Post on 21-Jun-2018
Investment Promotion: Coega Industrial Development Zone
The Business Development Unit was established in June 2007 as a result
of a merger between the former Enterprise Development business unit
and Metals units. In March 2008, it also incorporated the Nelson Mandela
Bay Logistics Park (NMBLP). The unit is responsible for all investor
attraction to the Industrial Development Zone (IDZ) and NMBLP.
A positive sentiment and an increasing awareness about the investment
location solutions offered by the Coega project have steadily been
generated through the commitment of large investors such as Rio
Tinto Alcan - Canada (deferred for four years) and Straights Chemicals
- Singapore. A further 11 investors have signed lease agreements to
locate to the Coega Industrial Development Zone (IDZ), adding further
momentum to investment promotion.
An increasing global recognition of South Africa and the country’s
position in the African context has resulted in positive interest
being expressed by stakeholders globally. The Coega Development
Corporation (CDC) has received increased attention from potential
investors in Europe, the Americas and in particular from Asian nations
such as India and China.
In the 2007/8 Financial Year, the CDC therefore increased the extent
of focus placed on these key emerging markets. In addition to China
and the Indian market, Brazil has been identified as providing niche
opportunities in particular sectors. Furthermore, the operational date of
the new deepwater port of Ngqura has drawn substantial interest from
stakeholders, both in South Africa and abroad. Several site reservation
agreements have been signed with prospective investors, while one
tenant has already been secured for the speculative warehouse in zone
2 of the IDZ.
Business Development Unit
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K h w e z i T i y a
R u s t u m M o h a m e d( r e s i g n e d M a r c h 2 0 0 8 )
“Several site reservation agreements have been signed with prospective investors...”
Executive Manager: Business Development
Executive Manager: Logistics Park
C O E G A | 2 0 0 8 | A N N U A L R E P O R T
PetroSA Site Visit November 2007
Deputy President Pumzile Mlambo-
Ngcuka visit November 2007
Rainbow Nation Renewable Fuels at
CDC March 2008
During a review of the CDC’s investment strategy,
which was instituted for the first time in the 2007/8
Financial Year, it was determined that 70% of the signed
investors originate from South Africa or have South
African partners. Amongst them is a Black Economic
Empowerment (BEE) compliant manufacturer of
vehicle interiors and a supplier to major Original
Equipment Manufacturers (OEM). In view of this,
an increased amount of focus has been placed on
attracting expansions and investment projects from
South African based entities. At the same time, the
developed markets, as South Africa’s major trading
partners, have continued to be a focus area in respect
of attracting investments.
National road shows were subsequently embarked upon
to reach potential South African investors seeking to
expand to locations such as the Coega IDZ, which offers
better logistics efficiencies and exporting advantages.
The result of these road shows will be seen in the
course of the year and are dependant to some extent
on how fast the following challenges will be addressed:
The perception that services and »buildings in the IDZ ought to be priced
more competitively than elsewhere;
The reliability issues of energy and »inconsistencies in the messages
conveyed to the public by the various
stakeholders; and
The uncertainty created by the delay »in announcing government incentives,
such as the Motor Industry Development
Programme (MIDP). A number of
potential investors have already shelved
their decisions to expand into the IDZ
due to this delay.
In mid-2007 the CDC and the Municipality entered into
negotiations with regards to the handing over of the
management of the Nelson Mandela Bay Logistics Park
(NMBLP) to the CDC. At the end of the 2007/8 Financial
Year, the CDC signed a 50-year lease agreement for the
management of this park, thus confirming the strategic
synergies that exist between the Municipality, the
auto industry in the region and the CDC. This strategic
alignment also makes headway into sustaining the
continuous drive towards long-term competitiveness
of Nelson Mandela Bay (NMB) in the automotive
industry, both nationally and internationally.
The park was developed by the Nelson Mandela Bay
Municipality (NMBM) as a specialised manufacturing
location for the automotive sector in the region.
The park comprises an area of 216.525ha (i.e.
Precinct A comprises 56.1045ha and Precinct B
comprises 160.4200ha) and was developed with the
support of the automotive industry. As a result, a
significant amount of focus is placed on meeting the
requirements of Volkswagen South Africa (Pty) Ltd,
Ford Engines, General Motors South Africa and other
NMB assemblers, specifically with regards to housing
just-in-time and just-in-sequence vehicle component
manufacturers and suppliers.
To date, two component suppliers, namely Rehau and
Faurecia, have committed over R300 million towards
the infrastructure of the Park. Further investments
from two component suppliers are expected during
the 2008/9 Financial Year.
A significant amount of the CDC’s successes can be
attributed to the manner in which it continues to
respond to investor requirements, the partnership-
based approach to developing business solutions and
the ability to execute complex enabling projects that
require the participation of multiple stakeholders.
These investment promotion initiatives have also
been largely enabled by the strengthening of the
CDC’s research capacity. In future, the Research Unit
will continue to play a primary role in ensuring that
potential investors are strategically identified and
pursued in an efficient manner.
In acknowledging the CDC’s efforts, the Chief
Executive Officer of Volkswagen South Africa, David
Powels states that, “Volkswagen may be in a position
to attract fixed investments from international
automotive component manufacturers through its
integrated global network, but national, provincial
and metropolitan governments have to do what
they can to make these investments attractive
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C O E G A | 2 0 0 8 | A N N U A L R E P O R T
and competitive compared with other global investment destinations. The Coega IDZ has been
of significant benefit in this regard. South Africa needs new suppliers with new technologies”.
Numerous challenges were faced throughout the 2007/8 Financial Year. Notably, on the investment promotion
front. The CDC was able to attract 83% of its anticipated target of signed investors in the IDZ.
In the 2008/9 Financial Year, a significant amount of focus will be placed on integrating the critical challenges and
opportunities presented by the energy crisis.
In spite of the abovementioned challenges faced, the CDC, in the 2007/8 Financial Year, has yielded the following
investment promotion successes:
Five signed projects are at implementation stage with a total investment value of R7.5 »billion. These projects fall within the Logistics, Chemicals, Renewable Energy, Metals and
Business Process Outsourcing sectors. These emanate from diverse countries, including
Singapore, Australia, India and South Africa.
