tikzn annual report 2014

ANNUAL REPORT 2013/14

VISIONTo contribute to the economic development by promoting the province of KwaZulu-Natal as the premier investment destination, and the leader in export trade.

• Identifyandpackageinvestmentopportunities in KwaZulu-Natal;

• BrandandmarketKwaZulu-Natalasan investment destination;

• Linkopportunitiestothedevelopmental needs of the KwaZulu-Natal community; and

• Ensureeasyaccesstoinvestmentand export trade opportunities.

MISSION MANDATE• Promote,brandandmarketthe

province of KwaZulu-Natal as an investment destination;

• Facilitatetradebyassistinglocalcompanies to access international markets;

• Identify,developandpackageinvestment opportunities in KwaZulu-Natal;

• Provideaprofessionalservicetoall clientele;

• Retainandexpandtradeandexport activities; and

• Linkopportunitiestothedevelopmental needs of the KwaZulu-Natal community.

Nelson Mandela Capture Site in the Midlands

1Trade & Investment KwaZulu-Natal Annual Report 2013/14

Contents

1. FOREWORD 2

2. BOARD OF DIRECTORS 4

3. CORPORATE PROFILE 5

4. ACTIng CHAIRPERSOn’S STATEMEnT 8

5. CHIEF EXECUTIVE’S REVIEW 10

6. OVERVIEW OF THE TRADE AnD InVESTMEnT EnVIROnMEnT 13

7. DEPARTMEnTAL REPORTS 17

7.1 INVESTMENT PROMOTION 18

7.1.1 INVESTMENT FACILITATION 18

7.1.2 BUSINESS RETENTION AND EXPANSION 23

7.2 EXPORT DEVELOPMENT AND PROMOTION 25

7.3 KNOWLEDGE MANAGEMENT 32

7.4 CORPORATE SERVICES 34

7.4.1 HUMAN RESOURCES 35

7.4.2 MARKETING AND COMMUNICATIONS 37

8. AnnUAL PERFORMAnCE REPORTS 42

9. AnnUAL FInAnCIAL STATEMEnTS 56

9.1 ADMINISTRATION 57

9.2 STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORS 58

9.3 BOARD’S REPORT 60

9.4 SECRETARY’S CERTIFICATION 63

9.5 REPORT OF AUDITOR-GENERAL 64

9.6 CORPORATE GOVERNANCE STATEMENT 67

9.7 BALANCE SHEET 73

9.8 NOTES TO THE ANNUAL FINANCIAL STATEMENT 94

10. TABLE OF ACROnYMS 111

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The last financial year bore witness to some interesting movements within the South African economy as the sensitive rand hit the spotlight again. The price of crude oil continued to rise resulting in petrol and diesel price increases. The World Bank revised South Africa’s economic growth outlook in 2014 to 2.7% from an earlier forecast of 3.2%. It also projected economic growth to improve to 3.4% in 2015. Despite the downward revision, according to the World Bank, the economic growth this year would be much better than the expected 1.9% growth in 2013 and would be boosted by an improvement in global demand and local exports.

Factors such as the volatility of the Rand, decreased manufacturing output and labour uncertainty continue to plague South Africa (SA) and KwaZulu-Natal (KZN). This has added strain to our already complex challenge of attracting foreign direct investment (FDI), as we compete with over 250 like-minded Agencies globally. At a provincial level, Development Agencies are being set up in districts which enhance Trade & Investment KwaZulu-Natal’s (TIKZN) efforts of being the authority responsible for investment and trade promotion in the province.

In order to direct the economy of South Africa, there has been a need for government-led intervention. This has led to government reviewing current strategies to drive economic development in South Africa. We have continued to develop the provincial strategies aligned to key national strategic policy frameworks such as New Growth Path, Industrial Policy Action Plan (IPAP2), the Provincial Growth and Development Plan (PGDS) and most importantly alignment with the country’s new long-term development blueprint, the National Development Plan (NDP).

The KwaZulu-Natal Provincial Cabinet met at the end of this financial year to consolidate integrated systems of governance and to review service delivery programmes. The main outcome was that the PGDP was adopted and will continue to be implemented by the new administration with three main priorities:

• ManagingtheimplementationoftheHIV/AIDSprogramme;• Improvementoflivingconditionsofvulnerablepeoplesuchasfarmworkers;and• Thetotaleradicationofthebuckettoiletsystem.

The planned multi-billion-rand government investment in infrastructure development will be the mainstay to steer the province to greater economic heights. Among innovative interventions we are introducing to instigate real growth across all regions in the province aretheSpecialEconomicZonesandIndustrialHubs;theAerotropolisandtheMaritimeand Tourism sectors as key drivers of the KwaZulu-Natal economy. Our programmes and strategic public entities are positioned to play a pivotal role in ensuring our socio-economic objectives are achieved and feeds into to the overall outcomes of the NDP.

01 MeC’s Foreword

Mr M MabuyakhuluMEC for Economic Development, Tourism and Environmental Affairs


The performance of Trade & Investment KwaZulu-Natal as an agency of the Department of Economic Development and Tourism has proved itself to be an important asset within the provincial economic cluster. This is done by means of driving the promotion of the province as a globally competitive trade and investment destination and as a formidable asset in nurturing and expanding our export sector.

Two key priorities identified for immediate implementation by the organisation were to formulate concise strategies that will focus on the analysis and opportunity identification of doing business in Africa and the marketing, development and foreign direct investment recruitment from the Brazil, Russia, India, China (BRIC) countries.

Throughout the past 20 years, our young democracy has shown resilience, equalled only by determination. We have remained true to our promise of delivering on our mandate of creating a better life for all. I therefore commend TIKZN for its commitment to creating an environment in the province conducive to business development and attractive to both local and international investors and traders.

Mr M Mabuyakhulu, MPP MEC for Economic Development, Tourism and Environmental Affairs

Durban Harbour

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Mr MA Tarr Director

Cllr DCP MazibukoDirector

Prof W Viviers Director

Ms LCZ CeleActing Chairperson

Mr CS GinaDirector

Dr NS MsomiDirector

Dr JJ Van ZylDirector

Dr VF Mahlati Director

Dr MAI VeliaDirector

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•BoArd oF dIreCtors


CorporAte proFIle

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•Trade & Investment KwaZulu-Natal (TIKZN) is a South African trade and inward investment promotion agency, established to specifically promote the province of KwaZulu-Natal as a premier investment destination and to facilitate trade by assisting locally-based business enterprises access international markets.

KwaZulu-Natal is home to South Africa’s second largest economy with TIKZN geared to promote the province’s competitive advantages as a world-class business investment destination and encourage trade by assisting local companies identify new markets for their products locally and internationally.

The organisation’s Chief Executive Officer is Mr Zamo Gwala who reports to a nine-member Board of Directors. The Board comprises individuals with the varied skills and collective expertise in the fields of trade and investment. They are responsible for providing TIKZN with its strategic business direction.

In addition, TIKZN employs specialist members of staff whose task is to address opportunities in the areas of investment promotion, strategy, research, project management, finance, marketing and human resources, so generating inward investment to the province and developing trade links with international role-players.

TIKZN is dedicated to creating an environment in the province conducive to business development and attractive to both local and international investors, as well as traders. In line with this, the organisation’s intent is to impact significantly on the socio-economic advancement of KwaZulu-Natal and its people.

KwaZulu-Natal, a 94 361km2 region situated on the east coast of South Africa, is a significant hub for industrial development in sub-Saharan Africa and is a prime tourist destination. It boasts a number of competitive advantages.

These include:• Superbnaturalresources;• Exceptionalproductivecapacity;• Highlydevelopedfirst-worldinfrastructure;• Avaluablecoastallocation;• BothofSouthAfrica’sprimaryharbours-Durban,oneofthebusiestinAfrica,and

RichardsBay,thedeepestbreakbulkinAfrica;• TheDubeTradePort,hometotheKingShakaInternationalAirport;and• Anenviablelifestylecomplementedbyanidyllicclimate.

The province offers an extensive range of economic activities, inclusive of capital-intensive manufacturing, transport, storage, communications, finance and business services, as well as highly productive agricultural, forestry, fishing and accommodation sectors.

TIKZN actively promotes these advantages to leverage an increased share of the global investment market. Accordingly, the organisation facilitates the formation of new local and foreign investment, supports retention and expansion of businesses already operating in the province and provides professional after-care services in a concerted and ongoing bid to support sustainable economic growth in KwaZulu-Natal.

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ObjectivesTo meet its shareholder and stakeholder expectations, TIKZN aims to deliver effective services and support to its clients and stakeholders through job creation, spatial development, sector development and rural development.

This will be achieved through:• Theattraction,developmentandretentionofhighperformingemployeeswhohave

the skills and competencies required to manage key internal business processes includingthemarketingofTIKZNasaninvestmentpromotionagency;

• EnhancingtheresearchandknowledgecapabilitiesofTIKZNandmakinguseoftechnologyasanenablerforTIKZN’sbusiness;

• Ensuringcompliancewithcorporategovernanceandfinancialreportingstandards;and

• Advocating for a conducive business environment in KZN and marketing theprovince as a premier business destination.

This will be done on behalf of the province of KwaZulu-Natal with a view to:• Attractnewfixedinvestments;• Facilitateexportopportunities;and• Facilitatebusinessretentionandexpansionprogrammes;thereby supporting sustainable economic growth in KwaZulu-Natal for the benefit of all its citizens.

Key ActivitiesTrade & Investment KwaZulu-Natal undertakes a diverse range of key activities, all designed to ensure the successful promotion of business investment and trade development.

Such activities facilitated include:• Jointventures;• Businesslinkagesbetweensmallandbigbusinesses;• The timely provision of relevant and reliable information to both potential and

existinginvestorsandtraders;• Assistance to both existing and new investors regarding applications for both

investmentandexportmarketingincentives;• Applicationsforbusinesspermitsforforeigninvestors;• Negotiationforlocalgovernmentincentivesonbehalfofinvestors;• Theprovisionforprojectsupportandafter-careservicestoinvestors;• Theprovisionforassistancetoemerginginternationaltraders;• Internationaltradeenquiryassistance;• Locatingsuitablepremisesforinvestors;and• Assistinginsecuringprojectandoperationalfinance.


Trade & Investment KwaZulu-Natal House

Strategic PartnersTrade & Investment KwaZulu-Natal has, through a number of strategic partnerships, aligned itself with like-minded stakeholders with a view to synergistically and consistently promote the province’s attributes.

Such linkages have seen a number of effective collaborations on projects, inclusive of in and outbound missions, events and promotional activities, all designed to leverage the expansion of the agency’s overall business activities.

Key strategic partners include:• Publicentities;• Financialinstitutions;• Tertiaryinstitutions;• Industryassociations;• Economicdevelopmentagencies;• Thevariouschambersofcommerceandindustry;• ThevariousmunicipalitiesinKwaZulu-Natal;• Otherinvestmentpromotionagencies(nationalandinternational);and• Provincialandnationalgovernmentdepartments.

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In October 2013 the Board Charter, which guides and assists the members of the board in discharging its duties, was reviewed inline with TIKZN becoming a Public Entity listed under Schedule 3C of the PFMA of 1999. The regulatory environment within which TIKZN functions is dynamic, particularly with regards to good corporate governance standards. The ongoing review of TIKZN’s Board Charter is essential to ensure the organisation maintains the highest corporate governance standards while developing ongoing strategic frameworks for investment promotion.

Strategic ReviewAs a young board, we assessed the deliverables of the organisation. To give strategic guidance, the organisation took stock of its performance and the strategy was reviewed to see how these deliverables can be accelerated. Consequently, the organisation had to be restructured to fit into the new streamlined focus of investor targeting and product development.

The organisation also embarked on a skills audit to take stock of what competencies exist versus what is needed. This process sought to identify the gaps that exist between the skills possessed and the skills required. For the organisation to deliver on its objectives contained in the strategy, it was necessary to identify the talent to ensure any gaps identified are addressed.

Trade & Investment KwaZulu-Natal FocusAnother facet of the organisational strategy included the formulation of Africa and BRICS strategies, which were identified as priority areas stemming from the Board’s review of the corporate strategy. It has become critical for KwaZulu-Natal within South Africa’s role in BRICS, to gauge the tangible benefits for business and manage the benefits that can be leveraged. To succeed, a BRICS Trade and Investment Strategy for KZN elevating the business opportunities and economic development has been commissioned. This strategy will include a detailed analysis of trade and investment opportunities within the BRICS member states. KZN companies will be guided into doing business within the BRICS member states to create new targeted markets for KZN products and to attract potential investors.

ACtIng ChAIrperson’s stAteMent

04

Ms LCZ Cele


Africa is facing an unprecedented opportunity for both trade in particular export trade and investment. TIKZN has responded to this need by developing a strategy for the province to assist industry and highlight the ease of doing business in Africa. This marks a significant focus in the way TIKZN encourages business to view Africa and its own role as a supporter of the continent’s economic development. TIKZN has participated in platforms such as the Swaziland International Trade Fair and Feira Agro-Pecuária, Comercial e Industrial De Moçambique (FACIM). The organisation’s work will now be taken to a new level with the development of specific country-focus strategies.

AppreciationThe members of the board express their thanks and appreciation to the former Chairperson H.E. Mr TO Mlaba who was appointed South African High Commissioner to the United Kingdom. In his tenure as chairperson Mr Mlaba provided sound, insightful leadership, the basis of which continues to help guide the organisation.

On behalf of the members of the board I wish to thank the MEC for Economic Development and Tourism, the Honourable Mr Michael Mabuyakhulu for his ongoing support in leading TIKZN.

I pay tribute to my fellow board members for the insightful guidance and wise counsel they each bring to the organisation. The immense experience and expertise of the board as a whole, has ensured that we have discharged our fiduciary responsibilities to the best of our efforts.

Finally, the members of the board thank TIKZN’s Chief Executive Officer Mr Zamo Gwala for his inspired and steadfast leadership. You have created and sustained an organisational culture that encourages excellence across all levels.

ConclusionFostering an environment conducive to attracting and retaining foreign direct investment and export expansion is essential in our efforts to sustain economic growth and job creation. Within the broad trade and investment landscape, TIKZN is a critical catalyst in unlocking that growth.

Ms LCZ Cele Acting Chairperson of the Board

Drakensberg

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Trade & Investment KwaZulu-Natal has delivered substantial achievements in the 2013/2014 period under review. Competition for foreign investment is robust as we compete against developed economies, the Asian giants and other emerging economies, including rapidly expanding economies in Africa such as Nigeria. Fortunately, TIKZN is well-positioned to leverage off KwaZulu-Natal’s comparative advantages to ensure we remain aggressively competitive.

Review of operationsThe activities we engaged in for the year under review reflect this strategic approach. In terms of our performance, TIKZN has again exceeded its investment target of R1.2 billion by R100 million, realising R1.3 billion in this financial year. The investment in these new projects is expected to be the catalyst for 5361 potential jobs. The sectors to benefit from these jobs include the business process outsourcing (BPO) sector, film, agro-processing, clothing and textiles and synthetic fibres.

In terms of export promotion, 109 companies were assisted with market development initiatives during the year and 77 new export markets opened for individual companies. Significantly, 24 of these were new export market leads from Angola and 12 from the east3ROUTE initiative.

TIKZN has assisted 29 broad-based black economic empowerment (B-BBEE) companies with export readiness interventions and our ongoing monitoring and support of these interventions through our various development programmes will certainly play a key role in unlocking their potential.

It has been a particularly busy year for our business retention unit with 13 companies provided with professional and technical assistance resulting in R786.9 million worth of expansion projects being committed.

TIKZN’s knowledge management unit continues to ensure the organisation has at its disposal accurate, up-to-date data on local, national and global economic trends and that this data is packaged appropriately for both internal and external consumption. Specifically the unit compiled 17 macro-economic research reports and helped package eight new high-impact investment opportunities. A further 49 export opportunities were identified and these will be packaged to product-to-export level in the new financial year. Our policy advocacy unit has met its key deliverables including obtaining board approval for reviewing the terms of reference for policy advocacy.

ChIeF exeCutIve’s revIew

05

Mr ZA Gwala


Particular highlights of the year under review

east3ROUTEThe 2013 edition of the east3ROUTE cross-border initiative involving South Africa, Swaziland, the Seychelles and Mozambique was a resounding success. The initiative is a collaborative partnership driven by the Department of Economic Development and Tourism (DEDT). In addition to its partnership obligations, TIKZN was additionally tasked with the execution of the one-day investment seminar and the trade exhibition in Swaziland on 16 October 2013.

Flights into AfricaIn keeping with the province’s objective to position itself as a hub to create express links into Africa, this financial year witnessed the official launch of the direct flights by SA Express from King Shaka International Airport to Harare and Lusaka. These missions were led by the Honourable MEC Michael Mabuyakhulu, coordinated by the Dube Trade Port (DTP), SA Express, TIKZN and Tourism KwaZulu-Natal (TKZN). The purposes of these missions were to establish business and tourism linkages using the SA Express direct flight as an enabler. The partnership between SA Express and DTP has led to SA Express using Durban’s King Shaka International Airport as a hub for new routes into the Southern Africa Development Community (SADC) countries. The purpose of introducing the new services was to provide convenient access to and from all regions in the SA Express network particularly business and leisure travellers.

Export WeekThe second annual Export Week was held in October 2013 which included the Export Summit. Export Week and, in particular, the Summit, were developed to boost the profile of KZN’s exporters. This is an essential way of contributing to the business community’s awareness of the crucial role those exporters play in KwaZulu-Natal’s and South Africa’s economy. New elements to the programme included a showcase of Women in Exports and the development of Halaal products for export in partnership with the South African National Halaal Industry Association.

Seizing the low carbon investment opportunityTIKZN’s relationship with United Nations Conference on Trade and Development (UNCTAD) spans over the years in an ongoing basis with representatives through seminars, workshops and conferences. It was through this relationship TIKZN was requested by UNCTAD to host a regional workshop themed “Seizing the Low Carbon Investment Opportunity in Africa” which explored the economic benefits of greening existing industries and examining business opportunities in the renewable energy sector. It was attended by over 30 countries and included expert input from UNCTAD, the World Bank Group, EY, and IBM Plant Location International.

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AppreciationI take this opportunity to thank our MEC for Economic Development and Tourism, Mr Michael Mabuyakhulu for his leadership, guidance, and unwavering support. Your commitment to the people of KwaZulu-Natal and South Africa is demonstrated by your relentless efforts to unlock economic development opportunities in KwaZulu-Natal.

The successful year under review would not have been possible without the strategic direction and oversight provided by our board of directors, under the leadership of the acting chairperson Ms LCZ Cele.

Finally, my respect and heartfelt appreciation is extended to my management and staff at TIKZN. It is a privilege to work among a professional team who are passionate to grow our province’s economy.

ConclusionAfrica is poised for growth and so are we. With the organisational restructuring and various new strategies at hand, TIKZN will remain more focused than ever. Together we will work at unlocking our province’s potential to secure foreign direct investment and to increase exports from KwaZulu-Natal into outward markets in Africa and beyond.

Mr ZA Gwala Chief Executive Officer

The government panel discussing investment issues during the east3ROUTE Investment Seminar and Exhibition 2013


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•

overvIew oF the trAde And InvestMent envIronMent

The financial year provided a gradual improvement in the global economic arena. Similar to the European Union’s (EU) avoidance of the much feared double-dip recession in 2012, the United States (US) escaped the much-anticipated fiscal cliff and grew its economy by nearly 2% in 2013. Given the sheer size of the US economy, its continued rebound has renewed hope. Other economies, particularly developing economies, will benefit and hopefully exceed conservative growth estimates or in some cases, year-on-year negative growth will be arrested.

Despite the growth in the US economy, the global economy remains volatile for emerging market economies that have experienced billions of dollars in capital outflows and consequential currency depreciations. The counter-balance is for these economies to exploit the favourable export opportunities created by the weakening of exchange rates.

Global trade trendsThe World Trade Organisation (WTO) estimates the value of world trade in merchandise to have expanded 2% to $18.8 trillion in 2013.

In real volume terms, world trade is estimated to have expanded 2.1% in 2013. This is expected to rebound further at 4.7% in 2014 and – while uncertain due to the long-term nature of the predictions and dependence on the pace of the global economic output – a further 5.3% in 2015. The WTO acknowledges the prevailing growth rates in trade volumes and values are still below the long-term trend we have come to know, around 8% per annum before the global economic crisis of 2009. Apart from the partial rebound of 14.5% in 2010 (particularly due to base effects), expansion has been greatly subdued. This is mainly owing to declining imports by the EU and Asia, which are the main trading partners for a number of economies, particularly the least developed ones.

Another observation is the declining ratio of the world economic output growth rate and world trade growth from 2:1 since the mid-80s to 1:1 in the last two years. This could be the result of increasing intra-regional trade fuelled by bilateral trade agreements and protectionism among members of common blocs. According to the research article ‘Stimulating world trade in the decades ahead: driving forces and policy implications’, WTO economists expect these intra-regional trade shares to decline by 2035, giving way to more multilateral trade relationships, thereby benefiting economies currently on the periphery of international trade.

Global investment trendsAccording to the United Nations Conference on Trade and Development’s (UNCTAD) World Investment Report (2014), world foreign direct investment (FDI) inflows rebounded to $1.45 trillion in 2013, a 9% increase from $1.317 trillion in 2012. This was in line with the UNCTAD’s forecast and also comparable to the pre-crisis average of $1.494 (Figure 1). UNCTAD further predicts FDI flows will rise gradually to US$1.6 trillion in 2014 and US$1.8 trillion in 2015.

