programme-driven campus inspired by public participation. These themes included:
1. Freedom Montha. Unfinished Business of the TRC Dialogue - TRC
Workshop for Tour Guides and Mediab. A Snake Gives Birth to a Snake -film screening
and Q&Ac. Indians Can’t Fly -film screening and panel
discussion
2. Africa Montha. African Leadership Seminarb. We never Give Up II - film screening and panel
Discussion“We the Children Walk” participants.
“We the People Walk” participants.
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3. Youth Montha. Men’s Seminar b. Basha Uhuru Music Festival and Cycling Tour
4. Environmental Awareness – Rights Based Discussion
5. Promoting Sexual Diversity
6. Women and Business Development
7. Women’s Month commemorations
8. Market @ the Fort
9. 16 Days of Activism for no violence against women and children
10. Promoting Social Cohesion
11. Promoting Racial Diversitya. Reflections on Palestineb. Antiracism Workshop
12. Affirming Constitutionalism a. We the People Walkb. We the Children Walk
FOOTFALL
Footfall is the total number of people that visited the site, for all activities hosted onsite. This number includes visitors of guided tours, exhibitions, public programmes, educational programmes and events.
The footfall indicates that a total of 185 404 patrons visited the site during the period under review. This is against a target of 184 231 visitors.
REVENUE GENERATED FROM TOURS
Sustainable revenue streams are needed to deliver the diverse, dynamic and awe-inspiring experiences visitors expect. R1 563 851.10 was generated through admissions for tours during the period under review. Constitution Hill is the point of intersection between two bus routes on the worldrenowned City Sightseeing red bus.
Children’s room workshop
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PROGRAMME 5: CONSTITUTIONAL HILL (CONHILL) (continued)
REVENUE GENERATED FROM VENUE HIRE
A total of R4 371 189.21 was generated through meetings, incentives, conferencing and events during the period under review. The conferencing spaces have been refurbished and fitted with the latest technology appropriate for a world-class conferencing venue.
MARKETING
Strengthening ConHill’s brand through an integrated communications approach led to the site being rated one of the top 10 landmarks in South Africa by Trip Advisor. This makes it one of the leading tourism attractions globally, and it is consistently listed in the top three things to do when in Johannesburg. Constitution Hill has additionally enhanced its tourism experience by developing an App for self-guided tours on site.
To deliver its programming; the site partnered with Kaya; SAFM and other media houses to ensure a wider reach in heightening constitutional awareness.
CONSTITUTION HILL DEVELOPMENT
The intention of the project is to develop the available portions as iconic infrastructure in such a way that it is sensitive to the context, the architecture and the overall ambition of the stakeholders. The programme is driven by its unique position as a place where both the difficulties of the past and the possibilities of the future can be experienced.
The development seeks to provide space for a Visitors Centre, exhibitions, office accommodation, conference centre and shared facilities. The unit has embarked on a two-pronged approach to securing professional services for the construction of the Visitors Centre and an RFI for the development of the remainder of the ConHill land parcels.
PROGRESS - VISITORS CENTRE
A professional team of heritage experts has been appointed and the review of the designs for the Visitors Centre has been completed. The scope for the team includes obtaining all relevant municipal and heritage approvals. The tender for the construction services will be issued during the 2017/18 financial year.
Exhibitors during Market@theFort.
School children at ConHill during tour visit
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PERFORMANCE INFORMATION BY PROGRAMME 5 (CONSTITUTION HILL)
PROGRAMME 5: CONSTITUTION HILL (CONHILL)
Programme 5 contributes directly to Strategic Goal 1: Gauteng’s economy radically transformed and Strategic Goal 2: Gauteng’s economy reindustrialised; and supports delivery of Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively.
Strategic objectives, performance indicators planned targets and actual achievements:
PROGRAMME/ACTIVITY/OBJECTIVE:
STRATEGIC OBJECTIVES
ACTUAL ACHIEVEMENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVEMENT2016/2017
DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT FOR 2016/2017
COMMENT ON DEVIATIONS
Fostering inclusive development and social transformation through the Heritage, Education and Public Programmes
20 exhibitorsper year
6 exhibitorsper year
8 exhibitorsper year
+2 Increase in the number of collaborations with external stakeholders
75 publicprogrammesper year
12 publicprogrammesper year
12 publicprogrammesper year
None None
100 educationprogrammesper year
6 educationprogrammesper year
6 educationprogrammesper year
None None
Strategic economic infrastructure that supports and facilitates radical economic transformation and re-industrialisation of Gauteng economy
Site developmentconceptcompleted.
Completion of construction of the Visitor Centre – B1 Conferencing Centre
Professional teams and Architects appointed.
Appointment of the service for construction to be completed during the first quarter of the new financial year
Delays due to internal processes
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PROGRAMME 5: CONSTITUTIONAL HILL (CONHILL) (continued)
Key performance indicators, planned targets and actual achievements
PROGRAMME/ACTIVITY/OBJECTIVE:
PERFOR-MANCE INDICATOR
ACTUAL ACHIEVE-MENT 2013/2014
ACTUAL ACHIEVE-MENT 2014/2015
ACTUAL ACHIEVE-MENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVE-MENT2016/2017
DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT FOR 2016/2017
COMMENT ON DEVIATIONS
Increase in visitor numbers at ConHill from previous year.
87 302 127 939 143 657 184 231 185 404 +1 173 Increased numbers coming through the Visitors Centre and the Constitutional Court.
Number of exhibitors per year organised.
16 20 21 6 8 +2 Heightened interested shown by stakeholders led to collaboration on issues of constitutionalism.
Number of public programmes per year organised.
45 63 77 12 12 None None
Number of education programmes per year organised.
75 83 103 6 6 None None
Construction of the visitor centre building at the ConHill site for visitors and conferencing opportunities.
New KPI Identified artworks and budget requirements to source the materials.
-N/A Completion of construction of the Visitor Centre – B1 Conferencing Centre.
Professional teams and Architects appointed.
Appointment of the service for construction to be completed during the first quarter of the new financial year.
The project was delayed due to internal processes.
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Constitution Hill
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Mr Saki Zamxaka
GNDC Chief Executive Officer
Mr Neeshan BaltonChairperson of GNDC Board
PROGRAMME 1: GGDA HOLDINGS (continued)PROGRAMME 6:
GREATER NEWTOWN DEVELOPMENT COMPANY (GNDC)
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Mr Neeshan BaltonChairperson of GNDC Board
THE OBJECTIVES OF THE NEWTOWN DEVELOPMENT COMPANY ARE:
1) The attraction of new private sector and other investment to complement and enhance the facilities and programme already available in the cultural quarter as a destination centre and
desired location for the creative industries. It is supported by three others.
2) The provision of a guaranteed, developing and focused cultural programme.
3) The creation of a supportive spatial framework creating urban amenity and identity.
4) The provision of the high quality management of the Cultural Quarter and certainty in plans for the management and programming in the future.
The objectives for the Newtown Development Company were formulated into three primary strategies for implementation:
• Strategy 1 - Commercial development and new investment: The aim of Strategy 1 is to facilitate –through both private and public investment - the supply of commercially viable retail, hospitality,
business, housing uses and associated social facilities to support the attainment of the vision set out for the Newtown Cultural Quarter.
• Strategy 2 - Cultural Programme and the Creative Industries: The aim of Strategy 2 is to create a sustainable critical mass of mixed cultural programmes to support Strategy 1 and to stimulate demand for the Newtown Cultural Quarter as a destination centre and as a location for the Creative Industries.
• Strategy 3 - Spatial framework: The aim of Strategy 3 is to establish a spatial framework that guides and supports development by enhancing urban amenity and identity, ensuring the provision of appropriate infrastructure, adding value and pre-assembling development.
The GGDA will support the initiatives of the City of Johannesburg and entities like the JohannesburgDevelopment Agency with regard to the above strategies.
KEY DELIVERABLES
The Greater Newtown Development Company is in the process of being transferred from the City of Johannesburg to a subsidiary of GGDA called the Supplier Park Development Company SOC Limited. Upon registration of transfer into the name of SPDC, the winding down process through deregistration will unfold.
The milestones for the transfer of the property include:• The signing of the transfer agreement,• Obtaining the regulation 38 certificate,• Registering the subdivided portion with the Deed
Office,• Obtaining the rate clearance certificate,• Lodging the documents at the Deeds Office,• Transfer of the subdivided portion from the City
to SPDC.
The milestones for the de-registration of the company include:• Passing of the special shareholders resolution to
de-register GNDC by GGDA and the City,• Settling of all liabilities, transferring of all
accounts such as municipality and rates, from Greater Newtown to JDA,
• Lodging of the documents to de-register GNDC at CIPC,
• Registration of the de-registration of GNDC by CIPC.
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The subdivided portion of the land on which Number 1 Central Place is situated has been registered at the Deeds Office and the rate clearance certificate has been issued by the City in respect of the said subdivided portion. The documents for the registration of transfer of the subdivided portion from the City to SPDC have been lodged.
The GNDC Board met on 22 February 2017 and resolved that, given the high liquidation fee estimated to be R2 million, an alternative to liquidation should be found to the winding down of GNDC.
A legal opinion obtained indicated that a less expensive alternative to liquidation would be deregistration of the company. The Board of GNDC resolved that GNDC be wound down through a deregistration process.
Strategic objectives, performance indicators, planned targets and actual achievements:
STRATEGIC OBJECTIVES
ACTUAL ACHIEVEMENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVEMENT2016/2017
DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT FOR 2016/2017
COMMENT ON DEVIATIONS
Transfer of 1Central Placeby due date
Rate clearancecertificateobtained fromCoJ
Level ofcompletionof the winding downprocess
The subdividedportion of the land on which Number 1 Central Place issituated wasregistered at theDeeds Office
GNDC windingdown not completed
Liquidation deemed costlyand the company deregistrationis the preferredoption that will be pursued
Image
PROGRAMME 6: GREATER NEWTOWN DEVELOPMENT COMPANY (GNDC) (continued)
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Key performance indicators, planned targets and actual achievements PROGRAMME/ACTIVITY/OBJECTIVE:
PERFOR-MANCE INDICATOR
ACTUAL ACHIEVE-MENT 2013/2014
ACTUAL ACHIEVE-MENT 2014/2015
ACTUAL ACHIEVE-MENT 2015/2016
PLANNED TARGET2016/2017
ACTUAL ACHIEVE-MENT2016/2017
DEVIATION FROM PLANNED TARGET TO ACTUAL ACHIEVEMENT FOR 2016/2017
COMMENT ON DEVIATIONS
Completion of the winding down process
New KPI Regulation38 certificateobtainedfrom CoJ
Ratesclearancecertificateobtainedfrom CoJ
Completionof the windingdownprocess
The subdividedportion of the land on which Number 1Central Placeis situated was registered at the DeedsOffice
GNDC windingdown not completed
Liquidationdeemed costly and the company deregistrationis the preferred option that will be pursued
STRATEGY TO OVERCOME AREAS OF UNDER PERFORMANCELevel of completion of the winding down process was not achieved. A decision to pursue the company de-registration was taken in view of the costs involved in a liquidation process.
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PART C: GOVERNANCE REPORT
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INTRODUCTION
The GGDA’s Corporate Governance framework embodies the Amendments to the Blue IQ Investment Holdings Act No.1 of 2012, the Public Finance Management Act No.1 of 1999 (PFMA), Companies Act No. 71 of 2008 and processes and systems that enable the GGDA meet corporate Governance expectations as well as provide direction, control and accountability. The Board of GGDA is ultimately responsible for ensuring high governance standards, assisted by management. The GGDA Group remains fully committed to business integrity, fairness, transparency and accountability in all its activities.
EXECUTIVE AUTHORITY
On a quarterly basis, the GGDA reports to the Department of Economic Development on progress made towards the achievement of the predetermined objectives and implementations of the business plan. These matters are detailed in part B of this annual report.
STANDING COMMITTEE ON PUBLIC
ACCOUNTS (SCOPA)
The role of SCOPA is to exercise oversight over Provincial and Local Government on behalf of the Gauteng Provincial Legislature to ensure accountable utilisation of resources and prudent financial management and to make recommendations to the Legislature.The Committee considered the Annual Report, including the Auditor-General’s Report on GGDA for the year ended 31 March 2016 for which the GGDA was not called to appear before the committee. The Committee notes that GGDA obtained an unqualified audit opinion with no findings under Annual Financial Statements, predetermined objectives and compliance with laws and regulations.
THE BOARD
The GGDA is an entity established in terms of the Amendment to the Blue IQ Investment Holdings Act No. 1 of 2012 by the Gauteng Provincial Government in its Department of Economic Development.
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THE ROLE OF THE BOARD
In terms of the Public Finance Management Act, No.1 of 1999 (PFMA), the Board is the accounting authority of the GGDA and has a fiduciary duty to act in good faith, with due diligence and care, and in the best interest of the Company and all its stakeholders. It is the guardian of the values and ethics of the Company and is accountable to the shareholder. The Board has full and effective control over the GGDA. The Board and its committee charters set out the roles, duties and responsibilities of the Board, as well as salient corporate governance principles. The Board and committee charters are revised annually to ensure effectiveness and relevance. The role of the Board is described by the following activities:
• Providing strategic direction and leadership• Determining the goals and objectives of the Company• Approving key policies, including investment and risk management• Reviewing the Company’s goals and strategies for achieving its objectives• Approving and monitoring compliance with corporate plans, financial plans and budgets• Reviewing and approving the Company’s financial objectives, plans and expenditure• Considering and approving the Annual Financial Statements, interim statements and notices to the shareholder• Ensuring good corporate governance and ethics• Monitoring and reviewing performance and effectiveness of controls• Ensuring effective communication with relevant stakeholders• Liaising with, and reporting to, the shareholder• Guiding key initiatives• Approving transactions beyond the authority of management• Considering and adopting, if appropriate, operating budgets and business plans proposed by management
for the achievement of its strategic direction• Delegating authority for capital expenditure• Ensuring ethical behaviour and compliance with relevant laws and regulations, audit and accounting principles and the GGDA’s internal governing documents and codes of conduct• Acting responsibly towards the GGDA’s relevant stakeholders
BOARD CHARTER
The Board Charter sets out the roles, duties and responsibilities of the Board, as well as salient corporate governance principles. The Board and committee charters are revised annually to ensure effectiveness and relevance. In line with the Charter, the Board met a minimum of four times this year to discharge its duties as set out in the Public Finance Management Act, No.1 of 1999 (PFMA) and the King Code of Corporate Governance. Proceedings at meetings are directed by a formal agenda. The proposed agenda is circulated prior to the meeting to allow Board members sufficient opportunity to request additional agenda items. In addition, a comprehensive Board pack is distributed to all members in advance of meetings, to ensure that they are properly informed and to enable them to undertake meaningful discussions and effectively discharge their duties.
PART C: GOVERNANCE REPORT (continued)
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These packs typically include:• Agenda• Previous meeting minutes• Minutes of all Board Committee meetings which have taken place since the last Board meeting
All Board members have unrestricted access to the Company Secretary and all Board records, as well as to independent professional advice in appropriate circumstances.
Composition of the BoardTHE MEMBERS OF THE ENTITY DURING THE YEAR AND TO THE DATE OF THIS REPORT ARE AS FOLLOWS:
NAME APPOINTED
M Mokoena (Chairman) 1 June 2012
Z Malele (Deputy Chairman) 25 September 2012
N Balton 1 June 2012
D Dondur 14 March 2013
Dr P Jourdan 1 June 2012
S Nicolaou 1 June 2012
Q Gungubele 1 February 2015
Dr N Msomi 1 October 2015
P Mafojane 1 October 2015
T Setiloane 1 October 2015
S Zamxaka (Executive Director) 1 March 2016
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COMPOSITION OF THE BOARD
NAME DESIGNATIONDATE
APPOINTED
DATE
RESIGNEDQUALIFICATIONS AREA OF EXPERTISE
BOARD DIRECTORSHIPS
(OTHER)
OTHER
COMMITTEES
OR TASK TEAMS
M
Mokoena
Chairman 01 June
2012
N/A B Com Hons (UNISA) – Public management; – Financial
management and auditing;
– Infrastructure and urban development;
– Trade and Investment – Promotion
– GIDZ Development Company
– Nedwater – Clinix Lesedi Private
Hospital – Nareli Investment
Holdings – INCA Portfolio
Managers – INCA Capacity Building
Fund – Dipogomo Investments – Mokwena Mokoena
Remuneration
Committee
Trade and
Investment
Committee
Z Malele Deputy
Chairman
25
September
2012
N/A B.Sc(UoL), BAP,
MAP(WBS)
– ICT – Economic
development – Marketing – Financial
management – Sales management – HR, Operations
management – Strategic
Management – Risk Management – Governance and
Project management
– Sec-Itech – Meadow Star
Investments 28 – Stanford Estates and
State – Information Technology
Agency
GGDA Group
Audit and
Risk Committee
N Balton Non-Executive
Director
01 June
2012
N/A Bachelor of Arts in
Education (B.Ed), Master
of Science (M.Sc.):
Public Management and
Finance
– Education – Public Management
and Finance
– Ahmed Kathrada Foundation
– Greater NewtownDevelopment Company
– Constitution Hill Development Company
Group Audit and
Risk
Committee
Social and Ethics
Committee
D Dondur Non- Executive
Director
14 March
2013
N/A – B Acc – B Compt Honours – MBA – CA (SA) – International Executive
Development Program – University of NevadaReno Executive Program – Post Graduate
Certificate in Labour Relations
– Finance – Business
Administration – Auditing – Accounting – IT Governance – Enterprise Risk
Management – Corporate
Governance – Labour relations and
HR
– SA Civil Aviation Authority
– Joburg Market – Gautrain Management
Agency – South African National
Blood Services – Basil Read Holdings – PPS
GGDA Group
Audit and
Risk Committee
Social and
Ethics Committee
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COMPOSITION OF THE BOARD
NAME DESIGNATIONDATE
APPOINTED
DATE
RESIGNEDQUALIFICATIONS AREA OF EXPERTISE
BOARD DIRECTORSHIPS
(OTHER)
OTHER
COMMITTEES
OR TASK TEAMS
Dr P Jourdan Non-Executive
Director
01 June 2012 N/A B.Sc.; B.A; M.Sc.
(Eng) x2; Ph.D.
(Leeds University)
– Resource-based and spatialdevelopment
– Coega Development Corporation
– GIDZ Development Company
Social and Ethics
Committee
S Nicolaou Non-Executive
Director
01 June 2012 N/A B. Pharm(WITS)
FPS(SA)
– Trade – Manufacturing – Pharmaceuticals
– Brand SA – Proudly SA – Aspen Polska – Aspen France – BRICS Business Council – Business Unity South Africa – Public Health Enhancement
Fund – PHARMISA – Sifiso and Nxasana Paediatrics
Fund for Children
GGDA Group
Audit and
Risk Committee,
Trade and
Investment
Committee
Q Gungubele Non-Executive
Director
1 February 2015 N/A B.Iuris. LLM in
Labour Law
– Labour Law – Corporate
Governance
– Kumaka Board Remuneration
Committee
Social and Ethics
Committee
Dr N Msomi Non-Executive
Director
2 October 2015 N/A PhD International
Executive
Development
Diploma in
Finance
– Innovation – Corporate
Finance – Entrepreneurship
– Board of Governors- ICGEB – The Innovation Hub
N/A
P Mafojane Non-Executive
Director
2 October 2015 N/A B. Proc LLB – Law – The Constitution Hill Development Company
Remuneration
Committee
T Setiloane Non-Executive
Director
2 October 2015 N/A Dip. Mash. Mech
BSc Mechanical
Engineering
– Engineering – Marketing
– African Holding Renaissance Holdings Limited
– Oppenheimer Memorial Trust – Heating Ventilation and Air-
Conditioning (Pty)Ltd – Oro Group (Pty) Ltd – University of Cape Town – Supplier Park Development
Company
Trade and
Investment
Committee
S Zamxaka Executive
Director
1 March 2016 N/A B. Admin B. Econ
Honours
Diploma Program
in
International
Education
– Developmental Economics
– Project Management
– Greater Newtown Development Company
– Constitution Hill Development Company
– Gauteng Industrial Development Zone
– The Innovation Hub – Supplier Park Development
Company
N/A
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BOARD COMMITTEES
The Board may establish committees to assist it in the execution of its duties, powers and authorities. The committees established by the Board are the Audit and Risk Committee, Social and Ethics Committee, Nomination, Human Resource and Remuneration Committee and the Trade and Investment Committee. The roles of these committees are set out in their respective charters. Non-executive directors receive fees for their contribution to the Board and the committees on which they serve. The shareholder determines this rate in terms of a policy. Non-executive directors are also reimbursed for out-of-pocket expenses incurred on the Company’s behalf. Further information on directors ‘remuneration appears on page 222.
COMMITTEE NO. OF MEETINGS HELD NO. OF MEMBERS NAME OF MEMBERS
GGDA Group Audit and Risk Committee 22 6 Ms D DondurMr Z MaleleMr O MogaleMr N BaltonMr S MahlalelaMs M Tshabalala
GGDA Group Nomination, HumanResource and Remuneration Committee
7 3 Ms Q GungubeleMr M MokoenaMr P Mafojane
GGDA Group Social and Ethics Committee
4 4 Mr N BaltonDr P JourdanMs D DondurMs Q Gungubele
GGDA Group Trade and InvestmentCommittee
6 3 Mr S NicolaouMr M MokoenaMr T Setiloane
Details of the attendance of Board members appear on page 132.
DIRECTORS’ REMUNERATION
Non-executive directors receive fees for their contribution to the Board and the committees on which they serve. The shareholder determines this rate in terms of a policy. Non-executive directors are also reimbursed for out-of-pocket expenses incurred on the Company’s behalf. Further information on directors ‘remuneration appears on page 222.
PART C: GOVERNANCE REPORT (continued)
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RISK MANAGEMENT
GGDA seeks to minimise risk by ensuring that the appropriate infrastructure, personnel, systems and controls are in place throughout the organisation, and risk management is integrated into management processes. Group Risk control strategies and policies have been put in place to ensure that risks are managed in an integrated manner throughout the group. The Board is responsible for ensuring that the risk management process is in place and is integrated into the day-to-day business activities of the Group. Significant risks that could hinder the achievement of GGDA’s strategic objectives are identified, assessed and prioritised annually and reviewed regularly, through a risk assessment in line with the Strategic Risk Management Framework, and control mechanisms are implemented to manage and monitor these risks.
GGDA has an Audit and Risk Committee that advises management on the overall system of risk management and independently monitors the effectiveness of the system of risk management through reviews carried out by the Internal Audit Unit. The Risk Management process continues to mature with increasing support from management and the Board.
INTERNAL AUDIT
The Internal Audit (IA) function of the GGDA is an independent appraisal activity of the various operations and systems of control to determine whether acceptable policies and procedures are followed, legislative requirements and established standards are met, resources are used efficiently and economically, and planned missions are accomplished effectively.
IA’s primary purpose is to provide its stakeholders with assurance regarding the adequacy and effectiveness of the GGDA’s internal control systems and, where appropriate, the quality of performance of its business operations as evaluated against agreed performance standards. Such assurance has been based on objective information to form audit conclusions.
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IA has had no direct operational responsibility or authority over any of the activities audited. Accordingly, it has not implemented internal controls, developed procedures, installed systems, prepared records or engaged in any other activity that may have impaired IA’s judgement, objectivity and/or independence. The controls subject to evaluation encompassed the following:
• The information systems environment• The reliability and integrity of financial and opera-
tional information• The effectiveness of operations• Safeguarding of assets• Compliance with laws and regulations
Compliance with Laws and RegulationsIn line with the Public Finance Management Act, No.1 of 1999 (PFMA) and Treasury Regulations, the Internal Audit has provided the Audit and Risk Committee and management with assurance that controls are ade-quate and effective. This has been achieved by means of appropriate and effective risk based internal audit process.
AUDIT AND RISK COMMITTEE
The GGDA has a shared Group Audit Risk Committee
for the Holdings Company and all its subsidiaries. The
Board has delegated the oversight of risk management
to the Audit and Risk Committee. The purpose of the
Audit and Risk Committee is to assist the Board dis-
charging its duties relating to:
• the safeguarding of assets,
• the operation of adequate systems and control pro-
cesses,
• the operation of adequate risk management pro-
cesses, and
• the review of the preparation of accurate and timely
financial reports and statements by management.
The Committee provides a platform for discussing business
risks and control issues and for developing relevant
recommendations for consideration by the Board. The
Committee acts as a channel of communication between
the GGDA management and the internal and external
auditors.