A further five projects are at negotiation stage with investment values ranging from R500 »million to R20 billion. These projects originate from different countries, falling within the
targeted regions of the CDC.
Ultimately the successes achieved in the 2007/8 Financial Year have been instrumental in building momentum
and paving the way for further investment attraction as well as socio-economic development in the Eastern Cape
and South Africa at large.
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Introduction
The Infrastructure Development business unit is responsible for the
construction of the landside infrastructure at the Coega Industrial
Development Zone (IDZ), while the deepwater port of Ngqura is
being completed by Transnet National Ports Authority. The business
unit has over the past two financial years metamorphosed into a unit
not only responsible for the planning and delivery of infrastructure,
but one that has strengthened its reach into the industry through its
focused development intent over construction businesses. The CDC’s
infrastructure development unit manages the rollout of services through
the programmes as elucidated below:
Programme 1: Enabling/Municipal infrastructure (zone infills); »Programme 2: Commercial/Investor-driven infrastructure »(warehouse facilities & buildings);
Programme 3: General/Zone development; »Programme 4: Professional services; and »Programme 5: Five Year Development projects. »
The 2007/8 Financial Year saw substantial effort being put behind
increasing the operational readiness of the area of the IDZ which lies
east beyond the Coega River. As challenging a year as 2007 was, the
unit managed to fully commit the allocated amount of R150 million
into infrastructure purely developed to service signed investors. Within
the limitations of the existing allocation requisite focus on meeting
investor requirements and performed exceptionally in massifying the
number of sustainable construction jobs through the roll-out of its
infrastructure programme. On the building and facilities front, 2007
Infrastructure Development Unit
B r i d g e t t e G a s a
“...the CDC, by providing the necessary support, were able to assist the learners to achieve higher performance levels than anticipated....”
Executive Manager: Infrastructure Development Unit
C O E G A | 2 0 0 8 | A N N U A L R E P O R T
saw the commencement and completion of the manufacturing facilities for Digistix in zone 1, UTI Sun Couriers
in zone 2 and Cerebos in zone 7. Other achievements included successfully migrating the CDC from its old
headquarters into a brand new CDC Head Office block locatd in the business district of zone 1 in the Coega IDZ
whilst simultaneously extending the CDC Recruitment and Induction Centre and Retro-fitting the Media Centre
to serve as a Call Centre for Absa. On the municipal infrastructure progamme, the business unit completed an
Attenuation pond in zone 3, the Colchester bulk waterline which provides water into the East of the Coega River
area, phases 2 and 3 of municipal infrastructure in the Automotive zone (zone 2), phase 3 bulk infrastructure in
zones 3 and 5 as well as work on the National Road N2 and access roads to zones 6, 7 and 10, to name but a few
projects.
The completion of Expanded Public Works Programme Projects
The 2007/8 Financial Year saw the successful completion of the Expanded Public Works Programme (EPWP)
projects, which were initiated three years ago. Each of the 10 contractors enrolled in the programme completed
their respective R6 million projects. As a result, they stand to graduate in the 2008/9 Financial Year and receive
acknowledgement for their competence through being awarded a Construction Industry Development Board
grading of 4.
The CDC exceeded expectations in its approach to the EPWP projects. Due to the fact that contract values and
the nature of projects were far beyond national recommendations, the CDC, by providing the necessary support,
were able to assist the learners to achieve higher performance levels than anticipated.
The CDC was the first corporation to implement the EPWP in the Eastern Cape and continues to receive awards
of recognition from the Provincial and National Departments of Public Works for effective implementation of the
EPWP principles. The corporation would like to acknowledge MEC Christian Martin and his team for the sustained
support of the projects over the past three years.
The CDC expresses its deepest appreciation for the high level of commitment and tenacity demonstrated by the
learner contractors whilst implementing these projects.
The success of Small, Medium and Macro Enterprise Development
The CDC maintained its commitment to the economic transformation agenda of the government. Over 40% of the
CDC’s spend on infrastructure for the 2007/8 Financial Year went towards Small, Medium and Macro Enterprise
(SMME) development. In addition, the number of SMME’s supported by the CDC increased significantly from 20
to 79 during the 2007/8 Financial Year. The corporation approved an SMME development strategy which, among
other things, culminated in a dedicated development plan for 36 months.
The CDC also broadened the scope of focus of the construction inclined SMME Development Strategy, to include
mentoring and on-site support services. The non-construction related SMME Development Strategy takes into
consideration plant hire and material suppliers amongst other things. A staggering R15 million in contracts were
received by SMME’s in the category of material supplying businesses.
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Meeting socio-economic objectives
Over and above the successes of the CDC in terms of enterprise development opportunities, the Infrastructure
Development business unit ensured meaningful involvement of recently qualified graduates. The business unit
employed a total of 16 interns during the 2007/8 Financial Year as yet another effort towards addressing the
shortage of skills in the industry. A total of 6 out of the 16 were permanently placed with employers in the
consulting and contracting fraternity. In line with the CDC’s strategic objectives of learning and growth, two of
the senior managers and executive of the business unit offer their services (i.e. sharing knowledge and expertise)
through lecturing at the Nelson Mandela Metropolitan University. The executive assists similarly with the
Construction Management Programme run by Stellenbosch University. Lastly, the Infrastructure Development
unit won a prestigious award from the South African Property Owners Association (SAPOA) for the efficient
design of the General Upholsterers/ Acoustex investor warehouse in zone 3 during the year under review. The
business unit also represented the CDC at a Construction Vision 2020 Conference in the United Kingdom in
February 2008 where the theme was around the strategic outputs of construction clients leading up to the year
2020.
In conclusion, the business unit acknowledges that without the concerted efforts of our strategic partners, it
would have been impossible to achieve the successes that 2007 would be remembered for. Those acknowledged
include the South African National Roads Agency Limited (SANRAL), the Construction Industry Development
Board (CIDB) through the partnership on the Eastern Cape Contractor Contact Centers, all our service providers
(DAB, consultants and contractors).
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Introduction
The Operations business unit was established in June 2007 as a result
of the merger between the former Safety, Health, Environmental and
Quality (SHEQ) business unit and the Zone Operations business unit.