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Regional contributions At the regional level, FDI flows to the developed countries are estimated to have remained at a historically low share of 39% of total global FDI inflows for the second consecutive year (or $566 billion), while flows to developing economies reached a new high of $778 billion, accounting for 54% of global FDI flows in 2013. This followed a trend started in 2011 when developing economies and economies-in-transition together attracted 51% of global FDI inflows and in 2012 when for the first time, developing economies alone attracted half of these FDI flows.

FDI inflows to the Latin America and the Caribbean (LAC) improved significantly by 14.1% while inflows to Africa and Asia remained somewhat unchanged, growing only 3.6% and 2.7% respectively. Asia also remained the largest host region for FDI flows at 29% surpassing the EU’s 17%. However Asia’s FDI flows to transitional economies also recorded a new high of US$108 billion, 29% up from the previous year, accounting for 7% of global flows.

African imports rise faster than exportsIn the same year, Africa is estimated to have increased its imports, even as its exports fell due to continued high prices of primary commodities. While oil prices have remained relatively steady, prices of metals, raw materials and beverages (including coffee, tea and cocoa) have fallen in the last two years.

The decline in the prices of metals cannot be a clearer wake-up call for South Africa and KwaZulu-Natal to restructure the trade pattern and include in the basket more value-added goods than raw materials, metals and steel. Economic and financial data provides estimates in 2013, the provincial trade was valued at R92 billion from R85 billion in 2012. At this level, the provincial trade was 11.7% of the South African total of R788.4 billion, a slight decrease from 12.1% in 2012 and 12.2% in 2011. Unmistakably, motor vehicles (14.1%), raw aluminium (11.5%), rolled stainless steel (6.6%), titanium ores (6.5%), niobium tantalum vanadium zirconium ores and aluminium plates, sheets and strips (4.7% each) were high on the province’s list of exports (Figure 1).

Africa’s FDI inflow still the smallestFDI inflows to Africa still accounted for the smallest share of all regions, estimated at $57 billion or 3.9% of total. This was a consolatory 3.6% increase from US$55 billion recorded in 2012 and US$48 billion in 2011. At this level, the continent was the least recipient of global FDI inflows of all regional groupings. North Africa accounted for $15 billion, while the remaining $42 billion was rationed among the rest of the region.

Developed economies attract bulk of FDIWhile at record low share of global flows, the developed economies’ FDI inflows reportedly recovered slightly. This group of economies attraction of $566 billion in 2013 a 9.5% jump from $517 billion in 2012 and an improvement from the 40% decline in 2012 compared to $880 billion in 2011.

While their share as the recipients of global FDI inflows is at a record low (39%), the developed economies continued to be the main sources of global FDI, contributing a reciprocal 61% of global FDI outflows in 2013. However, this was also a continued decline from 88% in 1999.


South Africa still regarded as one of the top prospective African host economiesWith those impressive strides, including annual growth of over 10% in the past 17 years, the developing economies accounted for 60% of the top 10 host economies and 50% of the top 20 countries and transitioning economies. These included China ($124bn), the Russian Federation ($79bn), British Virgin Islands ($92bn), Hong Kong SAR China ($77bn), Brazil ($64bn), Singapore ($64bn – equivalent of flows to the entire Africa), Mexico ($38bn), India ($28bn), Chile ($20bn) and Columbia ($17bn).

For the first time, the Russian Federation leapfrogged five places to be the third largest FDI host country in 2013. Needless to say, not a single African country made the top 20 list, let alone top 10. However, in another research report (World Investment Prospects Survey 2013-15), the UNCTAD finds at least 7% of surveyed transnational companies (TNCs) still regard South Africa as one of the top potential investment destinations, placing it at position 15.

Mergers and acquisitions versus greenfieldsWhile generally higher than mergers and acquisitions (M&A) - average $600 billion versus $349 billion respectively in 2013 – the value of greenfield projects declined slightly in 2013, while M&A took the opposite direction at 5% (from $349bn to nearly $368bn).

Figure 1: Global FDI inflows, average 2005 - 2007, 2007 - 2015 (US$ billion)

2 500

Pre-Crisis Average

2005-2007

2007 2008

1 819

2 002

1 494

1 221

1 412

1 691

1 317

1 451

1 600

1 800

2009 2010 2011 2012 2013 2014 2015

2 000

1 500

1 000

500

-

Source: TIKZN using the UNCTAD statistics (2014)

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High youth population an asset for AfricaAfrica, South Africa and KwaZulu-Natal are doing relatively well on the international trade front only to the extent our goods and services make it to the international trade logbooks. However, on the investment front, the region is not performing optimally.

According to the United Nations (UN), Africa is the world’s youngest continent, as the proportion of youth among the region’s total population is higher than in any other continent. In 2010 70% of Africa’s population were regarded as young (ages 30 and below). With this endowment, the region should gear towards change that will ensure significant participation on the global trade and investment arena. Trade restructuring and skills development should be prioritised.

Figure 2: KwaZulu-Natal leading export products, 2013

0.0% 2% 4% 6% 8% 10% 12% 14% 16%

Motor vehicles for the transport of goods

Niobium tantalum vanadium zirconium ores, concentrates

Unwrought aluminum

Aluminum plates, sheets and strip, thickness > 0.2 mm

Titanium ores and concentrates

Pig iron and spiegeleisen in primary forms

Diphosphorus pentaoxide, phosphoric acids

Rolled stainless steel sheet, with > 600m

Granulated slag (slag sand) form iron & steel industry

Uncoated kraft paper and paperboard

Source: TIKZN using Quantec (2014)


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•depArtMentAl reports

Executive Office

Finance Investment PromotionExport Development

& PromotionKnowledge

ManagementCorporate Services

Given Trade & Investment KwaZulu-Natal’s need to promote the province as a leading investment destination and attract foreign direct investment while stimulating trade from within the province, the organisation has been structured into six departments, as follows:

• ExecutiveOffice

• Finance

• InvestmentPromotion- Pre-Investment- Post-Investment

• ExportDevelopment&Promotion

• KnowledgeManagement

• CorporateServices- Human Resources- Marketing

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7.1InvestMent proMotIon

Investment promotion consists of the investment facilitation unit which promotes the province of KwaZulu-Natal as an investment destination. Additionally investment promotion includes the business retention and expansion unit (BREU) which maintains existing businesses throughout the province.

7.1.1InvestMent FACIlItAtIon

The financial year has delivered mixed results as far as attracting new investments in the province. The service sector continues to show resilience by returning cautiously good results while the sectors most negatively affected by the 2008 recession, particularly the manufacturing sector, are now starting to show signs of improvement. This is driven by the electronics and agro-processing sectors.

Clearly, government’s commitment to infrastructure development, coupled with investment support interventions and incentives, is now paying dividends by supporting and attracting new investments.

The overall success of the Investment Promotion and Facilitation Unit is measured by the value of investment committed in the province both foreign direct investment (FDI) and domestic direct investment (DDI) and by the number and quality of the jobs created by these investments.

Our randvalue target for the2013/14financial yearwasR1.2billionandweachievedR1.3 billion, exceeding our target by R100 million. From these investments, the estimated potential number of jobs that can be created is 5361, with most of these coming from the services sector and the balance from manufacturing.


Committed Projects

PROJECT NAME SECTORPROJECT

VALUEJOB CREATION

UNO Fibre Chemicals (synthetic hair manufacturing)

R90 m 100

Ithala (The Reunion) Creative Industries (film) R6.1m 37 (permanent and temporary)

AEGIS Call Centre R25 m 1000

Distinctive Choice Clothing and textiles R55 m 1800

Cappeny Estates Agriculture (strawberries) R18.5 m 95

NAMEC Manufacturing R80 m 300

Outworx BPO/S(callcentre) R117 m 1300

In Genius BPO/S(callcentre) R102.6 m 500

Code Green BPO/S(callcentre) R4 m 29

Bakhresa Manufacturing R800 m 200

TIKZN’s staff conducted a site visit to the Cappeny Estates strawberry farm

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Outbound missions TIKZN also embarked on outbound missions to attract FDI and promote KZN as a premier investment destination. This process targeted foreign capital, new skills and technologies needed to drive the economy. The organisation embarked on 20 focused outbound missionsforthefinancialyear2012/2013.Examplesofsomeoftheoutboundmissionsare listed below:• Turkey:BusinessProspectingMission.TIKZNhostedbusinessroundtablesessions

in Istanbul and Mersin with the assistance of the SA Embassy and chambers of commerceineachcity;

• UnitedKingdom:FinanceDirectorEuropeMission.Thisincludedseveralmeetingswith potential UK stakeholders as well as a business breakfast in London in partnershipwiththeFinanceDirectorEuropepublication;and

• USA:Mission toPanAfricanFilmFestival inLosAngeles.Threefilmscreeningswereattended;10meetingswereconductedandsixleadsgenerated.

Inbound missions During the financial year, TIKZN hosted 37 inbound business delegations. The inbound business delegations included the following:• KoreanOrthopaedicEquipmentInboundDelegation:TIKZNarrangedmeetingsfor

BL Tech, a Korean medical equipment company with the KZN Department of Health andInkosiAlbertLuthuliHospital;

• Ras al Khaimah Free Trade Zone Inbound Delegation (UAE): TIKZN hosted theRAKFTZCEOinasessionattendedbylocalbusinesschambersandKZNexporters;

• US-Illinois:MusicCitySouthAfrica.On18February2014 thedelegationsigneda Memorandum of Understanding (MOU) with KZN Premier The Honourable Mr Senzo Mchunu agreeing to pursue the development of a Music City on the South Coast;

• Nigeria:Abuja.ThisdelegationdiscussedtheimplementationoftheMOUsignedwith Dube Trade Port highlighting the need to share skills and services in the developmentofagri-zoneandcargoairlines.Afeasibilitystudywillbeconducted;

• Federation of Gujarat Industries Inbound Delegation: Working with EDPU andBREU;

• Miami-DadeCounty,FloridaInboundDelegation.WorkingwithEDPUandBREU;• JapanAutomotiveInvestmentMission.WorkingwithInvestmentPromotion;• UnitedStatesOPICandTDAInboundVisit.Focusonrenewableenergyprojects;

and• DIRCOWesternEuropeSecretariatDiplomatsitevisit.

Destination MarketingDestination Marketing continued to develop and engage in relationships to ensure the province of KwaZulu-Natal’s visibility as a premium trade and investment destination. Promotion toolkits containing marketing material and information were mailed to the Department of Trade and Industry’s (dti) Foreign Economic Representatives based in South Africa’s missions in 45 key markets. The unit engaged further with foreign chambers of business in countries such as Turkey and Spain as well as with foreign chambers based in South Africa, such as the German South Africa Chamber and South Africa Netherlands Chambers. In addition, TIKZN plays a key role in the World Routes 2015 event which will focus on developing direct international flights to King Shaka International Airport.


In the year under review, missions were undertaken to Zimbabwe, Zambia, Uganda, Russia and Swaziland as part of the east3ROUTE Investment Seminar & Exhibition that also engaged extensively with Mozambique. There was also an investment prospecting mission to Turkey.

The province also played host to missions from Australia, the Democratic Republic of Congo, Korea, the United Arab Emirates (UAE), the State of Gujarat in India, the state of Florida(USA),Japan,PortugalandThailand.

The Gauteng OfficeSituated in South Africa’s financial capital, the Gauteng Office plays a pivotal role in generating investment leads by high level interactions with venture capitalists, fund managers, national government departments and other public sector entities, the diplomatic corps, foreign trade delegations, funding and donor agencies.

From an export perspective, the Gauteng Office supports trade promotion and provides market intelligence for capacity building programmes and export-related market development programmes.Awareness is created for export tradepromotion activities;providing country-specific market intelligence and information updates on bilateral and multi-lateral agreements. Export programmes presented by the various trade offices have been handed over to international buyers seeking to source from KwaZulu-Natal.

Support is lobbied for outward selling missions, facilitating inward missions and hosting events with trade offices, buyers and wholesalers to refer inquiries to the relevant TIKZN departments.

The TIKZN exhibition stand at Tourism Indaba 2013

22

The year was a busy period for the Gauteng Office that yielded significant and tangible investment outcomes for KwaZulu-Natal. Some highlights include:

Highlights:• Uno (Korea)wascommittedby the InvestmentPromotionUnit for aR90million

investment;• Successfully assisted in the securing of funding for the second phase of the

CappenyEstatesproject.Value:R18.5million;• TheGautengOfficeintroducedspecificprogrammesprovidedforexporterstothe

Export Development and Promotion Unit (EDPU) who hosted sessions for KZN companies to introduce the support programmes available e.g. the Swiss Import PromotionProgramme;

• Generated125qualifiedbusinessopportunitiesforKwaZulu-Natal;• Createdaseriesofhighleveleventsforbusinessandinternationalorganisations

now annual events where updates are provided on strategic development on KZN. The international organisation event for the diplomatic corps this financial year was attended by 135 representatives from 92 countries and has generated a significant amountofbusiness;

• Hosted 40 foreign delegations in Gauteng and developed relevant businessopportunitiesfromItaly,FranceandKorea;

• Referred 22 foreign delegations to KwaZulu-Natal and assisted programmedevelopmentswithrelevantunitsindedicatedsectors;

• Facilitated and participated in themission to Germany in September 2013 andalso to the China International Fair for Investment and Trade from which business opportunitiesareactivelybeingpursued;

• Participated in 84 stakeholder events from which business opportunities weregenerated;and

• A successful programme was developed and implemented for 15 tradecommissioners and the EU Ambassador in October in KwaZulu-Natal.


7.1.2BusIness retentIon

And expAnsIon

Investment Promotion - Business Retention & Expansion UnitThe Business Retention and Expansion Unit (BREU) focuses on retaining and expanding foreign and domestic investments in KwaZulu-Natal developing business linkage opportunities encompassing a range of support services, opportunity and market identification analysis.

In an increasingly competitive global foreign direct investment (FDI) market, the unit leverages TIKZN’s professional support services, networks and repository of cutting edge data to assist at-risk businesses explore the full spectrum of KwaZulu-Natal’s competitive advantages. This enables the businesses to improve profitability and reaffirm their commitment to remain invested in KwaZulu-Natal.

Likewise, the unit provides high-level yet practical support to businesses wishing to further exploit the provincial competitive advantages by expanding their existing operations.

Company Retention and Expansion InterventionsDuring the financial year the BREU assisted 15 companies for both retention and expansion purposes. The assistance provided included facilitating access to finance;sectoral incentives’; business permits’; various municipality interventions’; mattersrelatingtoprimarymarketresearch;broadbasedblackeconomicempowermentratingsand interactions with business rescue practitioners. These companies committed R786.9 million in expansion investment which will yield 5966 jobs.

Business Development Linkages BREU collaborated with the organisation’s strategic partners, stakeholders and industry associations and has implemented various business development programmes for companies. These include:

• Automechanika2013Exhibitionheld inJohannesburginMay2013thatprovidedbusiness development opportunities for Rapid Air Tools, Walter McNaughtan, Connectco, Thule Group, Rapid Truck Bodies, Crisp Air, KZN Oils, Hesto Harnesses, KwaSisonke Logistics and the KwaZulu-Natal Tooling Initiative. All companies provided positive feedback about this exhibition. Automechanika is considered the world’s leading brand on business-to-business automotive aftermarket trade fairs, accordingtoindependentresearch;

• TheDurbanAutomotiveClusterpresentedthelatestresearchfindingsintotheKZNProvincial AutomotiveBenchmarking studies at the TIKZNoffices in June 2013.The companies found the report informative and relevant to their operational and strategicplanning;

• Durban Boat and Lifestyle Show held in June 2013 provided further businessdevelopment linkages for the eThekwini Maritime Cluster, KZN Sharks Board, SA Shipyards, KwaSisonke Logistics, Royal Cape Catamarans, Stealth Performance, Feral Inflatables, Ace Boating and Daycol Engineering. The Durban Boat and Lifestyle Show provides exhibitors opportunities to showcase new offerings in the world of boating on and around the water to boating and outdoor lifestyle enthusiasts from aroundthecountry;

24

• Afrimold 2013 Exhibition held in Johannesburg provided business developmentlinkages for the KZN Tooling Initiative, Rapid 3D Printing, HB Green Engineering, SOMTA Tools and Armoloy SA. All participating companies received potential business development opportunities. The Afrimold exhibition is specific to the tooling, mould-making, design and application development sub-sectors and an integralmarketdevelopmentplatformforthetoolingindustry;

• KZN Regional Economic Development Summit - The BREU formed part of thesteering committee for the successful implementation of the Regional Local Economic Development Summit held in November 2013. This summit saw collaboration between all levels of government, private sector and communities to forge a common vision for promoting rising levels of growth, investment, job creationandpeople-centreddevelopment;and

• JSE informationsharingsessionswereheld inOctober2013andwereattendedby 18 delegates. This initiative is aligned with the BREU key strategic objective of developing and retaining KZN businesses by assisting companies increase turnover andjobs;sustainabilityandgrowththroughthefacilitatingexpansionprojects.

Municipality and company BRE programmes - TIKZN appointed Lazarus Developments in December 2013 to co-ordinate and facilitate implementing of the TIKZN Municipality BRE programme rolled out in 12 municipalities over two years. The municipalities participating in this programme include uMhlatuze, uMtshezi, Mpofana, uMngeni, Msunduzi, Newcastle, Endumeni, Ilembe, Hibiscus, uLundi, eMnambithi and the Harry Gwala District Municipality.

Rapid Air Tools participated in the Automechanika 2013 Exhibition held in Johannesburg.


7.2export developMent

And proMotIon

•Through its Export Development and Promotion Unit (EDPU), Trade & Investment KwaZulu-Natal (TIKZN) assists local exporters increase their access to markets.

Its operational activities include:• Planningandparticipatinginoutwardsellingmissions;• JointparticipationwithKZN-basedcompaniesatexhibitions;• Implementingexportertradeprogrammes;and• Disseminatinginformation.

TheEDPUhadanextremelybusy2013/2014embarkingonseverallocalandinternationalinitiatives covering a range of sectors across key international markets with a particular emphasis on increasing KZN exports into Africa.

Highlights• TheunitfacilitatedtrademissionstoAngola,Ghana,ZambiaandZimbabwefor31

KZNcompanies;and• ItwasrepresentedattheZimbabweInternationalTradeFair(ZITF),amulti-sectoral

and multi-national trade exhibition encouraging firms to participate in the growing markets of Africa. TIKZN participated at ZITF for the first time under the Department of Trade and Industry (dti) Pavilion together with two KwaZulu-Natal companies who were approved by the dti through the Export Marketing and Investment Assistance (EMIA) Scheme.

The EDPU facilitated TIKZN participation at the following:• Feira Internacional de Benguela (FIB). KwaZulu-Natal engagements with the

province of Benguela was initiated within the trade MOU signed between Angola and South Africa providing a broad basis to vigorously facilitate an increased flow ofinvestmentsandtradeco-operation;

• FeiraInternacionaldeLuanda(FILDA).Feira Internacional de Luanda (FILDA) is thelargesttradeeventrepresentinginternationalbusinessinAngola;

• SwazilandInternationalTradeFair2013. The Swaziland International Trade Fair (SITF) is organised by the Ministry of Commerce, Industry and Trade through its tradeandpromotionunitaswellasamanagementselectedannually;

• FACIM(FeiraAgro-Pecuária,ComercialeIndustrialDeMoçambique). FACIM is an annual trade fair organised by the Mozambique Export Promotion Agency seekingtoencouragetradebetweenMozambiqueanddifferentcountries;and

• West&CentralAfricaMiningShow.EDPU successfully applied and facilitated applications to EMIA on behalf of nine KwaZulu-Natal entities to participate at the West & Central Africa Mining Summit & Expo (WaCA), held in Accra, Ghana.

26

Asian and Middle Eastern market• OutwardSellingMission(OSM)toIndonesia. The unit participated in the OSM to

IndonesiaandvisitedJakartaandBandung.OneKZNcompanySancrylChemicalsparticipatedinthistradeevent;

• OSM to Saudi Arabia and Kuwait. Sancryl Chemicals, Global Bags, Elgin Engineering, Iqlaas Food participated in the above OSM and still following up on leads from this event. So far we have received an export enquiry to supply beef to Kuwaitforbothfrozenandchilledpacks;

• IndiaEngineeringSourcingExhibitionandShow.Organised by the Ministry of Commerce & Industry, Government of India, the India Engineering Sourcing Show (IESS) provides a platform for various manufacturing technology of the global industrytoshowcasetheircompetenceandstrength;

• EuropeanandTraditionalMarketInterpolitex(Russia).Interpolitex is a Russian MilitaryExhibitionthatattractsover6000delegates,buyersandvisitors;and

• Import Shop Berlin (Germany). A multi-sectored exhibition held in Berlin in November 2013. Now in its 51st year showing, it is regarded as the world’s biggest shopping fair where manufacturers and vendors of arts and lifestyle crafts from around the world meet enthusiastic buyers of high-quality ethnic and natural products.

Other Trade EventsExport Promotion successfully facilitated the applications to EMIA for individual participation at the Italian Rum Festival. These were Show Rum on behalf of Zulu Rum as well for Gator SA to participate at the Pool, Spa & Patio Show in Los Angeles, USA.