The Committee acts primarily in an advisory capacity and
does not have executive responsibilities except in relation
to:
• The approval of non-audit services performed by
internal and external auditors.
• The approval of terms of engagement, and fees to be
paid to the external auditors.
• Approval of the appointment of internal auditors if the
function is outsourced, and the head of internal audit
• Whether an in-house internal audit function is
established.
The identification and management of risk is central to
achieving the GGDA’s mandate in terms of the Act. Each
year the Board reviews and considers the risk profile of the
whole business. This risk profile covers both operational
and strategic risks.
In addition, the Board specifically requires management
to implement a system of control for identifying and
managing risk. The Board, through the Audit and Risk
Committee, regularly reviews the effectiveness of the
system.
In this regard the role of the Audit and Risk Committee is
to ensure that:
• Appropriate risk and control policies are in place and
are communicated throughout the organisation
• The process of risk management and the system of
internal control are regularly reviewed for effectiveness
• There is an ongoing process of identifying, evaluating
and managing the significant risks faced by the GGDA
(including compliance and IT-related risks) and that
this is in place throughout the year.
• A formal risk assessment is undertaken annually.
• There is an adequate and effective system of
internal control in place to manage the more
significant risks faced by the Group to an
acceptable level.
• A risk register is maintained and kept up-to-date.
• Appropriate insurance cover is in place and
regularly reviewed, and that all uninsured risks are
reviewed and managed.
PART C: GOVERNANCE REPORT (continued)
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GGDA GROUP AUDIT AND RISK COMMITTEE
NAME QUALIFICATIONSINTENAL OR EXTENAL
IF INTER-NAL,POSITION IN THE PUBLICENTITY
DATEAPPOINTED
DATERESIGNED
NO. OFMEETINGSATTENDED
Ms D Dondur - B Acc- B Compt Honours- MBA- CA (SA)- WITS and London Business School International Executive Development Program- University of Nevada, Reno Executive Development Program- Post Graduate Certificate in Labour Relations- Fellow member at the IoDSA- Member of the Institute of Internal Auditors South Africa- Member of the SA Institute of Chartered Accountants
External N/A 02 October 2015
N/A 20 (12 Scheduledand 8 Special)
Mr N Balton - Bachelor’s Degree in Education,- Masters Degree in Public Management and Finance
External N/A 02 October 2015
N/A 14 (9 Scheduled and 5 Special)
Mr Z Malele B. Sc(UoL)- BAP- MAP(WBS)
External N/A 02 October 2015
N/A 19 (12 Scheduled and 7 Specials)
Mr S Nicolaou
- B. Pharm(WIT)- FPS(SA)
N/A 02 October 2015
24 May 2016
5 (4 Scheduled and 1 Special)
Mr T Setiloane
- Dip. Mash. Mech- BSc Mechanical Engineering
External N/A 02 October 2015
24 May 2016
4 (4 Scheduled)
Mr S Mahlalela
- Master of Business Administration (Finance)- Chartered Accountant CA(SD)
External N/A 24 May 2016 N/A 6 (5 Scheduled and 1 Special)
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GGDA GROUP AUDIT AND RISK COMMITTEE
NAME QUALIFICATIONSINTENAL OR EXTENAL
IF INTERNAL,POSITION IN THE PUBLICENTITY
DATEAPPOINTED
DATERESIGNED
NO. OFMEETINGSATTENDED
Ms MTshabalala
- Chartered Accountant CA(SA)- Certificate in the Theory of Accounting- Bachelor of Commerce in Accountancy Honours- Bachelor of Commerce (Accounting)
External N/A 24 May 2016 31 March 2017 18 (10 Scheduled and 8 Special)
Mr O Mogale - Masters in Information Technology (UP)- B.Sc (Information Technology) (Vista)
External N/A 24 May 2016 N/A 17 (11 Scheduled and 6 Special)
PART C: GOVERNANCE REPORT (continued)
SOCIAL AND ETHICS COMMITTEE
The role of the Committee is to assist the Board with the oversight of social and ethical matters relating to the GGDA.
Members of the CommitteeThe members of the Committee and the meetings attended are set out on page 146
ResponsibilitiesThe objectives and responsibilities of the Committee are recorded in its charter and are aligned with the Committee’s statutory functions as set out in the Companies Act, No. 71 of 2008. The Committee’s duties are summarised below:
1. Monitor GGDA’s activities with regard to any relevant legislation, other legal requirements
or prevailing codes of best practice pertaining to matters relating to social and economic development; and good corporate citizenship, including the GGDA’s:• Promotion of equality, prevention of unfair
discrimination, and reduction of corruption.• Contribution to development of the • communities in which its activities are
predominantly conducted or within which its products or services are predominantly marketed.
• Record of sponsorship, donations and charitable giving.
2. The environment, health and public safety, including the impact of the GGDA’s activities and of its products or services.
3. Stakeholder relationships.4. Labour and employment, including drawing
matters within its mandate to the attention of the
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Board as required. During the year under review, the Committee has considered presentations and reports on the following:• Gift registers• Financial disclosures• Quarterly reports on legislative updates• Quarterly reports on employment equity• Quarterly reports on ethics performance and
management• Quarterly reports on environment, health and
public safety• Whistle blowing reports• Risk management reports
COMPLIANCE WITH LAWS AND REGULATIONS
Management of the organisation is responsible for the day-to-day management of the activities of the institution, and Board members embrace their responsibilities imposed by the Blue IQ Amendment Act, the PFMA and other relevant laws and regulations. In addition, each individual manager undertakes to maintain a working understanding of the laws, rules, codes and standards applicable to the GGDA’s operations. The individual managers are supported by the Legal Advisory and Company Secretary Department which provides the following services:• Identifying and advising on existing, new
or amended legislation that is applicable to the GGDA’s business, including giving recommendations on applicable rules.
• Facilitating legal compliance with relevant laws and rules and assigning responsibility for areas of compliance.
• Facilitating legal compliance with internal policies, rules, guidelines and procedures.
• Facilitating and reviewing management’s monitoring of compliance.
Accordingly, the entire management team is responsible for the implementation of effective compliance and processes.
FRAUD AND CORRUPTION
The government of South Africa identified fraud and corruption as a serious concern that affects the quality of service delivery. By remaining silent about fraud, corruption and other malpractices, an employee contributes to, and becomes part of, a culture of fostering such improprieties. To address this concern the GGDA has adopted a fraud prevention policy, as
well as a policy on whistle blowing which emphasises the GGDA’s commitment to ensure that its exposure to corrupt activity is constrained, mitigated, regularly monitored and subject to periodic risk assessments.These policies provide the means by which employees and other stakeholders are able to raise concerns with appropriate line management or via the Tip-Offs Anonymous Hotline, where they have reasonable grounds to believe that there are irregular activities involving the GGDA. The whistle blowing policy that was adopted provides the means for informing the GGDA of any suspected reportable conduct or any other inappropriate activity.
The GGDA commits to doing everything practically possible within its powers and reach to protect a whistle-blower that has made a protected disclosure in terms of this policy. In support of the expectation for employees and all stakeholders to report incidents, the GGDA has established the Tip-Offs Anonymous Hotline. This hotline can be used to report known or suspected incidents without fear or occupational detriment and/ or victimisation. In the year under review, there were five tip-offs received of which all have been investigated, reviewed, and the final reports have been presented to the respective boards with recommendations being duly implemented.
MINIMISING CONFLICT OF INTEREST
The Board and staff members are required to declare any conflict of interest in matters that are considered by the Board. In addition Board members are required to provide an annual declaration of conflict of interest. At every meeting there is a second stage of declaration of potential conflict of interest for matters on the agenda for the meeting. A related party policy was drafted that provides guidance and details of disclosures to be made. Where conflict of interest was identified, an evaluation was made on its materiality and corrective measures taken to address the matter.
HEALTH, SAFETY AND ENVIRONMENTAL ISSUES
The Board of the GGDA is committed to ensuring a safe and healthy workplace for all its employees, visitors and invitees. The GGDA complies with all relevant legislation, in particular, the Occupational Health and Safety (OHS) Act, No. 85 of 1993. This includes monitoring risks in the workplace, addressing reported incidents and raising awareness and responsibility among employees around serious diseases.
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CODE OF CONDUCT
GGDA confirms and acknowledges its responsibility to comply with the Public Finance Management Act, No.1 of 1999 (PFMA), and Treasury Regulations, and where applicable and practical, with the Code of Corporate Practices and Conduct (“the Code”) laid out in the King III Report. The Board discusses the responsibilities of management in this respect at Board meetings and monitors the entity’s compliance with the Code on a quarterly basis.
GROUP COMPANY SECRETARY
The Company Secretary is appointed by, and is accountable to, the Board. This person is responsible for the execution of all statutory requirements applicable to the GGDA and its subsidiaries. In relation to their fiduciary duties and how to discharge such duties, the directors have unrestricted access to the advice and guidance of the Company Secretary as well as the Secretariat Department. The directors are entitled to obtain independent professional advice at GGDA’s expense, should they deem this necessary. In addition to the performance of other assurance functions, the Company Secretary monitors the GGDA’s compliance with the requirements of good corporate governance, the Amendment to the Blue IQ Investment Holdings Act, No.1 of 2012, Public Finance Management Act, No.1 of 1999, Companies Act, No. 71 of 2008 and other relevant legislation.
In terms of Section 88(2) (e) of the Companies Act, No. 71 of 2008, as amended, they certify that the company has lodged with the Companies and Intellectual Property Commissioner all such returns as are required of a public company in terms of the Companies Act and that all such returns are true, correct and up to date.
PART C: GOVERNANCE REPORT (continued)
Ms. Mosa Tshabalala - Acting Chief Financial Officer posing with the Clean Audit Awards received from the Auditor General’s Office.
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Newtown
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PART D: HUMAN RESOURCE MANAGEMENT
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INTRODUCTION
A Human Resources strategy and implementation plan has been put in place to manage the Human Capital function within the GGDA group. The strategy constitutes the framework for managing the GGDA’s human capital system through business partner and shared services delivery models. The strategic HR plan continues to deliver integrated and coherent services that enhance the capacity of the GGDA to act as a collective and united employer brand where people make the difference.
In order to address unemployment, poverty and inequality, GGDA through Human Capital is actively contributing to and participating on the following three macro interventions: – spatial reconfiguration, township economy revitalisation and massive infrastructure investments - jointly with municipalities and private sector partners. The GGDA Group Human Resources Department is responsible for providing strategic and transactional human resources services intended to enable the organisation to achieve its goals. The GGDA Group Human Resources department is comprised of the following functions:
FUNCTION DESCRIPTION
Recruitment and selection To attract and retain a skilled workforce.
Training and development To identify and implement training and development interventions responsive to organisational and employee training needs.
Performance management To manage and review employee performance.
Employee relations To maintain sound employee relations.
HR policies To ensure good HR practices and legislative compliance.
Employee wellness To manage and implement employee wellness programmes and activities.
Compensation and benefits To administer payroll, leave and benefits.
Organisational development To maintain organisational design and facilitate change management interventions.
HR systems and processes To maintain functional HR systems and processes.
HR reporting and compliance To produce HR reports and ensure legislative compliance to all labour laws and other applicable laws.
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KEY ACHIEVEMENTS
In the 2016/17 financial year key milestones were reached by the Group HR as per the functions prescribed above:
RECRUITMENT AND SELECTION
With the approval of the advertisement of the funded vacancies within the group, we note and register that by the end of the financial year a total number of 75 new employees were recruited across the Group for the financial year.
The GGDA has engaged with the SABPP to put together a plan to address the gaps and areas of improvement identified by the audit. Discussions to further capacitate the HR Team in other facets such as Job Evaluation and Recognising Prior Learning (RPL) will be rolled out in the new financial year.
TRAINING AND DEVELOPMENT
The Workplace Skills Plan and the Annual Training report were successfully submitted to the Services SETA, MICT SETA and TETA SETA group wide. This plan is comprised of Personal Development Plans (PDPs) submitted by respective employees. The PDP are the means to document identified skills gaps which were identified from the Skills Audit done previously and will be addressed by various learning and development interventions in the following financial year.
The GGDA has finalised the establishment of a Training and Development Committee according to the GGDA Learning and Development Policy. This committee will ensure that training and development strategies are designed, delivered and monitored in a consultative, participatory, transparent and equitable manner. Finally, a comprehensive capacity building on HR policies was conducted throughout the group to have common understanding of the policies and how employees are impacted.
PERFORMANCE MANAGEMENT
As a performance-driven organisation, GGDA Group places emphasis on setting annual targets that are derived from the Organisational Annual Performance Plan (APP). Each employee is expected to sign a performance contract with SMART KPIs. This process enables the organisation to monitor employee performance which culminates in the achievement of organisational goals. Performance contracts and mid-year performance assessments have been concluded for the year 2016/2017.
The final or year-end Performance Assessments for 2016/2017 have commenced. This process of performance assessments will inform how each employee and how each division has performed over the year.
EMPLOYEE WELLNESS AND EMPLOYEE RELATIONS
GGDA Holdings held several activities during the year under review including, amongst others, blood donation and awareness, OHSA awareness, Security Vetting awareness, Employment Equity awareness, Woman’s Day celebrations, overall health checks, heritage celebrations, encouraging healthy living lifestyles and promoting healthy habits.
The employee wellness program is in full force with employees in need of wellness support getting the required help from professionals through ICAS.
PERSONNEL COST BY PROGRAMME/ACTIVITY/ OBJECTIVE
The information below presents 2015/16 performance rewards paid out to employees. The 2016/17 performance rewards have not been paid pending conclusion of performance assessments and performance moderation processes.
PART D: HUMAN RESOURCE MANAGEMENT (continued)
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PROGRAMME/ACTIVITY/OBJECTIVE:
PROGRAMME/ACTIVITY/OBJECTIVE
TOTALEXPENDITURE FOR THEENTITYR’000
PERSONNELEXPENDITURER’000
PERSONNELEXPENDITURE AS A %OF TOTALEXPENDITURE R’000
NUMBER OFEMPLOYEES
AVERAGEPERSONNEL COST PER EMPLOYEER’000
AIDC 194 861 79 547 41 122 652
ConHill 43 446 13 144 30 35 375
GGDA (Holdings) 180 836 86 384 48 105 822
TIH 161 984 37 835 23 79 479
IDZ 49 659 7 619 15 10 761
TOTAL 630 786 224 529 38 351 639
Personnel cost by salary band
LEVELPERSONNELEXPENDITURE R’000
% OF PERSONNELEXPENDITURE TO TOTAL PERSONNEL COST R’000
NO. OFEMPLOYEES
AVERAGE PERSONNEL COST PER EMPLOYEE R’000
Top management 22 497 3 7 3 213
Senior management 88 278 12 28 3 153
Professional qualified 59 810 48 131 457
Skilled 35 244 25 119 296
Semi-skilled 18 700 12 66 283
Unskilled 0 0 0 0
TOTAL 224 529 100 351 639
Performance Rewards
ROGRAMME//ACTIVITY/OBJECTIVE
PERFORMANCEREWARDS
PERSONNEL EXPENDITURE R’000
% OF PERFORMANCEREWARDS TO TOTAL PER-SONNEL COST R’000
Top management 1 363 22 497 9
Senior management 2 317 88 278 15
Professional qualified 7 714 59 810 50
Skilled 2 838 35 244 18
Semi-skilled 1 178 18 700 7
Unskilled 0 0 0
TOTAL 15 410 224 529 100
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PART D: HUMAN RESOURCE MANAGEMENT (continued)
Training CostsThe group training expenditure was R2 936 000.00 of the allocated annual training budget, which translates to 90% of the R3, 4 million budgeted amount. The training budget is ranged between 1% - 4% of personnel cost, which is in line with the Skills Development Act, No: 31 of 2003 (as amended) and Skills Development Levies Act, No: 09 of 1999 (as amended).
PROGRAMME//ACTIVITY/OBJECTIVE
PERSONNEL EXPENDITURE R’000
TRAINING BUDGETR’000
TRAINING EXPENDITURE AS A % OF PER-SONNEL COST
NO. OFEMPLOYEESTRAINED
AVERAGETRAINING COST PEREMPLOYEE
AIDC 79 547 984 1 101 15
ConHill 13 144 286 2 30 8
GGDA(Holdings) 86 384 965 1 62 16
TIH 37 835 676 1,7 56 11
IDZ 7 619 25 0,3 6 28
TOTAL 224 529 2 936 1 255 13
EMPLOYMENT AND VACANCIES
During the year under review, vacant positions were filled across the Group with the view of strengthening capacity of the GGDA to deliver on its mandate. The attrition rate contributed to some of the key critical positions being left vacant. This includes employment of targeted groups to fulfil the employment equity and transformation objectives. These groups include women in senior management positions.
PROGRAMME/ACTIVITY/OBJECTIVE
2015/2016NO. OFEMPLOYEES
2015/2016APPROVEDPOSTS
2016/2017NO. OFEMPLOYEES
2016/2017VACANCIES
% OFVACANCIES
AIDC 135 218 122 96 44
ConHill 32 46 35 11 24
GGDA (Holdings) 102 142 105 27 19
TIH 56 66 79 0 0
IDZ 6 16 10 6 38
TOTAL 325 472 351 140
PROGRAMME/ACTIVITY/OBJECTIVE
2015/2016NO. OFEMPLOYEES
2015/2016APPROVEDPOSTS
2016/2017NO. OFEMPLOYEES
2016/2017VACANCIES
% OFVACANCIES
Top management 7 7 7 0 0
Senior management 15 22 28 0 0
Professional qualified 118 166 131 35 26
Skilled 109 155 119 36 26
Semi-skilled 70 115 62 60 44
Unskilled 6 7 4 3 2
TOTAL 325 472 351 134 100
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Employment changes
SALARY BANDEMPLOMENT ATBEGINNING OF PERIOD
APPOINMENTS TERMINATIONSEMPLOYMENT ATEND OF THEPERIOD
Top management 7 0 0 7
Senior management 21 9 2 28
Professional qualified 121 20 22 131
Skilled 108 17 13 119
Semi-skilled 65 7 9 62
Unskilled 5 0 0 4
TOTAL 327 53 46 351
Reasons for staff leaving
The majority of employees that exited GGDA Group employment in 2016/17 financial year resigned, this was then followed by expiry of contract and other reasons. The vacant positions will be filled as part of the approved Recruitment Programme.
REASON NUMBER% OF TOTAL NO. OF STAFF LEAVING
Death 0 0
Resignation 36 78
Dismissal 1 2
Retirement 0 0
Ill health 0 0
Expiry of contract 6 13
Other 3 7
TOTAL 46 100
Labour Relations: Misconduct and disciplinary action
ROGRAMME/ACTIVITY/OBJECTIVE PERFORMANCE REWARDS
Verbal warning 1
Written warning 4
Final written warning 2
Grievance 14
Dismissal 3
EQUITY TARGET AND EMPLOYMENT EQUITY STATUS
The GGDA Group has identified the lack of black women in senior management positions and the inability to recruit people with disability (PWD) in various job categories.
On the recruitment of black women in senior management positions, the GGDA Group Management resolved to target all senior management positions for appointment of women, in particular black women. GGDA Group is still below 50% provincial target of black women employees in Senior Management as indicated in the Gauteng Strategic Policy Framework on Gender Equality and Women Empowerment (GEWE). The Group is currently sitting at 42%.
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PART D: HUMAN RESOURCE MANAGEMENT (continued)
In relation to the recruitment of people with disability, the organisation resolved to implement targeted recruitment for PWD. Reputable organisations dealing with matters of people with disability are engaged on the vacant positions so as to assist in identifying suitably qualified and experienced candidates and/or candidates with potential who can be invited to apply and be considered for the vacant positions.
LEVELS MALE
AFRICAN COLOURED INDIAN WHITE
CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET
Top management 3 2 0 0 1 3 0 0
Senior management
14 7 0 0 1 1 0 2
Professionalqualified
47 47 2 1 7 7 9 12
Skilled 39 42 2 1 0 0 2 4
Semi-skilled 27 34 0 0 0 0 1 1
Unskilled 0 1 0 0 0 0 0 0
TOTAL 130 133 4 2 9 11 12 19
LEVELS FEMALE
AFRICAN COLOURED INDIAN WHITE
CURRENT TARGET CURRENT TARGET CURRENT TARGET CURRENT TARGET
Top management 2 0 1 0 0 0 0 0
Senior management
11 5 0 2 1 0 1 2
Professionalqualified
52 38 2 2 2 1 10 9
Skilled 64 49 2 1 3 1 7 10
Semi-skilled 32 42 1 2 0 1 1 3
Unskilled 4 0 0 0 0 0 0 0
TOTAL 165 134 6 7 6 3 19 24
LEVELS PEOPLE WITH DISABILITIES
MALE FEMALE
CURRENT TARGET CURRENT TARGET
Top management 0 0 0 0
Senior management 1 1 0 1
Professional qualified 0 1 0 1
Skilled 0 1 0 1
Semi-skilled 2 2 0 2
Unskilled 0 0 0 0
TOTAL 3 5 0 5
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10 Pillars at the Walter Sisulu Square in Kliptown representing the pillars of the Freedom Charter
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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PART E: FINANCIAL INFORMATION
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GENERAL INFORMATION
Country of incorporation and domicile South Africa
Nature of business and principal activities Facilitates economic development in the Gauteng Province
Directors M Mokoena (Group Chairman) Z Malele (Deputy Chairman) N Balton D Dondur Q Gungubele Dr P Jourdan P Mafojane Dr N Msomi S Nicolaou T Setiloane S Zamxaka (Group CEO)
Registered office 124 Main Street Cnr Main and Kruis Streets Marshaltown Johannesburg 2001
Business address 124 Main Street Cnr Main and Kruis Streets Marshaltown Johannesburg 2001
Postal address Private Bag 10420 Johannesburg 2000
Controlling entity Gauteng Growth and Development Agency SOC Ltd incorporated in the Republic of South Africa
Bankers First National Bank - a division of FirstRand Bank Limited
Auditors Auditor-General of South Africa
Group Company Secretary M J Mulaudzi
Company registration number 2003/021743/30
Website www.ggda.co.za
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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COMPANY REGISTRATION NUMBER 2003/021743/30
The reports and statements set out below comprise the Group Annual Financial Statements presented to the Provincial Legislature:
INDEX PAGE
Directors’ Responsibilities and Approval 131
Audit and Risk Committee Report 132
Report of the Auditor-General 136
Directors’ Report 140
Group Company Secretary’s Certification 148
Statement of Financial Position 149
Statement of Financial Performance 151
Statement of Changes in Net Assets 152
Cash Flow Statement 153
Accounting Policies 154
Notes to the Group Annual Financial Statements 192
The following supplementary information does not form part of the Group Annual Financial Statements and is unaudited: Detailed Statement of Financial Performance
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DIRECTORS’ RESPONSIBILITIES AND APPROVAL
The directors are required by the Public Finance Management Act, No. 1 of 1999 (PFMA) as amended, and the Companies Act, No. 71 of 2008, to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and related financial information included in this report. It is our responsibility to ensure that the financial statements fairly present the state of affairs of the company and group, the results of its operations and cash flows for the year ended 31 March 2017, in conformity with the Standards of Generally Recognised Accounting Practice (GRAP). The external auditors are engaged to express an independent opinion of the Annual Financial Statements and were given unrestricted access to financial records and related data.
The group annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board in accordance with the Public Finance Management Act, of 1999 as prescribed by National Treasury and the Companies Act, 71 of 2008.
The group annual financial statement are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgement and estimates.
The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the company and group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the directors set standards for internal control aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the company and group and all employees are required to maintain the highest ethical standards in ensuring the company and group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company and group is on identifying, assessing, managing and monitoring all known forms of risk across the company and group. While operating risk cannot be fully eliminated, the company endeavours to minimise it by ensuring that appropriate controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.
The directors are of the opinion, based on the information and explanations given by management and internal audit, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial controls can provide only reasonable, and not absolute, assurance against material misstatement or loss.
The directors have reviewed the company and group’s ability to continue as a going concern for the year to 31 March 2018 and, in the light of this review and the current financial position, they are satisfied that the company has or has access to adequate resources to continue in operational existence for the foreseeable future. The company is wholly dependent on the receipt of grant funding from the Gauteng Provincial Government of R535 million for continued funding of operations for the 2017/18 financial year. This funding has been approved as per the Medium Term Expenditure Framework of the Gauteng Provincial Government.