The merger was necessitated by internal restructuring, which resulted
in streamlined processes and improved performance, particularly on
the service delivery front. The Operations business unit consists of the
following departments:
Customs and logistics; »Safety, Health, Environmental and Quality (SHEQ) »management;
Investor services; »Commercial; »ICT; and »Facilities/Estates management. »
The following report briefly outlines the highlights for the 2007/8
Financial Year.
Customs And Logistics
During the 2007/8 Financial Year, the Customs and Logistics department
investigated the proposed customs environment for the IDZ, and
compared it with best practice standards at two zones, namely Mauritius
and Dubai.
Operations Business Unit
T h e m b a K o z a
“...The safety of everyone involved in the Coega project continues to be a priority....”
Executive Manager: Operations Business Unit
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Primary focus areas at these two zones were found
to be trade facilitation, revenue protection and
border management. The customs administration
process at both zones has, in recent years, undergone
restructuring, while their focus on trade facilitation
and service delivery has also been improved.
Furthermore, both zones engaged in modernisation
and reform programmes to bolster their compliance
with the World Customs Organisation Framework of
Standards.
The investigation highlighted the distinct separation
between the zone operator (CDC and its systems),
customs (South African Revenue Service and its
systems) and the port operator (National Ports
Authority) at the Coega IDZ. It showed that from a
systems viewpoint, the tight integration of these entities
with the other logistics role players (traders, carriers,
agents, etc.), to form a Cargo Community System
(CCS), whilst challenging, is absolutely necessary.
No supporting best practice cases were found for
the operation of the customs controlled area concept
within an IDZ. Therefore, it was concluded that an “open
warehouse” model, generally associated with a “free
trade zone”, as defined by the Kyoto Convention of
General Agreement on Tariffs and Trade, should be the
preferred operational model for the IDZ. Discussions
with SARS regarding this approach are continuing.
Safety, Health, Environmental and Quality Department
The CDC’s ability to monitor the safety, health and
environmental (SHE) performance of contractors and
tenants within the IDZ greatly improved during the
2007 – 2008 financial year with the addition of two
new SHE project managers to the section, bringing
the number of people directly involved with SHE
compliance monitoring to seven.
The safety of everyone involved in the Coega project
continues to be a priority and the CDC recorded a
Disabling Injury Frequency Rate (DIFR) of 0.6 at the end
of the financial year. This is well below the industry
norm of around 2.0 for construction projects of this
nature and can be attributed to the sound health and
safety culture that has been instilled in all contractors
associated with the project.
From an environmental perspective, the area within
the IDZ available for investment purposes increased,
with the receipt of a positive Record of Decision from
the National Department of Environmental Affairs and
Tourism for the ‘remainder of the IDZ’ (the IDZ land
outside of the initial ‘core development area’) thus
paving the way for the development of investments
within the metallurgical and chemical fields.
An exciting occurrence was the discovery of a
breeding colony of Damara Terns (9 adult birds and
three successful nests) within the IDZ. This species
is one of 14 bird species classified as endangered
in the Eskom Red Data Book (Barnes 2000) with less
than 125 pairs estimated to breed in South Africa. As
the main reasons for its decline are disturbance and
urbanization, conservation measures depend on the
protection of its limited breeding habitat. Accordingly
the breeding area is being closely monitored and
measures have been implemented to ensure that
construction does not encroach onto this area.
The success of the IDZ’s HIV and AIDS initiative was
assured during this time period, with contractors
taking ownership of their own programs for HIV and
AIDS prevention and awareness within their areas of
accountability. The creation of an IDZ HIV and AIDS
co-ordination committee amongst the contractors and
the training of one peer educator per thirty contractor
employees by the CDC have had a positive influence
on the level of HIV and AIDS awareness within the IDZ.
The roll-out of the CDC’s Quality Management System
(QMS) began in earnest during this reporting period.
Efforts to train certain employees as Internal Quality
Auditors and to train all employees on the requirements
of a QMS were successful. The initiative has gained
momentum with the successful mapping of a number
of CDC core processes and the development of
Service Level Agreements (SLA) between the various
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Business Units. Further training, with emphasis on
the entrenchment of the core processes within the
organization, is the focus for the immediate future.
The publication of the CDC’s first ever Sustainable
Development Report was a landmark occurrence.
The need for development within the IDZ to occur in
a sustainable manner has always been critical to the
success of the IDZ. The current energy crisis in South
Africa has only strengthened the CDC’s resolve and
sustainability issues continue to be given priority on
agendas within the organization.
Investor Services
During the year the first steps were taken to establish
a One Stop Investor Services Centre (OSISC)
The OSISC is a service management centre with
a mandate to provide a central point of contact for
all stakeholders, particularly investors. The OSISC
eliminates the need for numerous entry points
to information, and ensures that information is
conveniently made available, consolidated and
consistently communicated to investors. As such, the
OSISC is the nerve centre for services provided to
investors located in the Coega IDZ. A common service
desk, with the technological ability to maintain the
identity of customers/investors, will ensure the end-
to-end management of service level expectations. The
OSISC will operate seven days a week, 24 hours a day,
with the primary focus being on incident management
to ensure that services are restored in the shortest
possible time.
Commercial
Due to the increased number of engagements
with potential investors, the Commercial Unit was
expanded during the year. Initially, the primary focus
fell on contractual negotiations in respect of leases
of land to investors with all lease agreements being
negotiated by the Unit. Following the expansion, the
Unit began negotiations with the Nelson Mandela
Bay Municipality (NMBM) for the provision of bulk
services to the IDZ. The negotiations culminated in
the conclusion of an agreement to jointly manage
the supply of electricity to Investors located within
the IDZ. Discussions are continuing in respect of the
provision of other municipal services. The unit also
negotiated the take-over of the Nelson Mandela Bay
Logistics Park (NMBLP) from the NMBM, adding
another dimension to the value proposition of the IDZ.
Furthermore, the property development function was
absorbed into the unit and has assisted a number of
investors with space solutions, particularly in the NMBLP.
ICT Achievements For 2007
During the 2007/8 Financial Year, the ICT Unit achieved
the following:
Relocated to new premises; »Provided Bosun Brick with voice and »data services;
Implemented a data centre for the »provision of shared services;
Implemented a new Labour Management »System (LMS) which streamlines the
labour acquisition and management
processes;
Implemented a Property Management »System which streamlines the invoicing
of tenants in the IDZ; and
Facilitated the establishment of the »ABSA call centre.