Key AchievementsThe Export Promotion section successfully accessed 76 new export markets for KZN companies. In terms of market development, TIKZN unlocked key markets in Asia, the Middle East, Russia and the SADC region. The following are some of the companies that benefitted:

COMPANY SECTORREGION/

COUNTRY

Leather Touch Leather accessories SADC

Dumabezwe Leather Leather accessories South Africa and SADC

Mzansi Mobile Steel fabrication South Africa and SADC

Badumile Beads Jewellery South Africa

Free Flow Design Bags and accessories South Africa

Tones Platinum Pharmaceutical Botswana

Dawn Haddon Arts and crafts South Africa

KZN Oils Chemicals Zambia

Durban School of Fashion Clothing South Africa and SADC

Global Vision Trading Custom-made bags Australia

Lee Chem Chemicals Zambia

Ricinz Constructions Construction and related services Angola/BRICS

Gedore Tools Tooling Angola

Elangeni Oils Food and beverage Angola

Kulu Civils Construction and related services, IT, industrial workwear, clothing and textiles

Angola

Wanscan Consulting Angola/BRICS

TPT Workwear Angola

Kingsgate Clothing Angola

Astel Systems IT, chemicals, food and beverage Angola

Gold Reef Chemicals Angola

Mpilende Foods Angola

Maccaferri SA Angola

Megaphase IT, tooling and machinery, manufacturing, industrial workwear, engineering services

SADC

Cathexis Africa SADC

Land Resource International SADC

Kaytech SADC

Magnum Machine Tools SADC

Mzanzi Mobile Units BRICS/SADC

Leo Garments SADC

AL Engineering BRICS/SADC

Amanda May Designs Clothing and textiles SADC/EUROZONERuutz Art & Creations

JaraffMocs Footwear SADC

Saddler Belts Leather apparel US

Academic Apparel Clothing and textile SADC/US

28

Figure 1: Number of market development programmes

80

12 12

16 17 17 15

58

76

37

8

Q4

17

15

Annual

58

76

Q3

No.

of P

rogr

amm

es

17

37

Q2

12

16

Q1

12Target

8Achieved

70

60

50

10

20

30

40

0

Source: EDPU, 2014

The graph above illustrates the successful market development programmes facilitated for KwaZulu-Natal companies by TIKZN.

Export development programmesAs its mandate dictates, Export Development focuses on developing emerging and existing exporters in KZN. This assistance includes providing support that will help them achieve export-readinessstatusand/orcreatingplatformstoenhancetheirskillsandcapabilitiesto become better exporters. Below is an overview of the activities carried out during the year:

Awareness initiativesIn line with Africa being identified as a key market, the Export Development and Promotion Unit celebrated Africa Day by hosting the Doing Business in Africa seminar, where practical experience from industry was shared with businesses interested in doing business in the continent. Key markets focused on included Nigeria, Ghana, Kenya and the SADC region.

TIKZN also participated in two domestic exhibitions, the South Africa Trade Exhibition (SAITEX) and the East Coast Radio House and Garden Exhibition – for which the TIKZN Pavilion was chosen as one of the best stands and awarded gold status. The purpose was to create exposure for emerging and existing manufacturers, to help them gear up for the world of international exports.

Training and enterprise development initiatives In conjunction with the Programma Uitzending Managers (PUM) – in Dutch meaning ‘Manager Deployment Programme’ - the unit hosted a senior expert from The Netherlands to conduct a two-week mentorship programme.

TIKZN together with the Department of Trade and Industry (the dti) facilitated export training for companies in the cosmetic manufacturing sector.

As part of our Memorandum of Understanding (MOU) with the Department of Agriculture and Environmental Affairs, the export development unit hosted a two-day workshop on export orientation and support for farmers. Approximately 50 delegates participated. The sessions focused on incentive support, funding and market development issues.


Export development training programme Two export development training sessions were rolled out in March 2014. The sessions comprised classroom lectures and on-site visits with mentorship and advice.

Figure 2: Value of KwaZulu-Natal exports

R 90

R 80

R 60

R 40

R 20

2006 June2006 2007 June2007 2008 June2008 2009 June2009 2010 June2010 2011

50.458.9

75.0

56.7

63.5

77.4R 70

R 50

R 30

Bill

ions

R 10

R 0

Source: Mthente, 2013 using Quantec data

Zulu Rum participated successfully at the Italian Rum Festival

30

KwaZulu-Natal top 15 export product categories (HS-2 Digit)

PRODUCTVALUE OF EXPORTS

(2011)

AVERAGE ANNUAL GROWTH

RATE 2006-2011

VALUE OF EXPORTS

(2012)

AVERAGE ANNUAL GROWTH

RATE 2006-2012

Aluminium and articles thereof (H76)

R15.4bn 5.4% R13.2bn 1.45%

Vehicles other than railway, tramway (H87)

R12.7bn 10.6% R15.2bn 14.04%

Iron and steel (H72) R11.4bn 115.2% R12.5bn 107.71%

Ores, slag and ash (H26) R10.bn 39.9% R15.7bn

60.51%

Inorganic chemicals, precious metal compound, isotope (H28)

R337.1m 27.0% R2.8bn

15.45%

Nuclear reactors, boilers, machinery (H84)

R322.4m 1.0% R3.4bn

1.68%

Paper and paperboard, articles of pulp, paper and board (H48)

R231.1m 3.5% R2.6bn

5.41%

Copper and articles thereof (H74)

R194.7m 69.5% R2.6bn

60.22%

Mineral fuels, oils, distillation products etc (H27)

R148.6m -8.9% R2.0bn

-7.96%

Miscellaneous chemical products (H38)

R135.4m 31.7% R1.3bn

40.64%

Wood and articles of wood, wood charcoal (H44)

R131.2m -6.2% R979m

11.82%

Pulp of wood, fibrous cellulosic material, waste etc (H47)

R131.0m -11.2% R801m

-8.07%

Electrical, electronic equipment (H85)

R118.6m 6.7% R1.7bn

-12.20%

Articles of iron or steel (H73) R81.4m 8.6% R1.2bn

14.42%

Plastics and articles thereof (H39)

R70.9m 13.1% R818m

15.20%

Source: Mthente, 2013 using Quantec Data

KZN Exporter Directory and Export Information PortalIn the first quarter of 2014, the Export Development Unit launched the KZN Exporter Directory and Export Information Portal both of which were funded by the Department of Economic Development and Tourism.

The KZN Exporter Directory is the compilation of KZN-based export companies. The scope of service involves researching and sourcing relevant information to compile a detailed directory of export products and services available from KZN. Confidential information gathered during this exercise will be for the sole use of TIKZN. The other information will be published as part of the directory.


Export Week The second annual Export Week was held from 28 October to 1 November 2013. This included the Export Summit that attracted more than 200 export businesses per day. The week included a showcase of Women in Exports as well as the development of Halaal products for Export in partnership with South African National Halaal Industry Association.

The Women in Export session held during Export Week 2013

TR

AD

E & IN

VESTMENT KWAZULU-NATA

L

EXPORT WEEK 2

013

32

7.3knowledge MAnAgeMent

•Knowledge Management (KM) refers to the multi-disciplined approach of effectively generating, preserving and using organisational knowledge to achieve organisational objectives.

As “Your Knowledge Partner in Business”, Trade & Investment KwaZulu-Natal (TIKZN) has elevated KM as part of its core business strategy. As such, the business unit provides professionalsupportservicestosisterdepartments;researchesandmanagesdataanddatabases, information technology systems and organisational learning. The unit plays a directroleinshapingpolicy;packagingnewinvestmentopportunitiesandusingKMasatool to gain competitive advantage.

Research is a central factor of the interactive learning space useful in defining general and contextual barriers to inclusive development. TIKZN collaborates with provincial partners who contribute to breaking these barriers and creating opportunities for development.

Research and informationThe anchor booklet Doing Business in KwaZulu-Natal was reviewed and updated. Research on potential export opportunities from KZN to Africa and the rest of the world was commissioned and completed. The University of North West was also contracted to identify specific markets and realistic export opportunities for the province.

Knowledge Management collaborated with the Department of Economic Development and Tourism on the production and publication of Ezomnotho, the quarterly economic review of the province. KM also produced a reference book on KwaZulu-Natal’s (and South Africa’s) trade and investment performance. An electronic copy of this publication is available on the TIKZN website.

KwaZulu-Natal is the only province www.economists.co.za regularly measures investment activity with this data appearing in the KZN Business Barometer. TIKZN has maintained subscription to this service thus ensuring client businesses have up-to-date data on economic trends in the province.

The unit also participated in TIKZN’s road shows and brand activation sessions spearheaded by the marketing department in three of the province’s districts, namely uThukela, uMgungundlovu and uThungulu.

Policy advocacyTwelve research papers were produced and presented. The Green Technical Assistance Fund was awarded to various projects to facilitate renewable energy initiatives. KwaZulu-Natal is one of two provinces in South Africa to develop an interactive online renewable energy zone tool, providing a clearer indication of potential areas of renewable energy investment.


The Funding Fair generated R344 million worth of funding for projects in the province. The success of this funding fair is now replicated in other provinces. The inaugural Industrial Symbiosis workshop generated interest from over 60 companies and consequently funding has been secured to roll out this project provincially.

Packaged investment opportunitiesTIKZN has identified and packaged investment and export opportunities in line with the Provincial Growth and Development Strategy and in collaboration with municipalities and other key stakeholders. High impact investment opportunities packaged were categorised as follows:

Projects with strategic partners• Drakensbergcablecar;• Technologyhub;and• Businessprocessingandoutsourcinghubs.

Projects initiated by promoters• Pipelinesecurityandmonitoringsystems;and• EdwaleniGuestHouse.

Research development projects undertaken by TIKZN• Integrateddiamondandjewelleryhub;and• Productionofcastoroil.

Information technologyDuring the year under review, TIKZN’s information technology (IT) systems achieved 99% uptime, exceeding the expected level of 95%. Various system upgrades were performed, aligning with the latest software releases. The organisation enhanced the use of SharePoint as its document management system by upgrading to Microsoft SharePoint 2010.

IT auditAn audit intervention plan facilitated the clearing of audit findings. The remaining findings are work-in-progress and will be cleared in the new fiscal period. The review of the IT Strategy and Governance Framework and the review of the Business Continuity Plan has commenced in earnest.

The IT general controls were found to be at satisfactory levels.

34

7.4CorporAte servICes

BusIness unIt

•The major area of focus has been implementing corporate strategy following the approval of such strategy by the Board. Some of the areas that received attention include the new organogram comprising changes in certain positions and merging certain business units. The amalgamation of the human resources and marketing and communications business units, formed the new business unit corporate services. This report therefore seeks to cover those areas that needed attention to support implementing the corporate strategy.

The corporate services unit strives to build a strong team within the organisation.


7.4.1huMAn resourCes

The organisation faces a variety of complex challenges as discussed in the Corporate Strategic Review document. To address these, the Human Resource Business Unit (HRBU) developed the HR Strategy to address some of the challenges. The HR Strategic plan for a culture of excellence is the evolved plan started in 2008 and reviewed in 2011 and 2013. The 2013 review included developing a SWOT analysis, a gap analysis, an evaluation of the organisational diagnosis and organisational effectiveness reports, an environmental scan and focus group discussions.

Through this strategy, the business unit reaffirms its commitment and desire to serve as a strategic partner and continue to build a strong, united team serving the strengths of one organisation. The plan reflects a comprehensive approach to developing and sustaining an organisation that values employee contributions.

Special projects

Skills auditMany changes such as implementing the new corporate strategy required for the organisation to be adequately empowered, have occurred, since the skills audit was conducted in 2010. Skills management is an indispensable element of an organisation’s performance.

The skills audit provided the organisation a snapshot of its existing skills by identifying deficiencies and recommending strategies to improve skills levels, thus preventing potential loss of critical skills. This process helps ensure all existing skills and competencies are used to its benefit. It was conducted to ensure TIKZN and its people are adequately competent to deliver on the mandate and the timing of this initiative was aimed at aligning our training initiatives with our new corporate strategy. The gaps identified will now be addressed through training. The facilitation process sought to ensure participation by all through the interviews and discussions.

Job profiling and grading An intensive job profiling and grading exercise was conducted for all the roles in the organisation.Jobevaluation,profilingandgradingsystematicallydeterminestherelativeworth of a job and ranks these in a logical hierarchy. TIKZN regards this process as key to ensuring fairness and consistency in evaluating and grading jobs. As per the Public Finance Management Act and as a way of keeping performance competitive and up-to-date, job profiles are reviewed in line with the renewal of the Corporate Strategy.

36

Human resources planningThe long-term success of any organisation depends on having the right people in the right jobs at the right time. The key to the desired result is effective HR planning, otherwise referred to as workforce or manpower planning. Successfully implemented the corporate strategy required reviewing the organisational structure. This was done to ensure the entity has the required talent to deliver on its mandate. To this effect, some movements were made, resulting in some staff members migrating to new positions, while external recruitment appointed new talent. The creation of the executive layer provided the Executive Office with necessary support to achieve the organisational objectives.

Training and development Organisational performance is directly linked to staff development and TIKZN invests substantial resources for training and career development. These ensure staff operate at optimal levels within the competitive global FDI environment. During the financial year under review, all staff members received training in various aspects of their roles as informed by the training plan. The highlight of these training initiatives included emotional intelligence, conflict management and change management aimed at all members of staff.

Another highlight was involving TIKZN host and facilitate the Green FDI Regional workshop themed “Seizing the low carbon investment opportunity in Africa” organised by the United Nations Conference for Trade and Development (UNCTAD). The workshop was attended by experts such as the World Bank Group, EY, IBM Plant Location International and some of the best practice IPA’s in the region.

Employee wellness programmeOur improved wellness programme continued enhancing the lives of our staff members. Introducing executive medicals was well received with all senior managers participating in comprehensive tests and getting the full breakdown of their health status through personalised reports. The number of staff using the services of the Employee Assistance Programme (EAP) continued to increase to about 71.4%, indicating an increased trust and confidentiality. It is also a good indicator of the acceptance of the value and trust attached to the EAP by employees.

Promotion of the industry skillsIn an endeavour to promote industry skills within the investment promotion agency (IPA) environment, discussions on establishing the executive programme reached a turning point with Wits Business School agreeing on the content.


7.4.2MArketIng And

CoMMunICAtIons

The Marketing and Communications Unit (MCU), provides support to organisational marketing needs such as corporate branding, media and public relations, event management, stakeholder engagement and general marketing. The unit supports platforms for branding and positioning TIKZN domestically and internationally. The unit promotes the organisation and its services to improve market visibility and brand awareness.

Stakeholder sessions During the period, the CEO met with the heads of key KZN companies: Bell Equipment, KZN Oils, Tongaat Hulett and Hulamin. These meetings showcased TIKZN’s services. The meetings also provided the opportunity to discuss the current trade and investment environment; identify challenges and reflect possible ways to overcome any barriersto trade and investment. From these meetings, the CEO also recruited companies as goodwill ambassadors for promoting of the province as an investment destination and TIKZN’s services.

Provincial road showsTIKZN held a breakfast session in the Western Cape in March 2014 to promote KZN as an investment destination and explore trade partnerships between the two provinces. TIKZN will further initiate taking partner agencies from KZN to promote their services to the Western Cape market.

District municipal road showsTIKZN completed three district municipal road shows as part of the stakeholder engagement and general awareness campaign. The first road show was hosted in uThukela followed by uMgungundlovu and uThungulu. These initiatives received the support of local municipalities and business representatives within the regions.

These road shows provide a single messaging platform that improves the quality of awareness of TIKZN’s service, thus strengthening relationships and the flow of communication between TIKZN and the municipalities (both district and local).

Media monitoring and liaison Media is vital during the build-up and recruitment phase of any major event. It is equally important in achieving the communication objectives of the event, showcasing participants and their projects and highlighting the success of such initiatives. The media engagement for the organisation was pro-actively managed and leveraged to ensure the successful execution of TIKZN projects. During the period under review TIKZN received R7,737 million worth of unpaid publicity via TIKZN media mentions though print, broadcast and online media platforms.

38

Frontier Advisory thought leadership sponsored eventsTIKZN sponsored events organised by Frontier Advisory themed “Africa Outlook”, held in Johannesburg and Durban respectively. The Durban event was co-sponsored withDube Trade Port (DTP) and Durban Investment Promotion Agency (DIPA) to expose KZN companies to opportunities of doing business in Africa.

east3ROUTE Investment Seminar & Exhibition 2013TIKZN organised the east3ROUTE Seminar & Exhibition in October 2013 as part of the third edition of the east3ROUTE expedition. The expedition started in Mozambique ending after seven days and six nights in KwaZulu-Natal. The east3ROUTE Investment Seminar was hosted for the second year as a dedicated investment and trade promotion platform. This event, which had an exhibition component for the first time, was the leading cross-border platform to engage on investment in Swaziland, Mozambique and KwaZulu-Natal. The seminar included panel discussions that unpacked key issues facing the region including cross-border finance and perspectives on private and public sector development funders.

The exhibition provided a platform for select exhibitors to showcase food, fashion, accommodation and support services available in the three regions. Each region showcased innovations in cuisine and culinary delicacies. Other aspects of the exhibition included showcased successful tourism products and packaged development projects for prospective investors. Development projects such as the Tembe Heritage Route, a community project and similar projects from Swaziland and Mozambique were also on display. Media engagement was pro-actively managed and leveraged. Activities designed to boost delegate participation were hosted in Ezulwini, Maputo, Mkuze, Richards Bay and Durban.

TIKZN DVDTIKZN produced a generic DVD focussing on promoting KZN as an investment destination. This is a promotional tool to create marketing awareness for the province as a business destination. The DVD can be used by any KZN stakeholder for these promotional purposes. The DVD highlights the infrastructural strengths of the province and the facilities at hand that make living in KZN attractive to potential investors.

Coffee-table book: The Exceptional KZNThe TIKZN coffee-table book forms part of the corporate gifting items required by the organisation. This hard cover book is designed to inspire conversation on KwaZulu-Natal as a business destination and intended to sit on a coffee table or similar surface in an area where clients are seated.

The Royal Tembe Development Foundation were exhibitors at the east3ROUTE Investment Seminar & Exhibition 2013


Events CalendarEVENT AREA OF FOCUS OUTCOMES

Source Africa Trade Exhibition

EXPORT/TRADE

The two main objectives of the trade show are to promote African-made textiles, garments and footwear to International and African buyers as well as boosting intra-regional trade between African countries. The trade show encourages African buyers and manufacturers to do business with each other and capitalise on tariff advantages and shorter distances to market.

Export TrainingEXPORT/TRADE /

MINARA

TIKZN provided export capacity building for specially selected members of the Minara Chamber to upgrade their skills in exporting their products.

Afrimold 2013 exhibition and conference

BREU

The leading exhibition for Precision Machining, Tooling, Mouldmaking, Design and Application Development in Africa.

South African International Trade and Exhibition (SAITEX)

EXPORT/TRADE

Africa’s largest business opportunities showcase provides a successful platform for international companies wanting to enter the increasingly lucrative African market and for African businessmen looking to establish viable businesses targeting the disposable incomes of Africa’s rapidly expanding middle-class population.

10th Durban Boat and Lifestyle show

MANUFACTURING/ EXPORT/TRADE/

MARKETING

The show takes place in Durban around the harbour and products are exhibited to boating and outdoor lifestyle enthusiasts from around the country.

Wastex RENEWABLE ENERGYThe conference and expo unpacked issues on waste management and recycling.

Vodacom Durban July MARKETING

KZN hosts Africa’s Greatest Horseracing Event which is an essential networking tool for business

40

EVENT AREA OF FOCUS OUTCOMES

Africa Infrastructure GAUTENG OFFICE

Africa Infrastructure provides a biennial global platform, for conferences, summits and workshops focused on infrastructure themes.

East Coast Radio House and Garden Show

EXPORT/TRADETIKZN hosted KZN companies who exhibited their products at the show

TIKZN International Stakeholder dinner

GAUTENG OFFICE AND ALL

135 representatives from international organisations attended with representation from 92 countries. Strategic update on developments were provided.

uThukela municipality Roadshow

MARKETING

A series of TIKZN road shows sought to unlock investment and economic opportunities across KwaZulu-Natal

Joint event with KZN Growth Fund

GAUTENG OFFICE

DTP, RBIDZ, KZNGF provided an overview of the services and opportunities available.

Africa Dialogue Conference

MARKETING

The event drives direct attention to the abundant lucrative business prospects in South Africa and the rest of Africa. It also provides an opportunity for South African and international organisations to forge relationships and form business linkages with key players and decision makers in the various sectors globally.

International Entrepreneurship & Investment Conference

MARKETING

The International Entrepreneurship and Investment Conference targets the international community, mainly the Southern African Development Community region, team of experts and captains of industries as the province develops economic strategies that positions KZN in the global arena with other trading regions.


EVENT AREA OF FOCUS OUTCOMES

19th Amateur World Golf Championship

MARKETING

The World Amateur Golfers Championship takes place in Durban from the last week of October till the first week of November. WGC gives amateurs the experience and proud feeling of representing their country in a world championship final, individually and in a team.