The Annual Financial Statements of the company and group as set out, were prepared on a going concern basis. The directors have reviewed current and future plans of the company and group and are satisfied with the appropriateness of the basis.
The external auditors are responsible for auditing and reporting on the company and group annual financial statements. The group annual financial statements have been examined by the company and group external auditors and their report is presented on page .
APPROVAL OF COMPANY AND GROUP ANNUAL FINANCIAL STATEMENTS The Annual Financial Statements of Gauteng Growth and Development Agency SOC Limited, set out on pages 149 to 235 were approved by the Board of Directors on 31 July 2017 and signed on their behalf by:
Group ChairmanMr Mogopodi Mokoena
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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AUDIT AND RISK COMMITTEE REPORT
The GGDA Group Audit and Risk Committee (“the Committee”) is established as an independent statutory committee in terms the PFMA and the Companies Act. The Committee oversees all audit and risk matters for the company, however, the Board is ultimately accountable for risk management. The committee functions within approved terms of reference and complies with relevant legislation, regulation and governance codes.
The Committee submits this report for the year ended 31 March 2017, as required by the Treasury Regulations 27.1.7 and 27.1.10 (b) and (c) issued in terms of sections 51 (1) (a)(ii) and 76(4)(d) of the PFMA and section 37 (c) of the Companies Act 71 of 2008.
The GGDA Group has, in terms of Treasury Regulation 27.1.2, established the GGDA Group Audit and Risk Committee (ARC) as a shared audit committee for GGDA Holdings and all its subsidiaries under the
ownership and control of GGDA Holdings.
1. AUDIT AND RISK COMMITTEE MEMBERSHIP, MEMBERS’ QUALIFICATIONS AND MEETING
ATTENDANCE
The Committee consists of six Independent Non-Executive Members and is chaired by Ms Doris Dondur. The Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Internal and External Auditors have a standing invitation to all meetings of the Committee. A brief profile of each of the Committee Members, as well as their qualifications can be viewed in the Governance section of the Group Annual report, under Members of the Board.
The Chairman of the Committee reports to the Board quarterly, with regard to the Committee’s deliberations, decisions and recommendations.
Audit and Risk Committee members and meeting attendance:
NAME OF MEMBER TOTAL MEETINGS MEETINGS ATTENDED
D Dondur (Chairman) 22 20
N Balton 22 14
Z Malele 22 19
S Nicolaou (resigned 24 May 2016) 5 5
T Setiloane (resigned 34 May 2016) 5 6
S Mahlalela (appointed 24 May 2016) 18 4
M Tshabalala (appointed 24 May 2016 - resigned 31 March 2017 18 18
O Mogale (appointed 24 May 2016) 18 17
2. ROLES AND RESPONSIBILITIES
During the period under review, the Committee fulfilled its statutory duties as required by the PFMA and Treasury Regulations, as well as various additional responsibilities assigned to it by the Board. The Committee’s activities are also guided by its Terms of Reference which are approved by the Board.
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In conducting its duties, the Committee has performed the following activities:
2.1 EFFECTIVENESS OF INTERNAL CONTROL AND RISK MANAGEMENT
Section 51(1) (a) (i) of the PFMA states that the Board must ensure that a public entity has and maintains effective, efficient and transparent systems of financial, risk management and internal control.
The Committee is responsible for overseeing risk management and reviewing the internal controls. Reviews on the effectiveness of the internal controls were conducted and they covered financial, operational, compliance and risk assessment. During the year under review, the Committee conducted the following activities:
REVIEWED AND RECOMMENDED THE FOLLOWING MATTERS TO BOARD FOR APPROVAL
REVIEWED AND APPROVED THE FOLLOWING
• Company’s Enterprise Wide Risk Management Framework defining company’s risk management methodology.
• Company’s policies on risk assessment and risk management, Including fraud risks and information technology.
• Quarterly risk reports containing pertinent risks and opportunities aligned to the company’s vision and mission, emerging events and reportable incidents.
• Quarterly reports on legal compliance, litigation and fraud incidents.
• Capacity within the Finance Unit.
The Board conducted the risk assessment during February 2017. An overview of risks management for the 2016/17 Financial Year is discussed under the Governance section of the GGDA Group Annual report.
2.2 INTERNAL AUDIT
The Internal Audit Unit is responsible for reviewing and providing assurance on the adequacy of the internal control environment across all of the significant areas of the company and group’s operations.
The Internal Audit was also reviewed by an external Quality Assurance service provider, that the function is currently compliant with the professional statements and code of ethics.
The Committee is responsible for ensuring that the company and group’s internal audit function is independent and has the necessary resources, skills, standing and authority within the organisation to enable it to discharge its responsibilities effectively. The Internal Auditors have unrestricted access to the Committee.
The Committee reviews and approves the Internal Audit Plan annually. Internal audit’s activities are measured against the approved internal audit plan and the Head: Internal Audit tables progress reports in this regard to the Committee.
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During the reporting period the Committee conducted the following activities:
REVIEWED AND APPROVED THE FOLLOWING
• Internal Audit Charter;• Whistleblowing policy;• Fraud Prevention Policy and Plan
• Annual Internal Audit Plan• Capacity within the Internal Audit Unit; and• Internal Audit’s quarterly reports in line with the
approved Internal Audit Plan.
The Committee has formed an opinion that adequate, objective internal audit policies and procedures exist within the company and that the company’s Internal Audit Unit has complied with the internal audit standards, the required legal, regulatory and other responsibilities as stipulated in its charter during the period under review.
2.3 EXTERNAL AUDITORS
The Committee, in consultation with the company and group’s management, agreed to the terms of the Auditor General South Africa’s engagement letter, audit strategy and audit fees in respect of the 2016/17 financial year.
The Audit and Risk Committee also monitored the implementation of the action plan to address matters arising from the Management Report issued by the Auditor-General South Africa for the 2015/16 Financial Year. All the action items were closed during the Financial Year.
The Audit Committee has met with the Auditor General of South Africa to ensure that there are no unresolved issues.
2.4 EVALUATION OF THE GROUP ANNUAL FINANCIAL STATEMENTS
During the reporting period, the Committee reviewed the Group Annual Financial Statements of the company and is satisfied that they comply with International Financial Reporting Standards and that the accounting policies used are appropriate. The Annual Financial Statement was reviewed with the following focus:
• Significant financial reporting judgements and estimates contained in the Group Annual Financial Statements;• Clarity and completeness of disclosure and whether disclosures made have been set properly in context;• Changes in the Accounting Policies and Practices;• Significant adjustments resulting from the Audit;• Compliance with accounting standards and legal requirements;• Explanation for the accounting treatment adopted;• Reasons for year-on-year fluctuations;• Asset valuations and revaluations; and• The basis for the going concern assumption.
The review of the Group Annual Financial Statements and the Draft Annual Report for the 2016/17 Financial Year was done at the Committee’s meeting held on 23 May 2017 and recommended them to the Board for approval on 26 May 2017.
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3. QUALITY OF QUARTERLY MANAGEMENT REPORTS SUBMITTED IN TERMS OF THE PFMA
The Committee is satisfied that it received sufficient, reliable and timely information from Management in order to enable it to fulfil its responsibilities. During the period under review, quarterly management reports were presented by Management to enable the Committee to:
• Monitor the integrity, accuracy and reliability of the financial position of the company and group;• Review the management accounts of the company and group and provide the Accounting Authority with an
authoritative and credible view of the financial position of the company and group;• Review the company and group’s internal financial and operational controls, as well as the risk management
systems,• Review the disclosure in the financial reports of the company and group and the context in which statements
on the financial health of the company and group are made; and• Review all material information presented together with the management accounts.
The Committee reviewed the quarterly and annual reports on company and group’s performance against predetermined objectives.
4. AUDIT AND RISK COMMITTEE’S EVALUATION
An assessment of the Audit and Risk Committee has been carried out by an independent assurance provider that concluded that the overall performance of the committee is effective.
5. CONCLUSION
The Audit and Risk Committee has executed on its roles and responsibilities in terms of its Board approved charter. The Audit and Risk Committee concurs with and accepts the conclusions together with the audit opinion of the Auditor-General on the annual financial statements. The Audit and Risk Committee is of the view that
the audited annual financial statements be accepted and read together with the report of the Auditor-General.
Ms D DondurChairman of the GGDA Group Audit and Risk Committee
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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REPORT OF THE AUDITOR-GENERAL
To the Provincial Legislature of Gauteng Growth and Development Agency SOC Limited.
REPORT ON THE AUDIT OF THE CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS
Opinion
1. I have audited the consolidated and separate financial statements of the Gauteng Growth and Development Agency Group SOC Limited and its subsidiaries (the group) set out on pages 149 to 235 , which comprise the consolidated and separate statement of financial position as at 31 March 2017, the consolidated and separate statement of financial performance, statement of changes in net assets and cash flow statement for the year then ended, as well as the notes to the consolidated and separate financial statements, including a summary of significant accounting policies.
2. In my opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of the Gauteng Growth and Development Agency Group as at 31 March 2017 and their financial performance and cash flows for the year then ended in accordance with South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Public Finance Management Act, No. 1 of 1999 (PFMA) and the Companies Act of South Africa, Act, No. 71 of 2008.
Basis for opinion
3. I conducted my audit in accordance with the International Standards on Auditing (lSAs). My responsibilities under those standards are further described in the Auditor-General’s responsibilities for the audit of the consolidated and separate financial statements section of my report.
4. I am independent of the group in accordance with the International Ethics Standards Board for Accountants’ Code of ethics for professional accountants (IESBA code) together with the ethical requirements that are relevant to my audit in South Africa. I have fulfilled my other ethical responsibilities in accordance with these requirements andthe IESBA code.
5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Emphasis of matters
6. I draw attention to the matters below. My opinion is not modified in respect of these matters.
Material impairment
7. As disclosed in note 4 to the consolidated and separate financial statements, the receivables from exchange transactions balance have been significantly impaired. The impairment of this balance amounted to R9 749 000 (2016: R9 222 000), which represents 18% (2016: 24%) of the total receivables from exchange transactions.
Restatement of corresponding figures
8. As disclosed in note 48 to the consolidated and separate financial statements, the corresponding figures for 31 March 2016 have been restated as a result of errors in the consolidated and separate financial statements of the Gauteng Growth and Development Agency Group at, and for the year ended 31 March 2017.
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REPORT OF THE AUDITOR-GENERAL (continued)
Responsibilities of the accounting authority for the consolidated and separate financial statements
9. The board of directors, which constitutes the accounting authority is responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with SA Standards of GRAP, the requirements of the PFMA and the Companies Act and for such internal control as the accounting authority determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.
10. In preparing the consolidated and separate financial statements, the accounting authority is responsible for assessing the Gauteng Growth and Development Agency Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting there is an intention either to liquidate the group or to cease operations, or there is no realistic alternative but to do so.
Auditor-General’s responsibilities for the audit of the consolidated and separate financial statements
11. My objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements.
12. A further description of my responsibilities for the audit of the consolidated and separate financial statements is included in the annexure to the auditor’s report.
REPORT ON THE AUDIT OF THE ANNUAL PERFORMANCE REPORT
Introduction and scope
13. In accordance with the Public Audit Act of South Africa, Act, No. 25 of 2004 (PM) and the general notice issued in terms thereof I have a responsibility to report material findings on the reported performance information against predetermined objectives for selected strategic objectives presented in the annual performance report. I performed procedures to identify findings but not to gather evidence to express assurance.
14. My procedures address the reported performance information, which must be based on the approved performance planning documents of the group. I have not evaluated the completeness and appropriateness of the performance indicators included in the planning documents. My procedures also did not extend to any disclosures or assertionsrelating to planned performance strategies and information in respect of future periods that may be included as part of the reported performance information. Accordingly, my findings do not extend to these matters.
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15. I evaluated the usefulness and reliability of the reported performance information in accordance with the criteria developed from the performance management and reporting framework, as defined in the general notice, for the following selected strategic objectives presented in the annual performance report of the group for the year ended 31 March 2017:
SELECTED OBJECTIVE PAGES IN THE ANNUALPERFORMANCE REPORT
1.1 Facilitate investment that supports modernisation and re-industrialisation of Gauteng’s economy
38-45 and 53-54
1.2 Increased global trade activities from Gauteng 46 and 53-54
2.1 Revitalised and modernised township economies reflecting radical transformation and re-industrialisation of Gauteng’s economy
50-51 and 53-54
2.3 Revitalisation and Modernised industries reflecting reindustrialisation of the Gauteng economy
58-66
3.1 Radically transforming the Gauteng Economy through new, smart knowledge based economy
70-79
3.4 Facilitate and support innovations in building new, smart knowledge-based industries and economy
70-79
4.1 To stimulate employment led growth and development through the facilitation of strategic economic infrastructure interventions
85 and 90-92
4.2 To facilitate the development of sector specific skills required to meet the needs of the jewellery economic sector
89-92
5.1 Fostering inclusive development and social transformation through the heritage, education and tourism programme.
95-100
5.2 Strategic economic infrastructure that supports and facilitates radical economic transformation andre-industrialisation of the Gauteng economy
95-100
16. I performed procedures to determine whether the reported performance information was properly presented and whether performance was consistent with the approved performance planning documents. I performed further procedures to determine whether the indicators and related targets were measurable and relevant, and assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.
Other matter
17. I draw attention to the matter below. My opinion is not modified in respect of this matter.
Achievement of planned targets
18. Refer to the annual performance report on pages 54, 66, 80-81, 93, 100 and 105 for information on the achievement of planned targets for the year and explanations provided for the under and overachievement of certain targets.
REPORT OF THE AUDITOR-GENERAL (continued)
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REPORT OF THE AUDITOR-GENERAL (continued)
REPORT ON THE AUDIT OF COMPLIANCE WITH LEGISLATION
Introduction and scope
19. In accordance with the PAA and the general notice issued in terms thereof I have a responsibility to report material findings on the compliance of the group with specific matters in key legislation. I performed procedures to identify findings but not to gather evidence to express assurance.
20. I did not identify any instances of material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA.
OTHER INFORMATION
21. The Gauteng Growth and Development Agency and its subsidiaries accounting authority is responsible for the other information. The other information comprises the information included in the annual report which includes the director’s report, the audit committee’s report and the company secretary’s certificate as required by the Companies Act. The other information does not include the consolidated and separate financial statements, the auditor’s report thereon and those selected objectives presented in the annual performance report that have been specifically reported on in the auditor’s report.
22. My opinion on the consolidated and separate financial statements and findings on the reported performance information and compliance with legislation do not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon.
23. In connection with my audit, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements and the selected objectives presented in the annual performance report, or my knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work I have performed on the other information obtained prior to the date of this auditor’s report, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.
INTERNAL CONTROL DEFICIENCIES
24. I considered internal control relevant to my audit of the consolidated and separate financial statements, reported performance information and compliance with applicable legislation; however, my objective was not to express any form of assurance thereon. I did not identify any significant deficiencies in internal control.
Johannesburg31 July 2017
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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DIRECTORS’ REPORT
The Board of directors submits its report for the year ended 31 March 2017.
1. INCORPORATION
The Gauteng Growth and Development Agency SOC Limited (GGDA) is legally constituted by the Blue IQ Act 5 of 2003 (as amended). The entity is classified as a Schedule 3C entity in terms of the Public Finance Management Act 1 of 1999 as amended.
2. REVIEW OF ACTIVITIES
Main business and operations
A) GGDA HOLDINGS
The GGDA Group is an investment and management entity with trading controlled entities engaged in investing in infrastructure projects of strategic importance to Gauteng Provincial Government. The Group operates principally in South Africa.
The overarching aim of the GGDA is to provide specialised and focused competence for the Gauteng Province to implement its economic development goals. As the implementation arm of GDED’s economic growth and development strategy, the GGDA works towards the achievement of the following outcomes:• Promotion and application of smart and green development, technologies and processes• Creation of decent work and reduced levels of unemployment• Contribution to increased Gross Domestic Product (GDP)• Demographic inclusion in the mainstream economy and big business• The marginalised sectors of women, youth and persons with disabilities participating in mainstream economic
activities• An appropriately skilled work force and private sector (SMME, Co-operatives and emerging businesses) to
meet and grow the economy and the needs of key sectors
To contribute to the attainment above the outcomes, the GGDA focuses on the optimisation of efficiency as a ‘single strategically coherent and integrated institution’ (Business Case, 2011) and has established the following subsidiaries and business units to deliver on same.
B) GAUTENG IDZ DEVELOPMENT COMPANY
The Gauteng IDZ Development Company was established to develop and operate the Industrial Development Zone (IDZ) designated in and around the OR Tambo International Airport (ORTIA).
The Gauteng IDZ will identify, design and enable focused export-driven manufacturing and beneficiation programmes within the OR Tambo International Airport. These programmes will serve to increase industrialisation and manufacturing capability in targeted, export-driven sectors in the region, whilst promoting foreign direct investment and stimulating skills development, job creation and technological advancement, diversifying the province’s economy.
Phase I of the IDZ programme aims to deliver the development of a Jewellery Manufacturing Precinct and Expansion Phase explores other export-driven subsectors of the economy that are considered to have a catalytic impact.
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C) SPDC T/A SPDC
The SPDC T/A AIDC was established to support the automotive industry in Gauteng. This is achieved by providing enabling economic infrastructure and sector development interventions. The Automotive Supplier Park (ASP), the Winterveldt Enterprise Hub and the Incubation Centres in Silverton and Rosslyn are such examples.
D) THE INNOVATION HUB (TIH):
The Innovation Hub (TIH) is the first Science and Technology Park in Africa that was accredited by the International Association of Science Parks (IASP). TIH managed by The Innovation Hub Management Company (SOC) Ltd (TIHMC) was established by the Gauteng Provincial Government with a view to spur the development of smart industries (high technology sectors) in Gauteng.
TIH’s role in the provincial innovation ecosystem is to catalyse innovation and to be a key knowledge economy driver, in line with the Gauteng Growth and Development Strategy. The primary priority sectors for TIH are information and communications technology, biosciences and green economy (renewable energies and low carbon economy technologies).
E) CONSTITUTIONAL HILL PRECINCT:
The purpose of the Constitution Hill (Conhill) Project is to preserve historically significant buildings from the Old Fort in a manner which makes them publicly and commercially useful and catalyse the regeneration of the Braamfontein and Hillbrow Precincts. Historic buildings have been upgraded over the past year and Conhill has extended its education programmes and exhibitions to increase public participation and attendance to the precinct.
F) TRADE, INVESTMENT AND REGULATORY ENABLEMENT
The trade, investment and regulatory enablement functions of the organisation contributes towards the achievement of the provincial outcomes on economic development. The attraction of investments in targeted sectors contributes to the development of the province’s priority sectors. Both domestic and export trade, needs to be developed and stimulated to increase the GDP contribution leading to growth of the Gauteng economy. These are critical ingredients for the creation of jobs which are vital for turning the tide on poverty and inequality in the province and nationally.
The level of effort targets the focus on the input activities that must be undertaken especially in relation to promotion and attraction of trade and investment. These would be on number of missions abroad, events undertaken, delegations hosted and businesses supported in the province. The output focused targets speak to the outcome of investments attracted, value of trade generated, investments facilitated and jobs created.
G) GREATER NEWTOWN DEVELOPMENT COMPANY
The Greater Newtown Development Company aims to develop and promote the Newtown district as the creative capital of Johannesburg and South Africa. It advances a city that is dynamic, vibrant, sophisticated and cosmopolitan, boasting the best cultural offerings in Africa”. One of its primary goals is to assist in the rejuvenation of the inner city of Johannesburg. The original vision was framed within a long-term perspective – 2030.
DIRECTORS’ REPORT (continued)
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The GGDA’s Group performance is represented by the following core focus areas to which subsidiaries and business units at Holdings all contribute:• Identify and facilitate strategic economic infrastructure• Skills Development• Sector Development• Enterprise Development (Pre-incubation and Incubation and Mentorship)• Direct job creation in Gauteng• Facilitation of Investments and Trade
i) Identify and facilitate strategic economic infrastructure Bio Park Phase 2
The main contractor for the construction of the Biopark Phase 2 was appointed during the third quarter of the previous financial year. As at the end of the reporting period, recorded progress was registered to be 83%. The hand-over of the buildings is expected to be done by the end of the first quarter of the next financial year.
Nissan Incubation Centre (NIC)The construction of Nissan Incubation Centre (NIC) was completed during the third quarter.
Mini Factory Phase 2The construction of the mini factory 11 was completed during the third quarter
JMPConstruction of the bulk infrastructure and enablement works is proceeding with focus in the period under review being on the bulk earthworks viz completion of the platform earthworks and attenuation dams. Progress to-date is reported to be 70%.
ii) Skills Development
As at the end of the reporting period, a total of 4 615 people underwent the various Skills Development Programme which was delivered by the GGDA. The training programmes spanned export development, targeting export ready companies, training of young people aimed at those that wish to become welders, boiler makers, fitters, diesel mechanics, qualified artisans and master jewellers. Other programmes included the Leadership and Skills Development Programme aimed at human capability development in respect of engineering, information and communication technology (ICT) post-graduate students. In addition, there were programmes targeting young people in the green technologies and ICT fields.
iii) Sector Development
The sector development interventions are aimed at improving the competitiveness and efficiencies of Gauteng based companies and improving the value offering of the GGDA Group. This includes development interventions in the sectors of focus, including the automotive industry, green industries, ICT, bio-sciences, medical. At the Holdings company level, sector engagements happened with the capital equipment industry, tourism industry, mining and mineral beneficiation industry, the creative industry and the automotive industry.
DIRECTORS’ REPORT (continued)
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DIRECTORS’ REPORT (continued)
iv) Enterprise Development (Pre-incubation, Incubation and Mentorship)
The GGDA Group contributes to enterprise development by providing various incubation platforms and mentorship programmes. These platforms are offered through the AIDC and TIH.
v) Direct job creation in Gauteng
By the end of the reporting period, 5 070 jobs were facilitated by the group as follows: AIDC 92, TIH 337, Construction jobs at GIDZ and Township Industrial Hubs 179, Holdings 4 462.
vi) Investments and Trade
Domestic investments to the value of R1 billion spanning the identified target growth sectors were successfully facilitated by the GGDA to date. Meanwhile, FDIs to the value of R2 billion were claimed as successfully facilitated.
a) Export DevelopmentA total of 247 companies were trained to be export ready to date with a further 100 companies expected to undergo training during the last month of the financial year.
b) Export facilitationBy end of the reporting period, eighty (80) trade deals to the value of R325 million were recorded. Companies were assisted through exposure to new markets, invited to participate when trade delegations were hosted, to showcase their products and wares at trade shows such as Source Africa 2016, SAITEX 2016, and Manufacturing Indaba 2016 and international pavilions.
vi) Financial ResultsNet surplus of the group is R146 million (2016: restated surplus R144million).
3. GOING CONCERN
The group annual financial statements as set out on pages 9 to 80, were prepared on a going concern basis. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
The directors have reviewed the company’s ability to continue as a going concern for the year to 31 March 2018 and, in the light of this review and the current financial position, they are satisfied that the group has or has access to adequate resources to continue in operational existence for the foreseeable future. The group is wholly dependent on the receipt of grant funding from the Gauteng Provincial Government of R535 million for continued funding of operations for the 2017/18 financial year. This funding has been approved as per the Medium Term Expenditure Framework of the Gauteng Provincial Government.
4. POST REPORTING DATE EVENTS
The directors are not aware of any other matter or circumstance arising since the end of the financial year beside the matter above.
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5. DIRECTORS’ INTEREST IN CONTRACTS
None of the directors at the date of this report have interests in contracts entered into by the company and group.
6. ACCOUNTING POLICIES
The group annual financial statements have been prepared in accordance with the effective Standards of Generally Recognised Accounting Practices (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board in accordance with the Public Finance Management Act of 1999 as prescribed by the Nationaly Treasury and the Companies Act 71 of 2008.
7. SHARE CAPITAL/CONTRIBUTED CAPITAL
Authorised share capital.
The authorised share capital of the company is 4 000 shares.
There were no changes in the authorised share capital of the company during the 2016/17 financial year.
Issued share capital.
At 31 March 2017 the issued share capital comprised of 100 ordinary shares issued at R1 each. There were no shares issued during the financial year.
8. DISTRIBUTIONS TO OWNERS
No dividends were paid or declared during the year. In terms of the Dividend policy, the directors have dis-cretionary power to determine the timing and amount payable at any given financial year. However, in terms of Section 53(3) of the PFMA, the company and group is not allowed to retain surpluses without Treasury approval.