Facilities/Estate Management
ABSA Contact Centre
The Facilities Management Department continues to
provide services to the ABSA Contact Centre which
started operating at the Vulindlela Village in January
2008. A number of previously unemployed individuals
were trained as call centre agents, security and cleaning
personnel, and are now employed at the Centre.
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Vulindlela Village
The Vulindlela Village, through effective marketing initiatives, is now 90% occupied. The Village leases
accommodation to private individuals and provides accommodation for employees from outside Port Elizabeth
who are working in the IDZ. A number of private companies have also shown interest in leasing accommodation
in the Village. In addition, the Village is a popular venue for workshops, conferences, functions and training.
Masibambane Community Trust
The Masibambane Community Trust was formed by the Coega 360 community which relocated from the IDZ to
Wells Estate. The Trust employs a total of 24 people from the Coega 360 community. Typically, these individuals
undertake grass-cutting, pavement and street-sweeping, litter-trap maintenance, vegetation control and sidewalk
and verge maintenance at the IDZ.
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Background
During 2006 a decision was taken to respond effectively to the challenge of
skills shortage that would impede the CDC’s ability to attract investment
and to address the employment creation responsibility. The Coega Human
Capital Solutions (Coega HCS) business unit, focuses on development
of the requisite human capital for the Coega Industrial Development
Zone (IDZ), Nelson Mandela Bay (NMB) and the Eastern Cape province.
The core mandate of Coega HCS (CHCS) is to provide competent human
resources thus ensuring a managed labour environment for investors
and local businesses, and to generate revenue thus enabling CDC to
be self sustaining in the long term. The services offered by the unit are
underpinned by an advanced labour management information system
and employment relations framework, specifically suited to support the
management and development of mega projects.
The Coega HCS, in collaboration with the ICT unit, recently completed
the new Labour Management System (LMS). The web-enabled system
has functionalities that allow for the tracking and production of instant
reports about all candidates trained, skills areas and skills level in which
they were trained, employed candidates within the various IDZ projects
and those that have been demobilized. The optimised utilization
of local human capital has therefore been made possible through
the implementation of a proactive Human Resources Development
(HRD) strategy aimed at meeting the short, medium and long-term
requirements of not only investors in the IDZ, but for the external
business environment. The continuously improved and updated
LMS store a repository of information that allows for the effective
recruitment, screening, induction and selection of suitable local job
seekers, as well as monitoring of human capital development. Through
this, Coega HCS has pitched the Coega IDZ on a competitive edge as an
Coega Human Capital Solutions
Z u k o M a p o m a
“...the CHCS has shifted boundaries by ensuring that unemployed job seekers have the opportunity to benefit from government programmes....”
Executive Manager: Human Capital Solutions
Qualifications:• BProc,LLB,LLM,MBA
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investment destination of choice through the provision
of adequate human resources and the creation of an
enabling labour environment for investors.
Addressing the Skills Shortage
The innovative business model of the Coega HCS
and projects undertaken are informed by the critical
shortage of skills available countrywide. Although
there is a shortage across all levels, the research
conducted by Coega HCS during the year under review
has stashed that the most critical skills shortages in
NMB are experienced in the electrical/ mechanical
field; construction (civil, building, and piping)
industry; and the manufacturing, engineering and
call centre industry. The skills shortage challenge is
further exacerbated by a lack of available candidates
with maths and science knowledge, the low number
of students undertaking qualifications within these
sectors and a large percentage of unemployed people
with work experience but no formal qualifications.
With a view to addressing these challenges more
effectively, continuous review of the Coega HCS
business model, based on lessons learnt from the
erstwhile Coega Labour Business Management
Services (LBMS) unit, which started operating in
2002 has yielded a focused approach to critical skills.
Coega HCS initiated a process, linked to the Provincial
Growth and Development Plan (PGDP), to determine
how the skills shortage would impact on the CDC,
NMB and the Province. The model is informed
by ample experience in the process and system
management of labour, human resource management
and planning for mega projects within a regulated
environment. This process focuses on the energy;
manufacturing; information, communications and
technology, metals, automotive, chemicals, services,
tourism, agriculture and construction sectors. The
unit makes use of research, analysis and forecasting
on skill types and levels in order to fulfil the
requirements of investors locating to the Coega IDZ,
the NMB and the Eastern Cape Province. Based on
these projections, Coega HCS has managed to strike
strategic partnership with the relevant government
Sector Education Training Authorities (Setas) as
well as the Department of Labour (DoL) and secured
funding for training programmes.
Strategic Partnerships in Human Capital Development
The success of the Coega HCS in the implementation of
Human Resources and Development (HRD) initiatives
have largely been made possible through partnerships
and support of a range of critical stakeholders in the
skills development arena. The Department of Labour,
the Department of Trade and Industry, the Office of
the Premier, the Skills Education Training Authorities
and business chambers, such as the Port Elizabeth
Regional Chamber of Commerce and Industry
(PERCCI), as well as Trade Union movement, have
strong linkages that have been kept alive with the
Coega HCS. As a result of these linkages, a range of
HRD training programmes on critical and scarce skills
have been executed through the provision of grant
funding of over R100 million from government. Other
key strategic partners have been the Nelson Mandela
Bay HRD, EDTA units and public and private training
and educational institutions.
Through our relationship with business formations,
over 180 businesses have assisted Coega HCS
in providing experiential training and workplace
learnings to candidates. Thus, a critical component
of the success of HRD is the establishment of solid
partnerships with stakeholders and key players within
the field and to ensure that the curricula offered by
colleges, institutions and universities address the
labour market requirements. This was also borne out by
a further process of establishing similar partnerships
with Further Education and Training (FET) institutions
in the Buffalo City Municipality region. Among these
are the Eastern Cape based FET Colleges such as East
Cape Midlands; Ikhala College and PE College; various
Sector Education and Training Authorities (SETA); the
Departments of Labour and Education; the Office of the
Premier and the Department of Public Works (DPW).