Export Week KwaZulu-Natal

EXPORT/TRADE, MARKETING

The event recognises, promotes and assists growing KwaZulu-Natal’s export businesses and industries. Through a comprehensive programme of activities, it provides professional development and information on growth sectors and market opportunities to KwaZulu-Natal’s new and existing exporters and internationally focused businesses.

uMgungundlovu District Municipal Roadshow

MARKETING

A series of TIKZN road shows seek to unlock investment and economic opportunities across KwaZulu-Natal

Hospitality Investment Conference Africa (HICA)

MARKETING/TOURISM

HICA brings together regional and international hoteliers, investors, developers and senior public sector leadership for networking, constructive debate and deal-making.

East Coast Radio /Gibbs Executive Breakfast

MARKETING

The executive breakfast was sponsored by Trade & Investment KwaZulu-Natal. This partnership between TIKZN, GIBS and East Coast Radio comprised speakers who shared key insights under the theme Strategy, Transformation and Branding.

42

08AnnuAl perForMAnCe reports

•2013/14 Performance Information

Programme 1: Board and the Office of the CEO

Programme 2: Marketing and Communications

Programme 3: Human Resources

Programme 4: Knowledge Management

Programme 4.1: Information, communications and technology

Programme 4.2: Policy advocacy

Programme 4.3: Research and information

Programme 5: Investment Promotion

Programme 5.1: Facilitation of pre-investment opportunities

Programme 5.2: Facilitation of post-investment opportunities

Programme 6: Export development and promotion

Programme 6.1: Export promotion

Programme 6.2: Export development


Pro

gra

mm

e 1:

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ard

and

the

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ce o

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e C

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ts.

44

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e m

unic

ipal

roa

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how

s co

nduc

ted

in t

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Thuk

ela,

uT

hung

ulu

and

uM

gung

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tric

t M

unic

ipal

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par

tner

ship

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laun

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are

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e. T

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es w

ere

pitc

hed

at

high

leve

l st

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year

, TIK

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irect

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olve

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1117

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activ

ities

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cilit

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@ a

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ican

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war

ds,

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BQ

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azin

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dve

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Thun

gulu

loca

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spap

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ulan

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ever

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serv

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rel

ies

on e

nsur

ing

ther

e is

vis

ibili

ty a

nd k

now

led

ge o

f its

se

rvic

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bra

nd

awar

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as e

vid

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ontin

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effo

rts

to r

each

out

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cN

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f pub

lic r

elat

ions

(m

edia

and

com

mun

icat

ions

in

itiat

ives

) con

duc

ted

.

421

Med

ia in

itiat

ives

incl

ude:

SA

Exp

ress

Dur

ban

Har

are

Laun

ch, T

ouris

m In

dab

a, H

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, Glo

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and

laun

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anuf

actu

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TIK

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nsur

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46

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mm

e 3:

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an R

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3.1

Imp

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67.5

Ann

ual a

vera

ge s

taff

per

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antic

ipat

ed t

arge

t.C

hang

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the

org

anis

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pac

ted

on

per

form

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.

aR

evie

w t

he c

urre

nt

rete

ntio

n an

d s

ucce

ssio

n p

olic

ies

and

dev

elop

im

ple

men

tatio

n p

lans

.

Rep

ort

Pol

icie

s re

vise

dTh

e p

olic

ies

on s

ucce

ssio

n p

lani

ng a

nd r

eten

tion

wer

e re

view

ed

and

the

pla

n to

imp

lem

ent

the

succ

essi

on p

olic

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evel

oped

.Ta

rget

met

.

bA

vera

ge s

taff

per

form

ance

rat

ing.

70%

67.5

Ann

ual a

vera

ge s

taff

per

form

ance

rat

ing

was

low

er t

han

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antic

ipat

ed t

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t.C

hang

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org

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per

form

ance

.

cN

umb

er o

f sta

ff tr

aini

ng p

rogr

amm

es

imp

lem

ente

d.

55

Five

org

anis

atio

nal p

rogr

amm

es w

ere

faci

litat

ed: C

hang

e M

anag

emen

t, E

mot

iona

l Int

ellig

ence

, Per

form

ance

Man

agem

ent

Sys

tem

, Con

flict

Man

agem

ent

and

Pat

ters

on G

rad

ing

Sys

tem

and

S

alar

y S

truc

turin

g.

Targ

et m

et.


Pro

gra

mm

e 4:

Kno

wle

dg

e M

anag

emen

t

Pro

gra

mm

e 4.

1: In

form

atio

n, c

om

mun

icat

ions

and

tec

hno

log

y

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PE

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CE

IN

DIC

AT

OR

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UT

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EA

SO

N F

OR

VA

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E

4.1.

1C

omp

ly w

ith n

atio

nal

and

pro

vinc

ial t

reas

ury

regu

lato

ry r

epor

ting

stan

dar

ds.

80%

87.5

%14

out

of 1

6 IT

aud

it fin

din

gs h

ave

bee

n cl

eare

d.

87.5

% o

f the

find

ings

had

bee

n cl

eare

d.

The

bal

ance

will

be

add

ress

ed in

the

new

fin

anci

al y

ear.

aR

evie

w in

form

atio

n te

chno

logy

str

ateg

y.R

evie

w IT

st

rate

gy.

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vice

p

rovi

der

ap

poi

nted

.

This

ind

icat

or w

as p

artia

lly a

chie

ved

dur

ing

the

year

un

der

rev

iew

with

the

IT G

over

nanc

e Fr

amew

ork

havi

ng b

een

dev

elop

ed. H

owev

er it

will

be

carr

ied

fo

rwar

d t

o th

e ne

w fi

nanc

ial y

ear.

The

IT S

trat

egy

and

IT

Gov

erna

nce

Fram

ewor

k is

und

erw

ay.

To s

atis

fy S

CM

pro

cess

es, t

here

was

a d

elay

in

ap

poi

ntin

g a

serv

ice

pro

vid

er t

o re

view

th

e IT

str

ateg

y an

d g

over

nanc

e. T

he s

ervi

ce

pro

vid

er w

as a

pp

oint

ed s

hort

ly b

efor

e th

e en

d o

f the

fina

ncia

l yea

r an

d t

he r

evie

w is

un

der

way

.

bP

erce

ntag

e of

IT a

udit

find

ings

res

olve

d.

80%

87.5

%14

out

of 1

6 IT

Aud

it Fi

ndin

gs h

ave

bee

n cl

eare

d.

By

year

-end

, 14

of t

he a

udit

find

ings

wer

e at

tend

ed t

o, w

ith t

he IT

str

ateg

y re

view

an

d t

he B

usin

ess

Con

tinui

ty P

lan

still

ou

tsta

ndin

g.

cP

erce

ntag

e of

IT

syst

ems

uptim

e an

d

avai

lab

ility

.

Per

cent

age

of IT

sys

tem

up

time.

99%

The

IT s

yste

m a

vaila

bili

ty w

as 9

9% a

chie

ved

dur

ing

the

year

und

er r

evie

w. C

ertifi

catio

n of

sys

tem

up

time

as w

ell a

s b

ack-

up t

apes

of a

ll th

e d

ata

is p

rovi

ded

by

Firs

t Te

chno

logy

who

mai

ntai

ns a

reg

iste

r of

all

bac

k up

d

ata.

Targ

et m

et.

48

Pro

gra

mm

e 4.

2: P

olic

y ad

voca

cy

NO

PE

RFO

RM

AN

CE

IN

DIC

AT

OR

STA

RG

ET

OU

TP

UT

CO

MM

EN

TS

ON

OU

TP

UT

AC

HIE

VE

DR

EA

SO

N F

OR

VA

RIA

NC

E

4.2.

1C

reat

e a

cond

uciv

e b

usin

ess

envi

ronm

ent

for

trad

e an

d

inve

stm

ent.

88

Ad

voca

cy in

itiat

ives

incl

ude:

1) P

rovi

ncia

l Fun

din

g Fa

ir, 2

) Pos

ition

P

aper

on

Gre

en P

rocu

rem

ent,

3) I

nput

at

SA

NE

DI o

n W

aste

to

Ene

rgy,

4)

Pre

sent

ed p

aper

to

ES

ID C

lust

er, 5

) Pre

sent

atio

n to

Eco

nom

ic

Cou

ncil,

6) T

ai Y

uen

Text

iles

Inte

rven

tion,

7) I

nves

tor

Pol

icy

and

8) A

ir Q

ualit

y E

mis

sion

Sta

ndar

ds.

The

targ

et w

as m

et.

aR

evie

w t

he t

erm

s of

re

fere

nce

for

pol

icy

advo

cacy

.

Ad

voca

cy

valu

e p

rop

ositi

on.

Ap

pro

ved

b

y b

oard

.A

pap

er o

n th

e ro

le a

nd fu

nctio

n of

Pol

icy

Ad

voca

cy a

t TI

KZ

N w

as

pre

sent

ed a

nd a

pp

rove

d b

y b

oard

on

11 O

ctob

er 2

013.

The

targ

et w

as m

et.

bA

ctiv

ely

invo

lve

boa

rd

mem

ber

s in

pol

icy

advo

cacy

inte

rven

tions

to

leve

rage

on

thei

r ex

per

tise

and

kn

owle

dge

.

89

Inte

rven

tions

faci

litat

ed in

clud

e: 1

) Pro

vinc

ial F

und

ing

Fair,

2) P

ositi

on

Pap

er o

n G

reen

Pro

cure

men

t, 3

) Inp

ut a

t S

AN

ED

I on

Was

te t

o E

nerg

y,

4) P

rese

nted

pap

er t

o E

SID

Clu

ster

, 5) P

rese

nted

pap

er o

n G

reen

ing

Gov

ernm

ent

at t

he la

unch

of K

ZN

Clim

ate

Cha

nge

Cou

ncil

and

6)

A le

tter

of I

nter

vent

ion

craf

ted

by

TIK

ZN

on

beh

alf o

f the

ME

C fo

r E

cono

mic

Dev

elop

men

t re

gard

ing

cris

is in

the

Sug

ar In

dus

try

to

Min

iste

r M

r. B

en M

artin

s, 7

) Tai

Yue

n Te

xtile

s, 8

) Inv

esto

r P

olic

y an

d 9

) A

ir Q

ualit

y E

mis

sion

Sta

ndar

ds.

The

targ

et w

as e

xcee

ded

d

ue t

o em

ergi

ng is

sues

in

the

gree

n ec

onom

y an

d

the

inp

uts

wer

e re

qui

red

at

var

ious

foru

ms.

Thi

s in

clud

ed e

ngag

emen

ts w

ith

com

pan

ies

such

as

Tai Y

uen

Text

iles.

cN

umb

er o

f pol

icy

advo

cacy

rep

orts

co

mp

iled

.

9(8)

10A

dvo

cacy

rep

orts

incl

ude:

1) D

raft

Lic

ensi

ng b

ill, 2

) Was

te t

o E

nerg

y A

rtic

le fo

r N

etw

ork,

3) T

rad

e an

d E

xpor

t O

ptio

ns fo

r in

tern

al

stak

ehol

der

s, 4

) Ran

ds

and

Sen

se o

f Ren

ewab

le, 5

) Car

bon

Tax

, 6)

Mak

ing

Ren

ewab

le a

Rea

lity

in K

ZN

, 7) F

rack

ing

(Net

wor

k P

ublic

atio

n),

8) S

A-E

U T

rad

e is

sue,

9) P

rese

ntat

ion

to E

cono

mic

Cou

ncil

and

10)

In

vest

or P

olic

y.

The

targ

et w

as e

xcee

ded

due

to

the

new

dev

elop

men

ts

in t

he g

reen

eco

nom

y th

at

req

uire

d in

terv

entio

n.


Pro

gra

mm

e 4.

3: R

esea

rch

and

info

rmat

ion

NO

PE

RFO

RM

AN

CE

IN

DIC

AT

OR

STA

RG

ET

OU

TP

UT

CO

MM

EN

TS

ON

OU

TP

UT

AC

HIE

VE

DR

EA

SO

N F

OR

VA

RIA

NC

E

4.3.

1G

ener

ate

and

d

isse

min

ate

bus

ines

s in

form

atio

n to

key

st

akeh

old

ers.

1617

Qua

rter

ly p

ublic

atio

ns in

clud

e E

zom

noth

o,

KZ

N B

B, K

ZN

PIM

, Res

earc

h on

KZ

N P

oten

tial

Exp

ort

pro

duc

ts a

nd m

arke

ts fi

nalis

ed a

nd T

rad

e C

hap

ter

Volu

me

1.

Res

pon

ses

to r

esea

rch

into

pos

sib

le p

rod

ucts

for

exp

ort

led

to

add

ition

al o

utp

ut.

aN

umb

er o

f mac

ro-

econ

omic

res

earc

h re

por

ts d

evel

oped

.

1617

Qua

rter

ly p

ublic

atio

ns in

clud

e E

zom

noth

o, K

ZN

B

B, K

ZN

PIM

, Res

earc

h on

KZ

N P

oten

tial E

xpor

t p

rod

ucts

and

mar

kets

fina

lised

. Cou

ntry

tar

getin

g Strateg

yVo

lume1:TradeProduc

e/Update.

Res

pon

ses

to r

esea

rch

into

pos

sib

le p

rod

ucts

for

exp

ort

led

to

add

ition

al o

utp

ut.

bN

umb

er o

f new

hig

h im

pac

t in

vest

men

t op

por

tuni

ties

pac

kage

d w

ith r

elev

ant

stak

ehol

der

s.

68

Eig

ht h

igh

imp

act

pro

ject

s p

acka

ged

incl

ude:

D

rake

nsb

erg

Cab

le C

ar, C

asto

r O

il P

rod

uctio

n,

Tech

nolo

gy H

ub, B

PO

Par

k, P

ipel

ine

Sec

urity

an

d M

onito

ring,

Inte

grat

ed D

iam

ond

and

Je

welleryHub

,Edwalen

iLod

geand

Port

Dun

ford

.

Two

add

ition

al p

roje

cts

wer

e p

acka

ged

with

st

rate

gic

par

tner

s in

thi

s fin

anci

al y

ear.

cN

umb

er o

f sec

tor

anal

ysis

rep

orts

d

evel

oped

.

89

Nin

e se

ctor

stu

die

s co

mp

iled

incl

ude:

Sof

twar

e S

ecto

r S

tud

y, S

A S

hip

pin

g, C

loth

ing

and

Tex

tiles

, In

fras

truc

ture

and

SA

Ene

rgy,

Fur

nitu

re, F

ashi

on,

Alu

min

ium

Bev

erag

e C

ans,

Aut

omot

ive

and

Li

qui

d F

uels

.

The

alum

iniu

m b

ever

age

can

stud

y w

as d

one

colla

bor

ativ

ely

with

inve

stm

ent

pro

mot

ion

unit

to

take

the

pro

ject

to

mar

ket.

dN

umb

er o

f new

exp

ort

opp

ortu

nitie

s p

acka

ged

.48

4949

pot

entia

l exp

ort

pro

duc

ts a

nd r

elev

ant

sectors/marke

tsw

ereiden

tified

bythe

Kno

wle

dge

Man

agem

ent

bus

ines

s un

it. T

hese

op

por

tuni

ties

will

be

unp

acke

d fu

rthe

r d

urin

g th

e 20

14/15fin

ancialyea

rtopromoteex

portsand

d

evel

op K

ZN

bus

ines

ses.

The

ED

PU

iden

tified

pro

duc

ts fo

r K

M t

o p

acka

ge, t

hus

49 p

rod

ucts

iden

tified

. The

exp

ort

opp

ortu

nitie

s w

ere

pac

kage

d in

col

lab

orat

ion

with

th

e E

DP

U.

50

Pro

gra

mm

e 5:

Inve

stm

ent

Pro

mo

tio

n

Pro

gra

mm

e 5.

1: F

acili

tati

on

of

pre

-inv

estm

ent

op

po

rtun

itie

s

NO

PE

RFO

RM

AN

CE

IN

DIC

AT

OR

STA

RG

ET

OU

TP

UT

CO

MM

EN

TS

ON

OU

TP

UT

AC

HIE

VE

DR

EA

SO

N F

OR

VA

RIA

NC

E

5.1.

1P

rom

ote

the

KZ

N

pro

vinc

e as

an

inve

stm

ent

des

tinat

ion

of c

hoic

e.

R1,

2bn

R1,

3bn

10 p

roje

cts

com

mitt

ed t

o th

e ra

nd v

alue

of R

1,3

bill

ion.

Th

ese

are:

1) D

istin

ctiv

e C

hoic

e (R

55m

), 2)

Itha

la

(R5,

8m),

3) U

no F

ibre

(R90

m),

4) A

EIG

IS (R

25m

), 5)

In

Gen

ius

(R10

2,6m

), 6)

Bak

hres

a (R

800m

), 7)

Cod

e G

reen

(R4m

), 8)

Cap

pen

y E

stat

e (R

18,5

), 9)

NA

ME

C

(R90

m),

10) O

utw

orx

(R11

7 m

).

Targ

et e

xcee

ded

by

R10

0m. T

he b

igge

st

cont

ribut

or w

as B

akhr

esa,

a m

anuf

actu

ring

pro

ject

. All

of t

hese

pro

ject

s ar

e co

min

g fr

om

our

exis

ting

pip

elin

e an

d a

re p

roje

cts

wer

e em

inen

t fr

om t

he p

revi

ous

year

.

aN

umb

er o

f int

erna

tiona

l d

estin

atio

n m

arke

ting

initi

ativ

es in

str

ateg

ic

mar

kets

.

2020

20 o

utb

ound

mis

sion

s fa

cilit

ated

incl

ude:

US

(4 v

isits

), S

outh

Kor

ea (3

vis

its),

Chi

na (2

vis

its),

Ger

man

y (2

vi

sits

), M

alay

sia,

Aus

tral

ia, F

ranc

e, U

K (2

vis

its),

Turk

ey,

Chi

na, Z

imb

abw

e, H

ong

Kon

g.

Targ

et m

et.

bN

umb

er o

f new

in

vest

men

t p

roje

cts

com

mitt

ed.

18 (1

2)10

Alth

ough

the

ann

ual t

arge

t fo

r th

e nu

mb

er o

f in

vest

men

ts c

omm

itted

was

not

met

, the

ran

d v

alue

w

as h

owev

er e

xcee

ded

. In

qua

rter

4, 3

pro

ject

s w

ere

com

mitt

ed -

NA

ME

C, C

app

eny

Est

ates

and

Out

wor

x.

Unf

ortu

nate

ly n

ot a

ll of

the

pro

ject

s w

e w

ere

hop

ing

to b

e co

mm

itted

wer

e fu

nded

by

the

finan

cial

inst

itutio

ns. S

ome

pro

ject

s w

ere

del

ayed

due

issu

es r

egar

din

g E

IA’s

.

cR

and

val

ue o

f new

in

vest

men

t p

roje

cts

com

mitt

ed.

R1,

2bn

R1,

3bn

10 p

roje

cts

com

mitt

ed t

o th

e ra

nd v

alue

of R

1,3

bill

ion.

Th

ese

are:

1) D

istin

ctiv

e C

hoic

e (R

55m

), 2)

Itha

la

(R5,

8m),

3) U

no F

ibre

(R90

m),

4) A

EIG

IS (R

25m

), 5)

In

Gen

ius

(R10

2,6m

), 6)

Bak

hres

a (R

800m

), 7)

Cod

e G

reen

(R4m

), 8)

Cap

pen

y E

stat

e (R

18,5

), 9)

NA

ME

C

(R90

m),

10) O

utw

orx

(R11

7m).

Targ

et e

xcee

ded

by

R10

0m. T

he b

igge

st

cont

ribut

or w

as B

akhr

esa,

a m

anuf

actu

ring

pro

ject

. All

of t

hese

pro

ject

s ar

e co

min

g fr

om

our

exis

ting

pip

elin

e an

d a

re p

roje

cts

that

wer

e em

inen

t fr

om t

he p

revi

ous

year

.

dN

umb

er o

f pot

entia

l job

s cr

eate

d t

hrou

gh n

ew

pro

ject

s.

1700

5361

Exc

eed

ed b

y 36

61. T

he m

ajor

ity o

f hig

h im

pac

t jo

bs

crea

ted

wer

e in

the

BP

O s

ecto

r an

d t

wo

inve

stm

ents

w

ere

com

mitt

ed in

thi

s se

ctor

. Oth

er s

ecto

rs in

clud

e:

film

, agr

o-p

roce

ssin

g, c

loth

ing

and

tex

tiles

and

sy

nthe

tic fi

bre

s.

The

serv

ices

sec

tor

has

bee

n th

e ge

nera

tor

of

mor

e jo

bs

than

any

oth

er s

ecto

r.


NO

PE

RFO

RM

AN

CE

IN

DIC

AT

OR

STA

RG

ET

OU

TP

UT

CO

MM

EN

TS

ON

OU

TP

UT

AC

HIE

VE

DR

EA

SO

N F

OR

VA

RIA

NC

E

eN

umb

er o

f new

pac

kage

d

inve

stm

ent

opp

ortu

nitie

s fa

cilit

ated

for

SE

Zs

and

in

dus

tria

l hub

s.

127

Inve

stm

ents

op

por

tuni

ties

pac

kage

d in

clud

e: S

amsu

ng

Ele

ctro

nics

(Dub

e Tr

ade)

, NA

ME

C (S

et o

f Box

es)

Dub

e Tr

ade,

CA

N M

anuf

actu

ring

(Ric

hard

s B

ay),

and

D

rake

nsb

erg

Cab

le C

ar, C

ellu

lose

Pla

nt, E

urek

a C

apita

l, G

reat

Nor

th A

gri P

ark.