9. BORROWING LIMITATIONS
In terms of the PFMA, the company and group is prohibited from borrowing. During the year under review, the company and group did not enter into any borrowing activities. The entity had to capitalise copier rental agreements, which gave rise to a small interest bearing debt in terms of GRAP 13.
DIRECTORS’ REPORT (continued)
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10. BOARD OF DIRECTORS
The board of directors of the company during the year and to the date of this report are as follows:
NAME APPOINTED
M Mokoena (Chairman) 01 June 2012
Z Malele (Deputy Chairman) 25 September 2012
N Balton 01 June 2012
D Dondur 14 March 2013
Dr P Jourdan 01 June 2012
S Nicolaou 1 June 2012
Dr N Msomi 01 October 2015
Q Gungubele 01 February 2015
P Mafojane 01 October 2015
T Setiloane 01 October 2015
S Zamxaka (Group CEO) 04 May 2016
11. SECRETARY
The secretary of the company as at 31 March 2017 and up to the date of this report is:
M Mulaudzi
12. CORPORATE GOVERNANCE
GENERAL
Gauteng Growth and Development Agency SOC Ltd confirms and acknowledges its responsibility to comply with the Public Finance Management Act (PFMA), Act 1 of 1999, Treasury Regulations and where applicable and practical, with the Code of Corporate Practices and Conduct (“the Code”) laid out in the King III Report on Corporate Governance for South Africa 2009. The Board discusses the responsibilities of management in this respect at Board meetings and monitors the company’s compliance with the Code on a quarterly basis.
Physical address Physical address 124 Main StreetMarshalltownJohannesburg 2001
Postal address Private Bag 10420Johannesburg2000
DIRECTORS’ REPORT (continued)
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The salient features of the group’s adoption of the Code is outlined below:
BOARD OF DIRECTORS
The Board:• retains full control over the company, its plans and strategy;• acknowledges its responsibilities as to strategy, compliance with internal policies, external laws and
regulations, effective risk management and performance measurement, transparency and effective communication both internally and externally by the company;
• is of a unitary structure comprising: – non-executive directors, all of whom are independent directors as defined in the Code, and – executive directors.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The Chairman is a non-executive and independent director (as defined by the King III Report on Corporate Governance).
The roles of Chairman and Chief Executive are separate, with responsibilities divided between them, so that no individual has unfettered powers of discretion.
BOARD MEETINGS
The directors have met in line with the requirements of the King III Report on Corporate Governance.
During the current year 10 meetings were held.
NAME TOTAL MEETINGS MEETINGS ATTENDED
M Mokoena (Chairman) 10 10
Z Malele (Deputy Chairman) 10 8
N Balton 10 9
D Dondur 10 9
Dr P Jourdan 10 7
S Nicolaou 10 8
Dr N Msomi 10 6
Q Gungubele 10 9
S Zamxaka 10 10
P Mafojane 10 6
T Setiloane 10 8
DIRECTORS’ REPORT (continued)
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AUDIT AND RISK COMMITTEE
For the current financial year, the chairman of the Group Audit and Risk Committee was Ms D Dondur (non-executive director). The committee met in line with the requirements of the code to review matters necessary to fullfil its role.
Meetings held in the year:
NAME TOTAL MEETINGS MEETINGS ATTENDED
D Dondur (Chairman) 22 20
N Balton 22 14
Z Malele 22 19
S Nicolaou (resigned 24 May 2016) 5 5
S Mahlalela (appointed 24 May 2016) 18 6
T Setiloane (resigned 24 May 2016) 5 4
M Tshabalala (appointed 24 May 2016 - resigned 31 March 2017) 18 18
O Mogale (appointed 24 May 2016) 18 17
NOMINATION, HUMAN RESOURCE AND REMUNERATION COMMITTEE
For the current financial year, the chairman of the remuneration committee was Ms Q Gungubele (non-executive director).The committee met in line with the requirements of the King III Report on Corporate Governance to review matters necessary to fulfil its role.
NAME TOTAL MEETINGS MEETINGS ATTENDED
Q Gungubele (Chairman) 7 7
M Mokoena 7 7
P Mafojane 7 5
SOCIAL AND ETHICS COMMITTEE
For the current financial year, the chairman of the social and ethics committee was Mr N Balton (non executive director). The committee met in line with the requirements of the King III Report on Corporate Governance to review matters necessary to fulfil its role.
Meetings held in the year:
NAME TOTAL MEETINGS MEETINGS ATTENDED
N Balton 4 4
Dr P Jourdan 4 4
D Dondur 4 3
Q Gungubele 4 4
13. INTERNAL AUDIT
Gauteng Growth and Development Agency SOC Ltd has co-sourced its internal audit function and complies with the Public Finance Management Act 1, 1999 (PFMA).
14. AUDITORS
The Auditor-General of South Africa will continue in office in accordance with Public Audit Act No.25 of 2004 and Section 90 of the Companies Act 71 of 2008.
DIRECTORS’ REPORT (continued)
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GROUP COMPANY SECRETARY’S CERTIFICATION
DECLARATION BY THE COMPANY SECRETARY IN RESPECT OF SECTION 88(2)(E) OF THE
COMPANIES ACT
In terms of Section 88(2)(e) of the Companies Act 71 of 2008, as amended, I certify that the company has lodged with the Companies and Intellectual Property Commissioner all such returns as are required of a public company in terms of the Companies Act and that all such returns are true, correct and up to date.
M MulaudziCompany Secretary
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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2017
GROUP CONTROLLING ENTITY
NOTE(S) 2017
R’000
2016RESTATED*R’000
2017
R’000
2015RESTATED*R’000
Assets
Current Assets
Cash and cash equivalents 3 321 210 269 847 95 987 73 795
Receivables from exchange transactions 4 44 132 29 526 2 465 3 995
Receivables from non-exchange trans-actions 5 17 789 20 989 17 789 20 989
Other financial assets 6 – – 35 000 35 000
Prepayments 7 19 791 26 112 15 648 19 919
Deposits paid 8 2 119 2 329 – –
Current tax receivable 9 – 4 554 – 1 239
VAT receivable 10 9 954 13 842 – –
Operating lease asset 12 1 009 462 14 14
Total current assets 416 004 367 661 166 903 154 951
Non-Current Assets
Investment property 13 689 697 678 822 – –
Property, plant and equipment 14 605 154 447 262 9 707 9 244
Intangible assets 15 3 353 3 831 1 234 1 386
Heritage assets 16 177 708 177 708 – –
Investments in subsidiaries 17 – – 259 084 259 084
Deferred tax 18 28 435 15 319 2 604 1 505
Operating lease asset 12 12 140 10 368 – –
Other receivables 19 – 2 317 – –
Total non-current assets 1 516 487 1 335 627 272 629 271 219
Total Assets 1 932 491 1 703 288 439 532 426 170
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STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2017 (continued)
GROUP CONTROLLING ENTITY
NOTE(S) 2017
R’000
2016RESTATED*R’000
2017
R’000
2015RESTATED*R’000
Liabilities
Current Liabilities
Payables from exchange transactions 20 54 410 43 700 7 404 6 756
Payables from non-exchange transactions 21 7 700 12 905 – –
Finance lease obligation 22 200 560 46 127
Current tax payable 9 2 510 1 097 1 101 –
VAT payable 11 4 026 – – –
Operating lease liability 12 556 312 508 64
Unutilised conditional government grants 23 122 125 88 808 86 239 73 308
Unutilised conditional grants (other) 23 141 770 118 409 – –
Unspent conditional grants and receipts 24 113 13 124 113 11 424
Provisions 25 42 867 29 859 9 350 8 747
Deposits received 26 6 571 6 372 – –
Total current liabilities 382 848 315 146 104 761 100 426
Non-Current Liabilities
Finance lease obligation 22 – 202 – 46
Operating lease liability 12 60 044 34 062 10 151 8 984
Unutilised conditional government grants 23 – 7 737 – –
Deferred tax 18 – 5 754 – –
Provisions 25 3 007 – – –
Total non-current liabilities 63 051 47 755 10 151 9 030
Total Liabilities 445 899 362 901 114 912 109 456
Net Assets 1 486 592 1 340 387 324 620 316 714
Net Assets Attributable Controlling Entity
Accumulated surplus 1 459 952 1 317 617 324 620 316 714
1 459 952 1 317 617 324 620 316 714
Non-controlling interest 26 640 22 770 – –
Total Net Assets 1 486 592 1 340 387 324 620 316 714
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GROUP CONTROLLING ENTITY
NOTE(S)
2017
R’000
2016RESTATED*R’000
2017
R’000
2015RESTATED*R’000
Revenue from exchange transactions 28 167 475 181 259 – –
Revenue from non-exchange transactions – grants 29 580 676 464 555 453 939 342 872
Other income 30 5 020 3 990 2 659 3 226
Grants transfered and expensed 31 – – (274 840) (198 059)
Administrative expenses (30 855) (24 772) (19 051) (14 358)
Other operating expenses (380 367) (311 544) (75 401) (48 406)
Employee costs (224 529) (193 972) (86 384) (78 185)
Operating surplus 32 117 420 119 516 922 7 090
Finance income 33 20 561 13 858 9 186 4 400
Finance expense 34 (6 906) (420) (9) (25)
Surplus before taxation 131 075 132 954 10 099 11 465
Taxation 35 15 130 10 989 (2 193) (1 988)
Surplus for the year 146 205 143 943 7 906 9 477
Attributable to:
Net asset holders of the company 142 335 144 015 7 906 9 477
Non-controlling interest 3 870 (72) – –
146 205 143 943 7 906 9 477
STATEMENT OF FINANCIAL PERFORMANCEAS AT 31 MARCH 2017
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ACCUMULATED SURPLUS
R‘000
TOTAL ATTRIBUTABLE TO OWNERS OF THE GROUP/CONTROLLING ENTITYR ‘000
NON–CONTROLLING INTEREST
R ‘000
TOTAL NET ASSETS
R ‘000
Group
Opening balance as previously reported 1 175 990 1 175 990 (22 842) 1 198 832
Prior year adjustments (note 48) (2 388) (2 388) – (2 388)
Balance at 01 April 2015 as restated* 1 173 602 1 173 602 22 842 1 196 444
Changes in net assets
Surplus for the year – restated (refer to note 49) 144 015 144 015 (72) 143 943
Total changes 144 015 144 015 (72) 143 943
Restated* Balance at 01 April 2016 1 317 617 1 317 617 22 770 1 340 387
Changes in net assets
Surplus for the year 142 335 142 335 3 870 146 205
Total changes 142 335 142 335 3 870 146 205
Balance at 31 March 2017 1 459 952 1 459 952 26 640 1 486 592
Controlling entity
Opening balance as previously reported 308 757 308 757 – 308 757
Prior year error (1 519) (1 519) – (1 519)
Balance at 01 April 2015 as restated* 307 238 307 238 – 307 238
Surplus for the year – restated (refer to note 49) 9 477 9 477 – 9 477
Total changes 9 477 9 477 – 9 477
Restated* Balance at 01 April 2016 316 714 316 714 – 316 714
Surplus for the year 7 906 7 906 – 7 906
Total changes 7 906 7 906 – 7 906
Balance at 31 March 2017 324 620 324 620 – 324 620
STATEMENT OF CHANGES IN NET ASSETSAS AT 31 MARCH 2017
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GROUP CONTROLLING ENTITY
NOTE(S) 2017
R’000
2016RESTATED*R’000
2017
R’000
2015RESTATED*R’000
Cash flows from operating activities
Receipts
VAT refund 12 199 – – –
Receipts from customers 149 329 159 611 – –
Government grants – MTEF 473 065 359 046 473 065 359 046
Finance revenue received 18 694 12 494 8 696 4 015
Conditional grants – non-MTEF 170 416 123 801 12 977 7 398
Other income 35 088 49 480 13 747 935
Total receipts from operating activities 858 791 704 432 508 485 371 394
Payments
Employee costs (230 249) (202 235) (94 429) (86 607)
Payments suppliers (335 441) (263 864) (76 106) (59 095)
Finance expense (6 864) (376) (9) (22)
Surrender of accumulated surplus (37 312) – (37 312) –
VAT payments (579) (8 445) – –
Taxation 39 (1 520) (2 296) (1 366) (1 763)
Government grants to subsidiaries 47 – – (274 840) (198 059)
Total payments from operating activities (611 965) (477 216) (484 062) (345 546)
Net cash flows from operating activities 36 246 826 227 216 24 423 25 848
Cash flows from investing activities
Acquisition of property, plant and equipment 14 (167 557) (152 402) (2 014) (1 290)
Proceeds from sale of property, plant and equipment 14 63 90 – –
Acquisition of investment property 13 (27 165) (7 944) – –
Acquisition of intangible assets 15 (215) (2 022) (90) –
Net cash flows from investing activities (194 874) (162 278) (2 104) (1 290)
Cash flows from financing activities
Finance lease payments (589) (914) (127) (402)
Net increase/(decrease) in cash and cash equivalents 51 363 64 024 22 192 24 156
Cash and cash equivalents at the beginning of the year 269 847 205 823 73 795 49 639
Cash and cash equivalents at the end of the year 3 321 210 269 847 95 987 73 795
CASH FLOW STATEMENT AS AT 31 MARCH 2017
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1. PRESENTATION OF GROUP ANNUAL FINANCIAL STATEMENTS
The group annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board in accordance with Section 91(1) of the Public Finance Management Act (Act 1 of 1999) and Companies Act of 2008.
Basis of preparationThese group annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention as the basis of measurement, unless specified otherwise.
A summary of the significant accounting policies, which have been consistently applied in the preparation of these group annual financial statements, are disclosed below.
Basis of measurementThese Group Annual Financial Statements are presented in South African Rand which is the Group’s functional currency. All financial information presented in Rand has been rounded to the nearest thousand.
1.1 GOING CONCERN ASSUMPTION
These group annual financial statements have been prepared based on the expectation that the group will continue to operate as a going concern for at least the next 12 months.
1.2 CONSOLIDATION BASIS OF CONSOLIDATION
Subsidiaries are entities controlled by the group. Control exists when the Group has the power to govern financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The annual financial statements of subsidiaries are included in the consolidated annual financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.
Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated annual financial statements.
ACCOUNTING POLICIES
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ACCOUNTING POLICIES (continued)
1. PRESENTATION OF GROUP ANNUAL FINANCIAL STATEMENTS (CONTINUED)
1.3 TRANSFER OF FUNCTIONS BETWEEN ENTITIES UNDER COMMON CONTROL
DefinitionsAn acquirer is the company that obtains control of the acquiree or transferor.
Carrying amount of an asset or liability is the amount at which an asset or liability is recognised in the Statement of Financial Position.
Control is the power to govern the financial and operating policies of another company so as to benefit from its activities.
A function is an integrated set of activities that is capable of being conducted and managed for purposes of achieving a company’s objectives, either by providing economic benefits or service potential.
Transfer date is the date on which the acquirer obtains control of the function and the transferor loses control of that function.
A transfer of functions is the reorganisation and/or the re-allocation of functions between entities by transferring functions between entities or into another company.
A transferor is the company that relinquishes control of a function. Common control – for a transaction or event to occur between entities under common control, the transaction or event needs to be undertaken between entities within the same sphere of government or between entities that are part of the same economic company. Entities that are ultimately controlled by the same company before and after the transfer of functions are within the same economic company.
Accounting by the company as acquirer Initial recognition and measurement As of the transfer date, the group recognises the purchase consideration, if any, paid to the transferor and all the assets acquired and liabilities assumed in a transfer of functions. The assets acquired and liabilities assumed are measured at their carrying amounts.
The consideration, if any paid, by the group can be in the form of cash, cash equivalents or other assets. If the consideration paid is in the form of other assets, the Company de-recognises such assets on the transfer date at their carrying amounts.
The difference between the carrying amounts of the assets acquired, the liabilities assumed and the consideration paid to the transferor, is recognised in accumulated surplus or deficit.
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ACCOUNTING POLICIES (continued)
1.3 TRANSFER OF FUNCTIONS BETWEEN ENTITIES UNDER COMMON CONTROL (CONTINUED)
Subsequent measurementThe Company subsequently measures any assets acquired and any liabilities assumed in a transfer of functions in accordance with the applicable Standards of GRAP.
At the transfer date, the group classifies or designates the assets acquired and liabilities assumed as necessary to apply other Standards of GRAP subsequently. The group makes those classifications or designations on the basis of the terms of the binding arrangement, economic conditions, its operating or accounting policies and other relevant conditions that exist at the transfer date. An exception is that the group classifies the following contracts on the basis of the contractual terms and other factors at the inception of the contract (or, if the terms of the contract have been modified in a manner that would change its classification, at the date of that modification, which might be the transfer date):• classification of a lease contract as either an operating lease or a finance lease in accordance with the
Standard of GRAP on Leases; and• classification of a contract as an insurance contract in accordance with the International Financial Reporting
Standard on Insurance Contracts.
1.4 MERGERS
DefinitionsCarrying amount of an asset or liability is the amount at which an asset or liability is recognised in the statement of financial position.
Combined group is a new reporting company formed from the combination of two or more entities. Combining entities are the entities that are combined for the mutual sharing of risks and benefits in a merger.
Control is the power to govern the financial and operating policies of another group so as to benefit from its activities.
A merger is the establishment of a new combined group in which none of the former entities obtain control over any other and no acquirer can be identified.
Merger date is the date on which entities are combined for the mutual sharing of risks and benefits and when the assets and liabilities are transferred to the combined group.
A merger is the establishment of a new combined group in which none of the former entities obtains control over any other and no acquirer can be identified. As no acquirer can be identified, a merger does not result in an group having or obtaining control over any of the entities that are involved in the transaction or event, as the combining entities are not controlled entities of each other, either before or after the merger. Identifying the combined company and combining entitiesFor each merger a combined group and combining entities are identified. All relevant facts and circumstances are considered in identifying the combined group and combining group.
The binding arrangement usually sets out which entities are to be combined as a result of the merger, and identifies the new reporting group after the merger.
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ACCOUNTING POLICIES (continued)
1.4 MERGERS (CONTINUED)
Determining the merger dateThe combined group and the combining entities identify the merger date, which is the date on which the new reporting group obtains control of the assets and liabilities and the combining entities loses control of their assets and liabilities.
All relevant facts and circumstances are considered in identifying the merger date.
Assets acquired [transferred] and liabilities assumed [derecognised]The recognition of assets and liabilities by the company as combined company are subject to the following conditions:
The assets and liabilities that qualify for recognition in a merger are part of what had been agreed in terms of the binding arrangement, rather than the result of separate transactions.
Other criteria for the company (as the combined entity)The assets and liabilities that quality for recognition as set out in the binding arrangement meets the definitions of assets and liabilities in the Framework for the Preparation and Presentation of Financial Statements and the recognition criteria in the applicable Standards of GRAP at the merger date.
Costs that the company expects but which the group is not obliged to incur in the future to effect its plan to exit an activity of the combining entities or to terminate the employment of, or relocate the combining entities’ employees, is not be accounted for as part of the liabilities at the merger date. the company does not recognise those costs as part of a merger. Instead, the group recognises these costs in its group annual financial statements after the merger has occurred, in accordance with the applicable Standards of GRAP.
Accounting by the company as the combined company
Initial recognition and measurementAs of the merger date, the group recognises all the assets acquired and liabilities assumed. The assets acquired and liabilities assumed are measured at their carrying amounts.
If, prior to the merger, a combining group was not applying the accrual basis of accounting, that combining group changes its basis of accounting to the accrual basis of accounting prior to the merger.
The difference between the carrying amounts of the assets acquired and the liabilities assumed is recognised in accumulated surplus or deficit.
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ACCOUNTING POLICIES (continued)
1.4 MERGERS (CONTINUED)
Measurement periodIf the initial accounting for a merger is incomplete by the end of the reporting period in which the merger occurs, the group reports in its group annual financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the group retrospectively adjust the provisional amounts recognised at the merger date to reflect new information obtained about facts and circumstances that existed as of the merger date and, if known, would have affected the measurement of the amounts recognised as of that date. The measurement period ends as soon as the group receives the information it was seeking about facts and circumstances that existed as of the merger date or learns that more information is not obtainable. However, the measurement period does not exceed two years from the merger date. The group considers all relevant factors in determining whether information obtained after the merger date should result in an adjustment to the provisional amounts recognised or whether that information results from events that occurred after the merger date. Relevant factors include the date when additional information is obtained and whether the group can identify a reason for a change to provisional amounts.
The group recognises an increase (decrease) in the provisional amount recognised for an asset (liability) by means of decreasing (increasing) the excess of the purchase consideration paid over the carrying amount of the assets acquired and liabilities assumed previously recognised in accumulated surplus or deficit.
During the measurement period, the group recognises adjustments to the provisional amounts as if the accounting for the merger had been completed at the merger date. Thus, the group revises comparative information for prior periods presented in group annual financial statements as needed, including making any change in depreciation, amortisation or other income effects recognised in completing the initial accounting.
After the measurement period ends, the group revises the accounting for a merger only to correct an error in accordance with the Standard of GRAP on Accounting Policies, Changes in Accounting Estimates and Errors.
Expenditure incurred in relation to the mergerExpenditures incurred in relation to the merger are costs that the company incurs to effect the merger. These costs include advisory, legal, accounting and other professional or consulting fees, general administrative costs, costs to furnish information to owners of the combining entities, and salaries and other expenses related to services of employees involved in achieving the merger. It also includes costs or losses incurred in combining the assets and liabilities of the combining entities. The group accounts for such expenditure as expenses in the period in which the costs are incurred.
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ACCOUNTING POLICIES (continued)
1.4 MERGERS (CONTINUED)
Subsequent measurementThe group subsequently measures any assets acquired and any liabilities assumed in a merger in accordance with the applicable Standards of GRAP.
At the merger date, the group classifies or designates the assets acquired and liabilities assumed as necessary to apply other Standards of GRAP subsequently. The group makes those classifications or designations on the basis of the terms of the binding arrangement, economic conditions, the operating or accounting policies and other relevant conditions as these exist at the merger date. An exception is that the group classifies the following contracts on the basis of the contractual terms and other factors at the inception of the contract (or, if the terms of the contract have been modified in a manner that would change its classification, at the date of that modification, which might be the merger date):• classification of a lease contract as either an operating lease or a finance lease in accordance with the
Standard of GRAP on Leases; and• classification of a contract as an insurance contract in accordance with the International Financial Reporting
Standard on Insurance Contracts.
The group annual financial statements of the group are prepared using uniform accounting policies for similar transactions and other events or similar circumstances.
Accounting by company as the combining company
Assets transferred and liabilities derecognisedAs of the merger date, the group as the combining company transfer and derecognise from its group annual financial statements, all the assets and liabilities derecognised at their carrying amounts.
Until the merger date, the group continues to measure these assets and liabilities in accordance with applicable Standards of GRAP.
The difference between the carrying amounts of the assets transferred and the liabilities derecognised are recognised in accumulated surplus or deficit.
1.5 SIGNIFICANT JUDGEMENTS AND SOURCE OF ESTIMATION UNCERTAINTY
In preparing the Group Annual Financial Statements, management is required to make estimates and assumptions that affect the amounts represented in the Group Annual Financial Statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the Group Annual Financial Statements. Significant judgements include:
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ACCOUNTING POLICIES (continued)
1.5 SIGNIFICANT JUDGEMENTS AND SOURCE OF ESTIMATION UNCERTAINTY (CONTINUED)
Trade receivables, loans and/or other receivablesThe Group assesses its trade receivables, loans and receivables for impairment at each statement of financial position date individually. In determining whether an impairment loss should be recorded in the Statement Of Financial Performance, the Group makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.
The entity assesses its trade receivables and loans and receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit, the entity makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset. Each receivable is reviewed individually at year end.
Property, equipment and intangible assetsThe Group’s management determines the estimated useful lives and residual values of property and equipment and intangible assets. These assessments are made on an annual basis and use historical evidence and current economic factors to estimate the values. Administrative computer equipment, office furniture and equipment, exhibits and motor vehicles are not componentised. These assets do not have significant parts that are considered to have an estimated useful life different to the estimated useful life of the asset as a whole.
Fair value estimationThe carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the entity for similar financial instruments. The carrying amount of cash and cash equivalents, trade and other receivables and trade and other payables approximated their fair values due to the short-term maturities of these assets and liabilities.
Impairment testingThe recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations and fair values. These calculations require the use of estimates and assumptions.
The entity reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets.
Expected future cash flows used to determine the value in use of tangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number of factors, including supply demand, together with economic factors such as interest.