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A mutual project between the Coega HCS and the Nelson Mandela Bay Municipality (NMBM) involves the
Municipality’s Department of Economic Affairs and Development, and is aimed at ensuring the integration of
support to all investment initiatives in the NMB region, in particular the HRD aspect. The strategy of the project is
informed by NMB and the Province’s economic activities and investment pipeline. It is anticipated that the project
will enable the identification of skills gaps and the requirements necessary to fill those gaps.
Contributions to the Joint Initiative on Priority Skills Acquisition (JIPSA)
The Coega HCS is involved with the Eastern Cape division of the Joint Initiative for Priority Skills Acquisition
(JIPSA) through participation of its management on the Council and Working Group levels respectively. Three
JIPSA-EC Working Groups are focused on maths and science, while skills audits and research are also a priority.
Coupled with this initiative, Coega HCS has conceptualised a Maths and Science teacher development project in
partnership with the Services Seta, and this project will be rolled out in the next financial year.
Human Resources Development Initiatives
Currently there are 750 apprentices funded by the Services SETA and the Foodbev SETA respectively. In addition,
the trade testing of a further 895 candidates will be facilitated while implementing several technical learnerships
in partnership with the Provincial Department of Labour, MERSETA, CHIETA and ESETA.
The HRD initiatives include apprenticeships, learnerships, internships and skills programmes in the engineering
and construction trades, manufacturing and chemical sector trades as well as the Business Process Outsourcing
and Offshoring sector. During the 2007/8 Financial Year, Coega HCS secured contracts for ten projects valued at
over R100 million. These are being rolled out during the 2008/9 Financial Year and will be to the benefit of 6052
learners.
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Sanlam Delegation November 2008
Port of Rotterdam Delegation
November 2007
CDC NMMU Collaboration
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Skills Development Centre and Trade Testing Facilities
In an effort to further the achievement of the set HRD objectives, the CDC initiated the establishment of the
Coega Skills Development Centre, which is anticipated to be fully operational by 2010. The Centre will ensure the
development of skills at all occupational levels within dominant sectors of the Eastern Cape.
In collaboration with the Department of Labour’s Indlela Centre, the trade testing facility, which will also be
incorporated into the centre, which will be the first of its kind in the Eastern Cape, will allow for the trade testing
of all learnership and apprenticeship candidates qualifying for artisan trade testing. The trade testing facilities
will be in accordance with the standards that are set by the Department of Labour’s National Trade Test Centre.
Employment Relations
One of the key successes is management of employment relations with both employer organizations and trade
union movement. This has established and improved upon a labour management policy framework that creates
an enabling environment that is focused on maintaining labour stability and a culture of respect for the dignity
of human life. The Zone Employment Relations Policy and the Zone Labour Agreement remain effective through
the application of a common and consistent labour management approach, both on the Coega IDZ and the Port of
Ngqura. Coega IDZ has recorded the downtime of 0.12% compared to 2.4% in the industry nationally.
Table 1: Learnerships
NQFLevel
2008 / 2009 2009 / 2010 FIVE YEAR TOTAL %
NSF ESETA MERSETA T NSF ESETA MERSETA T NSF ESETA MERSETA TOTAL
1 0 0 0 0 0 0 0 0 0 0 0 0 0%
2 513 15 12 540 0 60 42 102 513 480 696 1689 50%
3 0 105 96 201 219 75 66 360 219 375 342 936 28%
4 0 180 192 372 0 165 192 357 0 345 384 729 22%
TOTAL 513 300 300 1113 219 300 300 819 732 1200 1422 3354 100%
The following table is representative of one of the key successes achieved in the past year, namely the signing of
grants that allow CHCS to roll out the largest apprenticeship project in the Eastern Cape.
The table below presents the various CHCS HRD initiatives which are funded by different partners.
Table 2: Apprenticeships
SETA2008 / 2009 2009 / 2010 TWO YEAR TOTAL %
S28 S13 T S28 S13 T S28 S13 TOTAL
SERVICES 900 600 1500 0 600 600 900 600 1500 100%
FOODBEV 0 150 150 0 150 150 0 150 150 100%
TOTAL 900 750 1650 0 750 750 900 750 1650 100%
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HRD Initiatives
KEY STATISTICS MAY 2008
Contracts awarded (Total Coega Project to date) 140
Sub-contracts awarded (Total Coega Project to date) 1 102
Job Seeker Pool 81 172
Labour requisitions processed 1 337
Lost time as a consequence of labour strike action 0.12%
Cumulative man-hours on site to-date 21 083 054
Currently employed 5 350
% Current Employment for residents of Nelson Mandela Metro 83%
% Current Employment for residents from outside Nelson Mandela Metro 17%
Total employment created 24 082
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Background
Coega Development Corporation Services Unit (CDC-S) is a special
purpose vehicle of the CDC, aimed at providing assistance on infrastructure
development to the Eastern Cape provincial government. It focuses
mainly on fast-tracked projects, where rapid delivery is required. The
involvement of the CDC in provincial projects was informed by the fact that:
(a) One of the CDC’s corporate objectives is to advance »socio-economic upliftment in the Eastern Cape. CDC-S
involvement in the provincial projects enables the CDC
to contribute meaningfully in this regard;
(b) The CDC considers its involvement in provincial »projects as a form of contribution towards Corporate
Social Investment (CSI), due to the number of people
who benefit from the projects that it rolls out;
(c) Involvement in the development of critical »infrastructure in the province assists in unlocking and
realising sustained economic development; and
(d) The CDC needs to ensure that there is meaningful »backward integration with the province, which is
enhanced via the provision of basic infrastructure. In
turn, the attractiveness for investments in the province
is improved.
Coega Development Corporation Services Unit
D r M p u m i M a b u l a
“...CDC Services has implemented a number of projects on behalf of the Provincial Government and continues to do so....”
Executive Manager: CDC Services
Qualifications:• ?
Services
(a) Project facilitation, i.e. assisting in conceptualising projects and transforming them into »plans that can be implemented;(b) Acts as implementation agent, where it implements projects on behalf of its clientele, »adopting a cradle-to-grave approach in doing so. This includes planning the infrastructure roll-out, budgeting, procuring services of various service providers, management of these aforementioned service providers and commissioning of infrastructure;(c) Assisting in developing monitoring systems on infrastructure roll-out and to carry out »monitoring and reporting on infrastructure budget expenditure;(d) Facilitate inclusion of socio-economic aspects during the implementation of »infrastructure projects. This includes facilitation of Small and Emerging contractor development; infusion and Expanded Public Works Programme (EPWP) approach on its
projects; and encouraging labour based methods of construction to maximise job creation.