Pro

ject

s w

ere

pac

kage

d fo

r S

EZ

and

ind

ustr

ial

hub

s an

d c

urre

ntly

the

re a

re n

o p

rocl

aim

ed

SE

Zs

and

ind

ustr

ial h

ubs,

tha

t ha

d a

n im

pac

t on

p

acka

ging

pro

ject

s fo

r th

ese

hub

s. F

ocus

was

on

Dub

e Tr

ade

Por

t an

d R

icha

rds

Bay

IDZ

.

52

Pro

gra

mm

e 5.

2: F

acili

tati

on

of

po

st-i

nves

tmen

t o

pp

ort

unit

ies

NO

PE

RFO

RM

AN

CE

IN

DIC

AT

OR

STA

RG

ET

OU

TP

UT

CO

MM

EN

TS

ON

OU

TP

UT

AC

HIE

VE

DR

EA

SO

N F

OR

VA

RIA

NC

E

5.2.

1D

evel

op a

nd r

etai

n K

waZ

ulu-

Nat

al’s

bus

ines

ses.

R30

0mR

786.

9m15

com

pan

ies

wer

e as

sist

ed a

nd in

clud

e: 1

) Dis

tinct

ive

Cho

ice

675,

2) F

ootw

ear

Gia

nts,

3) S

pel

l Ind

ustr

ies

and

Com

pun

ders,4)G

eneralCab

les,5)Z

ikizaJo

inery,6)

YIB

Con

sort

ium

, 7) N

hlos

o D

evel

opm

ent

Con

sulta

nts,

8)

Tilt

-Up

, 9) B

ears

Pro

ject

, 10)

Gol

d-S

hu L

in C

loth

ing,

11

)Injo-Enh

leM

anufac

turers,1

2)Las

erJun

ction,13)

Thek

win

i Wire

and

Fas

tene

rs, 1

4) C

CI C

all C

entr

e an

d

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asrep

ortedduring20

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ancialyea

r,98

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pan

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mor

e jo

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ng c

reat

ed.

cN

umb

er o

f com

pan

y ex

pan

sion

pro

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s.10

1313

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pan

ies

wer

e as

sist

ed w

ith e

xpan

sion

s: 1

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istin

ctiv

e C

hoic

e, 2

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twea

r G

iant

s, 3

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eral

Cab

les,4)Z

ikizaJo

inery,5)Y

IBCon

sortium,6

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oD

evel

opm

ent

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sulta

nts,

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ilt U

p S

yste

ms,

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rs P

roje

cts,

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njo-

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le M

anuf

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rers

, 10)

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er

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tion,11)The

kwiniW

ireand

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tners,12)CCIC

all

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tre

and

13)

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eme

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ber

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ustr

y.

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e w

ere

mor

e co

mp

any

exp

ansi

on

inq

uirie

s re

ceiv

ed fo

r in

cent

ives

and

d

evel

opm

ent

finan

ce r

esul

ting

in t

he t

arge

t b

eing

exc

eed

ed.


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CE

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OR

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sted

with

exp

ansi

on: 1

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istin

ctiv

e C

hoic

e, 2

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twea

r G

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s, 3

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eral

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ikizaJo

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IBCon

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ent

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p S

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ustr

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as e

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p

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ct n

amel

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g a

very

sig

nific

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ansi

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alue

.

eNum

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ompan

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ipal

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usin

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xpan

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pro

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wer

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ing

the

year

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ipal

ities

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rmat

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shar

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sess

ions

(5),

bus

ines

s d

evel

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ges

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gram

mes

(6).

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s b

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sign

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tere

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KZ

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in t

he t

arge

t b

eing

exc

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ed

from

imp

lem

entin

g va

rious

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evel

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gram

mes

.

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gra

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e 6:

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ort

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elo

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ent

and

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mo

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gra

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e 6.

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6.1.

1P

rom

ote

exp

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fr

om K

ZN

(Exp

ort

Pro

mot

ion)

.

48 (5

8)93

93KZNcom

pan

ieswereas

sisted

during20

13/14

finan

cial

yea

r w

ith t

rad

e op

por

tuni

ties.

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se w

ere

in:

OS

M, B

erlin

, eas

t3R

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hana

, US

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taly

, Rus

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ia, M

ozam

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ana,

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teng

, Cap

e To

wn,

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ngol

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imb

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d L

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ibiti

on s

how

s in

clud

e: S

AIT

EX

and

the

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se &

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ard

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how

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at in

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st w

as s

how

n b

y K

ZN

com

pan

ies

in

par

ticip

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g in

pla

tfor

ms

arra

nged

by

TIK

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to

pro

mot

e ex

por

t op

por

tuni

ties.

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ough

the

tar

get

was

bas

ed o

n th

e p

revi

ous

year

’s p

erfo

rman

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TI

KZ

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ccom

mod

ated

the

incr

ease

d n

umb

er o

f co

mp

anie

s th

roug

h th

e ye

ar in

que

stio

n.

aN

umb

er o

f new

ex

por

t m

arke

ts

for

ind

ivid

ual

com

pan

ies.

48 (5

8)77

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mar

kets

dev

elop

ed in

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swan

a, C

ape

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n,

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bab

we,

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, Gau

teng

, Moz

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, Mau

ritiu

s,

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ola

(24)

, OS

M (4

), B

erlin

(13)

, eas

t3R

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TE (1

2),

Gha

na (1

), Ita

ly (1

), R

ussi

a (5

), U

AE

(5),

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ia (6

) and

M

ozam

biq

ue (1

).

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targ

et w

as e

xcee

d b

y 14

in t

erm

s of

ne

w m

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ts fo

r in

div

idua

l com

pan

ies

as w

e ac

com

mod

ated

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e co

mp

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som

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p

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cent

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app

licat

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pro

ved

by

the

dti

crea

ting

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r m

ore

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bN

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f co

mp

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sist

ed

with

mar

ket

dev

elop

men

t in

itiat

ives

.

5010

9TI

KZ

N fa

cilit

ated

109

mar

ket

dev

elop

men

t in

itiat

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fo

r K

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pan

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guel

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ir (6

), H

arar

e R

oute

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unch

(3),

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(3),

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azila

nd (1

), D

RC

(1),

Zam

bia

(1),

SA

ITE

X (1

0), L

usak

a (1

7), G

hana

(9),

EC

R H

ouse

and

G

ard

en (8

), O

SM

(4),

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lin (1

3), e

ast3

RO

UTE

(12)

, R

ussi

a (5

), U

AE

(5),

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ia (6

) and

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amb

ique

(5).

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num

ber

for

this

ind

icat

or w

as e

xcee

ded

due

to

assi

stan

ce p

rovi

ded

to

KZ

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omp

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form

atio

n gr

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n p

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ticip

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utw

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g in

com

ing

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egat

ions

.

cD

evel

op a

nd

imp

lem

ent

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xpor

t sa

les

trac

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to

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por

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les.

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evel

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ng t

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ble

and

in u

se.

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et a

chie

ved

.


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gra

mm

e 6.

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t

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6.2.

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t d

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ort

dev

elop

men

t p

rogr

amm

es fa

cilit

ated

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e:

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ort

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ntat

ion

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rse

(Min

ara

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mb

er),

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ort

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duc

t M

arke

ting

and

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ndin

g, E

xpor

t Fi

nanc

ial

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agem

ent,

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oduc

tion

to E

xpor

t an

d M

arke

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xpor

t C

ycle

and

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cess

and

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hnic

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spec

ts,

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hod

s of

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t, E

xpor

t A

dm

inis

trat

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nd

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ng B

usin

ess

(Ind

ones

ia a

nd K

enya

), Fo

od

Pac

kaging

(JETR

O).

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ort

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elop

men

t U

nit

exce

eded

its

targ

et d

ue

to a

n in

crea

sed

up

take

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he n

umb

er o

f ses

sion

s an

d

assi

stan

ce g

rant

ed t

o K

ZN

com

pan

ies

in c

onju

nctio

n w

ith lo

cal a

nd in

tern

atio

nal p

artn

ers.

aN

umb

er

of B

BB

EE

co

mp

anie

s as

sist

ed w

ith

exp

ort

read

ines

s in

terv

entio

ns.

1029

Dur

ing

Q2,

four

com

pan

ies

wer

e as

sist

ed fo

r ex

por

t re

adin

ess.

The

se in

clud

e S

ure

Line

, Ten

Trid

ge,

Zaz

a A

genc

ies

and

Lin

e In

vest

men

ts in

Q2.

In Q

3 20

co

mp

anie

s at

tend

ed t

he F

ood

Pac

kagi

ng fa

cilit

ated

by

JETR

O.InQ4,Cub

bieSolutions

,Fibertex,Sea

ltron

,R

ock

Sol

id In

dus

trie

s an

d U

tility

Sys

tem

s w

ere

assi

sted

.

The

targ

et w

as e

xcee

d a

s a

resu

lt of

the

incr

ease

d

par

ticip

atio

n of

BE

E c

omp

anie

s in

the

Exp

ort

Wee

k initiativeduringthe3rdQ

uarterof2

013/14

.

bN

umb

er o

f ac

cred

ited

ex

por

t en

terp

rise

dev

elop

men

t p

rogr

amm

es

faci

litat

ed

for

emer

ging

ex

por

ters

.

1514

Alth

ough

the

ann

ual t

arge

t w

as n

ot m

et, t

he

pro

gram

mes

faci

litat

ed d

urin

g th

e ye

ar h

ave

yiel

ded

p

ositi

ve r

esul

ts in

ter

ms

of d

istin

guis

hing

cat

egor

ies

of

exp

orte

rs fr

om e

mer

ging

exp

orte

rs, e

xpor

ter

read

ines

s an

d k

ey in

terv

entio

ns r

equi

red

prio

r to

tra

din

g w

ith

othe

r co

untr

ies

or lo

cally

. TIK

ZN

wor

ked

with

str

ateg

ic

par

tner

s in

clud

ing

Min

ara

Cha

mb

ers,

SE

TA a

nd T

ETA

.

In Q

uart

ers

1 an

d 3

we

wer

e un

able

to

host

suf

ficie

nt

ente

rpris

e d

evel

opm

ent

pro

gram

mes

. The

1st

Qua

rter

w

e on

ly m

anag

ed t

wo

as w

e w

ere

put

ting

pla

ns in

p

lace

to

roll

out

our

oper

atio

nal p

lan

for

the

year

and

it

is g

ener

ally

a s

low

per

iod

for

com

pan

ies

as w

ell.

cN

umb

er o

f su

cces

sful

S

AR

S e

xpor

ters

ap

plic

atio

ns

faci

litat

ed fo

r K

ZN

co

mp

anie

s.

24 (3

0)19

19 e

xpor

ter

app

licat

ions

wer

e fa

cilit

ated

for

Gol

den

R

ewar

ds,

Tea

se Y

our

Tast

ebud

s, U

nofib

re, A

tlant

a Mining,Bak

hres

aMiling

,DBNSch

oolo

fFas

hion

,Jak

ad

Dim

ensi

ons,

Aca

dem

y, P

holo

kgol

o, R

ocke

t W

orkz

, Ib

uyile

Afr

ica,

Aq

uila

Met

al, M

etro

Cat

erer

s, S

afet

y &

A

llied

Pro

duc

ts a

nd V

N In

dus

tria

l.

This

tar

get

was

not

met

as

it w

as a

diffi

cult

year

for

man

ufac

ture

rs -

thi

s th

us h

ad a

n im

pac

t on

the

num

ber

of

com

pan

ies

that

cam

e fo

rwar

d t

o b

e re

gist

ered

as

exp

orte

rs.

56

09

•

AnnuAl FInAnCIAl stAteMents - For the yeAr ended MArCh 2014

The reports and statements set out below comprise the Annual Financial Statements presented to the provincial legislature:

9.1 ADMINISTRATION

9.2 STATEMENT OF RESPONSIBILITY BY THE BOARD OF DIRECTORS

9.3 BOARD’S REPORT

9.4 SECRETARY’S CERTIFICATION

9.5 REPORT OF THE AUDITOR-GENERAL

9.6 CORPORATE GOVERNANCE STATEMENT

9.7 BALANCE SHEET

9.8 NOTES TO THE ANNUAL FINANCIAL STATEMENT


9.1AdMInIstrAtIon

Country of incorporation and domicile South Africa

Legal form of entity Public Entity

Nature of business and principal activities Trade and investment promotion agency

Members Ms LCZ Cele (Acting Chairperson) Mr MA Tarr DrJJVanZyl Mr CS Gina Cllr DCP Mazibuko Dr VF Mahlati Dr NS Msomi Prof W Viviers Dr MAI Velia Mr TO Mlaba (resigned)

Registered office Trade and Investment House 1 Arundel Close Kingsmead Office Park Durban 4001

Business address Trade and Investment House 1 Arundel Close Kingsmead Office Park Durban 4001

Postal address Trade & Investment KwaZulu-Natal PO Box 4245 Durban 4000

Bankers Standard Bank of SA Limited

Auditors Auditor-General of South Africa

Secretary Ms P Tabile

Company registration number Trade and Investment Act No.5 of 2010

Preparer The financial statements were internally compiled by: Ms L Nyamade Chief Financial Officer

58

9.2stAteMent oF responsIBIlIty By

the BoArd oF dIreCtors

The members are required by the Public Finance Management Act (Act 1 of 1999), 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 the responsibility of the members to ensure the financial statements fairly present the state of affairs of the entity as at the end of the financial year and the results of its operations and cash flows for the period. The external auditors are engaged to express an independent opinion on the financial statements and are to be given unrestricted access to all financial records and related data.

The 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.

The financial statements are based on appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The members acknowledge they are ultimately responsible for the system of internal financial controls established by the entity and place considerable importance on maintaining a strong control environment. To enable the members to meet these responsibilities, they ensure the entity complies with the set standards for internal control aimed at reducing the risk of error or deficit 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 entity and all employees are required to maintain the highest ethical standards in ensuring the entity’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the entity is on identifying, assessing, managing and monitoring all known forms of risk across the entity.

While operating risk cannot be fully eliminated, the entity endeavours to minimise it by ensuring appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The members believe, based on the information and explanations given by management, the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or deficit.

The members have reviewed the entity’s cash flow forecast for the period ended 31 March 2014 and, are satisfied the entity has access to adequate resources to continue in operational existence for the foreseeable future.

The entity is wholly dependent on the Department of Economy Development and Tourism (DEDT) for continued funding of operations. The financial statements are prepared on the basis the entity is a going concern and the provincial government has neither the intention nor the need to liquidate or curtail materially the scale of the entity.


Although the board of members are primarily responsible for the financial affairs of the entity, they are supported by the entity’s internal auditors.

The external auditors are responsible for independently reviewing and reporting on the entity’s financial statements. The financial statements have been examined by the entity’s external auditors and their report is presented on page 66.

The financial statements set out on pages 73 to 110, prepared on the going concern basis, were approved by the board of members on and signed on its behalf by:

Ms LCZ Cele Mr ZA Gwala (Acting Chairperson) (Chief Executive Officer)

60

9.3BoArd’s report

The members submit their report for the period ended 31 March 2014.

1. IncorporationTIKZN was a Section 21 Company established under the provincial Department of Economic Development and Tourism (DEDT). The intention was always to convert thiscompanytoaPublicEntity.TheTIKZNActwaspassedin2010andon1June2011, TIKZN was finally listed as a provincial Public Entity under Schedule 3C of the PFMA of 1999. The entity converted to a PFMA Schedule 3C Public Entity in September 2012 and commenced trading as a public entity on 1 October 2013. The entity reported as a public entity for the six months ended 31 March 2013. Theentitywillbereportingasapublicentityfortheentireyearforthe2013/2014financial period.

2. Review of activities

Main business and operationsThe entity posted a net deficit of R1,813,852 for the period under review.

3. Going concernWe draw attention to the fact that at 31 March 2014, the entity had an accumulated surplus of R159,792 and the entity’s total assets exceed its liabilities by R159,792. The financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes funds will be available to finance future operations and the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

The ability of the entity to continue as a going concern is dependent on several factors. The most significant of these is the members continue to exercise their duties and responsibilities of ensuring the entity fulfils its mandate in terms of its enabling legislation (TIKZN Act No. 5 of 2010) and in terms of its MOU with DEDT. This will ensure funding is guaranteed and entity continues as a going concern.

4. Subsequent eventsThe members of the board are not aware of any matters or circumstances arising which can impact on the organisation since the end of the financial period concerned.

5. Members’ interest in contractsMembers of the board declared any conflict of interest during the meetings. As at the 31 March 2014, no interest or conflict of interests were recorded.


6. Accounting policiesThe financial statements were prepared in accordance with the South African Standards of Generally Recognised Accounting Practice (GRAP), including any interpretations of such Standards issued by the Accounting Practices Board, and in accordance with the prescribed Standards of GRAP issued by the Accounting Standards Board as the prescribed framework by the National Treasury.

7. Members of the BoardThe members of the entity as at the date of this report are as follows:

Name NationalityMs LCZ Cele (Acting Chairperson) South AfricanMr MA Tarr South AfricanDrJJVanZyl SouthAfricanMr CS Gina South AfricanCllr DCP Mazibuko South AfricanDr VF Mahlati South AfricanDr NS Msomi South AfricanProf W Viviers South AfricanDr MAI Velia South African

8. SecretaryThe secretary of the entity is Ms P Tabile.

Business address:Trade & Investment House1 Arundel CloseKingsmead Office ParkDurban4001

Postal address:Trade & Investment KwaZulu-NatalPO Box 4245Durban4000

9. Corporate Governance

GeneralThe board is committed to business integrity, transparency and professionalism in all its activities. As part of this commitment, the members of the board supports the highest standards of corporate governance and the ongoing development of best practice.

The entity subscribes to the notion of Good Corporate Governance and therefore aligns itself to the Code of Corporate Practices and is on its way to fully adopt the King Code as laid out in the King Report. The members of the board discuss the responsibilities of management in this respect, at board meetings and monitor the entity’s compliance with the code on a quarterly basis.

62

The salient features of the entity’s alignment with the Code include:

Members of the Board• Retainsfullcontrolovertheentity,itsplansandstrategy;• 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 internallyandexternallybytheentity;

• Isofaunitarystructurecomprising:- non-executive directors, all of whom are independent directors as

definedintheCode;and- executive members.

• Hasestablishedaboarddirectorshipcontinuityprogramme.

Chairperson and Chief ExecutiveThe chairperson is a non-executive and independent director as defined by the PFMA, TIKZN Act and the Code of Good Corporate Governance.

The roles of chairperson and chief executive are separate with responsibilities divided between them so no individual has unfettered powers of discretion.

RemunerationTrade & Investment KwaZulu-Natal underwent a restructuring programme in 2013. This was informed by the new corporate strategy implemented by the entity. The new structure required the appointment of new executive members. For this reason the entity now has seven executive managers including the CEO and the CFO. The upper limits of the remuneration of the executive managers of the entity, are determined by the Human Resources Committee in consultation with the members of the board.

Executive meetingsThe members of the board have met on four separate occasions during the financial period. The Board schedules to meet at least four times per annum.

Non-executive directors have access to all members of management of the entity.

Audit CommitteeThe Acting Chairperson for the period ended 31 March 2014 was Dr NS Msomi. The committee met four times during the financial period to review matters necessary to fulfil its role. Dr NS Msomi is an independent board member.

The members of the board were satisfied the audit committee of the entity then, constituted by the non-executive directors was properly constituted to fulfil its role and advise the board of its responsibilities as provided in the PFMA Act of 1999.

Internal auditThe entity has outsourced its Internal Audit function to KwaZulu-Natal Provincial Treasury Internal Audit who provided the service in the previous year at no cost.

10. BankersStandard Bank of South Africa Limited.

11. AuditorsAuditors-General of South Africa will continue in office for the next financial period.


deClArAtIon By the CoMpAny seCretAry In respeCt oF seCtIon 88(2) (e) oF the

CoMpAnIes ACt.

9.4

During the year under review, Trade & Investment KwaZulu-Natal received a Notice of Deregistration from the Companies Intellectual Property Commission Office (CIPC). The notice served to confirm that TIKZN is now a provincial Public Entity listed under Schedule 3C of the PFMA of 1999. TIKZN has since filed a Notice of Incorporation as well as adopted a standard Memorandum of Incorporation according to section 14 (1)(a)(b)(i-iii) of the Companies Act 2008. TIKZN has prepared its Annual Financial Statements on the basis of Generally Acceptable Accounting Practice (GAAP).

I certify, in accordance with section 88(2)(e) of the Companies Act 71 of 2008, that for the period ended 31 March 2014, the entity has lodged with the Companies Intellectual Property Commission all such returns as required by a public company in terms of the Act and that all such returns are true, correct and up to date.

Ms P TabileCompany Secretary

64

9.5report oF the AudItor-generAl

Report of the Auditor-General to the KwaZulu-Natal provincial legislature on Trade & Investment KwaZulu-Natal report on the financial statements.

Introduction1. I have audited the financial statements of the Trade & Investment KwaZulu-Natal set

out on pages 73 to 110, which comprise the statement of financial position as at 31 March 2014, the statement of financial performance, statement of changes in net assets, cash flow statement and the statement of comparison of budget with actual information for the year then ended, as well as the notes comprising a summary of significant accounting policies and other explanatory information.