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ACCOUNTING POLICIES (continued)
1.5 SIGNIFICANT JUDGEMENTS AND SOURCE OF ESTIMATION UNCERTAINTY (CONTINUED)
ProvisionsProvisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material). When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.
The provisions raised by the Company are limited to performance bonus and leave pay provisions. For performance bonuses, the provision raised estimates the amount of the provision based on the anticipated performance of employees.
This anticipated performance is based on experience with the employees of the Company, taking into account performance trends in the prior periods. For the provision for leave pay, the amount is based on the accumulated leave days balances at the end of the financial year after taking into account the forfeited leave days.
Furthermore, the amount of the performance bonus and the provision for leave pay is determined with reference to the salary scales as at end of the financial year.
Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 25.
Effective interest rateThe group used the prime interest rate to discount future cash flows.
Allowance for doubtful debtsOn debtors an impairment loss is recognised in surplus and deficit when there is objective evidence that it is impaired. The impairment is measured as the difference between the debtors carrying amount and the present value of estimated future cash flows discounted at the effective interest rate, computed at initial recognition.
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Item Useful life
Property – land Indefinite
Property – buildings 20-50 years
ACCOUNTING POLICIES (continued)
1.6 INVESTMENT PROPERTY
Investment property is property (land or a building – or part of a building – or both) held to earn rentals or for capital appreciation or both, rather than for:• use in the production or supply of goods or services or for• administrative purposes, or• sale in the ordinary course of operations.
Owner-occupied property is property held for use in the production or supply of goods or services or for administrative purposes.
Investment property is recognised as an asset when, it is probable that the future economic benefits or service potential that are associated with the investment property will flow to the group, and the cost or fair value of the investment property can be measured reliably.
Investment property is initially recognised at cost. Transaction costs are included in the initial measurement. Where investment property is acquired through a non-exchange transaction, its cost is its fair value as at the date of acquisition.
Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or service a property. If a replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised.
Cost modelInvestment property is carried at cost less depreciation less any accumulated impairment losses.
Depreciation is provided to write down the cost, less estimated residual value over the useful life of the property, which is as follows:
Investment property is derecognised on disposal or when the investment property is permanently withdrawn from use and no future economic benefits or service potential are expected from its disposal.
Gains or losses arising from the retirement or disposal of investment property is the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in surplus or deficit in the period of retirement or disposal.
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ACCOUNTING POLICIES (continued)
1.7 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one period.
The cost of an item of property, plant and equipment is recognised as an asset when it is probable that future economic benefits or service potential associated with the item will flow to the group the cost of the item can be measured reliably.
Property, plant and equipment is initially measured at cost.
The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.
Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.
Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination of monetary and non-monetary assets, the asset acquired is initially measured at fair value. If the acquired item’s fair value was not determinable, it’s deemed cost is the carrying amount of the asset(s) given up.
When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.
The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the entity is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories.
Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.
Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.
Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value.
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ACCOUNTING POLICIES (continued)
1.7 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
The useful lives of items of property, plant and equipment have been assessed as follows:
The residual value, and the useful life and depreciation method of each asset are reviewed at the end of each reporting date. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.
The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset.
Construction work in progress is not depreciated until it is utilised.
Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset.
The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.
Assets which the group holds for rentals to others and subsequently routinely sell as part of the ordinary course of activities, are transferred to inventories when the rentals end and the assets are available-for-sale. Proceeds from sales of these assets are recognised as revenue. All cash flows on these assets are included in cash flows from operating activities in the cash flow statement.
Non-current assets and disposal groups are classified as held for sale (and therefore current assets) when carrying amounts will be recovered principally through sale rather than through continuing use.
ITEM DEPRECIATION METHOD AVERAGE USEFUL LIFE
Land Indefinite
Buildings Straight line 20 – 40 years
Facilities equipment Straight line 3 – 20 years
Furniture and fixtures Straight line 3 – 20 years
Motor vehicles Straight line Straight line 5 – 15 years
Office equipment Straight line 3 – 15 years
IT equipment Straight line 3 – 15 years
Training equipment Straight line 3 – 20 years
Communication equipment Straight line 5 – 20 years
Infrastructure Straight line 3 – 25 years
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ACCOUNTING POLICIES (continued)
1.7 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
Non-current assets and disposal groups are classified as held for sale if the:• entity plans to sell assets at approximately its fair value in the present condition• the sale is highly probable with appropriate level of management committed to a plan to sell, indicated by:• an active programme to locate a buyer and complete the sale• actively marketing the asset or disposal group• completing the sale within one year• actions to ensure that it’s unlikely that there will be significant changes or withdrawal of the plan.
1.8 INTANGIBLE ASSETS
An asset is identified as an intangible asset when it:• is capable of being separated or divided from an entity and sold, transferred, licensed, rented or exchanged,
either individually or together with a related contract, assets or liability; or• arises from contractual rights or other legal rights, regardless whether those rights are transferable or
separate from the Company or from other rights and obligations.
An intangible asset is recognised when:• it is probable that the expected future economic benefits or service potential that are attributable to the asset
will flow to the group; and• the cost or fair value of the asset can be measured reliably.
Intangible assets are initially recognised at cost.
Should an intangible asset be acquired at no or nominal cost, the cost shall be its fair value as at the date of acquisition.
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding is recognised in the Statement of Financial Performance as an expense in the period incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group has sufficient resources to complete development, and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads.
Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses.
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ACCOUNTING POLICIES (continued)
1.8 INTANGIBLE ASSETS (CONTINUED)
An intangible asset arising from development (or from the development phase of an internal project) is recognised 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 or service potential.• 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.
The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.
Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.
An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful lives to their estimated useful life.
Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.
Internally generatedGoodwill is not recognised as an intangible asset.
Computer softwareAcquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.
The cost of software and licences used within a 12 month period are recognised in the Statement of Financial Performance as an expense when accrued.
Subsequent expenditureSubsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the Statement of Financial Performance as an expense when incurred.
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1.8 INTANGIBLE ASSETS (CONTINUED)
AmortisationThe amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.
Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life to its estimated residual value.
Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.
Internally generated goodwill is not recognised as an intangible asset.
Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:
Item Useful lifeComputer software, other 3 – 10 years
Intangible assets are derecognised on disposal; or when no future economic benefits or service potential are expected from its use or disposal.
The gain or loss is the difference between the net disposal proceeds, if any, and the carrying amount. It is recognised in surplus or deficit when the asset is derecognised.
1.9 HERITAGE ASSETS
Heritage assets are assets that have a cultural, environmental, historical, natural, scientific, technological or artistic significance and are held indefinitely for the benefit of present and future generations.
RecognitionThe group recognises a heritage asset as an asset if it is probable that future economic benefits or service potential associated with the asset will flow to the group, and the cost or fair value of the asset can be measured reliably.
Initial measurementHeritage assets are measured at cost.
The cost of an item of heritage assets is the purchase price and other costs attributable bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the Company.
The cost of an item of heritage assets acquired in exchange for non-monetary assets or monetary assets, or a combination of monetary and non-monetary assets is measured at the fair value of the asset given up, unless the fair value of the asset received is more clearly evident. If the acquired item could not be measured at its fair value, its cost is measured at the carrying amount of the asset given up.
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ACCOUNTING POLICIES (continued)
1.9 HERITAGE ASSETS (CONTINUED)
Subsequent measurementAfter recognition as an asset, a class of heritage assets is carried at its cost less any accumulated impairment losses.
Costs incurred to enhance or restore the heritage asset to preserve its indefinite useful life should be capitalised as part of the carrying amount of the heritage asset. These costs should be recognised only if the recognition criteria are met.
The Company does not recognise in the carrying amount of heritage assets the costs of the day-to-day servicing of such assets. Rather, these costs are recognised in surplus or deficit when incurred.
Costs of day-to-day servicing are primarily the cost of inspecting the heritage assets, cost of labour and con-sumables, and may include the cost of parts or repairs.
ImpairmentThe group assess at each reporting date whether there is an indication that a heritage asset may be impaired. If any such indication exists, the group estimates the recoverable amount or the recoverable service amount of the heritage asset.
TransfersTransfers from heritage assets are only made when the particular asset no longer meets the definition of a her-itage asset. Transfers to heritage assets are only made when the asset meets the definition of a heritage asset. DerecognitionThe group derecognises heritage asset on disposal, or when no future economic benefits or service potential are expected from its use or disposal.
The gain or loss arising from the derecognition of a heritage asset is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the heritage asset. Such difference is recognised in
surplus or deficit when the heritage asset is derecognised.
1.10 INVESTMENTS IN CONTROLLED ENTITIES, GROUP ANNUAL FINANCIAL STATEMENTS
Group annual financial statementsThe group annual financial statements include those of the holding company and its subsidiaries. The results of the subsidiaries are included from the effective date of acquisition.
On acquisition the group recognises the subsidiary’s identifiable assets, liabilities and contingent liabilities at fair value, except for assets classified as held-for-sale, which are recognised at fair value less costs to sell.
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1.10 INVESTMENTS IN CONTROLLED ENTITIES, GROUP ANNUAL FINANCIAL STATEMENTS (CONTINUED)
Controlling entity annual financial statementsIn the entity’s separate Annual Financial Statements, investments in controlled entities are carried at cost less any accumulated impairment.
The cost of an investment in a subsidiary is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the entity; plus any costs directly attributable to the purchase of the subsidiary.
An adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is probable and can be measured reliably.
1.11 FINANCIAL INSTRUMENTS
ClassificationThe group has the following types of financial assets (classes and category) as reflected on the face of the statement of financial position or in the notes thereto:
FINANCIAL ASSETS: CATEGORY
The group has the following types of financial liabilities (classes and category) as reflected on the face of the statement of financial position or in the notes thereto:
FINANCIAL LIABILITIES: CATEGORY
Initial recognitionThe group recognises a financial asset or a financial liability in its statement of financial position when the group becomes a party to the contractual provisions of the instrument.
Initial measurementThe group measures a financial asset and financial liability initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.
The group measures a financial asset and financial liability initially at its fair value [if subsequently measured at fair value].
Receivables from exchange transactions Financial asset measured at amortised cost
Cash and cash equivalents Financial asset measured at amortised cost
Operating lease asset Financial asset measured at amortised cos
Payables from exchange transactions Financial liability measured at amortised cost
Finance lease obligation Financial liability measured at amortised cost
Operating lease liability Financial liability measured at amortised cost
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1.11 FINANCIAL INSTRUMENTS (CONTINUED)
Subsequent measurementThe group 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.
Fair value measurement considerationsThe best evidence of fair value is quoted prices in an active market. If the market for a financial instrument is not active, the group establishes fair value by using a valuation technique. The objective of using a valuation technique is to establish what the transaction price would have been on the measurement date in an arm’s length exchange motivated by normal operating considerations. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the company uses that technique. The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing financial instruments. Periodically, an group calibrates the valuation technique and tests it for validity using prices from any observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on any available observable market data.
The fair value of a financial liability with a demand feature (e.g. a demand deposit) is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.
ReclassificationThe group 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 group cannot reliably measure the fair value of an embedded derivative that has been separated from a host contract 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 group reclassifies the investment from fair value to cost. The carrying amount at the date that fair value is no longer available becomes the cost.
If a reliable measure becomes available for an investment in a residual interest for which a measure was previously not available, and the instrument would have been required to be measured at fair value, the company reclassifies the instrument from cost to fair value.
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1.11 FINANCIAL INSTRUMENTS (CONTINUED)
Gains and lossesA gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair value is recognised in surplus or deficit.
For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through the amortisation process. Impairment and uncollectibility of financial assetsThe group assess at the end of each reporting period whether there is any objective evidence that a financial asset or group of 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 of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset‘s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in surplus or deficit.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor‘s credit rating), the previously recognised impairment loss shall be reversed either directly or by adjusting an allowance account. The reversal shall not result in a carrying amount of the financial asset that exceeds what 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 not measured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.
DerecognitionFinancial assetsThe group derecognises financial assets using trade date accounting.
The group derecognises a financial asset only when:• the contractual rights to the cash flows from the financial asset expire, are settled or waived;• he group transfers to another party substantially all of the risks and rewards of ownership of the financial
asset; or
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1.11 FINANCIAL INSTRUMENTS (CONTINUED)
• The group, 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 an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the group :
– derecognise the asset; and – 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 transferred on the basis of their relative fair values at the transfer date. Newly created rights and obligations are measured at their fair values at that date. Any difference between the consideration received and the amounts recognised and derecognised is recognised in surplus or deficit in the period of the transfer.
If the group transfers a financial asset in a transfer that qualifies for derecognition in its entirety and retains the right to service 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 company adequately for performing the servicing, a servicing liability for the servicing obligation is recognised at its fair value. If the fee to be received is expected to be more than adequate compensation for the servicing, a servicing asset is recognised for the servicing right at an amount determined on 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 company obtaining a new financial asset or assuming a new financial liability, or a servicing liability, the company recognise the new financial asset, financial liability or servicing liability at fair value.
On derecognition of a financial asset in its entirety, the difference between the 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 recognised and the part that is derecognised, based on the relative fair values of those parts, on the date of the transfer. For this purpose, a retained servicing asset is treated as a part that continues to be recognised. The difference between the carrying amount allocated to the part derecognised and the sum of the consideration received for the part derecognised is recognised in surplus or deficit.
If a transfer does not result in derecognition because the group has retained substantially all the risks and rewards of ownership of the transferred asset, the group continue to recognise the transferred asset in its entirety and recognise a financial liability for the consideration received. In subsequent periods, the group recognises any revenue on the transferred asset and any expense incurred on the financial liability. Neither the asset, and the associated liability nor the revenue, and the associated expenses are offset.
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1.11 FINANCIAL INSTRUMENTS (CONTINUED)
Financial liabilitiesA financial liability is derecognised when the obligation is extinguished. Exchanges of debt instruments between a borrower and a lender are treated as the extinguishment of an existing liability and the recognition of a new financial liability. Where the terms of an existing financial liability are modified, it is also treated as the extinguishment of an existing liability and the recognition of a new liability.
An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as having extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is accounted for as having extinguished the original financial 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 transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven or assumed by another group by way of a non-exchange transaction are accounted for in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions (Taxes and Transfers).
PresentationInterest relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.
Dividends or similar distributions relating to a financial instrument or a component that is a financial liability is recognised as 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 or expense in surplus or deficit.
Distributions to holders of residual interests are recognised by the group directly in net assets. Transaction costs incurred on residual interests are accounted for as a deduction from net assets. Income tax [where applicable] relating to distributions to holders of residual interests and to transaction costs incurred on residual interests are accounted for in accordance with the International Accounting Standard on Income Taxes.
A financial asset and a financial liability are only offset and the net amount presented in the statement of financial position when the group currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
In accounting for a transfer of a financial asset that does not qualify for derecognition, the group does not offset the transferred asset and the associated liability.
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ACCOUNTING POLICIES (continued)
1.12 TAX
Current tax assets and liabilitiesCurrent tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the Statement of Financial Position date.
Deferred tax assets and liabilitiesA deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting surplus nor taxable profit (tax loss).
A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable surplus will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises from the initial recognition of an asset or liability in a transaction at the time of the transaction, affects neither accounting surplus nor taxable profit (tax loss).
A deferred tax asset is recognised for the carry forward of unused tax losses and unused STC credits to the extent that it is probable that future taxable surplus will be available against which the unused tax losses and unused STC credits can be utilised.
Deferred tax is provided using the balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting surplus nor taxable surplus or deficit.
In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable surplus will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable surplus will allow the deferred tax asset to be recovered.
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1.12 TAX (CONTINUED)
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable company and the same taxation authority.
Value added taxValued Added Tax- The Group accounts for Value Added Tax on invoice basis in accordance with section 15(2)(a) of the Value Added Tax (Act No. 89 of 1991).
1.13 FINANCIAL RISK MANAGEMENT
Overview• Credit risk;• Liquidity risk;• Market risk; and• Interest rate risk.
This note presents information about the company’s exposure to each of the above risks, the company’s objectives, policies and processes for measuring and managing risk, and the company’s management of capital. Further quantitative disclosures are included throughout these annual financial statements.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board has established the Audit and Risk Management Committee, which is responsible for developing and monitoring the Group’s risk management policies. The Committee reports regularly to the Board of Directors on its activities.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.
The Group aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.
Credit riskCredit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the company’s receivables from customers and investment securities.
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1.13 FINANCIAL RISK MANAGEMENT (CONTINUED)
Receivables from exchange transactionsThe company’s exposure to credit risk is influenced mainly by debtors.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.
The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for company of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets. The Group collects three months rentals from tenants and does upfront invoicing to manage the credit risk.
DepositsThe company limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have a credit rating of at least A+. Given these high credit ratings, management does not expect any counterparty to fail to meet its obligations.
InvestmentsThe company limits its exposure by ensuring that vigorous due diligence processes are performed prior to investing in ventures. Performance of the investments is continuously monitored.
Liquidity riskLiquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. The company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company’s reputation. The company is wholly dependent on MTEF and Provincial budget vote. Market riskMarket risk is the risk that changes in market prices, such as interest rates and equity prices will affect the company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.The company ensures that it reviews its cash management strategies to ensure interest income is maximised.
Interest rate riskThe company has neither significant interest bearing assets nor liabilities. Accordingly the company’s income and expenses are substantially independent of changes in markets rates of interest. As a result, changes in the market rate of interest have a negligible impact on the financial performance of the company.
Capital managementThe Board’s policy is to maintain a strong capital base so as to maintain creditor and market confidence and to sustain future development of the business.
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1.14 LEASES
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is 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 company assesses the classification of each element separately.
Finance leases – lesseeFinance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments.
The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine; if not, the lessee’s incremental borrowing rate shall be used. Any initial direct costs of the lessee are added to the amount recognised as an asset.
The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. The same distinction is made for the presentation of the lease liabilities on the face of the statement of financial position between current and non-current liabilities as other liabilities.
The minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of return on the remaining balance of the liability.
A finance lease gives rise to a depreciation expense for depreciable assets as well as finance expense for each accounting period.
Operating leases – lessorOperating lease income is recognised as an income on a straight-line basis over the lease term. The difference between the amounts recognised as revenue and the contractual receipts are recognised as an operating lease asset or liability.
Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income.
Income for leases is disclosed under revenue in the statement of financial performance. Operating leases – lesseeOperating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability. This operating lease asset or liability is not discounted.
Any contingent rents are expensed in the period they are incurred.
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1.15 IMPAIRMENT OF CASH-GENERATING ASSETS
Cash-generating assets are those assets held by the Group with the primary objective of generating a commercial return. When an asset is deployed in a manner consistent with that adopted by a profit-orientated entity, it generates a commercial return.
Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation/amortisation.
Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses thereon.
A cash-generating unit is the smallest identifiable group of assets managed with the objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.
Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.
Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.
Recoverable amount of an asset or a cash-generating unit is the higher its fair value less costs to sell and its value in use. Useful life is either:(a) the period of time over which an asset is expected to be used by the group; or(b) the number of production or similar units expected to be obtained from the asset by the group.
Criteria developed by the group to distinguish cash-generating assets from non-cash-generating assets are as follow:
IdentificationWhen the carrying amount of a cash-generating asset exceeds its recoverable amount, it is impaired.
The group assesses at each reporting date whether there is any indication that a cash-generating asset may be impaired. If any such indication exists, the group estimates the recoverable amount of the asset.
Irrespective of whether there is any indication of impairment, the group also test a cash-generating intangible asset with an indefinite useful life or a cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current reporting period, that intangible asset was tested for impairment before the end of the current reporting period.
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ACCOUNTING POLICIES (continued)
1.15 IMPAIRMENT OF CASH-GENERATING ASSETS (CONTINUED)
Value in useValue in use of a cash-generating asset is the present value of the estimated future cash flows expected to be derived from the continuing use of an asset and from its disposal at the end of its useful life.
When estimating the value in use of an asset, the group estimates the future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal and the group applies the appropriate discount rate to those future cash flows. Basis for estimates of future cash flowsIn measuring value in use the group:• base cash flow projections on reasonable and supportable assumptions that represent management’s best
estimate of the range of economic conditions that will exist over the remaining useful life of the asset. Greater weight is given to external evidence;
• base cash flow projections on the most recent approved financial budgets/forecasts, but excludes any estimated future cash inflows or outflows expected to arise from future restructuring’s or from improving or enhancing the asset’s performance. Projections based on these budgets/forecasts covers a maximum period of five years, unless a longer period can be justified; and
• estimate cash flow projections beyond the period covered by the most recent budgets/forecasts by extrapolating the projections based on the budgets/forecasts using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. This growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the company operates, or for the market in which the asset is used, unless a higher rate can be justified.
Composition of estimates of future cash flowsEstimates of future cash flows include:• projections of cash inflows from the continuing use of the asset;• projections of cash outflows that are necessarily incurred to generate the cash inflows from continuing use
of the asset (including cash outflows to prepare the asset for use) and can be directly attributed, or allocated on a reasonable and consistent basis, to the asset; and
• net cash flows, if any, to be received (or paid) for the disposal of the asset at the end of its useful life.
Estimates of future cash flows exclude cash inflows or outflows from financing activities.
The estimate of net cash flows to be received (or paid) for the disposal of an asset at the end of its useful life is the amount that the group expects to obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the estimated costs of disposal.
Foreign currency future cash flowsFuture cash flows are estimated in the currency in which they will be generated and then discounted using a discount rate appropriate for that currency. The group translates the present value using the spot exchange rate at the date of the value in use calculation.
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ACCOUNTING POLICIES (continued)
1.15 IMPAIRMENT OF CASH-GENERATING ASSETS (CONTINUED)
Discount rateThe discount rate is a pre-tax rate that reflects current market assessments of the time value of money, represented by the current risk-free rate of interest and the risks specific to the asset for which the future cash flow estimates have not been adjusted.
Recognition and measurement (individual asset)If the recoverable amount of a cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. This reduction is an impairment loss.
An impairment loss is recognised immediately in surplus or deficit.
Any impairment loss of a revalued cash-generating asset is treated as a revaluation decrease.
When the amount estimated for an impairment loss is greater than the carrying amount of the cash-generating asset to which it relates, the group recognises a liability only to the extent that is a requirement in the Standard of GRAP.
After the recognition of an impairment loss, the depreciation (amortisation) charge for the cash-generating asset is adjusted in future periods to allocate the cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life. Cash-generating unitsIf there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the group determines the recoverable amount of the cash- generating unit to which the asset belongs (the asset’s cash-generating unit).
If an active market exists for the output produced by an asset or group of assets, that asset or group of assets is identified as a cash-generating unit, even if some or all of the output is used internally. If the cash inflows generated by any asset or cash- generating unit are affected by internal transfer pricing, the group use management’s best estimate of future price(s) that could be achieved in arm’s length transactions in estimating:(a) the future cash inflows used to determine the asset’s or cash-generating unit’s value in use; and(b) the future cash outflows used to determine the value in use of any other assets or cash-generating units that are affected by the internal transfer pricing.
Cash-generating units are identified consistently from period to period for the same asset or types of assets, unless a change is justified.
The carrying amount of a cash-generating unit is determined on a basis consistent with the way the recoverable amount of the cash-generating unit is determined.
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ACCOUNTING POLICIES (continued)
1.15 IMPAIRMENT OF CASH-GENERATING ASSETS (CONTINUED)
An impairment loss is recognised for a cash-generating unit if the recoverable amount of the unit is less than the carrying amount of the unit. The impairment is allocated to reduce the carrying amount of the cash-generating assets of the unit on a pro rata basis, based on the carrying amount of each asset in the unit. These reductions in carrying amounts are treated as impairment losses on individual assets.
In allocating an impairment loss, the company does not reduce the carrying amount of an asset below the highest of:• its fair value less costs to sell (if determinable);• ts value in use (if determinable); and• zero.
The amount of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other cash-generating assets of the unit.
Where a non-cash-generating asset contributes to a cash-generating unit, a proportion of the carrying amount of that non- cash-generating asset is allocated to the carrying amount of the cash-generating unit prior to estimation of the recoverable amount of the cash-generating unit.
The group reports segment information in accordance with the standard of GRAP on Segment Reporting shall disclose the following for each for each reportable segment based on Group’s primary reporting format:• the amount of impairment losses recognized in surplus or deficit and directly in net assets during the period;
and• the amount of reversals of impairment losses recognised in surplus deficit and directly in net assets during
the period.
Reversal of impairment lossThe group assess at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a cash-generating asset may no longer exist or may have decreased. If any such indication exists, the company estimates the recoverable amount of that asset.