Projects Rolled Out
Since its inception, CDC-S has implemented a number of projects on behalf of the provincial government and
continues to do so. Although CDC-S considers all the projects that it embarks upon as being of utmost importance,
the key projects that CDC-S has been involved in during 2007/08 Financial Year are listed in the table below:
Key Projects
Client Dept Project Name Description of Project Est Contract Value
Department of Health
Upgrading of Cecilia Makiwane Hospital (CMH)
Rebuilding Cecilia Makiwane Hospital in Mdantsane in Mdantsane to a 600 bed Primary Hospital where it would provide Level 1/2 Services
R2.1 billion
Upgrading Frere Hospital Demolishing and rebuilding some parts of Frere Hospital in East London where it would provide Level 2/3 services with 830 beds.
R1.9 billion
Forensic Pathology Laboratories (FPL) (Mortuaries)
Construction of 15 new FPLs in various hospitals grounds and upgrading of 5 FPLs in various SAPS premises around the province
R84 million
Community Health Centre in Mdantsane
Construction of new 40 bed Community Health Centre at NU 17 in Mdantsane
R85 million
Dept of Sports, Recreation, Arts & Culture
Eastern Cape Sports Academy
Development of a new Sports Academy in the Eastern Cape
R20 million
Steynsburg Indoor Sports Centre
Construction of a new Indoor Sports Centre in Steynsburg
R6.9 million
Mt Ayliff Arts & Culture Centre
Construction of a new Arts & Culture Centre in Mt Ayliff
R2.9 million
Mthatha Archives Construction of a new Archives in Mthatha R6.0million
Mt Ayliff Museum Construction of a new museum in Mt Ayliff for the Alfred Nzo District Municipality
R7.2 million
Tsitsikama Museum Construction of a new museum in Tsitsikama R3.3 million
Upgrading of Bayworld Upgrading some parts of Bayworld aquarium in Port Elizabeth
R3.9 million
Dept of Education
51 EPWP Schools Construction of 51 schools under the Expanded Public Works Programme around the eastern part of the Eastern Cape using Learner Contractors
R74 million
National Dept of Environmental Affairs & Tourism
Vusubuntu Cultural Village Construction of a new Cultural Village in Cradock. R13 million
CDC-S managed to create 1900 jobs during the construction of these projects.
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Awards
CDC-S prides itself for winning the following awards and certificates of recognition:
• BestGovernmentEnterpriseDevelopmentProgramme
(EPWP Big News Awards for 2007)
The main objective of this award is to contribute towards the success and impact of SMME’s in South Africa
by rewarding, publicising, documenting and encouraging good practices in Enterprise Development (ED).
It recognises and rewards companies, organisations and individuals who contribute meaningfully towards
strengthening SMME’s.
• EasternCapeEPWPContractorRecognitionAward
An employee of the CDC-S unit received the 2007 Eastern Cape Department of Public Works MEC award which
recognised the efforts of the CDC-S in assisting the Eastern Cape government to implement the EPWP within the
Eastern Cape.
Development of Best Practices
CDC-S conceptualized and developed together with the Construction Industrial Development Board (CIDB) and the
Business Trust Unit that supports the Expanded Public Works Programme (EPWP) the Specification for Social and
Economic Deliverables in Construction Works Contracts. The aim of the specification is to ensure that objectives
of the Millennium Development Goals (MDG), Accelerated and Shared Growth Initiative for South Africa (ASGISA)
and Joint Initiative on Priority Skills Acquisition (JIPSA) are being achieved.
The CDC, via CDC-S, will continue providing the necessary support to the provincial government and state-owned
enterprises, particularly in infrastructure development.
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Corporate Services Unit
Background
The Coega Corporate Services (CS) business unit is tasked with
overseeing human capital and the creation of a work environment that is
conducive to the maximisation of the Coega Development Corporation’s
(CDC) potential to achieve its vision of becoming a preferred investment
destination. The unit offers human resources management, legal
services, office management and travel management services.
Employee Development
A competitive advantage of the CDC is its ability to secure quality human
capital and the efficient management of the available talent pool, which
is a major focus area of the human capital strategy.
The CDC’s commitment to being the leading knowledge-based
organisation in the country is reflected in its investment in human capital
development. During the 2007/8 Financial Year, the CDC provided funding
for employees enrolled in 13 post graduate/honours qualifications, 16
masters degrees and 3 PhD’s. In addition to these individual study
programmes, CS coordinated corporate employee development
programmes in project management (Project Management Body of
Knowledge - PMBOK), voice clinic training, executive personal assistant,
computer training, driver training and investment in excellence.
As a knowledge and service-driven organisation, the CDC’s priority is to
recruit, develop and retain a team of people who can support investors
and tenants across key sectors. As such, employees are encouraged to
further their studies in order to add additional value to the knowledge
and skills base of the organisation. To this end, the CDC provides
financial support towards employee development. Furthermore, as a
“...CDC’s commitment to being the leading knowledge-based organisation in the country is reflected in its investment in human capital development....”
N o m a w a b o M s i z i( r e s i g n e d M a r c h 2 0 0 8 )
Executive Manager: Corporate Services
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performance-driven organisation, the CDC recognises and rewards individual excellence and the contribution of
teams to the achievement of the business objectives.
Corporate Research Foundation (CRF)
In the 2007/8 Financial Year, the CDC was once again recognised as one of the best employers in a survey conducted
by Corporate Research Foundation (CRF). Among the key dimensions and focus areas of the survey were the
CDC’s human capital priorities, which placed the organisation among the best in the country.
Best Company To Work For
The CDC is the industry winner among the public sector/utilities companies, which participated in the annual 2007
Deloitte/FM Best Companies To Work For survey. A core aspect of the survey is the measures taken by the company
to attract, develop, motivate and retain its human capital. The purpose of the survey is to enable companies to
understand what motivates and engages employees as well as what hinders them in the workplace. The results of the
survey will assist the organisation in developing retention strategies that contribute to the success of the business.