Accounting authority’s responsibility for the financial statements2. The accounting authority is responsible for the preparation and fair presentation of

these financial statements in accordance with South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA) and for such internal control as the accounting authority determines is necessary to enable the preparation of financial statements free from material misstatement, whether due to fraud or error.

Auditor-General’s responsibility3. My responsibility is to express an opinion on these financial statements based on my

audit. I conducted my audit in accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA), the general notice issued in terms thereof and International Standards on Auditing. Those standards require I comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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


Opinion6. In my opinion, the financial statements present fairly, in all material respects, the

financial position of the Trade & Investment KwaZulu-Natal as at 31 March 2014 and its financial performance and cash flows for the year then ended in accordance with SA Standards of GRAD and the requirements of the PFMA.

Report on other legal and regulatory requirements7. In accordance with the PAA and the general notice issued in terms thereof, I report the

following findings on the reported performance information against predetermined objectives for selected objectives presented in the annual performance report, non-compliance with legislation as well as internal control. The objective of my tests was to identify reportable findings as described under each subheading, but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives8. I performed procedures to obtain evidence about the usefulness and reliability of the

reported performance information for the following selected programmes presented in the annual performance report of the public entity for the year ended 31 March 2014:Programme 2: Investment Promotion and Facilitation on pages 50 to 53Programme 3: Export Development and Promotion on pages 54 to 55Programme 4: Advocacy and Knowledge Management on pages 47 to 49

9. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

10. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury’s annual reporting principles and whether the reported performance was consistent with the planned objectives. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for Managing Programme Performance Information (FMPPI).

11. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

12. I did not raise any material findings on the usefulness and reliability of the reported performance information for the selected programmes.

Additional matters13. Although I raised no material findings on the usefulness and reliability of the

reported performance information for the selected programmes, I draw attention to the following matters:

Achievement of planned targets14. Refer to the annual performance report on pages 42 to 55 for information on the

achievement of planned targets for the year.

Adjustment of material misstatements15. I identified material misstatements in the annual performance report submitted for

auditing on the reported performance information for the selected programmes. As management subsequently corrected the misstatements, I did not raise any material findings on the usefulness and reliability of the reported performance information.

66

Compliance with legislation 16. I performed procedures to obtain evidence the public entity had complied with

applicable legislation regarding financial matters, financial management and other related matters. My findings on material non-compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA, are as follows:

Annual financial statements17. The financial statements submitted for auditing were not prepared in accordance

with the prescribed financial reporting framework, as required by section 55 (1) (b) of the PFMA. Material misstatements of commitments, cash flow statement, employee costs, related parties, budget statement and supply chain management deviations identified by the auditors in the submitted financial statement were subsequently corrected, resulting in the financial statements receiving an unqualified audit opinion.

Internal control 18. I considered internal control relevant to my audit of the financial statements, annual

performance report and compliance with legislation. The matters reported below are limited to the significant internal control deficiencies resulting in the findings on non-compliance with legislation.

Leadership19. The accounting authority and management did not ensure the financial reporting

framework was fully complied with before submitting the AFS for auditing.

Financial and performance management20. The financial statements contained numerous misstatements that were corrected.

This was mainly due to staff members not fully understanding the requirements of the financial reporting framework.

21. The annual performance report contained material misstatements that was corrected. This was mainly due to staff members not following the National Treasury’s framework for reporting on performance information.

Auditor-GeneralPietermaritzburg 31 July 2014


9.6CorporAte governAnCe

stAteMent

How We Govern Our Business

Trade & Investment KwaZulu-Natal (TIKZN) is a South African trade and inward investment promotion agency, established to promote KwaZulu-Natal as an investment destination and facilitate trade by assisting local companies access local and international markets. TIKZN is governed by the TIKZN Act, No. 5 of 2010. During the year under review, TIKZN received Notice of Deregistration of the Section 21 Company in November 2013 from the Companies Intellectual Property Commission and is now operating as a listed Schedule 3C Public Entity under the Public Finance Management Act of 1999. The TIKZN Board has endorsed the Notice of Incorporation which will be filed with the Memorandum of Incorporation in its prescribed manner according to section 15 of the Companies Act 71 of 2008.

TIKZN is fully committed to sound and effective corporate governance standards. Governance of TIKZN stems from the shareholder and other stakeholders, members of the board of directors, the chief executive officer assisted by the company secretary on governance issues as well as the board committees.

The members of the board adopted a board charter which was reviewed in October 2013. The board charter provides guidance as well as assists in ensuring all responsibilities of the board are discharged as required by the TIKZN Act, the PFMA as well as King III standards of Good Corporate Governance. Members of the board are responsible for establishing a risk management process, effectiveness of the Audit, Risk and Compliance Committee and Remuneration Committee, as well as other corporate governance structures.

The members of the board are accountable to the shareholder and owe a duty of care and diligence to the company. They act in the best interest of the company and consequently its shareholder. The board is also responsible for the following:

• Strategyandstrategicdecision-makingandexecution;• Thecompany’sperformanceandregularassessments;• Ensuringfullandtimelydisclosuresofmaterialmattersaffectingthecompany;• Ensuringtheimplementationofaneffectivecomplianceframework;and• TheimplementationofaCodeofConduct,aswellassafety,healthandenvironmental

issues that may impact on the organisation.

Management is responsible and accountable to the board for designing, implementing and monitoring the processes outlined above and integrating them into the day-to-day operational activities.

68

The Board of Directors

CompositionIn terms of the TIKZN Act, Section 5 (1) (a) of No. 05 of 2010, the appointment of executive directors is the responsibility of the Executive Authority, i.e. the MEC of DEDT. 11 members wereinitiallyappointedasmembersoftheboardandwhoassumedofficeon1June2012.Since then two members have resigned and have not yet been replaced. The members of the board are as follows:

NAME GENDER TERM BOARD MEMBER QUALIFICATIONS

Ms LCZ Cele (acting chairperson)

F 1 MAcc Taxation

Mr MA Tarr M 1 MSc, Agricultural Economics

Dr MAI Velia F 1 PhD, Economics

DrJJvanZyl M 2 DCom, Economics

Mr CS Gina M 1 Executive Development Programme

Prof W Viviers F 1 DCom, Economics

Cllr DCP Mazibuko F 3 Hon, BEd Management and Administration

Dr VF Mahlati F 1 PhD, Policy Speciality

Dr NS Msomi M 3 PhD, Molecular Genetics

Board Committees

Audit Risk and Compliance CommitteeThe committee comprises a minimum three members nominated from the board. The members are Dr NS Msomi (acting chairperson), Ms LCZ Cele and Mr MA Tarr.

During the year under review, the chairperson Mr TO Mlaba resigned as he had been appointed as South Africa’s High Commissioner to the United Kingdom. As a result the chairperson of the Audit Committee, Ms LCZ Cele was appointed the acting chairperson of the board.

The Audit, Risk and Compliance Committee adopted the Terms of Reference (TOR) and the Audit Charter reviewed annually. During the year under review, the Audit Committee recommended to the board the approval of the Risk Management Policy which gave effect to the review of the Audit Committee’s TOR and Board Charter respectively.

The primary role of the Audit Risk and Compliance Committee is to ensure the integrity of financial reporting and the audit process and maintain sound risk management and internal control systems. In pursuing these objectives, the committee oversees relations with the external auditors, the scope of work, the annual audit and the applicable levels of materiality. The committee monitors development in corporate governance to ensure TIKZN continues to apply high and appropriate standards. Thereafter, the Audit, Risk and Compliance Committee’s recommendations are submitted to the board for approval. Primary functions of the committee are as follows:


Financial Statements: • The committee examines and reviews the annual financial statements with

management and external auditors to ensure they are complete and consistent with informationprovidedpriortosubmittingtotheregulators;

• Reviewwithmanagementandexternalauditorstheresultsof theaudit includinganydifficultiesencountered;

• Review the annual financial statements and consider the appropriateness ofaccountingpoliciesused;and

• Review with management and external auditors all matters required to becommunicated to stakeholders under relevant accounting framework Generally Recognised Accounting Practice (GRAP).

Internal controls and risk management:The Audit Risk and Compliance Committee has overall responsibility for risk management, while management is accountable for designing, implementing and monitoring this process. The committee defines acceptable risk tolerance levels and determines the continuous monitoring and control processes required across business-specific risk areas to provide the basis for regular and exceptional reporting to business management and the Management Committee and board. The effectiveness of internal controls and risk management mechanisms is regular management reporting. The CFO reports every quarter on the operation of the financial and accounting control frameworks and the board also receives assurance from the Audit, Risk and Compliance Committee, which derives its information from regular audit reports on risk and internal control throughout the organisation. The mechanisms to ensure the effectiveness of internal controls include reviewing the:

• Effectiveness of the organisation’s internal control system and informationtechnologysecurityandcontrol;

• Controlproceduresfollowedbymanagementandassessingtheireffectiveness;• Controlsdesignedtoensureassetsaresafeguarded;• Fraudandpreventionplanimplementedtodetectfraud;• Riskmanagementandrelatedpolicies;and• Compliancewithprescribedaccountingframework.Aspartofthistask,themajority

of finance policies were reviewed and updated to ensure alignment with the new accounting framework as well as to tighten the internal control environment.

Internal auditAn important role of the Audit, Risk and Compliance Committee is to monitor, guide and supervise the functioning of internal audit to ensure that the services of the internal audit and external audit are sufficiently clarified and coordinated to provide an objective overview of the organisation’s operating systems of internal control and reporting.

Theseincludethefollowing;• AnnualapprovaloftheinternalAuditChartertoensureadherencetobestpractices;• Reviewingtheadequacyofcorrectiveactiontakeninresponsetosignificantinternal

auditfindings;• Reviewingtheinternalauditplanstoensurehighriskareashavebeenidentifiedand

mitigationstrategieshavebeenidentifiedandadopted;• Reviewingsignificantmattersreportedbytheinternalauditfunction;• Assessingtheadequacyofperformanceoftheinternalauditfunction;• Reviewing theco-operationandco-ordinationbetween the internal andexternal

auditfunctions;and• Evaluating the independence and effectiveness of the internal audit function,

including compliance with the institute of Internal Auditors International Standards for the Professional Practice of Internal Audit.

70

External audit and compliance• Reviewingtheexternalauditor’sproposedauditscope,approachandco-ordination

ofauditeffortwithinternalaudit;• Reviewingandconfirmingtheindependenceoftheexternalauditors;• Reviewing the external auditor’s observations as presented in themanagement

reportsandtheadequacyofthemanagementresponses;• On a regular basis, meet separately with the external auditor’s to discuss any

mattersthatthecommitteeorauditorsfeelshouldbediscussedinprivate;• Reviewing theeffectivenessof systemsofmonitoringcompliancewith lawsand

regulations and the results of management’s investigation and follow-up of any instancesofnon-compliance;and

• ReviewingprocessesforcommunicatingtheCodeofConducttoTIKZNpersonnel.

Sustainability reporting and other responsibility• Regular reporting to the board about Audit, Risk and Compliance Committee

activities,issuesandrelatedrecommendations;• Facilitatingcommunicationbetweeninternalaudit,externalauditandtheexecutive

management;• PerforminganyotheractivitiesasrequestedbytheAccountingAuthority;• Institutingandoverseeingspecialinvestigationsasneeded;• ReviewingandassessingtheadequacyoftheAuditCharteronanannualbasis;• Ensuringallresponsibilitiesasoutlinedinthecharterarecarriedout;and• Evaluating the committee’s and individual member’s performance on a regular

basis.

Dr NS Msomi (Acting chairperson of the Audit, Risk and Compliance Committee)


Human Resources and Remuneration CommitteeThe committee comprises a minimum of three members nominated by members of the boardnamely;MrCSGina(chairperson),DrVFMahlatiandDrMAIVelia.Thecommittee’sobjectives include ensuring continuous improvement and excellence in performance of TIKZN staff members, increasing capacity by addressing areas of personal development and ensuring staffing requirements are addressed adequately.

The committee has provided the necessary guidance on human resource related issues affecting the organisation in line with its mandate as prescribed in the TOR for the Human Resources and Remuneration Committee. During the year, two policies were reviewed. These include a staff retention and succession plan complementing the review of the organisational structure following the development of a five-year strategic plan. The committee provided the much-needed insight into issues affecting TIKZN staff members and was also part of the panel recruiting executive management.

Some of the initiatives implemented during the year include;• Employmentequityandskillsplanssubmittedandimplemented;• Reviewofstaffretentionandsuccessionpolicies;• Reviewoftheorganisationalstructure;and• Changemanagement.

Mr CS Gina (Chairperson of Human Resources and Remuneration Committee)

72

MeetingsA minimum of four board meetings are held annually. In this way, the members of the board provide proper strategic direction to the management of Trade & Investment KwaZulu-Natal.Membershipofandattendanceatboardmeetingsduringthe2013/2014financial year is illustrated in the table below:

Board and sub-committee meetings

Directors

Board HR Committee

Audit Committee

Other

19 July, 11 Oct, 02 Dec,

14 March

04 June, 01 Oct, 17 Feb

24 May, 12 July, 06 Sept, 21 Feb

17 Feb 14

TOTAL MEETINGS 4 3 4 1

Number of meetings attended for the period April 2013 - March 2014

Ms LCZ Cele Acting Chairperson

4 4 0

Mr MA Tarr 4 4 1

DrJJVanZyl 2 0

Mr CS Gina 4 3 1

Cllr DCP Mazibuko 2 0

Dr V Mahlati 4 3 1

Dr NS Msomi 4 4 1

Prof W Viviers 4 1

Dr M Velia 3 3 1

Other: Strategy Review Meeting


9.7stAteMent oF FInAnCIAl posItIon As At 31 MArCh 2014

Figures in rand Note(s) 2014 2013

Assets

Current assets

Receivables from exchange transactions 4 718,784 519,856

Cash and cash equivalents 5 11,611,985 13,460,234

12,330,769 13,980,090

Non-current assets

Property, plant and equipment 2 956,317 787,918

Intangible assets 3 141,859 639,063

1,098,176 1,426,981

Total Assets 13,428,945 15,407,071

Liabilities

Current liabilities

Finance lease obligation 6 170,091 58,036

Payables from exchange transactions 7 6,583,335 7,486,441

6,753,426 7,544,477

Non-current liabilities

Finance lease obligation 6 45,525 241,323

Unspent conditional grants and receipts 8 6,470,202 1,147,627

6,515,727 1,388,950

Total Liabilities 13,269,153 8,933,427

Net Assets

Accumulated surplus 159,792 6,473,644

74

stAteMent oF FInAnCIAl perForMAnCe As At 31 MArCh 2014


Revenue

Other income 29 103,297 1,771

Government grants (conditional) 10 2,551,187 1,176,324

Interest received - investment 145,717 46,070

Public contributions (main grant) 10 72,333,617 27,573,915

Total revenue 75,133,818 28,798,080

Expenditure

Employee related costs 12 (33,758,043) (14,564,944)

Administration 30 (30,698) (6,238)

Depreciation and amortisation (978,485) (483,394)

Finance costs 14 (137,877) (40,855)

Repairs and maintenance (443,786) (189,181)

General expenses 11 (41,620,841) (20,491,876)

Total expenditure (76,969,730) (35,776,488)

Operating deficit (1,835,912) (6,978,408)

Gain on disposal of assets and liabilities 22,060 -

Loss on foreign exchange - (4,551)

22,060 (4,551)

Deficit for the year (1,813,852) (6,982,959)


stAteMent oF ChAnges In net Assets As At 31 MArCh 2014

Figures in rand Accumulated surplus

Total net assets

Balance at 01 April 2012 13,456,603 13,456,603

Changes in net assets


Total changes (6,982,959) (6,982,959)

Balance at 01 April 2013 6,473,644 6,473,644

Changes in net assets


Transfer to Technical Assistance Fund (TAF) (4,500,000) (4,500,000)

Total changes (6,313,852) (6,313,852)

Balance at 31 March 2014 159,792 159,792

R4,500,000 was transferred from TIKZN accumulated funds to the Technical Assis-tance Fund (TAF) during the period under review. The transfer was approved by De-partment of Economy Development and Tourism (DEDT) to assist in small businesses.

76

stAteMent oF CAsh FlowAs At 31 MArCh 2014


Cash flows from operating activities

Receipts

Public contributions (grant) 80,207,379 27,573,915

Interest income 145,717 47,833

Other receipts 103,297 267,518

80,456,393 27,889,266

Payments

Employee costs (32,540,349) (14,564,944)

Finance costs (137,877) (40,855)

Other payments (44,302,998) (14,697,514)

(76,981,224) (29,303,313)

Net cash flows from operating activities 16 (3,475,169) (1,414,047)

Cash flows from investing activities

Purchase of property, plant and equipment 2 (649,679) (159,681)

Proceeds from sale of property, plant and equipment

2 22,060 -

Purchase of other intangible assets 3 - (185,221)

Net cash flows from investing activities (627,619) (344,902)

Cash flows from financing activities

Movement in lease liability non-current por-tion

(195,798) 65,029

Transfer to Technical Assistance Fund (TAF) (4,500,000) -

Finance costs - (40,854)

Net cash flows from financing activities (4,695,798) 24,175

Net increase/(decrease) in cash and cash equivalents

(1,848,248) (1,734,774)

Cash and cash equivalents at the beginning of the year

13,460,233 14,047,380

Cash and cash equivalents at the beginning of the year (prior year adjustment)

28 - 1,147,627

Cash and cash equivalents at the end of the year

5 11,611,985 13,460,233


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ACCountIng polICIesAs At 31 MArCh 2014

1. Presentation of financial statementsThe financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP) issued by the Accounting Standards Board in accordance with Section 55 of the Public Finance Management Act (Act 29 of 1999) and the Public Management Act (Act No. 1 of 1999 as amended).

Accrual basisThese financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention unless specified otherwise. The principal accounting policies adopted in the preparation of these financial statements are set out below:

OffsettingAssets and liabilities, revenue and expenses have not been offset, except where offsetting is required or permitted by GRAP.

ComparabilityComparative information represents the results of the six months ended 31 March 2013 presented on the same basis as the previous year. In the preparation of the Financial Statements the entity has taken into consideration the guidelines from Directive 5 of the ASB and no new GRAP Standards were adopted by the entity. The following applicable standardswhichcameintoeffecton1April2013wereconsidered;

Grap 20 - Related party disclosures

Grap 25 - Employees benefits

Grap 31 - Intangible assets

IGRAP 16 - Website costs

The amendments to the above listed standards did not have any bearing on the accounting policies adopted in the preparation of the Annual Financial Statements.

The entity adopted the following GRAP standard on 01 April 2014.

GRAP 24 - Presentation of budget information in Financial Statement.

A summary of the significant accounting policies applied, are disclosed below.

1.1. Property, plant and equipmentProperty, plant and equipment are tangible non-current assets 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.

82

Initial recognitionThe cost of an item of property, plant and equipment is recognised as an asset when:

• Itisprobablefutureeconomicbenefitsorservicepotentialassociatedwiththeitemwillflowtotheentity;and

• Thecostoftheitemcanbemeasuredreliably.

Initial measurementProperty, 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 at no cost, or for a nominal cost, 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 (the cost). If the acquired item’s fair value was not determinable, its 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.

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. No assets were revalued at the reporting date.

Subsequent measurementProperty, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value.

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

The useful life of all categories of property, plant and equipment are assessed annually.

The useful lives of items of property, plant and equipment have been assessed as follows:


Item Average useful life

Furniture and fixtures 5 - 8 yearsOffice equipment 5 - 12 yearsIT equipment 3 - 6 yearsComputer software 2 - 3 yearsOther property, plant and equipment 5 years

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 significant cost 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 included in the carrying amount of another asset.

DerecognitionItems of the 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.

1.2. Intangible assetsAn 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 togetherwitharelatedcontract,assetsorliability;or

• Arisesfromcontractualrightsorotherlegalrights,regardlesswhetherthose rights are transferable or separate from the entity or from other rights and obligations.

Initial recognitionAn intangible asset is recognised when:

• It is probable that future economic benefits or service potentialattributabletotheassetwillflowtotheentity;and

• Thecostorfairvalueoftheassetcanbemeasuredreliably.

Intangible assets are initially recognised at cost.

MeasurementAn intangible asset acquired through a non-exchange transaction, the cost will be its fair value as at the date of acquisition.

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

84

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

• Itistechnicallyfeasibletocompletetheassetsoitwillbeavailableforuseorsale;

• Thereisanintentiontocompleteanduseorsellit;• Thereisanabilitytouseorsellit;• Itwillgenerateprobablefutureeconomicbenefitsorservicepotential;• Thereareavailabletechnical,financialandotherresourcestocomplete

thedevelopmentandtouseorselltheasset;or• Theexpenditureattributabletotheassetduringitsdevelopmentcan

be measured reliably.

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 the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful life.

The 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 the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount amortised over its useful life.

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

Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:

Computer software, other than three years.

Intangible assets are derecognised:

• Ondisposal;or• Whenno futureeconomicbenefitsorservicepotentialareexpected

from its use or disposal.

1.3. Financial instrumentsA financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual interest of another entity.

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

A concessionary loan is a loan granted to or received by an entity on terms not market related.


Credit risk is the risk one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.

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

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

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

• Itsvaluechangesinresponsetothechangeinaspecifiedinterestrate,financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index or other variable provided in the case of a non-financial variable, the variable is not specifictoapartytothecontract(sometimescalledthe‘underlying’);

• Itrequiresnoinitialnetinvestmentoraninitialnetinvestmentsmallerthan would be required for other types of contracts expected to have a similarresponsetochangesinmarketfactors;and

• Itissettledatafuturedate.