An impairment loss recognised in prior periods for a cash-generating asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss for a cash-generating asset is recognised immediately in surplus or deficit. Any reversal of an impairment loss of a revalued cash-generating asset is treated as a revaluation increase. For cash-generating asset• the nature of the asset; and• if the Group reports segment information in accordance with standard of GRAP on Segment Reporting, the
reportable segment to which the asset belongs.
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1.15 IMPAIRMENT OF CASH-GENERATING ASSETS (CONTINUED)
After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the cash-generating asset is adjusted in future periods to allocate the cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.
A reversal of an impairment loss for a cash-generating unit is allocated to the cash-generating assets of the unit pro rata with the carrying amounts of those assets. These increases in carrying amounts are treated as reversals of impairment losses for individual assets. No part of the amount of such a reversal is allocated to a non-cash-generating asset contributing service potential to a cash-generating unit.
In allocating a reversal of an impairment loss for a cash-generating unit, the carrying amount of an asset is not increased above the lower of:• its recoverable amount (if determinable); and• the carrying amount that would have been determined (net of amortisation or depreciation) had no
impairment loss been recognised for the asset in prior periods.
The amount of the reversal of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other assets of the unit.
RedesignationThe redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-cash-generating asset to a cash-generating asset only occur when there is clear evidence that such a redesignation is appropriate.
1.16 IMPAIRMENT OF NON-CASH-GENERATING ASSETS
Cash-generating assets are assets managed with the objective of generating a commercial return. An asset generates a commercial return when it is deployed in a manner consistent with that adopted by a profit-oriented entity.
Non-cash-generating assets are assets other than cash-generating assets.
Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation/amortisation.
Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses thereon.
A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.
Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs
and income tax expense.
ACCOUNTING POLICIES (continued)
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ACCOUNTING POLICIES (continued)
1.16 IMPAIRMENT OF NON-CASH-GENERATING ASSETS (CONTINUED)
Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and its value in use. Useful life is either:(a) the period of time over which an asset is expected to be used by the group; or(b) the number of production or similar units expected to be obtained from the asset by the group. IdentificationWhen the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is impaired.
The group assesses at each reporting date whether there is any indication that a non-cash-generating asset may be impaired. If any such indication exists, the group estimates the recoverable service amount of the asset.
Irrespective of whether there is any indication of impairment, the company also test a non-cash-generating intangible asset with an indefinite useful life or a non-cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable service amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current reporting period, that intangible asset was tested for impairment before the end of the current reporting period.
Value in useValue in use of non-cash-generating assets is the present value of the non-cash-generating assets remaining service potential.
The present value of the remaining service potential of a non-cash-generating assets is determined using the following approach:
Depreciated replacement cost approachThe present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated replacement cost of the asset. The replacement cost of an asset is the cost to replace the asset’s gross service potential. This cost is depreciated to reflect the asset in its used condition. An asset may be replaced either through reproduction (replication) of the existing asset or through replacement of its gross service potential. The depreciated replacement cost is measured as the reproduction or replacement cost of the asset, whichever is lower, less accumulated depreciation calculated on the basis of such cost, to reflect the already consumed or expired service potential of the asset.
The replacement cost and reproduction cost of an asset is determined on an “optimised” basis. The rationale is that the group would not replace or reproduce the asset with a like asset if the asset to be replaced or reproduced is an overdesigned or overcapacity asset. Overdesigned assets contain features which are unnecessary for the goods or services the asset provides. Overcapacity assets are assets that have a greater capacity than is necessary to meet the demand for goods or services the asset provides. The determination of the replacement cost or reproduction cost of an asset on an optimised basis thus reflects the service potential required of the asset.
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ACCOUNTING POLICIES (continued)
1.16 IMPAIRMENT OF NON-CASH-GENERATING ASSETS (CONTINUED)
Recognition and measurementIf the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment loss.
An impairment loss is recognised immediately in surplus or deficit.
Any impairment loss of a revalued non-cash-generating asset is treated as a revaluation decrease.
When the amount estimated for an impairment loss is greater than the carrying amount of the non-cash-generating asset to which it relates, the group recognises a liability only to the extent that is a requirement in the Standards of GRAP.
After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.
Reversal of an impairment lossThe group assess at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a non-cash-generating asset may no longer exist or may have decreased. If any such indication exists, the group estimates the recoverable service amount of that asset. An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable service amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods.
A reversal of an impairment loss for a non-cash-generating asset is recognised immediately in surplus or deficit. Any reversal of an impairment loss of a revalued non-cash-generating asset is treated as a revaluation increase.
After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.
RedesignationThe redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-cash-generating asset to a cash-generating asset only occur when there is clear evidence that such a redesignation is appropriate.
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ACCOUNTING POLICIES (continued)
1.17 SHARE CAPITAL/CONTRIBUTED CAPITAL
Ordinary sharesOrdinary shares are classified as net assets in the books of the subsidiary. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from net assets, net of any tax effects.
1.18 EMPLOYEE BENEFITS
Short-term employee benefitsEmployee benefits are all forms of consideration given by an entity in exchange for services rendered by employees.
Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within twelve months after the end of the period in which the employees render the related service.
Short-term employee benefits include items such as:i wages, salaries and social security contributions;ii short-term compensated absences (such as paid annual leave and paid sick leave) where the compensation for the absences is due to be settled within twelve months after the end of the reporting period in which the employees render the related employee service;• bonus, incentive and performance related payments payable within twelve months after the end of the
reporting period in which the employees render the related service; and• non-monetary benefits (for example, medical care, and free or subsidised goods or services such as housing,
cars and cellphones) for current employees.
When an employee has rendered service to the group during a reporting period, the company recognise the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:(a) as a liability (accrued expense), after deducting any amount already paid. If the amount already paid exceeds the undiscounted amount of the benefits, the group recognise that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and(b) as an expense, unless another Standard requires or permits the inclusion of the benefits in the cost of an asset.
The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs. The group measure the expected cost of accumulating compensated absences as the additional amount that the company expects to pay as a result of the unused entitlement that has accumulated at the reporting date.
the group recognise the expected cost of bonus, incentive and performance related payments when the group has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when the company has no realistic alternative but to make the payments.
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1.18 EMPLOYEE BENEFITS (CONTINUED)
Defined contribution plansA defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.
Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.
Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the Group’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan
Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in surplus or deficit when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
1.19 PROVISIONS AND CONTINGENCIES
Provisions are recognised when the group 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 of a provision is the best estimate of the expenditure expected to be required to settle the present obligation.
Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.
The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if the group settles the obligation.
The reimbursement is treated as a separate asset. The amount recognised for the reimbursement does not exceed the amount of the provision.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required, to settle the obligation.
Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as an interest expense.
ACCOUNTING POLICIES (continued)
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ACCOUNTING POLICIES (continued)
1.19 PROVISIONS AND CONTINGENCIES (CONTINUED)
A provision is used only for expenditures for which the provision was originally recognised. Provisions are not recognised for future operating deficits.
If an entity has a contract that is onerous, the present obligation (net of recoveries) under the contract is recognised and measured as a provision.
A constructive obligation to restructure arises only when a entity:• has a detailed formal plan for the restructuring, identifying at least: – the activity/operating unit or part of a activity/operating unit concerned; – the principal locations affected; – the location, function, and approximate number of employees who will be compensated for services being
terminated; – the expenditures that will be undertaken; and – when the plan will be implemented; and• has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement
that plan or announcing its main features to those affected by it. No obligation arises as a consequence of the sale or transfer of an operation until the group is committed to the sale or transfer, that is, there is a binding arrangement.
After their initial recognition contingent liabilities recognised in business combinations that are recognised separately are subsequently measured at the higher of the amount that would be recognised as a provision; and the amount initially recognised less cumulative amortisation.
Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 46.
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument.
Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions.
The group recognises a provision for financial guarantees and loan commitments when it is probable that an outflow of resources embodying economic benefits and service potential will be required to settle the obligation and a reliable estimate of the obligation can be made.
Determining whether an outflow of resources is probable in relation to financial guarantees requires judgement. Indications that an outflow of resources may be probable are:• financial difficulty of the debtor;• defaults or delinquencies in interest and capital repayments by the debtor;• breaches of the terms of the debt instrument that result in it being payable earlier than the agreed term and
the ability of the debtor to settle its obligation on the amended terms; and• a decline in prevailing economic circumstances (e.g. high interest rates, inflation and unemployment) that
impact on the ability of entities to repay their obligations.
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1.19 PROVISIONS AND CONTINGENCIES (CONTINUED)
Where a fee is received by the group for issuing a financial guarantee and/or where a fee is charged on loan commitments, it is considered in determining the best estimate of the amount required to settle the obligation at reporting date. Where a fee is charged and the group considers that an outflow of economic resources is probable, an group recognises the obligation at the higher of:• the amount determined using in the Standard of GRAP on Provisions, Contingent Liabilities and Contingent
Assets; and• the amount of the fee initially recognised less, where appropriate, cumulative amortisation recognised in
accordance with the Standard of GRAP on Revenue from Exchange Transactions.
1.20 REVENUE FROM EXCHANGE TRANSACTIONS
Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners.
An exchange transaction is one in which the company receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
MeasurementRevenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates. Rendering of servicesWhen the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:• the amount of revenue can be measured reliably;• it is probable that the economic benefits or service potential associated with the transaction will flow to the
group;• the stage of completion of the transaction at the reporting date can be measured reliably; and• the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
When services are performed by an indeterminate number of acts over a specified time frame, revenue is recognised on a straight line basis over the specified time frame unless there is evidence that some other method better represents the stage of completion. When a specific act is much more significant than any other acts, the recognition of revenue is postponed until the significant act is executed.
When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.
Service revenue is recognised by reference to the stage of completion of the transaction at the reporting date. Stage of completion is determined by reference to reviews of work performed.
ACCOUNTING POLICIES (continued)
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1.21 REVENUE FROM NON-EXCHANGE TRANSACTIONS
Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, the company either receives value from another company without directly giving approximately equal value in exchange, or gives value to another company without directly receiving approximately equal value in exchange.
RecognitionAn inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to the extent that a liability is also recognised in respect of the same inflow.
As the entity satisfies a present obligation recognised as a liability in respect of an inflow of resources from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability recognised and recognises an amount of revenue equal to that reduction.
MeasurementRevenue from a non-exchange transaction is measured at the amount of the increase in net assets recognised by the company.
When, as a result of a non-exchange transaction, the company recognises an asset, it also recognises revenue equivalent to the amount of the asset measured at its fair value as at the date of acquisition, unless it is also required to recognise a liability. Where a liability is required to be recognised it will be measured as the best estimate of the amount required to settle the obligation at the reporting date, and the amount of the increase in net assets, if any, recognised as revenue. When a liability is subsequently reduced, because the taxable event occurs or a condition is satisfied, the amount of the reduction in the liability is recognised as revenue.
1.22 FINANCE INCOME
Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in the Statement of Financial Performance, using the effective interest method.
1.23 COMPARATIVE FIGURES
Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year. 1.24 IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE
Irregular expenditure as defined in section 1 of the PFMA is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including this Act.
All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the Statement of Financial Performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, the corresponding revenue and debtor is also recognised when the expense is incurred.
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1.24 IRREGULAR, FRUITLESS AND WASTEFUL EXPENDITURE (CONTINUED)
Any irregular, fruitless and wasteful expenditure is charged against income in the period in which it is incurred.
Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.
1.25 SEGMENT INFORMATION
A segment is an activity of an entity:• that generates economic benefits or service potential (including economic benefits or service potential relating to transactions between activities of the same entity);• whose results are regularly reviewed by management to make decisions about resources to be allocated to
that activity and in assessing its performance; and• for which separate financial information is available.
Reportable segments are the actual segments which are reported on in the segment report. They are the segments identified above or alternatively an aggregation of two or more of those segments where the aggregation criteria are met.
MeasurementThe amount of each segment item reported is the measure reported to management for the purposes of making decisions about allocating resources to the segment and assessing its performance. Adjustments and eliminations made in preparing the entity’s financial statements and allocations of revenues and expenses are included in determining reported segment surplus or deficit only if they are included in the measure of the segment’s surplus or deficit that is used by management. Similarly, only those assets and liabilities that are included in the measures of the segment’s assets and segment’s liabilities that are used by management are reported for that segment. If amounts are allocated to reported segment surplus or deficit, assets or liabilities, those amounts are allocated on a reasonable basis.
If management uses only one measure of a segment’s surplus or deficit, the segment’s assets or the segment’s liabilities in assessing segment performance and deciding how to allocate resources, segment surplus or deficit, assets and liabilities are reported in terms of that measure. If management uses more than one measure of a segment’s surplus or deficit, the segment’s assets or the segment’s liabilities, the reported measures are those that management believes are determined in accordance with the measurement principles most consistent with those used in measuring the corresponding amounts in the entity’s financial statements.
1.26 RELATED PARTIES
The group operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only parties under the executive authority of the MEC Department of Economic Development, Environment Agriculture and Rural Development will be considered to be related parties.
ACCOUNTING POLICIES (continued)
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1.26 RELATED PARTIES (CONTINUED)
Key management is defined as individuals with the authority and responsibility for planning, directing and controlling the activities of the entity. All individuals from the level of Corporate Executives up to the Board of Directors are regarded as key management.
Close family members of key management are considered to be those family members who may be expected to influence, or be influenced by key management individuals or other parties related to the entity.
Other related party transactions are also disclosed in terms of the requirements of the standard. The objective of the standard and the Annual Financial Statements is to provide relevant and reliable information and therefore materiality is considered in the disclosure of these transactions.
1.27 EVENTS AFTER REPORTING DATE
Events after reporting date are those events, both favourable and unfavourable, that occur between the reporting date and 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 group will adjust the amount recognised in the financial statements to reflect adjusting events after the reporting date once the event occurred.
The group will disclose the nature of the event and an estimate of its financial effect or a statement that such estimate cannot be made in respect of all material non-adjusting events, where non-disclosure could influence the economic decisions of users taken on the basis of the financial statements.
1.28 FINANCE EXPENSES
The finance expense relates to deemed interest on finance lease and interest on late payment for SARS. The finance charge on finance lease is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.
ACCOUNTING POLICIES (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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2. NEW STANDARDS AND INTERPRETATIONS
2.1 STANDARDS AND INTERPRETATIONS EFFECTIVE AND ADOPTED IN THE CURRENT YEAR
In the current year, the group has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations:
STANDARD INTERPRETATION:EFFECTIVE DATE: YEARS BEGINNING ON OR AFTER EXPECTED IMPACT:
• GRAP 103: Heritage Assets 01 April 2016 Unlikely there will be a material impact
• GRAP 17 (as amended 2015): Property, Plant and Equipment
01 April 2016 Unlikely there will be a material impact
• GRAP 16 (as amended 2015): Investment Property
01 April 2016 Unlikely there will be a material impact
2.2 Standards and interpretations issued, but not yet effective
The group has not applied the following standards and interpretations, which have been published and are mandatory for the group’s accounting periods beginning on or after 01 April 2017 or later periods:
STANDARD INTERPRETATION:
EFFECTIVE DATE: YEARS BEGINNING ON OR AFTER EXPECTED IMPACT:
• GRAP 20: Related parties No effective date Not expected to impact results but may
result in additional disclosure
• GRAP 109: Accounting by Principals
and Agents
No effective date Unlikely there will be a material impact
• GRAP 108: Statutory Receivables No effective date Unlikely there will be a material impact
• GRAP 32: Service Concession
Arrangements: Grantor
No effective date Unlikely there will be a material impact
• IGRAP 17: Service Concession
Arrangements where a Grantor Controls a
Significant Residual Interest in an Asset
No effective date Unlikely there will be a material impact
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
3. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of:Cash on hand 41 43 8 8
Current Account 178 369 201 138 21 004 49 933
Call accounts 142 800 68 666 74 975 23 854
321 210 269 847 95 987 73 795
Cash and cash equivalents earn interest. The group does not have any restrictions to realise or use any of its
balances andthe group does not have access to overdraft facilities included in cash holding.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS
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4. RECEIVABLES FROM EXCHANGE TRANSACTIONS4. Receivables from exchange transactions
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Trade receivables 33 631 18 495 – –
Deposits 48 48 – –
Broll trust 2 160 725 – –
Other receivables 3 686 5 733 3 278 4 996
Gauteng Motorsport Company SOC Limited 4 382 4 382 4 382 4 382
Guaranteed trust fund 9 974 9 365 – –
Less: Impairment of trade and other receivables (9 749) (9 222) (5 195) (5 383)
44 132 29 526 2 465 3 995
Ageing of trade receivables
The ageing of amounts are as follows:
Current 17 227 11 064 – –
31 – 60 days 11 350 3 033 – –
61 – 90 days 560 640 – –
Older than 90 days 4 494 3 758 – –
33 631 18 495 – –
Reconciliation of provision for impairment of trade and other receivablesBalance at the beginning of year (9 222) (9 086) (5 383) (5 383)Provision for impairment (1 003) (1 841) – –Amounts written off as uncollectible 476 1 705 188 –Balance at the end of the year (9 749) (9 222) (5 195 (5 383)
Refer to note 48, prior period error.
5. RECEIVABLES FROM NON-EXCHANGE TRANSACTIONS
Government grants -DED 17 789 20 989 17 789 20 989
6. OTHER FINANCIAL ASSETS
At amortised cost
Greater Newtown Development Company – – 35 000 35 000
The above loan is interest free, unsecured and will be repaid when the property is sold.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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7. PREPAYMENTS
GGDA entered into an agreement with Department of Information and communication system to provide branding and promotional services with regard to marketing.
SPDC prepayment consists mainly of insurance and software licenses.
TIH share the electricity bill with its tenant in terms of which TIH buys bulk prepaid electricity from City of Tshwane and internally bills its tenant as per their consumption.
Group prepayments include further amounts under IDZ attributable to the investor attraction project - GIFA, and Office and parking rental.
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Prepayments – Current Portion 19 791 26 112 15 648 19 919
8. DEPOSITS PAID
Deposits paid – Current portion 2 119 2 329 – –
9. CURRENT TAX PAYABLE/(RECEIVABLE)
Current tax payable/(receivable) represents amounts liable to and receivable from South African Revenue Services.
Current tax receivable – (4 554) – (1 239)
Current tax payable (2 510) 1 097 (1 101) –
(2 510) (3 457) (1 101) (1 239)
10. VAT RECEIVABLE
VAT 9 954 13 842 – –
VAT receivable represents amounts claimed from the South African Revenue Services but not yet received.
11. VAT PAYABLE
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Vat payable 4 026 – – –
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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12. OPERATING LEASE ASSET/LIABILITY
Non-current assets 12 140 10 368 – –
Current assets 1 099 462 14 14
Non-current liabilities (60 044) (34 062) (10 151) (8 984)
Current liabilities (556) (312) (508) (64)
(47 451) (23 544) (10 645) (9 034)
The above future minimum lease rentals represent rental payable under non-cancellable operating leases in the aggregate and for each period.
The above represents the lease rentals for operating leases of Gauteng Investment Centre (GIC) and the offices at 124 Main street, which are amortised on a straight line basis over the period of the lease.
Minimum lease commitments – as lessee:
– within one year 30 142 27 542 25 684 23 563
– in second to fifth year 91 586 115 198 72 829 98 513
– later than five years 1 247 737 1 257 837 – –
1 369 465 1 400 577 98 513 122 076
Minimum lease payments due – as lessor:
– Within one year (59 424) (53 333) – –
– In second to fifth year (137 827) (95 639) – –
– later than five years (61 864) (46 515) – –
(259 115) (195 487) – –
Refer to note 48, prior period error.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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13. INVESTMENT PROPERTY
GROUP
2017 2016
FIGURES IN RAND THOUSAND
COST /VALUATION
ACCUMULATEDDEPRECIATIONANDACCUMULATEDIMPAIRMENT
CARRYING VALUE
COST /VALUATION
ACCUMULATEDDEPRECIATIONANDACCUMULATEDIMPAIRMENT
CARRYING VALUE
Reconciliation of investment property – Group – 2017
Investment property - Noncurrent 951 667 (261 970) 689 697 925 203 (246 381) 678 822
FIGURES IN RAND THOUSAND
OPENING BALANCE
ADDITIONS DISPOSALS ACQUISITION BY ACCRUAL
DEPRECIATION TOTAL
Reconciliation of investment property – Group – 2017
Investment property 678 822 27 164 (586) 103 (15 806) 689 697
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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13. INVESTMENT PROPERTY (CONTINUED)
FIGURES IN RAND THOUSAND OPENING BALANCE
ADDITIONS DEPRECIATION *TOTAL
Reconciliation of investment property – Group – 2016
Investment property 685 806 7 944 (14 928) 678 822
Refer to Note 48, prior period error.
FIGURES IN RAND THOUSAND OPENING BALANCE
ADDITIONS DEPRECIATION *TOTAL
The Innovation Hub Management Company 207 095 208 960 – –
Supplier Park Development Company 347 107 330 730 – –
Constitution Hill Development Company 102 353 105 882 – –
Greater Newtown Development Company 32 375 33 250 – –
688 930 678 822 – –
Investment property comprises a number of commercial properties that are leased to third parties. Each of the leases contains an initial non-cancellable period which varies between three and 12 years. Subsequent renewals are negotiated with the lessee. No contingent rent is charged.
The entity subsequently accounts for investment property on the cost model. The carrying amount of the investment property is the cost less the accumulated depreciation and any impairment losses.
None of the above investment properties have been pledged as security.
In terms of the PFMA, investment properties can only be sold with the approval of the Executive Authority.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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13. INVESTMENT PROPERTY (CONTINUED)
The amounts included in (deficit)/surplus in relation to investment property
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Rental revenue from Investment property 68 174 60 849 – –
Direct operating expenses from rental generating
Direct operating expenses from rental generating (28 863) (28 863) (15 008) (15 008)
property (excluding repairs and maintenance)
Direct operating expenses from non-rental gener-ating property
(5 564) (5 060) – –
Expenditure incurred to repair and maintain Investment property
Repairs and Maintenance expenditure 10 901 7 849 – –
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GROUP 2017 2016
FIGURES IN RAND THOUSAND
COST ACCUMULATEDDEPRECIATIONANDACCUMULATEDIMPAIRMENT
CARRYING VALUE
COST ACCUMULATEDDEPRECIATIONANDACCUMULATEDIMPAIRMENT
CARRYING VALUE
Buildings 269 592 (29 116) 240 476 182 158 (24 449) 157 709
Infrastructure 95 436 (34 495) 60 941 91 714 (29 870) 61 844
Land 2 304 – 2 304 2 304 – 2 304
Facilities equipment 4 304 (1 716) 2 588 3 981 (1 397) 2 584
Motor vehicles 3 187 (1 074) 2 113 2 764 (804) 1 960
Communication equipment 5 163 (2 713) 2 450 6 652 (5 329) 1 323
Furniture and fixtures 24 150 (10 268) 13 882 21 094 (8 598) 12 496
Office equipment 17 810 (8 733) 9 077 14 491 (7 457) 7 034
IT equipment 43 795 (15 663) 28 132 37 192 (12 718) 24 474
Leasehold improvements 1 262 (834) 428 1 262 (563) 699
Training equipment 64 963 (2 054) 62 909 57 505 – 57 505
Work in progress 179 854 – 179 854 87 314 – 87 314
Building Under Construction – – – 30 016 – 30 016
Total 711 820 (106 666) 605 154 538 447 (91 185) 447 262
COMPANY 2017 2016
FIGURES IN RAND THOUSAND
COST ACCUMULATEDDEPRECIATIONANDACCUMULATEDIMPAIRMENT
CARRYING VALUE
COST ACCUMULATEDDEPRECIATIONANDACCUMULATEDIMPAIRMENT
CARRYING VALUE
IT equipment 8 236 (2 691) 5 545 7 481 (2 918) 4 563
Furniture and fixtures 5 954 (2 384) 3 570 5 936 (2 153) 3 783
Motor vehicles 345 (181) 164 345 (146) 199
Leasehold improve-ments
1 262 (834) 428 1 262 (563) 699
Total 15 797 (6 090) 9 707 15 024 (5 780) 9 244
None of the above Property, Plant and Equipment have been pledged as security.