Corporate Social Investment (CSI)
The CDC places a significant amount of focus on socio-economic growth in South Africa. As such, the CDC, which
is the opperator of the Industrial Development Zone (IDZ), can be classified as a Corporate Social Investment (CSI)
initiative. It is government funded, with the bottom line being the creation of jobs and economic empowerment.
Internally, the CDC has established an internship programme with a corporate target of employing 50 interns
per annum. The ultimate aim of the programme is to increase the employability of the inexperienced graduates,
through experiential learning, mentorship and other training and development initiatives. In the 2007/8 Financial
Year, a total of 63 interns were placed in the programme of which 30 have secured permanent employment.
Apart from the internship programme, the latest CSI programme involves the sponsoring of driver training for
interns and unemployed graduates at various centres around the Eastern Cape. A total of 60 CDC interns and 89
graduates from tertiary institutions throughout the province have received driver training during the first phase,
which took place in the 2007/8 Financial Year.
In addition, the CDC Board approved the establishment of a bursary scheme to provide financial support to high school
learners and tertiary students. CS has secured grants from the Services Sector Education and Training Authority
(SETA) to finance the programme, which will involve the support of high school learners on academic programmes as
well as life skills training. In the 2008/9 Financial Year, this initiative will progress to support students at tertiary level.
Coega Corporate Travel
Corporate Services launched the Coega Corporate Travel (CCT) as a fully licensed travel agency to provide corporate
travel management services to CDC and investors in the IDZ. CCT aims to become a financially independent and
sustainable unit by sourcing business from entities outside of the IDZ. As such, the marketing of CCT will be one
of the priorities of the CS unit in the following Financial Year.
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Coega Corporate Travel Launch
Coega Open day Hellenvale
November 2007
Interns Initiative –
Sinethemba benefit program
I n t h i s s e c t i o n :
_ The Board of Directors & Sub-Committee 63
_ Statement of Responsibility of the Board of Directors 65
_ Attendance Schedule of Board & Sub_Committee Meetings 66
_ Risk Management & Internal Controls 67
_ Certificate by Company Secretary 68
_ Report of the Audit & Finance Sub-Committee 69
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The Board of Directors comprises executive and non-executive directors.
The non-executive directors have a wide range of skills and significant
commercial and other interests that enable them to bring independent
judgement to the Board’s deliberations and decisions.
The roles of Chairperson and Chief Executive Officer do not vest in the
same person. The chairperson is a non executive director. The Board
and its sub-committees meet at least four times a year, and more
frequently if necessary. Decisions on material matters are in the hands
of the Board.
Company Secretary & Professional Advice
All Directors have access to the service of the company Secretary, who
is responsible for ensuring that the Board functions effectively. All
Directors are entitled to seek independent professional advice about
the affairs of the Company at the Company’s expense.
Audit & Finance Sub-committee
The Audit and Finance Sub-committee is chaired by an independent
chartered accountant who is neither a member of the CDC management
nor the Board of Directors. Other members are the three non-executive
directors and an external independent member. The committee is
attended by the Chief Executive Officer and the Chief Financial Officer.
The Audit & Finance Sub-committee functions under the powers and
authority delegated to it by the Board to:
The Board of Directors and Sub-Committees
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Oversee the internal audits; »
Review the annual financial statements; »
Agree the scope and ensure the independence of the statutory auditors; »
Monitor internal control systems the process of risk management; »
Monitor compliance with the Code of Corporate Governance and the Company’s Code of Ethics; »
Human Resources & Remuneration Sub-Committee
The Human Resources & Remuneration Sub-committee is comprised of four non-executive directors.
The Human Resources & Remuneration Sub-committee’s specific terms of reference include direct authority
for, or consideration of, and recommendation to the Board on matters relating to, inter alia, general staff policy,
remuneration, bonuses, Directors’ remuneration and fees, service contracts and other benefits.
Investment Promotion Sub-committee
The Investment Promotion Sub-committee is fully mandated by the Board. It is composed of five members, two
of whom are independent members and three non-executive directors. Its terms of reference are to:
Review the CDC’s investment policy and strategy »
Ensure compliance with the adopted framework, through which investments can be monitored. »
Ensure that a justifiable process, is aligned to the strategy, is followed. »
The Board is responsible for the preparation, integrity and fair
presentation of the financial statements for the year ended 31 March
2008. The financial statements have been prepared on a going concern
basis, in accordance with International Financial Reporting Standards
and in the manner required by the Companies Act of South Africa. The
directors also prepared the other information included in the annual
report and are also responsible for both its accuracy and its consistency
with the financial statements.
Management has been delegated with the responsibility of implementing
systems of internal control and maintaining accounting and information
systems. These systems are designed to provide reasonable assurance
as to the reliability of the financial statements, safeguarding of assets,
execution and recording of transactions in accordance with generally
accepted business practices and procedures and that the risks of error,
fraud and loss are minimized in a cost-effective manner.
The going concern basis has been adopted in preparing the financial
statements. The directors have no reason to believe that the company
will not be a going concern in the foreseeable future.
The financial statements have been audited by the independent auditing
firm, PriceWaterhouseCoopers Inc, which was given unrestricted
access to all financial records and related data, including minutes of
all meetings of shareholders, the board of directors and committees
of the board. The directors believe that all representations made to the
independent auditors during their audit were valued and appropriate.
Price Waterhouse Coopers Inc’s audit report is presented on page 73.
The financial statements set out on pages 75 to 100 were approved by
the Board and are signed on its behalf:
Chairperson
S ta tement o f Respons ib i l i ty o f the Board o f D i rec tors
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Attendance Schedule of Board & Sub-Committee Meetings
2007 2008
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Board Meeting Attendance
Date 7 13 23
M Ngoasheng (Chair)
P Silinga
M Kwenaite
P Jourdan
J de Bruyn
S Zikode
M Matshamba
S Nondwangu
L Maasdorp
P Ndoni
Investment Promotion Sub-committee meeting attendance
Date 28 13
P Jourdan (Chair)
M Ngoasheng
M Kwenaite
B Rayner
G van Wyk
Human Resources Sub-committee meeting attendance
Date 16 13
J de Bruyn (Chair)
M Ngoasheng
P Jourdan
S Nondwangu
Audit & Finance Sub-committee meeting attendance
Date 28 17 13
X Ncame (Chair)
J de Bruyn
L Maarsdorp
A Mjekula
M Matshamba
Risk Management
The board is accountable for the process of risk management and
effectiveness of the system of internal control and for this reason has
continued to devote considerable efforts to ensuring the practice of
responsible, pro-active and sound risk management.