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.

A financial asset is:

• Cash;• Aresidualinterestofanotherentity;or• Acontractualrightto:

- receivecashoranotherfinancialassetfromanotherentity;or- exchange financial assets or financial liabilities with another

entity under conditions potentially favourable to the entity.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.

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

• Delivercashoranotherfinancialassettoanotherentity;or• Exchange financial assets or financial liabilities under conditions

potentially unfavourable to the entity.

Interest rate risk is the risk the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

Liquidity risk is the risk encountered by an entity in the event of difficulty in meeting obligations associated with financial liabilities settled by delivering cash or another financial asset.

Loan commitment is a firm commitment to provide credit under pre-specified terms and conditions.

Loans payable are financial liabilities, other than short-term payables on normal credit terms.

86

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

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

Financial instruments at amortised cost are non-derivative financial assets or non-derivative financial liabilities that have fixed or determinable payments, excluding those instruments:

• Theentitydesignatesatfairvalueatinitialrecognition;or• Areheldfortrading.

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

Financial instruments at fair value comprise financial assets or financial liabilities that are:

• Derivatives;• Combinedinstrumentsdesignatedatfairvalue;• Instrumentsheldfortrading.Afinancialinstrumentisheldfortradingif:

- it is acquired or incurred principally for the purpose of selling or repurchasingitinthenear-term;or

- on initial recognition it is part of a portfolio of identified financial instruments managed together and for which there is evidence ofarecentactualpatternofshort-termprofit-taking;

- non-derivative financial assets or financial liabilities with fixed or determinable payments designated at fair value at initial recognition;and

- financial instruments not meeting the definition of financial instruments at amortised cost or financial instruments at cost.

ClassificationThe entity 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:

Class CategoryEmployees costs in advance Employees costs in advance were not amortisedPrepayments Prepayments were not amortisedDeposits Deposits were not amortisedOther receivables Receivables were not amortised


The entity 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:

Class CategoryTrade payables Trade payables were not discountedStaff control account staff Control accounts were not discountedAccrued expenses Accrued expenses were not amortisedLong-term finance lease Financial liability measured at amortised cost

Financial liabilities and financial assets are initially measured at fair value and subsequently at:

• Fairvalue;• Amortisedcost;and• Costdependingontheirnature.

The entity’s financial liabilities and financial assets required to be amortised (except for financial leases) were not amortised due to the following reasons:

ReceivablesThe major part of receivables are prepayments of which there would not be settled in cash and therefore do not meet the definition of financial asset.

Other receivablesOther receivables include a combination of deposits for rentals and municipal rates as well as staff advances. Staff advances will be settled within the initial credit period which is one month. The deposit amount is insignificant and not amortised.

LiabilitiesLeases - these are included at amortised costs as per the amortisation table.

Trade liabilities - these are expected to settled within the initial credit period in line with the government sector norm.

Leave - these costs are expected to be settled at fair value.

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

Initial measurement of financial assets and financial liabilitiesThe entity measures a financial asset and financial liability initially at its fair value plus transaction costs directly attributable to the acquisition or issue of the financial asset or financial liability.

The entity measures a financial asset and financial liability initially at its fair value (if subsequently measured at fair value).

88

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

• AsocialbenefitinaccordancewiththeFrameworkforthePreparationand Presentation of Financial Statements, where it is the issuer of the loan;or

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

Subsequent measurement of financial assets and financial liabilitiesThe entity measures all financial assets and financial liabilities after initial recognition using the following categories:

• Financialinstrumentsatfairvalue;• Financialinstrumentsatamortisedcost;and• Financialinstrumentsatcost.

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

Impairment and uncollectibility of financial assetsThe entity assess at the end of each reporting period whether there is any objective evidence financial asset or group of financial assets is impaired.

Financial assets measured at amortised cost:If there is objective evidence 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. The carrying amount of the asset is reduced directly or 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, the previously recognised impairment loss is reversed directly or by adjusting an allowance account. The reversal does 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 an impairment loss has been incurred on an investment in a residual interest 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.


Derecognition

Financial assetsThe entity derecognises financial assets using trade date accounting.

The entity derecognises a financial asset only when:

• Thecontractualrightstothecashflowsfromthefinancialassetexpire,aresettledorwaived;

• Theentitytransferstoanotherpartysubstantiallyalloftherisksandrewardsofownershipofthefinancialasset;or

• Theentity,despitehavingretainedsomesignificantrisksandrewardsof 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 can exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the entity:- derecognisestheasset;and- recognises separately any rights and obligations created or

retained in the transfer.

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

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 waived, forgiven or assumed by another entity 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.

1.4. LeasesA 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 entity assesses the classification of each element separately.

90

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 corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the effective interest rate implicit in the lease.

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 to produce a constant periodic rate of on the remaining balance of the liability.

Any contingent rents are expensed in the period in which they are incurred.

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.

1.5. Employee benefitsEmployee benefits are all forms of consideration given by an entity in exchange for service rendered by employees.

A qualifying insurance policy is an insurance policy issued by an insurer not a related party (as defined in the Standard of GRAP on Related Party Disclosures) of the reporting entity, if the proceeds of the policy can be used only to pay or fund employee benefits under a defined benefit plan and are not available to the reporting entity’s own creditors (even in liquidation) and cannot be paid to the reporting entity, unless either:

• Theproceeds representsurplusassetsnotneeded for thepolicy tomeetalltherelatedemployeebenefitobligations;or

• Theproceedsare returned to the reportingentity to reimburse it foremployee benefits already paid.

Termination benefits are employee benefits payable as a result of either:

• Anentity’sdecisiontoterminateanemployee’semploymentbeforethenormalretirementdate;or

• Anemployee’sdecisiontoacceptvoluntaryredundancyinexchangefor those benefits.

Other long-term employee benefits are employee benefits (other than post-employment benefits and termination benefits) not due to be settled within 12 months after the end of the period in which the employees render the related service.

1.6. Investment incomeInvestment income is recognised on a time-proportion basis using the effective interest method.

Investment income comprises of interest from deposits placed with a reputable financial institution.


1.7. Translation of foreign currencies

Foreign currency transactionsA foreign currency transaction is recorded, on initial recognition in rands, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.

At each reporting date:

• Foreigncurrencymonetaryitemsaretranslatedusingtheclosingrate;• Non-monetary items are measured in terms of historical cost in a

foreign currency are translated using the exchange rate at the date of thetransaction;and

• Non-monetaryitemsaremeasuredatfairvalueinaforeigncurrencyare translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from those at which they were translated on initial recognition during the period or in previous financial statements are recognised in surplus or deficit in the period in which they arise.

When a gain or loss on a non-monetary item is recognised directly in net assets, any exchange component of that gain or loss is recognised directly in net assets. When a gain or loss on a non-monetary item is recognised in surplus or deficit, any exchange component of that gain or loss is recognised in surplus or deficit.

Cash flows arising from transactions in a foreign currency are recorded in rands by applying to the foreign currency amount the exchange rate between the rand and the foreign currency at the date of the cash flow.

1.8. Fruitless and wasteful expenditureFruitless expenditure means expenditure made in vain and would have been avoided had reasonable care been exercised.

All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year the expenditure incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.

1.9. Irregular expenditure• Irregularexpenditureasdefinedinsection1ofthePFMAisexpenditure

other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including –

(a) ThisAct;or(b) The State Tender Board Act, 1968 (Act No. 86 of 1968), or any

regulationsmadeintermsoftheAct;or(c) Any provincial legislation providing for procurement procedures

in that provincial government.

92

NationalTreasurypracticenoteno.4of2008/2009issuedintermsofsections76(1) to 76(4) of the PFMA requires the following (effective from 1 April 2008):

• Irregular expenditure incurred and identified during the currentfinancialandcondonedbeforeyear-endand/orbeforefinalisationofthe financial statements must also be recorded appropriately in the irregular expenditure register. In such an instance, no further action is required with the exception of updating the note to the financial statements;

• Irregularexpenditureincurredandidentifiedduringthecurrentfinancialyear and for which condonement is being awaited at year-end must be recorded in the irregular expenditure register. No further action is required with the exception of updating the note to the financial statements;and

• Whereirregularexpenditurewasincurredinthepreviousfinancialyearand is only condoned in the following financial year, the register and the disclosure note to the financial statements must be updated with the amount condoned.

1.10. Conditional grants and receiptsRevenue received from conditional grants, donations and funding are recognised as revenue to the extent the entity has complied with any of the criteria, conditions or obligations embodied in the agreement. To the extent the criteria, conditions or obligations have not been met a liability is recognised.

The entity has the following conditional grants:

• TechnicalAssistanceFund(TAF);and• EasternEuropePromotion.

1.11. Budget informationThe entity is typically subject to budgetary limits in the form of appropriations or budget authorisations (or equivalent), given effect through authorising legislation, appropriation or similar.

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

The approved budget is prepared on an accrual basis and presented by economic classification linked to performance outcome objectives.

Theapprovedbudgetcoversthefiscalperiodfrom2013/04/01to2014/03/31.

The financial statements and the budget are on the same basis of accounting therefore a comparison with the budgeted amounts for the reporting period has been included in the statement of comparison of budget and actual amounts.


1.12. Related partiesThe entity operates in an economic sector currently dominated by entities directly or indirectly owned by the South African government.

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

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

Related parties are disclosed in terms of GRAP 20.

94

notes to the FInAnCIAl stAteMents As At 31 MArCh 2014

Figures in rand 2014/2013 2014 2013

2. Property, plant and equipment

2014 2013

Cost / Valuation

Accumulat-ed depreci-ation and

accumulat-ed impair-

ment

Carrying value

Cost / Valuation

Accumulat-ed depreci-ation and

accumulat-ed impair-

ment

Carrying value

Furniture andfixtures

760,036 (602,065) 157,971 726,977 (522,620) 204,357

Office equipment

905,233 (620,582) 284,651 788,033 (479,480) 308,553

ITequipment

1,435,071 (921,376) 513,695 1,051,500 (776,492) 275,008

Total 3,100,340 (2,144,023) 956,317 2,566,510 (1,778,592) 787,918

Reconciliation of property, plant and equipment - 2014

Opening balance

Additions Depreciation Total

Furniture and fixtures 204,357 37,259 (83,645) 157,971

Office equipment 308,553 126,368 (150,270) 284,651

IT equipment 275,008 486,052 (247,365) 513,695

787,918 649,679 (481,280) 956,317

The management of TIKZN assessed the useful life of assets for the period ended March 2014. Most of the assets in the organisation were inherited from the previous tenant in 2008. The assets were brought into books at marginal values. These assets are fully depreciated and their economic lives are not expected beyond one year and will be disposed of during thecourseof2014/2015financialyear.

Table A depicts classes and the total value of assets written off during the period. These assets were fully depreciated at the time they were disposed of by means of the staff bidding process and others are in the process of being donated (mainly computer equipment) as part of the organisation’s Corporate Social Responsibility initiative.

Table B depicts classes and total value of assets inherited from the previous tenant in 2008. Most of these assets were taken into books at low values and have since reached the end of their economic lives and fully depreciated.

Table C depicts the value of the pledged asset against the finance lease liabilities.

Table D depicts the estimated value of assets brought at zero values. The economic value of these assets is immaterial from the materiality set by the entity. These assets form part oftheexclusionlistforitemstobedisposedofin2014/2015.


Figures in rand 2014/2013 2014 2013

Table A - Value of fully depreciated assets disposed of

Furniture and fixtures 4,200 -

Office equipment 9,168 -

Computer equipment 102,481 -

115,849 -

Table B - Value of inherited and fully depreciated assets

Furniture and fixtures 402,824 -

Office equipment 73,781 -

476,605 -

Table C - Value of pledged assets

HP Color Laserjet MFP Multi Function 70,643 -

Hewlett Packard Colour Laserjet CM6049 41,410 -

Hewlett Packard Colour Laserjet CM6049 41,410 -

153,463 -

Table D - Estimated initial value of assets brought at zero value

Estimated original

cost

Estimated economic

value

Estimated original cost 124,004 -

Estimated economic value - 21,220

124,004 21,220

Reconciliation of property, plant and equipment - 2013

Opening balance

Additions Other changes,

movements

Depreciation Total

Furniture and fixtures - 10,978 320,718 (127,339) 204,357

Office equipment - 98,999 297,797 (88,243) 308,553

IT equipment - 49,704 281,470 (56,166) 275,008

- 159,681 899,985 (271,748) 787,918

2. Intangible assets

2014 2013

Cost / Valuation

Accumulat-ed amorti-sation and accumulat-ed impair-

ment

Carrying value

Cost / Valuation

Accumulat-ed amorti-sation and accumulat-ed impair-

ment

Carrying value

Computer software, other

2,004,408 (1,862,549) 141,859 2,004,408 (1,365,345) 639,063

96

Figures in rand 2014/2013 2014 2013

Reconciliation of intangible assets - 2014

Opening balance

Amortisation Total

Computer software, other 639,063 (497,204) 141,859

Reconciliation of intangible assets - 2013

Opening balance

Additions Other changes,

move-ments

Amortisation Total

Computer software, other

- 185,221 665,487 (211,645) 639,063

4. Receivables from exchange transactions

Employee costs in advance 59,693 5,596

Prepayments 574,914 430,542

Deposits 46,882 40,320

Other receivables 37,295 43,398

718,784 519,856

5. Cash and cash equivalents

Cash and cash equivalents consist of:

Standard Bank Account (Main bank) 5,141,783 12,312,607

Standard Bank Account (Main bank - Eastern Europe promotion)

2,750,000 -

Standard Bank Account (TAF) 3,720,202 1,147,627

11,611,985 13,460,234

Standard Bank Main Accounts

Opening Balances (Cash and Cash Equivalents) 12,312,607 -

Receipts for the year 75,354,691 -

Payments for the year including transfers (79,775,515) -

Previous year closing balance - 12,312,607

7,891,783 12,312,607

Standard Bank (Technical Assistance Fund)

Opening Balances (Cash and Cash Equivalents) 1,147,627 -

Receipts for the year 5,100,000 -

Payments for the year (2,527,425) -

Previous year closing balance - 1,147,627

3,720,202 1,147,627

Standard Bank Main Accounts consist of two accounts mainly used for payments of the preliminary transactions of the entity including payment of staff salaries. No bank balances were pledged as security at year-end.


Figures in rand 2014/2013 2014 2013

6. Finance lease obligation

Minimum lease payments due

- Within one year 112,055 85,870

- In second to fifth year inclusive 96,980 363,590

209,035 449,460

Less: future finance charges (89,386) (171,050)

Present value of minimum lease payments 119,649 278,410

Present value of minimum lease payments due

- Within one year 112,055 85,870

- In second to fifth year inclusive 7,594 192,540

119,649 278,410

Non-current liabilities 45,525 241,323

Current liabilities 170,091 58,036

215,616 299,359

It is entity policy to lease certain equipment under finance leases.

The average lease term was four years and the average effective borrowing rate was 10% -20% (2013:10%-15%).

Interest rates are linked to prime at the contract date. All leases escalate between 10% and 15%.

The entity’s obligations under finance leases are secured by the lessor’s charge over the leased assets.

7. Payables from exchange transactions

Trade payables 1,872,040 4,024,591

Staff control account 17,031 19,175

Accrued expense 4,694,264 3,442,675

6,583,335 7,486,441

8. Unspent Conditional Grant and Receipts

Technical Assistance Fund (TAF) 3,720,202 1,147,627

Eastern Europe Promotion 2,750,000 -

6,470,202 1,147,627

Technical Assistance Fund (TAF) is a fund originally managed through KZN Growth Fund and transferred to Trade & Investment KwaZulu-Natal (TIKZN) in 2009. Its purpose is to assist project promoters prepare and package their projects to the level of quality that will allow them to access funding from main financial institutions. The fund has proved beneficial as some of the projects funded have moved closer to operational stages and some are already operational. The fund was depleted in 2013, however, due to the benefits perceived. TIKZN applied to KZN Provincial Treasury to transfer R4,5 million from the main account to replenish this fund.

98

Figures in rand 2014/2013 2014 2013

Eastern Europe Promotion - The Department of Economic Development and Tourism (DEDT) though the MEC engaged Trade & Investment KwaZulu-Natal and Tourism KZN regarding the opportunity of marketing KwaZulu-Natal in Eastern Europe. A company known as Makhaya Arts and Culture was appointed to oversee this project as they had been involved in similar projects before. An agreement was signed with all parties involved. A total of R5,5 million was provided by DEDT of which R5 million was to be utilised in the project and R500 000 was to be shared equally between TIKZN and Tourism KZN to cover implementation costs.

Both funds are accounted for as conditional grants.

9. TAF and Eastern Europe Promotion Grants

Grants received in respect of Technical Assistance Fund and Eastern Europe Promotion projects are accounted for as conditional grants. The revenue was recognised to the extent of expenses incurred. These are indicated in the table below.

Technical Assistance Fund

Technical Assistance Fund (TAF) 2,551,187 1,176,324

Eastern Europe Promotion

Grant received from DEDT 5,500,000 -

Expenses incurred (2,500,000) -

Tourism KZN portion for implementation (250,000) -

2,750,000 -

10. Revenue

Other income 103,297 -

Government grants - conditional grant 2,551,187 1,176,324


Public contributions - main grant 72,333,617 27,573,915

75,133,818 28,796,309

The amount included in revenue arising from exchanges of goods or services are as follows:


Government grants (TAF) 2,551,187 1,176,324


2,800,201 1,222,394

The amount included in revenue arising from non-exchange transactions is as follows:

Transfer revenue

Public contributions - main grant 72,333,617 27,573,915


Figures in rand 2014/2013 2014 2013

11. General expenses

Advertising 2,777,690 1,254,120

Auditor’s remuneration 582,586 335,094

Bank charges 33,101 18,043

Cleaning 248,713 124,949

Computer expenses 242,073 108,141

Consulting and professional fees 3,525,778 3,052,997

Consumables 116,484 112,395

Entertainment 197,741 138,164

Insurance 253,869 105,570

Conferences and seminars 914,589 224,191

IT expenses 470,365 376,289

Lease rentals on operating lease 4,432,746 2,231,276

Marketing 2,901,698 648,350

Promotions and sponsorships 1,665,212 823,085

BEE Financial Assistance 543,144 64,811

Postage and courier 251,423 174,666

Printing and stationery 279,604 72,692

Promotions 1,438,272 1,444,295

Security for office premises 287,310 158,446

Staff welfare 236,726 53,417

Subscriptions and membership fees 1,311,223 798,012

Telephone and fax 874,109 569,032

Training 748,750 366,053

Travel - local 2,373,692 1,597,774

Travel - overseas 6,243,668 3,687,066

Electricity 251,528 113,369

Inward missions 621,389 663,255

east3ROUTE 2,496,171 -

Eastern Europe promotion - expenses 2,750,000 -

Technical Assistance Fund (TAF) expenses 2,551,187 1,176,324

41,620,841 20,491,876

100

Figures in rand 2014/2013 2014 2013

12. Employee related costs

Basic 18,540,817 8,960,670

Bonus 1,551,260 -

Medical aid - company contributions 869,825 393,728

UIF 166,858 84,853

WCA 140,000 144,557

SDL 276,116 -

Leave pay provision charge 129,622 (346,837)

Post-employment benefits - Pension - Defined contri-bution plan

4,219,572 1,983,559

PAYE 7,229,297 3,271,961

Recruitment cost 634,676 72,453

33,758,092 14,564,993

Average number of employees 49 49

For the financial year ending 31 March 2014 Trade & Investment KwaZulu-Natal made contributions for employees as follows:

Employees contributions

Pension contributions 3,775,048 1,983,559

Group life and disability 236,028 -

Other 208,496 -

4,219,572 1,983,559

Trade & Investment KwaZulu-Natal made pension contributions for its executive directors for the financial year ending 31 March 2014 as follows:

Executive directors’ contributions

Contributions Pension contribution

Group life and

disability

Other Total

ZA Gwala 271,488 17,001 15,009 303,498

NSTMatjie(appointed01/10/2013) 83,727 5,184 3,632 92,543

L Nyamande 152,905 9,516 7,456 169,877

IM Manyakanyaka (appointed 01/10/2013)

83,727 5,184 3,632 92,543

K Ntloko-Gasa (appointed 01/10/2013)

54,190 3,355 2,350 59,895

LGBouah(appointed01/10/2013) 83,727 5,184 3,632 92,543

LBU Sibanyoni (appointed 01/01/2014)

29,072 1,800 1,261 32,133

758,836 47,224 36,972 843,032

13. Investment revenue

Interest revenue

Bank 145,717 46,070


Figures in rand 2014/2013 2014 2013

14. Finance costs

Finance lease costs 137,877 40,855

15. Auditors’ Fees

Fees 582,586 335,094

16. Cash generated from (used in) operations

Deficit (1,813,852) (6,982,966)

Adjustments for:

Depreciation and amortisation 978,485 483,394

Loss on sale of assets and liabilities (22,060) -

Finance costs - 40,854

Changes in working capital:

Receivables from exchange transactions (198,928) 267,518

Payables from exchange transactions (903,106) 4,777,153

Unspent conditional grants and receipts 5,322,575 -

Lease liability current portion 112,055 -

3,475,169 (1,414,047)

17. Operating lease

Operating leases - as lessee (expense)

Minimum lease payments due

- Within one year 4,447,221 4,198,330

- In second to fifth year inclusive 9,619,943 14,976,361

14,067,164 19,174,691

Operating lease payments represent rentals payable by the entity for office space. Leases are negotiated for an average term of five years. No contingent rent is payable.