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
FIGURES IN RAND THOUSAND
OPENING BALANCE
ADDITIONS AQUISITION BY ACCRUAL
DISPOSALS TRANSFERS DEPRE-CIATION
IMPAIR-MENT LOSS
TOTAL
Reconciliation of property, plant and equipment – Group – 2017
Land 2 304 – – – – – – 2 304
Buildings 157 709 56 361 1 057 – 30 016 (4 667) – 240 476
Furniture and fixtures 12 496 3 080 253 (72) 29 (1 887) (17) 13 882
Motor vehicles 1 960 423 – – – (270) – 2 113
Office equipment 7 034 3 318 37 (16) (4) (1 187) (105) 9 077
IT equipment 24 474 8 959 – (526) (1) (4 578) (196) 28 132
Leasehold improvements 699 – – – – (271) – 428
Infrastructure 61 844 3 734 – – (12) (4 625) – 60 941
Other property, plant and equipment 2 584 444 – – – (287) (153) 2 588
Training Equipment 57 505 7 342 128 – (12) (2 054) – 62 909
Work in progress 87 314 82 005 10 535 – – – – 179 854
Building under construction 30 016 – – – (30 016) – – –
Communication equipment 1 323 1 667 – (233) – (307) – 2 450
447 262 167 333 12 010 (847) – (20 133) (471) 605 154
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
FIGURES IN RAND THOUSAND
OPENING BALANCE
ADDI-TIONS
AQUISITION BY ACCRUAL
DIS-POSALS
TRANSFERS PRIOR PERIOD ERROR ADDITION
DEPRE-CIATION
IMPAIR-MENT LOSS
*TOTAL
Reconciliation of property, plant and equipment – Group – 2016
Land 2 304 – – – – – – – 2 304
149 203 7 386 – – 5 102– – (3 982) – 157 709
Furniture and fixtures 10 284 3 623 – (4) – – (1 378) (29) 12 496
Motor vehicles 1 491 721 – – – – (252) – 1 960
Office equip-ment 4 013 4 137 – (29) – – (1 087) – 7 034
IT equipment 23 171 5 012 313 (40) – – (3 882) (100) 24 474
Leasehold im-provements 969 – – – – – (270) – 699
Infrastructure 65 352 1 050 – – – – (4 558) – 61 844
Other proper-ty, plant and equipment 1 660 1 206 – – – – (262) (20) 2 584
Training equip-ment 25 949 31 556 – – – – – – 57 505
Work in prog-ress – 71 840 – – – 15 474 – – 87 314
Building under con-struction 9 032 26 086 – – (5 102) – – – 30 016
Communica-tion equipment 1 676 – – (2) – – (351) – 1 323
295 104 152 617 313 (75) – 15 474 (16 022) (149) 447 262
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
202
14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
FIGURES IN RAND THOUSAND OPENING BALANCE
ADDITIONS DEPRECIATION WRITE OFFS *TOTAL
Reconciliation of property, plant and equipment – Controlling entity – 2017
Furniture and fixtures 3 783 105 (292) (26) 3 570
Motor vehicles 199 – (35) – 164
IT equipment 4 563 1 707 (549) (176) 5 545
Leasehold improvements 699 – (271) – 428
9 244 1 812 (1 147) (202) 9 707
FIGURES IN RAND THOUSAND OPENING BALANCE
ADDITIONS DEPRECIATION WRITE OFFS *TOTAL
Reconciliation of property, plant and equipment – Controlling entity – 2016
Furniture and fixtures 3 506 394 – (116) (1) 3 783
Motor vehicles 233 – – (34) – 199
IT equipment 3 780 896 313 (366) (60) 4 563
Leasehold im-provements 969 – – (270) – 699
8 488 1 290 313 (786) (61) 9 244
Refer to Note 48, prior period error.
Assets subject to lease (Net carrying amount)
IT equipment 262 977 43 166
Leasehold improvements 428 699 428 699
690 1 676 471 865
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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14. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
FIGURES IN RAND THOUSAND INCLUDED WITHIN INFRASTRUCTURE
TOTAL
Reconciliation of Work-in-Progress Group – 2017
Opening balance 87 314 87 314
Additions/capital expenditure 82 005 82 005
Acquisition by accrual transferred to completed items 10 537 10 537
179 856 179 856
Reconciliation of Work-in-Progress Group – 2016
Additions/capital expenditure 71 841 71 841
Prior period error addition 15 474 15 474
Transferred to completed items – –
87 314 87 314
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Expenditure incurred to repair and maintain property, plant and equipment
Expenditure incurred to repair and maintain property, plant and equipment included in Statement of Financial Performance
Office equipment 2 137 1 189 – –
Leasehold improvements 26 10 26 10
Facilities equipment 2 067 1 340 – –
4 230 2 539 26 10
Capitalised lease assetCapitalised lease assets are IT equipment and capitalised Leasehold improvements held in terms of a lease agreement. Refer to note 22 on finance leases.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
204
15. INTANGIBLE ASSETS
GROUP 2017 2016
FIGURES IN RAND THOUSAND
COST ACCUMULATED AMORTISATION
AND ACCUMULATED
IMPAIRMENT
CARRYING VALUE
COST ACCUMULATED AMORTISATION
AND ACCUMULATED
IMPAIRMENT
CARRYING VALUE
Computer software 6 427 (3 074) 3 353 6 267 (2 436) 3 831
COMPANY 2017 2016
FIGURES IN RAND THOUSAND
COST ACCUMULATED AMORTISATION
AND ACCUMULATED
IMPAIRMENT
CARRYING VALUE
COST ACCUMULATED AMORTISATION
AND ACCUMULATED
IMPAIRMENT
CARRYING VALUE
Computer software 2 225 (991) 1 234 2 189 (803) 1 386
15. INTANGIBLE ASSETS (CONTINUED)
FIGURES IN RAND THOUSAND OPENING BALANCE
ADDITIONS AMORTISATION WRITE OFF TOTAL
Reconciliation of intangible assets – Group – 2017
Computer software 3 831 215 (688) (5) 3 353
Reconciliation of intangible assets – Group – 2016
Computer software 2 372 2 022 (562) (1) 3 8 31
Reconciliation of intangible assets – Controlling entity – 2017
Computer software 1 386 90 (237) (5) 1 234
FIGURES IN RAND THOUSAND OPENING BALANCE
AMORTISATION TOTAL
Reconciliation of intangible assets – Controlling entity – 2016
Computer software 1 618 (232) 1 386
Refer to Note 48, prior period error.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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16. HERITAGE ASSETS
GROUP 2017 2016
FIGURES IN RAND THOUSAND
COST/VALUATION
ACCUMULATED IMPAIRMENT
LOSSES
CARRYING VALUE
COST/VALUATION
ACCUMULATED IMPAIRMENT
LOSSES
CARRYING VALUE
Art Collections, antiquities and exhibits 121 – 121 121 – 121
Historical build-ings 177 587 – 177 587 177 587 – 177 587
Total 177 708 – 177 708 177 708 – 177 708
FIGURES IN RAND THOUSAND OPENING BALANCE
TOTAL
Reconciliation of heritage assets Group – 2017
Art Collections, antiquities and exhibits 121 121
Historical buildings 177 587 177 587
177 708 177 708
OPENING BALANCE
ADDITIONS TRANSFERS IMPAIRMENT LOSSES
REVERSED
*TOTAL
Reconciliation of heritage assets Group – 2016
Art Collections, antiquities and exhibits 59 6 57 (1) 121
Historical buildings 177 644 – (57) – 177 587
177 703 6 – (1) 177 708
Refer to Note 48, prior period error.
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Expenditure incurred to repair and maintain heritage assets
Expenditure incurred to repair and maintain heritage assets included in Statement of Financial
Performance
Historic building 35 12 – –
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
206
17. INVESTMENTS IN CONTROLLED ENTITIES
NAME OF COMPANY % HOLDING 2017
% HOLDING 2016
CARRYING AMOUNT
2017
CARRYING AMOUNT
2016
Supplier Park Development Company 100% 100% 27 27
Greater Newtown Development Company 77% 77% – –
The Innovation Hub Management Company 100% 100% – –
Gauteng IDZ Development company 100% 100% – –
Constitution Hill Development Company 87% 87% 384 380 384 380
Total cost amount 384 407 384 407
Accumulated impairment of investment in controlled entities (125 323) (125 323)
Total carrying amount 259 084 259 084
The net asset values of investments in subsidiaries is shown below:– The Innovation Hub Management Company – R317m (2016: R291m)– Supplier Park Development Company – R661m (2016: R625m)– Constitution Hill Development Company – R291m (2016: R295m)– Gauteng IDZ Development Company – R149m (2016: R73m)
The investment in Constitution Hill Development Company (ConHill) is made up of shareholder loans which have no repayment terms and are interest free. The primary factor that was considered when impairing the loan account to ConHill was the accumulated loss posted by ConHill. The only impaired investment is the ConHill loan.
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
The carrying amounts of subsidiaries are shown net of impairment which are as follows.
Reconciliation of provision for impairment of investments in controlled entities
Balance at the beginning of the year – – (125 323) (125 323)
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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18. DEFERRED TAX
Deferred tax (liability)/asset
Deferred tax asset 28 435 15 319 2 604 1 505
Deferred tax liability – (5 754) – –
Total deferred tax liability 28 435 9 565 2 604 1 505
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Reconciliation of deferred tax asset/(liability)
At beginning of year 9 565 (2 759) 1 505 2 442
Increases (decrease) in tax loss available for set off
12 467 1 541 – –
Taxable/(deductible) temporary difference movement on tangible fixed assets
(208) 1 648 – (2 900)
Originating temporary difference on tangible fixed assets
– – – –
Other movements -originating temporary differences
6 611 9 582 1 099 2 410
Adjustment due to prior year error – (447) – (447)
Balance at the end of year 28 435 9 565 2 604 1 505
19. OTHER RECEIVABLES
Other receivables consist of:
Workmens compensation – 2 291 – –
SDL – 24 – –
UIF – 2 – –
– 2 317 – –
20. PAYABLES FROM EXCHANGE TRANSACTIONS
Trade payables 6 063 9 368 353 180
Accrued expenses 35 020 15 779 7 051 6 576
Other payables 13 327 18 553 – –
54 410 43 700 7 404 6 756
21. PAYABLES FROM NON-EXCHANGE TRANSACTIONS
Advance receipts – conditional grants 7 700 12 905 – –
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
208
22. FINANCE LEASE OBLIGATION
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Minimum lease payments due
– within one year 207 625 48 136
– in second to fifth year inclusive – 207 – 48
207 832 48 184
less: future finance charges (7) (70) (2) (11)
Present value of minimum lease payments 200 762 46 173
Present value of minimum lease payments due
– within one year 200 560 46 127
– in second to fifth year inclusive – 202 – 46
200 762 46 173
Non-current liabilities – 202 – 46
Current liabilities 200 560 46 127
200 762 46 173
The Group holds certain equipment under finance lease obligations.
Refer to note 48, prior period error.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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ANNUAL REPORT 2016/17
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23. UNUTILISED CONDITIONAL GOVERNMENT GRANTS
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Reconciliation of unutilised government grant
Restated balance at the beginning of the year 214 954 164 682 73 308 40 170
Receipts – Grant 617 092 476 843 469 865 366 444
Receipts – DED (GIDZ grant) 3 402 15 474 – –
Receivable – DED Grant – 20 989 – 20 989
Prepayments – GCIS – (13 124) – (11 424)
Receipts from GIDZ – – 10 030 –
Transfers to projects – – (274 840) (198 059)
Operating and capital expenditures (567 667) (464 554) (167 789) (144 812)
Receipts and conditional grant receivable 33 426 14 644 12 977 –
Surrender of accumulated surplus (37 312) – (37 312) –
Balance at the end of year 263 895 214 954 86 239 73 308
Current liabilities 263 895 207 217 86 239 73 308
Non-Current Liabilities – 7 737 – –
263 895 214 954 86 239 73 308
Unutilised government grants represent the amount of grant funding that was received for specific GGDA projects and/or operational expenditure in relation to projects, which had not been utilised (i.e. transferred/deferred/expensed/committed) at year end.
At group level unutilised grants comprise MTEF grants of R122 125 (prior year: R109 678), and Non-MTEF grants of R141 770 (prior year: R105 277).
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
210
23. UNUTILISED CONDITIONAL GOVERNMENT GRANTS (CONTINUED)
Controlling entityIncluded in unutilised grants are third-party funds relating to the Special Economic Zone (SEZ) and the Department of Trade and Industry (Dti) for conditional grants:
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Unutilised grants MTEF
Balance at the beginning of the year 60 682 31 198
Receipts – grant 469 865 359 046
Receivable – DED Grant – 20 989
Prepayments – GCIS – (11 424)
Receipts from GIDZ 10 030 –
Transfers to projects (274 840) (198 059)
Operating and capital expenditures (163 586) (141 068)
Surrender of accumulated surplus (37 312) –
64 839 60 682
Unutilised grant SEZ Non-MTEF
Balance at the beginning of the year 12 626 8 972
Additions during the year 12 977 7 398
Income recognition during the year (4 203) (3 744)
21 400 12 626
24. UNSPENT CONDITIONAL GRANTS AND RECEIPTS
Deferred income comprises:
Current – GGDA 113 11 424 113 11 424
Current – GIDZ – 1 700 – –
113 13 124 113 11 424
GGDA entered into a contract with GCIS for the provision of strategic marketing and branding activities.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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ANNUAL REPORT 2016/17
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25. PROVISIONS
FIGURES IN RAND THOUSAND OPENING BALANCE
ADDITIONS UTILISED DURING THE YEAR
REVERSEDDURING THE YEAR
TOTAL
Reconciliation of provisions – Group – 2017Bonus 18 405 19 472 (15 410) (2 880) 19 587
Leave pay 3 465 3 632 (1 807) (51) 5 239
External bulk infrastructure – road – 21 048 – – 21 048
Other provisions – PMSA 7 989 – (7 989) – –
29 859 44 152 (25 206) (2 931) 45 874
Reconciliation of provisions – Group – 2016Bonus 17 559 17 723 (16 365) (512) 18 405
Leave pay 4 365 846 (624) (1 122) 3 465
Other provisions – PMSA – 7 989 – – 7 989
21 924 26 558 (16 989) (1 634) 29 859
Reconciliation of provisions – Controlling entity – 2017Provision for bonus 7 421 7 537 (5 514) (1 907) 7 537
Provision for leave pay 1 326 1 813 (1 316) (10) 1 813
8 747 9 350 (6 830) (1 917) 9 350
Reconciliation of provisions – Controlling entity – 2016Provision for bonus 7 688 6 706 (6 637) (336) 7 421
Provision for leave pay 2 172 370 (168) (1 048) 1 326
9 860 7 076 (6 805) (1 384) 8 747
Non-current liabilities 3 007 – – –
Current liabilities 42 905 29 859 9 350 8 747
45 912 29 859 9 350 8 747
Employee benefits represent management’s best estimate of the company liability for staff bonuses and leave pay.
The provisions raised by the company are limited to performance bonus and leave pay provisions. For the performance bonuses, the provision raised estimates the amount of the provision based on the anticipated performance of employees.
This anticipated performance is based on experience with the employees of the company, taking into account performance trends in the prior periods. For the provision for leave pay, the amount is based on accumulated leave days balances at the end of the financial year after taking into account the forfeited leave days.
Furthermore, the amount of the performance bonus and the provision for leave pay is determined with reference to the salary scales as at the end of the financial year.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
212
25. PROVISIONS (CONTINUED)
External bulk infrastructure – road (TIH)Provision for external bulk infrastructure cost is for the residual obligation in terms of site development for road works as required by the City of Tshwane. TIHMC was granted 121 000sqm of development rights (bulk gross floor area) however, the current Service Level Agreement has placed a cap or limitation on the TIHMC bulk uptake to 40 000 sqm . TIHMC may not exercise its total development rights (allowable bulk) of 121 000sqm until it has discharged its residual obligations in terms of such agreement. It is therefore required from the entity to construct the agreed upon external road infrastructure in line with the Service Level Agreement to be able to utilise the full development rights. Provision has been made for this cost based on the estimated present value of future cash flows arising from the road construction cost expected as at 31 March 2017. The discount rate used for the present value calculation was based on prime rate and amounts to 10.5%.
26. DEPOSITS RECEIVED
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Deposits received – Current portion 6 571 6 372 – –
27. SHARE CAPITAL/CONTRIBUTED CAPITAL
Authorised4 000 Ordinary shares – – – –
Issued100 Ordinary shares issued at R1 each – – – –
28. REVENUE FROM EXCHANGE TRANSACTIONS
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Rental income 7 392 4 190 – –
Rental of facilities and equipment 66 787 61 632 – –
Recoveries 1 258 1 437 – –
Project income 28 412 30 258 – –
Rendering of services 61 929 82 640 – –
Admissions fee 1 697 1 102 – –
167 475 181 259 – –
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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29. REVENUE FROM NON-EXCHANGE TRANSACTIONS/GOVERNMENT GRANTS
Operating expenses 414 826 287 308 177 197 143 249
Related to assets 162 448 161 773 1 902 1 483
Projects and transfers 3 402 15 922 274 840 198 140
580 676 465 003 453 939 342 872
30. OTHER INCOME
Sundry income 5 020 3 990 2 639 3 226
31. GRANT TRANSFERRED AND EXPENSED
Supplier Park Development Company SOC Ltd – – 76 000 83 161
The Innovation Hub Management Company SOC Ltd
– – 120 700 74 465
Constitution Hill Development Company SOC Ltd – – 59 857 21 433
Gauteng IDZ Development Company SOC Ltd – – 18 283 19 000
– – 274 840 198 059
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
214
32. OPERATING SURPLUS
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Operating surplus/(deficit) for the year is stated after accounting for the following:
Operating lease chargesPremises
• Contractual amounts 27 558 27 591 27 558 27 591
Equipment
• Contractual amounts 118 166 – –
27 676 27 757 27 558 27 591(Loss) gain on sale of property, plant and equip-ment
(1 177) 62 – –
Impairment on property, plant and equipment 462 – – –
Impairment on heritage assets – 2 – –
Gain (loss) on exchange differences 21 (59) – –
Amortisation on intangible assets 688 562 237 232
Depreciation on property, plant and equipment 20 163 16 022 1 147 787
Depreciation on investment property 15 770 14 927 – –
Employee costs 224 567 193 972 86 384 78 185
33. FINANCE INCOME
Finance incomeCash and Cash equivalent 18 640 11 936 8 696 4 015
Interest charged on trade and other receivables 1 079 385 490 385
Other finance income 842 1 537 – –
20 561 13 858 9 186 4 400
34. FINANCE EXPENSE
Deemed finance lease 11 25 9 25
Finance leases 52 47 – –
Other interest paid 6 843 348 – –
6 906 420 9 25
The other interest paid relates to AIDC, they paid interest to PMSA.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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35. TAXATION
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Major components of the tax (income) expense
CurrentLocal income tax – current period (3 773) (496) 3 292 1 051
DeferredOriginating and reversing temporary differences (8 138) (7 960) (1 099) 937
Other deferred tax (3 219) (2 533) – –
(11 357) (10 493) (1 099) 937
(15 130) (10 989) 2 193 1 988
Reconciliation of the tax expenseReconciliation between accounting surplus and tax expense.
Accounting surplus 130 301 133 305 10 099 11 465
Tax at the applicable tax rate of 28% (2016: 28%) 36 484 37 885 2 828 3 210
Tax effect of adjustments on taxable incomeDeferred tax effect and non-temporary differences (24 920) (23 146) – –
Non deductible expenses 715 20 878 715 764
Non taxable income (27 110) (44 688) (1 198) –
Deferred tax under provision (147) 130 – –
Adjustment due to prior year error deferred tax – 424 – 424
Prior year over/under provision (152) (2 472) (152) (2 410)
(15 130) (10 989) 2 193 1 988
Greater Newtown Development Company SOC Limited No provision has been made for the 2017 income tax as the company has no taxable income. The estimated tax loss available for set off against future taxable income is R30.3 million (2016: Restated assessed loss R34.1 million).
Constitution Hill Development Company SOC LimitedNo provision has been made for 2017 tax year as the company is in an assessed loss position. The estimated tax loss available for set off against future taxable income for 2017 is R170 million (2016:R 146 million). No deferred taxation asset has been recognised as the company will not have taxable income in the future.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
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36. CASH GENERATED FROM OPERATIONS
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Surplus 146 205 143 943 7 906 9 477
Adjustments for:Depreciation and amortisation 36 629 31 600 1 384 1 019
Gain (loss) on sale of assets and liabilities 1 177 (62) – –
Finance costs – Finance leases 50 90 – –
Impairment deficit 463 46 – –
Movements in operating lease assets and accruals 23 906 29 572 1 611 3 545
Employee benefits 603 (1 113) 603 (1 113)
Movement in tax receivable and payable 5 967 (4 640) 2 340 (659)
Annual charge for deferred tax (18 868) (8 592) (1 099) 937
Movement in provision 15 412 9 122 – –
Finance lease obligation – (300) – (300)
Non-cash item – interest accrual, straight lining lease
(222) 89 9 89
Assets write-off 206 61 206 61
Changes in working capital:Receivables from exchange transactions (13 895) 1 052 1 530 (2 381)
Other receivables from non-exchange transac-tions
3 200 (18 489) 3 200 (20 989)
Prepayments 6 321 20 741 4 271 (7 503)
Other receivables 2 317 (2 317) – –
Payables from exchange transactions (7 465) (5 637) 842 (897)
VAT 7 914 (4 764) – –
Taxes and transfers payable (non exchange) (5 205) 8 578 – –
Unspent conditional grants and receipts 54 706 34 801 12 931 33 138
Deposits Paid 209 210 – –
Deferred income (13 011) (7 838) (11 311) 11 424
Deposits received 207 1 063 – –
246 826 227 216 24 423 25 848
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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37. AUDITORS’ REMUNERATION
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Auditor’s remuneration – External 3 837 6 563 1 244 2 878
Auditor’s remuneration – Internal 1 627 934 679 387
5 464 7 497 1 923 3 265
38. DEBT IMPAIRMENT
Debt impairment 484 1 439 – –
Contributions to debt impairment provision 126 280 – –
Bad debts written off 22 91 – –
632 1 810 – –
This relates to the provision for bad debts for staff debtors.
39. TAX PAID
Balance at beginning of the year 142 (763) 1 239 581
Current tax for the year recognised in surplus or deficit
(3 971) (1 338) (3 392) (1 051)
Refund from SARS (414) – (414) –
SARS interest (18) – – –
Adjustment – – – (54)
Balance at end of the year 2 741 (195) 1 101 (1 239)
(1 520) (2 296) (1 366) (1 763)
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
218
40. COMMITMENTS
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Authorised capital and other expenditure
Already contracted for but not provided for• Property, plant and equipment 69 365 41 495 4 15
• Investment property 33 438 54 023 – –
102 803 95 518 4 15
Total capital commitmentsAlready contracted for but not provided for 102 803 95 518 4 15
Authorised operational expenditure
Already contracted for but not provided for• Operational and other commitments 40 364 185 854 10 464 3 241
• Projects 1 198 224 494 25 351 494
1 238 588 186 348 35 815 3 735
Total operational commitmentsAlready contracted for but not provided for 1 238 588 186 348 35 815 3 735
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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41. FRUITLESS AND WASTEFUL EXPENDITURE
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Fruitless and wasteful expenditure 18 - - -
Interest paid to Inkanyezi – 293 – –
Interest paid to PMSA 15 185 – – –
Condoned (15 203) (293) – –
– – – –
2017
SPDCThe PMSA/SPDC matter commenced in 2008 when a project management agreement entered into between SPDC and PMSA was terminated allegedly for poor performance. . The final appeal outcome of the arbitrator ordered that SPDC is liable to PMSA based on projects commenced even though such projects were not completed as well as interest and penalties thereon which in total amounted to R15.185 million.
GIDZInterest on Income tax related to the 2015 Tax year has occured in the 2016/17 financial year, upon assessment of the 2015 tax return. This was due to late registration of the company for income tax.
2016
AIDC co-hosted an event with Inkanyezi Event Organisers (Pty) Ltd (Inkanyezi) in 2014, and committed to a maximum amount of funding over four years and two events, of R10 million. In that financial year, AIDC suffered a budget cut, and informed Inkanyezi immediately, and asked them to downscale the event accordingly, as AIDC could only contribute R2 million in that financial year.
For many reasons, Inkanyezi decided not to completely downscale the event, as International exhibitors and attendees were expected, and they did not want to suffer reputational damage.
Although AIDC was not contractually obliged to contribute any specific amount below R10 million, the arbitrator awarded Inkanyezi its claim based on the fact that AIDC derived benefit from hosting the event, and that Inkanyezi had legitimate expenses in arranging the conference.