18. Commitments - Trade & Investment KwaZulu-Natal main activities

Main Activities 2014 2013

Approved and contracted 16,970,894 17,105,795

Approved and not contracted 244,583 427,479

17,215,477 17,533,274

The entity also has commitments for operating lease agreements for both its KwaZulu-Natal and Gauteng administration offices.

Operating lease commitments

Minimum lease payments due - -

- Within one year 4,447,221 4,198,330

- In second to fifth year inclusive 9,619,943 14,976,361

14,067,164 19,174,691

102

Figures in rand 2014/2013 2014 2013

19. Commitments - Technical Assistance Funds

16 projects were approved for funding worth R5,209,000 of these R2,551,187 has been disbursed and the balance of R2,717,813 committed.

20. Related parties

2014 Income Expenditure Total

1. DEDT 75,083,617 (74,418,543) 665,074

2. Durban Chamber of Commerce and Industry

- (186,014) (186,014)

3. KwaZulu-Natal Tourism - (871,773) (871,773)

4. SEDA eThekwini Business Centre - (1,117,000) (1,117,000)

Subtotal 75,083,617 (76,593,330) (1,509,713)

2013 Income Expenditure Total

1. DEDT 27,573,915 (33,441,046) (5,867,131)

3. Durban Chamber of Commerce and Industry

- (75,120) (75,120)

4. KwaZulu-Natal Tourism Authority - (564,300) (564,300)

27,573,915 (34,080,466) (6,506,551)

- Department of Economy Development and Tourism (DEDT)

DEDT is the sole shareholder of Trade & Investment KwaZulu-Natal (TIKZN). The entity receives two funds in the form of grants conditional on the terms stipulated in the Memorandum of Understanding (MOU) signed with DEDT. The grants are received for the purposes of supporting the delivery of services as set out in the MOU. Conditions stipulated in the main grant were met hence the grant was recognised as revenue. TAF and Eastern Europe Promotion funds were recognised as revenue to the extent the conditions were met.

- Durban Chamber of Commerce and Industry

The Chief Financial Officer (CFO) and the executive manager of Corporate Services for Trade & Investment KwaZulu-Natal are both members of the Durban Chamber of Commerce and Industry. Expenditure is in respect of membership subscription and sponsorship for events hosted by the Durban Chamber of Commerce and Industry such as sponsorship towards Exporter of the Year. Other expenditures relate to workshops and conferences facilitated by the Durban Chamber of Commerce and Industry.

- KwaZulu-Natal Tourism Authority (Tourism KZN)

Tourism KZN is the sister entity with Trade & Investment KwaZulu-Natal. Both entities are funded by DEDT and belong to one cluster. The entities would normally form partnerships through MOUs in certain strategic initiatives. The expenditure is in respect of expenses incurred for HICA 2013/2014, a partnership agreement between DEDT, Tourism KZNand TIKZN to organise the annual Hotel Investment Conference Africa in KwaZulu-Natal. ExpenditurealsorelatestothesharedcostsoftheannualVodacomJulyHandicapandIndaba Tourism events.


Figures in rand 2014/2013 2014 2013

- SEDA eThekwini Business Centre

SEDA eThekwini Business Centre is strategic partner with TIKZN through an MOU and joint effort to develop and promote export markets and create a platform for emerging exporters. The executive manager for Export Development and Promotion of TIKZN takes part in strategic meetings of SEDA aimed at promoting export. The expenditure is in connection with annual contributions TIKZN make to SEDA for creating a platform for emerging exporters.

- Key management personnel

Transactions with key management personnel are disclosed in note 21 to the financial statements.

21. Members’ emoluments

Non-Executive

2014 Emoluments Other benefits*

Total

Ms LCZ Cele (Acting Chairperson) 430,260 51,906 482,166

Mr MA Tarr 119,927 1,190 121,117

Mr TO Mlaba (resigned) 113,406 43,103 156,509

DrJJVanZyl 104,322 8,116 112,438

Mr CS Gina 120,705 18,512 139,217

Cllr DCP Mazibuko 58,337 1,128 59,465

Dr VF Mahlati 105,965 30,559 136,524

Dr NS Msomi 142,257 - 142,257

Prof W Viviers 116,089 12,004 128,093

Dr MAI Velia 82,431 - 82,431

1,393,699 166,518 1,560,217

2013 Emoluments Other benefits*

Total

Mr TO Mlaba 221,044 213,373 434,417

DrEJDorward-King(resigned) 55,261 1,295 56,556

Mr MA Tarr 61,740 - 61,740

Ms LCZ Cele 60,593 - 60,593

DrJJVanZyl 22,451 8,540 30,991

Mr CS Gina 57,905 30,334 88,239

Cllr DCP Mazibuko 44,902 13,726 58,628

Dr VF Mahlati 50,824 19,011 69,835

Dr NS Msomi 61,740 - 61,740

Prof W Viviers 22,451 19,166 41,617

Dr MAI Velia 50,824 6,530 57,354

709,735 311,975 1,021,710

104

Figures in rand 2014/2013 2014 2013

Executives remuneration is on a total cost to company basis such as travel allowance and medical contributions. Defined contribution plan for the executive members amounted to:

Executive Managers - 2014

Salary Medical Aid

Allowance and Travel

Performance Total

Travel Bonus

ZA Gwala - CEO 1,454,985 70,101 96,000 239,070 1,860,156

L Nyamande - CFO 896,755 - 12,000 103,092 1,011,847

NST Matjie (appoint-ed01/10/2013)

520,208 - 21,000 - 541,208

LBU Sibanyoni (ap-pointed01/01/2014)

236,547 - 31,500 - 268,047

K Ntloko-Gasa (ap-pointed01/10/2013)

532,486 - - - 532,486

LG Bouah (appointed 01/10/2013)

520,679 19,257 - - 539,936

IM Manyakanya-ka (appointed 01/10/2013)

512,189 28,855 - - 541,044

4,673,849 118,213 160,500 342,162 5,294,724

Executive Managers - 2013

Salary Pension and

Medical Aid

Allowance and Travel

Performance Bonus

Other Total

CEO - ZA Gwala

675,005 125,763 48,000 - - 848,768

CFO - L Nyamande

380,637 45,917 6,000 - - 432,554

1,055,642 171,680 54,000 - - 1,281,322

* The remuneration for executive managers disclosed is for six months ie. from 1 October to 31 March 2014. This is the first period the entity operated as a Public Entity.

22. Fruitless and wasteful expenditure

Fruitless and wasteful expenditure for the year 62,686 -

Less : Expenditure condoned by board (62,686) -

- -

The main item for fruitless and wasteful expenditure of R52,859 is attributed to the main penalty from SARS for late payment of May 2013 PAYE account. The other payment relate to cancellation of catering services as meetings were cancelled at short notice.


Figures in rand 2014/2013 2014 2013

23. Deviation from supply chain management regulations

Paragraph 12(1)(d)(i) of Government gazette No. 27636 issued on 30 May 2005 states a supply chain management policy must provide for the procurement of goods and services by way of a competitive bidding process.

Paragraph 36 of the same gazette states the accounting officer may dispense with the official procurement process in certain circumstances, provided he records the reasons for any deviations and reports them to the next meeting of the board of members and includes a note to the financial statements.

Deviations amounting to R5,332,541 were documented and reported to the board of members who considered them and subsequently approved them in terms of the normal supply chain management regulations. The deviations relate to the acquisition of services acquired from sole suppliers.

Category of Deviations

Previous year Deviations 179,604 4,896,571

Sole Supplier Approvals 4,104,865 -

Training and Conference 626,141 -

Sponsorships 421,931 -

5,332,541 4,896,571

24. Budget differences

Material differences between budget and actual amounts

There are differences between budget and actual expenditure in some of the expenditure categories. These are as mainly due to changes in prices, additional expenditure on conversion-related costs as well as exchange rate differences. The changes were noted mainly in the following items: international travel, consultancy fees (legal and financial) and increases in subscriptions.

Differences between budget and actual amounts basis of preparation and presentation

The budget and the accounting bases differ. The financial statements for the whole of government are prepared on the accrual basis using a classification based on the nature of expenses in the statement of financial performance. Details of the differences between actuals and approved budget are indicated in the Statement of Comparisons of Budget and Actual Amounts. Detailed explanations have been included under note 35.

Changes from the approved budget to the final budget

The changes between the approved and final budget are a consequence of reallocations within the approved budget parameters.

The changes between the approved and final budget are a consequence of changes in the overall budget parameters.

2014 Original Budget

Final Budget (Adjusted Budget)

Actual Expenditure

Trade & Investment KwaZulu-Natal - Public Entity

67,240,000 75,083,617 74,418,543

106

Figures in rand 2014/2013 2014 2013

2013 Original Budget

Final Budget (Adjusted Budget)

Actual Expenditure

Trade & Investment KwaZulu-Natal - Section 21

31,018,795 31,257,408 31,234,441

Trade & Investment KwaZulu-Natal - Public Entity

33,594,205 34,795,592 34,604,714

64,613,000 66,053,000 65,839,155

25. Financial statements preparation

Trade & Investment KwaZulu-Natal commenced operations as a Schedule 3C Public Entity on the 1st of October 2012. As a public entity listed under Schedule 3C of the PFMA, TIKZN is required to report on the basis of GRAP. The Annual Financial Statements for the period ended 31 March 2014 were therefore prepared on these basis.

26. Contingent liability

The Public Entity has guaranteed a rental deposit to the maximum value of R439,677 in favour of Crescendo Management Services (Pty) Ltd. The entity has not defaulted on its rental payment as at the year-end.

27. Reporting period

Thecurrentreportingperiodfor2013/2014is12monthswhilethepreviousyearreportingperiodfor2012/2013wassixmonths.

28. Correction of prior-year error

Cash Flow Statement

Cash and cash equivalent at the beginning of the year 13,460,225 12,312,598

Correction of prior-year period error - 1,147,627

13,460,225 13,460,225

The adjustment arose as cash flows relating to the TAF account were not included in the main cash flows. A recommendation was made to the effect these cash flows be reported together as they were managed by the same entity.

The correction does not carry tax implications.

29. Other income


Other income is in respect of the refund in the form of a discount from the International Convention Centre (ICC) for Export Week venue hire. Part of other income was received from NRB Bank liquidated years ago. The entity used to hold short-term investment funds with the bank. The payment to the entity was made after the NRB Bank estate was approved by the liquidator to pay the contribution to the bank’s previous creditors. There are no funds expected in the future.

30. Administrative expenditure

Administration and management fees - related party 30,698 6,238


Figures in rand 2014/2013 2014 2013

31. Going concern

We draw attention to the fact that at 31 March 2014, the entity had accumulated deficits of R159,792 and total liabilities exceed its assets by R159,792.

The financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes funds will be available to finance future operations and the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

32. Events after the reporting date

Events after reporting date are classified into two categories, adjusting and non-adjusting.

AdjustingThese are events that happened before the reporting date that may have an impact on the AFS.

Non-adjustingThese will be events that have taken place after the reporting date, but before the AFS are issued.

At this stage the management has assessed the events that have taken since the reporting date and nothing has come up that will require the adjustment of the AFS. In making this assessment, management has looked at the following:

• Anylegalclaimslodged;• Anypublicitythatmayhavetakenplacesincethereportingdatethatmayhavean

impactontheorganisation;• Minutesofthelastmanagementmeetingstoseewhetheranythingwasdiscussed

thatmayrequiredisclosureintermsofthisstandard;and• Whetherthereareanysignificantassetsboughtordisposedofafterthereporting

date.

Disclose for each material category of non-adjusting events after the reporting date:

• Natureoftheevent;and• Estimationofitsfinancialeffectorastatementthatsuchanestimationcannotbe

made.

The only change that happened after the reporting date is the resignation of the company secretary, Ms P Tabile.

108

Figures in rand 2014/2013 2014 2013

33. Financial instruments

Current period - Total financial assets one year or less

1 to 5 years

Total

TAF cash and cash equivalent 3,720,202 - 3,720,202

TIKZN cash and cash equivalents 7,891,783 - 7,891,783

Receivables 718,784 - 718,784

12,330,769 - 12,330,769

Current period - Total financial liabilities one year or less

1 to 5 years

Total

Accruals and payables 6,583,335 - 6,583,335

Finance lease liability 170,091 45,525 215,616

6,753,426 45,525 6,798,951

Prior year - Total financial asset one year or less

1 to 5 years

Total

TAF cash and cash equivalents 1,147,627 - 1,147,627

TIKZN cash and cash equivalents 12,312,606 - 12,312,606

Receivables 519,856 - 519,856

13,980,089 - 13,980,089

Prior year - Total financial liabilities one year or less

1 to 5 years

Total

Accruals and payables 7,486,441 - 7,486,441

Finance lease liability 58,036 241,323 299,359

7,544,477 241,323 7,785,800

Credit riskThe entity does not have a huge debtors’ book. Its exposure to credit risk is minimal. The items indicated under trade and other receivables refer to rental prepayments in the operating leases for the Durban and Gauteng offices and advance payments to employees for travelling costs. The cash and cash equivalents are deposits placed with high credit financial institutions. The deposits comprise of grants received from the Department of Economic Development and Tourism and these are deposited as draw-downs every quarter. The entity limits its exposure by dealing with well-established financial institutions. The entity does not have significant exposure to an individual debtor or counter party.

Liquidity riskThe entity’s exposure to liquidity risk is minimal as it is 100% funded by the Department of Economic Development and Tourism. The annual budgets are approved at the beginning of each fiscal year and draw-downs are requested at the beginning of each quarter. Cash flows are monitored monthly against budgets and adjustments are made where necessary. Risk management assessments are conducted bi-annually to assist with identifying any possible cash flows, liquidity or other risks.

Interest rate riskAlthough the entity’s funds are subject to interest rate risk, these funds are placed with reputable financial institutions. The entity does not hedge any of its funds, but monitors the fluctuations in interest rates and obtains advice from bank officials on a regular basis.


Figures in rand 2014/2013 2014 2013

34. Reconciliation of amounts in terms of GRAP 24

Operating Activities

Financing Activities

Investing Activities

Total

Actual amounts on comparable basis in the budget and actual comparative statement

76,981,224 4,695,798 627,619 82,304,641

Actual amount in the cash flow statement

76,981,224 4,695,798 627,619 82,304,641

35. Actual operating expenditure versus budgeted operating expenditure

Refer to Appendix A for the comparison of actual operating expenditure versus budgeted expenditure.

(1) Personnel - Over-expenditure in employees’ costs is mainly attributable to newly appointed executive personnel and temporary staff employees as additional capacity in other sections. The over-expenditure was funded through savings in other budgeted items.

(2) Administration and operational costs - The main contributing factor to the savings realised in the board expenditure was due to the fact that board assessments and evaluations scheduled were deferred to the next financial year.

(3) Finance costs - Finance costs are relating to interest charged on finance lease liability against the office equipment. Part of the finance costs relate to interest and penalty levied by SARS on late payment of May 2013 PAYE account.

(4) Travel and accommodation - Savings in travel and accommodation is due to the cost-cutting measures the entity implemented in line with the Treasury directive. These included reduced local trips, car hire and booking less expensive classes of flights.

(5) Repairs and maintenance - The significant part of expenditure results from the required office alterations to accommodate additional staff members and pressure cleaning of the basement.

(6) Professional fees - The main reason for the over-expenditure in the professional fees was caused by the fashion and furniture sector studies conducted, but not budgeted for the current financial year.

(7) International marketing - The over-expenditure mainly resulted from the participation of the entity in activities and events at the invitation of the Office of the MEC and Premier. It was essential for the entity to participate as these activities were aligned to its strategic initiatives. These also presented the entity with the opportunity of marketing KwaZulu-Natal as a premier destination for investments. Examples include Russia missions, German, Zimbabwe at subsidised costs.

110

Figures in rand 2014/2013 2014 2013

(8) Inward mission - The inward mission costs were not fully used as other events for hosting of foreign investors were done in-house hence savings were recorded.

(9) Export promotion - The increase in costs for export promotion was attributable to the demand in international and local export exhibitions. Additional costs incurred by EDPU were a result of the increased prices of exhibition stands and designs.

(10) Marketing and communication - The over-expenditure in the marketing and communications budget is due the costs relating to entity’s participation in the Hotel Investment Conference in Africa (HICA) as well as increased costs in hosting theDurbanJulyandtheEastCoastRadioGibbsBreakfast.Allthreeactivitiesarehuge marketing platforms for the province.


tABle oF ACronyMs

AFS Annual Financial Statements

AG Auditor-General

AIDS Acquired Immune Deficiency Syndrome

APP Annual Performance Plan

ASB Accounting Standards Board

BAC Bid Adjudication Committee

BBBEE Broad-Based Black Economic Empowerment

BBQ Black Business Quarterly

BEC Bid Evaluation Committee

BEE Black Economic Empowerment

BPO Business Process Outsourcing

BREU Business Retention and Expansion Unit

BRIC Brazil, Russia, India and China

BRICS Brazil, Russia, India, China and South Africa

BSC Bid Specification Committee

CEO Chief Executive Officer

CFO Chief Financial Officer

CPT Cape Town

DDI Domestic Direct Investment

DEDT Department of Economic Development and Tourism

DIPA Durban Investment Promotion Agency

DIRCO Department of International Relations and Co-operation

DRC Democratic Republic of Congo

DTI Department of Trade and Industry

DTP Dube Trade Port

EAP Employee Assistance Programme

ECR East Coast Radio

EDPU Export Promotion and Development Unit

EIA Environmental Impact Assessment

EMIA Export Marketing and Investment Assistance

ESID Effective States and Inclusive Development

EU European Union

112

FACIM Feira Agro-Pecuaria, Comercial e Industrial de Mocambique

FDE Finance Director Europe

FDI Foreign Direct Investment

FIB Feira Internaçional de Benguela

FILDA Feira Internaçional de Luanda

FMPPI Framework for Managing Programme Performance Information

GAAP Generally Accepted Accounting Practice

GDP Gross Domestic Product

GRAP Generally Recognised Accounting Practice

HICA Hotel Investment Conference Africa

HIV Human Immunodeficiency Virus

HR Human Resources

HRBU Human Resources Business Unit

ICT Information Communications Technology

IDZ Industrial Development Zone

IEH Industrial Economic Hub

IESS India Engineering Sourcing Show

IGRAP Interpretations of the Standards of Generally Recognised Accounting

Practice

IPA Investment Promotion Agency

IPAP2 Industrial Action Policy Plan 2

IT Information Technology

JETRO JapanExternalTradeOrganisation

JHB Johannesburg

JSE JohannesburgStockExchange

KM Knowledge Management

KSIA King Shaka International Airport

KZN KwaZulu-Natal

KZNTI KwaZulu-Natal Tooling Initiative

LAC Latin America and the Caribbean

M&A Mergers and Acquisitions

MCU Marketing and Communications Unit

MEC Member of the Executive Committee

MOU Memorandum of Understanding

MSc Masters in Science

NAMEC National Association of Manufacturers in Electronic Components

NDP National Development Plan

NGP National Growth Plan


OPIC Overseas Private Investment Corporation

OSM Outward Selling Mission

PAA Public Audit Act

PFMA Public Finance Management Act

PGDP Provincial Growth and Development Plan

PGDS Provincial Growth and Development Strategy

PhD Doctor of Philosophy

(PTY) LTD Proprietary Limited

PUM Programma Uitzending Managers

RAKFTZ Ras al Khaimah Free Trade Zone

RBIDZ Richards Bay Industrial Development Zone

ROI Return on Investment

SA South Africa

SADC Southern African Development Community

SAITEX South African Trade Exhibition

SANEDI South African National Energy Development Institute

SAOGA South African Oil and Gas Association

SARS South African Revenue Service

SCM Supply Chain Management

SETA Sector Education and Training Authority

SEZ Special Economic Zone

SITF Swaziland Trade Fair

SWOT Strengths, Weakness, Opportunities, Threats

TAF Technical Assistance Fund

TETA Transport Education and Training Authority

TIKZN Trade & Investment KwaZulu-Natal

TKZN Tourism KwaZulu-Natal

TNCs Trans National Companies

TOR Terms of Reference

UAE United Arab Emirates

UK United Kingdom

UNCTAD United Nations Conference for Trade and Development

USA United States of America

WGC World Golfers Championship

WTO World Trade Organisation

ZITF Zimbabwe International Trade Fair

114

notes


notes

116

notes

Trade & Investment KwaZulu-Natal Annual Report 2013/14

Trade & Investment House, 1 Arundel Close

Kingsmead Office Park

Durban, 4001, South Africa

PO Box 4245, Durban, 4000

+27 (0) 31 368 9600

+27 (0) 31 368 5888

[email protected]

www.tikzn.co.za

Durban Office

Gauteng Office

99 George Storrar Avenue

Groenkloof, Pretoria

+27 (0) 12 346 4386/6763

+27 (0) 86 501 0848/1788

[email protected]

www.tikzn.co.za

tikzn annual report 2014

Documents

investment promotion

investment facilitation

investment environment

kwazulunatal community

premier investment destination

kwazulunatal kzn

economic development

trade promotion