The interest paid by AIDC was based on an arbitration order and defending the matter was meant to protect the financial interest of AIDC. This is not expenditure which was made in vain. Legal advice was sought as and when the matter was out on arbitration, and the legal process had to run its course. This amount has been condoned by the board.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
220
42. IRREGULAR EXPENDITURE
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Opening balance 630 – – –
Add: Irregular expenditure – current year 2 138 3 311 – –
Less: Amounts condoned (2 768) (2 681) – –
Closing balance – 630 – –
Details of irregular expenditure
SPDC - Invoices received before new purchase orders were issued
– 150 – –
SPDC - Vehicles procured without following SCM processes
– 630 – –
TIHMC - Materiality framework 2 138 – – –
GIDZ - Irregularity of appointment of Jewellery Council of South Africa
– 2 531 – –
2 138 3 311 – –
43. RELATED PARTIES
RelationshipsControlling companySubsidiaries
Gauteng Department of Economic DevelopmentThe Innovation Hub Management CompanySupplier Park Development Company Constitution Hill Development Company Greater Newtown Development Company Gauteng IDZ Development Company
Gauteng Department of Economic Development Agencies
Gauteng Gambling BoardGauteng Tourism Authority Gauteng Enterprise Propeller Cradle of Human Kind Dinokeng
Executive management and non-executive directors Refer to note for executive management and non-executive directors emoluments
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Related party balances
Amounts included in Trade Payable regarding related partiesThe Innovation Hub Management Company SOC Limited
(5) –
Amounts included in Trade Receivables (Pay-ables) regarding related partiesSupplier Park Development Company SOC Limited – 228
Supplier Park Development Company SOC Limited – (54)
Constitutional Hill Development Company SOC Limited 10 180
The Innovation Hub Management Company SOC Limited
– 153
Gauteng IDZ Development Company SOC Limited – 53
Greater Newtown Development Company SOC Limited – 21
Loans and other receivablesGreater Newtown Development Company SOC Limited 35 000 35 000
Department of Economic Development 17 789 20 989
Related party transactions
Grants received from related parties
Gauteng Department of Economic Development 461 949 359 046
Cradle of Human Kind 6 566 –
Dinokeng 1 350 –
Grants paid to related partiesSupplier Park Development Company SOC Limited 76 000 83 161
The Innovation Hub Management Company SOC Limited
120 700 74 465
Gauteng IDZ Development Company SOC Limited 18 283 19 000
Constitution Hill Development Company SOC Limited 59 857 21 433
Rent and other expenses paid to related partiesSupplier Park Development Company SOC Limited – 491
Constitution Hill 85 97
Gauteng Department of Economic Development 23 119 26 846
43. RELATED PARTIES (CONTINUED)
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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44. EXECUTIVE MANAGEMENT AND DIRECTORS EMOLUMENTS
Executive
2017 – FIGURES IN RAND THOUSANDS EMOLUMENTS BONUS OTHER BENEFITS
TOTAL
S Zamxaka (Group CEO) 3 165 – 123 3 288
N Madlala (Group CFO) 1 982 – 77 2 059
J Chand 2 469 238 95 2 802
HD Chegwidden 1 491 – 51 1 542
WC Marhanele 133 – 22 155
E Matshele 1 626 – 103 1 729
S Mhlongo 1 969 – 80 2 049
I Mogorosi 1 458 139 62 1 659
S Molalabangwe 1 771 195 66 2 032
SM Molobi 1 088 – 55 1 143
J Morulane 160 – 5 165
M Mosehla 196 – 5 201
M Mulaudzi 1 742 182 75 1 999
N Ndlovu 905 – 105 1 010
S van der Merwe 25 – – 25
20 180 754 924 21 858
Executive
2016 – FIGURES IN RAND THOUSANDS REMUNERATION BONUS OTHER BENEFITS
TOTAL
S Ngwenya (GCEO) – Resigned 1 501 273 12 1 786
S Zamxaka (GCEO) 260 – 2 262
J Chand 1 985 278 44 2 307
C Pillay (GCFO) – Resigned 1 403 267 132 1 802
N Madlala (GCFO) 305 – 3 308
M Mosehla 1 768 182 32 1 982
J Morulane 1 466 69 25 1 560
S Mhlongo 1 878 228 12 2 118
I Mogorosi 1 390 169 11 1 570
S Molalabangwe 1 559 130 11 1 700
S Nokaneng 1 721 210 11 1 942
M Mulaudzi 1 658 197 23 1 878
16 894 2 003 318 19 215
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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44. EXECUTIVE MANAGEMENT AND DIRECTORS EMOLUMENTS (CONTINUED)
Non-executive
2017 – BOARD OF DIRECTORS FEESR’000
TOTALR’000
Mr M Mokoena (Chairman) 224 224
Z Malele (Deputy Chairman) 119 119
N Balton 131 131
D Dondur 184 184
Q Gungubele 198 198
Dr P Jourdan 114 114
P Mafojane 95 95
Dr N Msomi 55 55
S Nicolaou 144 144
T Setiloane 133 133
1 397 1 397
2017 – MEMBERS OF AUDIT AND RISK COMMITTEE FEESR’000
TOTALR’000
D Dondur (Chairman) 165 165
N Balton 106 106
S Mahlalela 5 5
Z Malele 137 137
O Mogale 132 132
S Nicolaou 40 40
T Setiloane 32 32
M Tshabalala 149 149
766 766
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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44. EXECUTIVE MANAGEMENT AND DIRECTORS EMOLUMENTS (CONTINUED)
2016 – BOARD OF DIRECTORS FEESR’000
TOTALR’000
M Mokeona 332 332
Dr P Jourdan 181 181
RMQ Gungubele 112 112
Dr T Moema 60 60
A Mawela 67 67
Z Mtshotshisa 4 4
Z Taho 114 114
P Ntsobi 59 59
929 929
2016 – MEMBERS OF AUDIT AND RISK COMMITTEE FEESR’000
TOTAL R’000
D Dondur (Chairman) 235 235
N Balton 169 169
Z Malele 199 199
S Nicolaou 191 191
P Ntsobi 1 1
T Setiloane 61 61
856 856
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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45. FINANCIAL INSTRUMENTS
Fair value versus carrying amountsThe fair values together with the carrying amounts shown in the Statement of financial position are as follows:
FIGURES IN RAND THOUSANDS FAIR VALUE 2017
CARRYING AMOUNT 2017
FAIR VALUE 2016
CARRYING AMOUNT 2016
Total Financial Assets – GroupReceivables from exchange transactions 44 132 44 132 29 526 29 526
Cash and cash equivalents 321 210 321 210 269 847 269 847
365 342 365 154 299 373 299 373
Total Financial Liabilities – GroupPayables from exchange transactions 54 410 54 410 43 700 43 700
Payables from non-exchange transactions 7 700 7 700 12 905 12 905
62 110 62 110 56 605 56 605
Total Financial Assets – CompanyOther financial assets 35 000 35 000 35 000 35 000
Receivables from exchange transactions 2 465 2 465 3 995 3 995
Receivables from non-exchange transactions 17 789 17 789 20 989 20 989
Cash and cash equivalents 95 987 95 987 73 795 73 795
151 241 151 241 133 779 133 779
Total Financial Liabilities – CompanyPayables from exchange transactions 7 404 7 404 6 756 6 756
Finance lease obligation 46 46 173 173
7 450 7 450 6 929 6 929Liquidity risk The group’s risk to liquidity is a result of the funds available to cover future commitments. The group manages liquidity risk through an ongoing review of future commitments and credit facilities.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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46. CONTINGENCIES
Contingent assets Soaring SummitThe company has a contractual dispute with a construction contractor: Soaring Summits. The contractor has defaulted on the contract time frame and penalties are leviable of R10,4 million, which the company has claimed from the Insurance underwriter of the contractor. The matter is now referred for arbitration.
Workmen’s Compensation CommissionerThe Workmen’s Compensation Commissioner has assessed the company on an incorrect rate. This was due to changing the basis of calculating the fees from category consultancy to construction which has resulted in an assessed amount of R5 million. In the 2016/17 financial year the Workmen’s Compensation Commissioner has made a payment of R2,4 million which reduces the contigency to R2,6 million.
47. EVENTS AFTER REPORTING DATE
There are no matters or circumstances arising since the end of the financial year, which significantly affect the financial position of the group or the results of its operations.
48. PRIOR PERIOD ERRORS
SPDC – Reversal of Prior Year Accruals:In the prior year directors fees accrual was overstated. The accrual was based on meetings attended, however there was no invoice raised by the holdings company (GGDA).
SPDC – Property, plant and equipmentIn the prior year property plant and equipment was over accrued. This error has now been corrected.
GGDA – Unutilised grantDuring 2014-15 financial year an amount of R3,9 million relating to non MTEF funds of SEZ was incorrectly recognised in the Statement of Financial Performance instead of being accounted and disclosed as Unutilised Grant in the Statement of Financial Position.
GGDA – Trade and other receivablesDuring the 2015/16 financial year, intercompany balance between SPDC and GGDA was overstated by R11 588.
Conhill – Heritage assetsHeritage Assets was understated with the artefect of David Webster bed.
GNDC – Investment property and operating lease assetDepreciation was understated in the prior year on the statement of financial performance. The depreciation was not calculated on the investment property due to Annual Financial Statements being prepared on a liquidation basis.
Income was understated in the prior period on the statement of financial performance. The income relates to straightlining of lease that was not accrued due to Annual Financial Statements being prepared on a liquidation basis.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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48. PRIOR PERIOD ERRORS (CONTINUED)
The correction of the errors results in adjustments as follows:
GROUP CONTROLLING ENTITY
2017R’000
2016R’000
2017R’000
2016R’000
Statement of financial positionIncrease/(decrease) in property, plant and equip-ment
– 18 052 – 2 900
Increase/(decrease) in invesment property – (1 750) – –
Increase/(decrease) in heritage asset – 6 – –
Increase/(decrease) of operating lease asset – 115 – –
(Increase)/decrease in Unutilised grants – (3 916) – (3 916)
(Increase)/decrease in operating lease liability – (25 078) – –
Increase/(decrease) in deferred tax – 8 406 – (447)
Increase/(decrease) receivables from exchange transactions
– – – (12)
Payables from exchange transactions – 382 – –
Statement of Financial PerformanceDepreciation expense – 875 – –
Income tax – deferred tax – (8 406) – 447
Other operating expenses – 24 567 – (491)
Revenue from exchange transactions – (115) – –
Revenue from non-exchange transactions – (15 474) – –
Administrative expenses – (52) – –
Statement of Changes in Net AssetsNet assets – 2 388 – 1 519
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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49. COMPARATIVE FIGURES
Certain comparative figures have been reclassified.
The effects of the reclassification are as follows:
Group
FIGURES IN RAND THOUSANDS COMPARATIVE FIGURES PREVIOUSLY REPORTED
RECLASSIFICATION AFTER RECLASSIFICATION
Statement of financial position – extract
Operating lease liability – current 9 047 (8 984) 63
Operating lease liability – non current – 8 984 8 984
Loan from shareholders 52 915 (52 915) –
Non-Controlling Interest (30 145) (52 915) 22 770
Total 31 817 – 31 817
Controlling entity
Statement of financial position – extractOperating lease liability – current 9 047 (8 984) 63
Operating lease liability – non current – 8 984 8 984
Total 9 047 – 9 047
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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50. SEGMENT INFORMATION
General information
Identification of segmentsThe group is organised and reports to management on the basis of six major functional areas (Programmes): Gauteng Growth and Development Agency Holdings (GGDA), Supplier Park Development Company (SPDC) t/a Automotive Industry Development Centre (AIDC), The Innovation Hub (TIH), Gauteng IDZ Development Company (IDZ), Constitution Hill (Conhill) and Greater Newtown Development Company (GNDC). Management uses these same programmes for determining strategic objectives.
Information reported about these segments is used by management as a basis for evaluating the segments’ performances and for making decisions about the allocation of resources. The disclosure of information about these segments is also considered appropriate for external reporting purposes.
Types of goods and/or services by segment
Automotive SectorThe Automotive Industry Development Centre (AIDC) is a project-driven organisation which focuses on excellence in technical project implementation and service delivery. The SPDC manages the Automotive Supplier Park, an automotive supplier logistics node in Rosslyn, Pretoria which provides a unique value proposition to suppliers of original equipment manufacturers (OEMs) in Gauteng.
The purpose of the AIDC is to develop the automotive manufacturing sector to globally competitive standards of excellence through a world-class value proposition which enables effective and sustainable socio-economic growth.
Innovation SectorThe Innovation Hub Management Company (TIHMC) manages The Innovation Hub, which is southern Africa’s first Science and Technology Park. TIH serves as a catalyst for innovation and entrepreneurship. It is an important driver of the knowledge and green economies in Gauteng.
The purpose of TIH is to establish and manage an enabling environment and initiatives that support innovation, enterprise development and skills development in targeted sectors, in order to contribute towards the growth of Gauteng’s economy, creation of decent jobs and poverty alleviation.
Industrial Development ZoneThe Gauteng IDZ (GIDZ) Development Company was formed to develop and operate the Industrial Development Zone (IDZ) at OR Tambo International Airport (ORTIA).
Heritage Tourism SectorConstitution Hill (Conhill) is a multi-million rand inner city regeneration project that has rejuvenated the site and uplifted the adjoining localities. The intention is to develop the available portions as iconic infrastructure in such a way that it is sensitive to the context, the architecture as well as the overall ambition of the stakeholders.
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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50. SEGMENT INFORMATION (CONTINUED)
Greater Newtown DevelopmentNewtown, in the western quadrant of the Johannesburg CBD, is a Special Economic Zone. It aims to become the creative capital of the city and South Africa. A dynamic, vibrant, sophisticated and cosmopolitan space is being created, boasting the best cultural offerings in Africa.
The day to day management of the precinct is carried out by the Johannesburg Development Agency. The intervention works towards inner-city regeneration in partnership with the GGDA and the Johannesburg City Council. Originally, the intention was to transform Newtown into a safe and attractive place to work, live and visit.
The GNDC is in the process of being wound down and this will happen parallel to the transfer of Number 1 Central Place to the GGDA through the sale agreement between the GGDA and City of Joburg.
Segment surplus or deficit, assets and liabilities
Controlling entity – 2017
AUTOMOTIVESECTOR
INNOVATIONSECTOR
INDUSTRIALDEVELOPMENT ZONE
HERITAGETOURISM SECTOR
GREATERNEWTOWN DEVELOPMENT
TOTAL
RevenueRevenue from non-exchange 118 588 142 981 115 624 24 384 – 401 577
Revenue from exchange 108 120 36 148 – 14 415 9 133 167 816
transactions Other Income 170 1 586 – 605 – 2 361
Finance income 3 224 4 121 3 053 451 525 11 374
Total segment revenue 230 102 184 836 118 677 39 855 9 658 583 128Entity’s revenue 583 128ExpenditureEmployee costs 79 547 37 835 7 619 13 144 – 138 145
Administrative expenses 5 366 2 372 455 3 326 285 11 804
Other operating expenses 109 948 121 777 41 585 26 976 5 020 305 306
Finance expense 6 853 2 18 24 – 6 897
Taxation (7 512) (3 219) (6 592) – – (17 323)
Total segment expenditure 194 202 158 767 43 085 43 470 5 305 444 829Total seg-mental sur-plus/(deficit) 35 900 26 069 75 592 (3 615) 4 353 138 299
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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50. SEGMENT INFORMATION (CONTINUED)
AUTOMOTIVESECTOR
INNOVATIONSECTOR
INDUSTRIALDEVELOPMENT ZONE
HERITAGETOURISM SECTOR
GREATERNEWTOWN DEVELOPMENT
TOTAL
AssetsCurrent As-setsReceivables from exchange trans-actions 12 491 18 414 – 3 358 7 421 41 684
Cash and cash equivalents 7 269 52 754 126 782 38 109 308 225 222
VAT receivable 9 954 – – – – 9 954
Prepayments 2 316 760 251 683 5 4 015
Deposits paid 258 1 861 – – – 2 119
Operating lease asset 772 12 – 137 74 995
Non-Current AssetsInvestment property 347 874 207 095 – 102 353 32 375 689 697
Property, plant and equipment 299 439 110 373 180 522 5 113 – 595 447
Intangible assets 2 015 103 – – – 2 118
Heritage assets – – – 177 708 – 177 708
Deferred tax 1 759 9 953 14 119 – – 25 831
Operating lease asset 10 926 1 074 – – 140 12 140
Total segment assets 695 073 402 399 321 674 327 461 40 323 1 786 930Total assets as per Statement of Financial Position 1 786 930
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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AUTOMOTIVESECTOR
INNOVATIONSECTOR
INDUSTRIALDEVELOPMENT ZONE
HERITAGETOURISM SECTOR
GREATERNEWTOWN DEVELOPMENT
TOTAL
Equity and liabilitiesCurrent liabilitiesCurrent tax payable – – 1 409 – – 1 409
Finance lease obligation 110 7 – 37 – 154
Payables from exchange 17 624 19 589 8 455 1 059 284 47 011
Payables from non-exchange transactions – 7 700 – – – 7 700
Provisions 7 628 23 279 937 1 673 – 33 517
Unutilised government grants 907 5 543 – 29 436 – 35 886
Unutilised conditional grant (other) s 4 620 24 285 112 865 – – 141 770
Operating lease liability – – 48 – – 48
VAT payable – – – 3 945 81 4 026
Deposits received 2 980 2 287 – 211 1 093 6 571
Non-Current Liabilities
Loans from shareholders – – – – 35 000 35 000
Operating lease liability – – 49 893 – – 49 893
Provisions – 3 007 – – – 3 007
EquityContribution from owners 27 – – 424 980 12 315 437 322
Accumulated surplus 661 177 316 702 148 067 (133 880) (8 450) 983 616
Total segment equity and liabilities 695 073 402 399 321 674 327 461 40 323 1 786 930Total liabilities as per Statement of Financial Position 1 786 930
50. SEGMENT INFORMATION (CONTINUED)
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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50. SEGMENT INFORMATION (CONTINUED)
Controlling entity – 2016
AUTOMOTIVESECTOR
INNOVATIONHUB
INDUSTRIALDEVELOPMENT ZONE
HERITAGETOURISM SECTOR
GREATERNEWTOWN DEVELOPMENT
TOTAL
RevenueRevenue from non-exchange 127 919 72 656 101 511 17 656 – 319 742
transactions
Revenue from ex-change 123 148 38 539 – 14 760 5 906 182 353
Other Income 352 508 – 42 – 902
Finance income 5 825 1 536 1 334 400 363 9 458
Total segment revenue 257 244 113 239 102 845 32 858 6 269 512 455Entity’s revenue 512 455
ExpenditureEmployee costs 72 958 28 335 5 677 8 816 – 115 786
Administrative expens-es 4 906 1 990 422 2 486 610 10 414
Other operating ex-penses 120 482 81 645 33 168 23 627 5 449 264 371
Finance expense 348 6 – 41 – 395
Taxation (3 734) (2 534) (6 709) – – (12 977)
Total segment expenditure 194 960 109 442 32 558 34 970 6 059 377 989Total segmental surplus/(deficit) 62 284 3 797 70 287 (2 112) 210 134 466
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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50. SEGMENT INFORMATION (CONTINUED)
AUTOMOTIVESECTOR
INNOVATIONHUB
INDUSTRIALDEVELOPMENT ZONE
HERITAGETOURISM SECTOR
GREATERNEWTOWN DEVELOPMENT
TOTAL
Assets Current assetsReceivables from exchange transactions 9 750 12 753 – 1 223 2 517 26 243
Cash and cash equivalents 86 059 39 879 61 931 8 104 79 196 052
Current tax receivable 3 315 – – – – 3 315
Operating lease asset – 243 – 176 29 448
VAT receivable 13 420 – – 291 131 13 842
Prepayments 2 143 445 2 057 1 420 – 6 065
Deposits paid 250 2 079 – – – 2 329
Non-current assetsInvestment property 330 730 208 960 – 105 882 33 250 678 822
Property, plant and 262 686 82 260 87 996 5 079 – 438 021
Intangible assets 2 322 122 – – – 2 444
Heritage assets – – – 177 708 – 177 708
Deferred tax – 6 734 7 080 – – 13 814
Operating lease asset 9 681 601 – – 86 10 368
Other receivable 2 317 – – – – 2 317
Total segment assets 722 673 354 076 159 064 299 883 36 092 1 571 788Total assets as per Statement of financial Position 1 571 788
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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AUTOMOTIVESECTOR
INNOVATIONHUB
INDUSTRIALDEVELOPMENT ZONE
HERITAGETOURISM SECTOR
GREATERNEWTOWN DEVELOPMENT
TOTAL
Equity and liabilitiesCurrent LiabilitiesCurrent tax payable – – 1 097 – – 1 097
Finance lease obligation 244 28 – 161 – 433
Payables from exchange transactions 2 1922 12 568 376 2 372 481 37 719
Payables from non-exchange transactions – 12 905 – – – 12 905
Provisions 15 588 3 795 585 1 072 – 21 040
Deferred income – – 1 700 – – 1 700
Unutilised government grants 2 474 11 712 – 1 314 – 15 500
Unutilised conditional grants (other) 48 503 12 211 57 695 – – 118 409
Operating lease liability 191 – 57 – – 248
Deposits received 2 583 2 479 – 211 1 099 6 372
Non-current Liabilities
Loans from shareholders – – – – 35 000 35 000
Finance lease obligation 110 7 – 39 – 156
Operating lease liability – – 25 078 – – 25 078
Deferred tax 5 754 – – – – 5 754
Unutilised government grants – 7 737 – – – 7 737
Equity
Contributions from owners 27 – – 424 980 12 315 437 322
Accumulated surplus 625 277 290 634 72 476 (130 266) (12 803) 845 318
Total segment equity and liabilities 722 673 354 076 159 064 299 883 36 092 1 571 788Total liabilities as per Statement of Financial Position 1 571 788
Following a change in the composition of its reportable segments, the corresponding items of segment information for earlier periods has been restated.
50. SEGMENT INFORMATION (CONTINUED)
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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DETAILED STATEMENT OF FINANCIAL PERFORMANCE
GROUP CONTROLLING ENTITY
NOTE(S) 2017
R’000
2016RESTATED*R’000
2017
R’000
2015RESTATED*R’000
RevenueRendering of services 61 929 82 640 – –
Recoveries 1 258 1 437 – –
Rental of facilities and equipment 66 787 61 632 – –
Project income 28 412 30 258 – –
Admissions fee 1 697 1 102 – –
Rental income 7 392 4 190 – –
Other income 3 434 3 361 2 659 3 226
Government grants 580 676 464 555 453 939 342 872
Fee income 1 586 508 – –
Finance Income 20 561 13 858 9 186 4 400
Total revenue 773 732 663 541 465 784 350 498ExpenditureEmployee related costs (224 529) (193 972) (86 384) (78 185)
Administration (30 855) (24 772) (19 051) (14 358)
Depreciation and amortisation (36 627) (31 512) (1 384) (1 019)
Impairment loss (462) (2) – –
Finance costs 34 (6 906) (420) (9) (25)
Lease rentals on operating lease (27 676) (27 757) (27 558) (27 591)
Debt Impairment 38 (632) (1 810) – –
Repairs and maintenance (12 595) (8 172) (615) (507)
Projects (13 751) (5 837) – –
Grants paid – – (274 840) (198 059)
General Expenses (262 612) (236 454) (45 844) (19 289)
Total expenditure (641 659) (530 708) (455 685) (339 033)Operating surplus 32 132 273 132 833 10 099 11 465(Loss) gain on disposal of assets and liabilities
(1 177) 62 – –
Loss on foreign exchange (21) 59 – –
(1 198) 121 – –
Surplus before taxation 131 075 132 954 9 921 11 465Taxation 35 (15 130) (10 989) 2 193 1 988
Surplus for the year 146 205 143 943 7 906 9 477Attributable to:Owners of the controlling entity 142 335 144 015 7 906 9 477
Non-controlling interest 3 870 (72) – –
146 205 143 943 7 906 9 477
The supplementary information presented does not form part of the annual financial statements and is unaudited
NOTES TO THE GROUP ANNUAL FINANCIAL STATEMENTS (continued)
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GAUTENG GROWTH AND DEVELOPMENT AGENCY
238
124 Main Street , Marshalltown, Johannesburg, Gauteng,
South Africa
Tel: +27 11 085 2321
www.ggda.co.za
RP150/2017
REGISTRATION NUMBER 2003/201743/07124 Main Street, Marshalltown,
Johannesburg, South Africa
Tel: (011) 085 2400
www.ggda.co.za
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