There is a formally defined risk management policy and »strategy in place designed to ensure that risk management
practices are maintained at best practice levels
There is an ongoing process for identifying, evaluating »and managing the significant risks faced by the company
that has been in place for the year under review
There is an adequate system of internal control in place »to mitigate significant risks faced by the company to an
acceptable level. Such a system is designed to manage,
rather than eliminate, the risk of failure or maximise
opportunities to achieve business objectives.
Internal Audit
The board recognizes the need to oversee internal controls within the
organization. In accordance with the approved Internal Audit Charter,
Internal Audit reviews the systems and management controls to
determine the effectiveness of the process around:
safeguarding of assets; »integrity and reliability of financial and operational »information;
compliance with legislation, and; »the adequacy of the risk management and internal control »process.
R isk Management
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Certificate by Company Secretary
For the year ended 31 March 2008
Declaration by the Company Secretary in terms of Section 268G (D) of
the Companies Act.
The Company has lodged with the Registrar all such returns as are
required of a private company in terms of the Companies Act, and all
such returns are true, correct and up to date.
Miranda Pango
COMPANY SECRETARY
26 June 2008
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Report of the Audit and Finance Sub-Committee
The Audit and Finance Sub-Committee has adopted formal terms of reference, which have been approved by the
Board, and has satisfied its responsibilities as set out in the terms of reference.
In performing its responsibilities the Audit and Finance Sub-committee has reviewed the following:
The functioning of the Risk Management internal control system »The functioning of the internal audit department »The risk areas of the entity’s operations to be covered in the scope of the internal and external »auditsFinancial information provided by management »The accounting or auditing concerns identified as a result of the internal or external audits »The entity’s compliance with legal and regulatory provisions »The credibility, independence and objectivity of the external auditors as well as their audit »reports
The Audit and Finance Sub-Committee is satisfied that internal controls and systems have been put in place and
that these controls have generally functioned effectively during the period under review.
The Audit and Finance Sub-Committee considers the company’s internal controls and systems appropriate in all
material respects to:
Reduce the company’s risks to an acceptable level »Meet the business objectives of the company »Ensure the company’s assets are adequately safeguarded »Ensure that the transactions undertaken are recoded in the company’s records. »
The Audit and Finance Sub-Committee has evaluated the annual financial statements of Coega Development
Corporation (Proprietary) Limited for the year ended 31 March 2008 and concluded that they comply, in all
material respects, to the requirements of the Companies Act (Act 61 of 1973, as amended) and International
Financial Reporting Standards.
The Audit and Finance Sub-Committee agrees that the adoption of the going concern premise is appropriate in
preparing the annual financial statements.
The Audit and Finance Sub-Committee has therefore recommended the adoption of the annual financial statements
by the Board of Directors at their meeting on 22 August 2008.
X Ncame
Chairperson: Audit and Finance Sub-Committee
22 August 2008
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I n t h i s s e c t i o n :
_ Independant Auditor’s Report 73
_ Directors’ Report 75
_ Balance Sheet 80
_ Income Sheet 81
_ Statement of Changes in Equity 82
_ Cashflow Statement 83
_ Notes 84
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Report on the Financial Statements
We have audited the accompanying financial statements of Coega
Development Corporation (Pty) Limited which comprise the balance
sheet as of 31 March 2008 and the income statement, statement of
changes in equity and cash flow statement for the year then ended and
a summary of significant accounting policies and other explanatory
notes as set out on pages 80 to 100.
Director’s Responsibility for the Financial Statements
The Directors are responsible for the preparation and fair presentation
of these financial statements in accordance with International Financial
Reporting Standards, the requirements of the South African Companies
Act and in the manner required by the Public Finance Management Act,
1999 as amended. This responsibility includes: designing, implementing
and maintaining internal control relevant to the preparation and
fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that
are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with International Standards on Auditing read with General Notice 616
of 2008, issued in the Government Gazette no 31057 of 15 May 2008.
Those Standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance whether the
financial statements are free from material misstatement.
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
Independent Auditors Report To the Minister of Department of Trade and Industry
and Eastern Cape Development Corporation
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not prepared consolidated financial statements.
We concur with the Directors’ decision, as stated
in the Directors Report, not to consolidate Rapid
Infrastructure Development Agency (Pty) Ltd (RIDA)
as the company is dormant and has never traded.
Other Reporting responsibilities
We have audited the performance information as set
out on pages 103 to 115 of the financial statements.
Responsibility of the Board of Directors for performance information
The board members have additional responsibilities
as required by section 40(3)(a) of the Public Finance
and Management Act to ensure that the annual report
and audited financial statements fairly present the
performance against predetermined objectives of the entity.
Responsibility of the Auditors
We conducted our engagement in accordance with
section 13 of the Public Audit Act 2004 read with
General Notice 616 of 2008, issued in the Government
Gazette no. 31057 of 15 May 2008.
In terms of the foregoing our examination included
performing procedures of an audit nature to obtain
sufficient appropriate evidence about the performance
information and related systems, processes and
procedures. The procedures selected depend on the
auditors’ judgement.
We believe the evidence we have obtained is sufficient
and appropriate to report that no significant findings
have been identified as a result of our audit.
PricewaterhouseCoopers Inc
Director: Sakhile Masuku
Registered Auditor, Johannesburg, 10 October 2008
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 in order to design audit procedures that
are 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.
The audit was also planned and performed to obtain
reasonable assurance that our duties in terms of
section 60 and 61 of the Public Finance Management
Act, 1999, as amended have been complied with.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the accompanying financial statements
present fairly, in all material respects the financial
position of Coega Development Corporation (Pty)
Limited as of 31 March 2008, and of its financial
performance and its cash flows for the year then
ended in accordance with International Financial
Reporting Standards and the requirements of the
South African Companies Act 1973. The transactions
of the company that have come to our attention during
the course of the audit were in all material aspects in
accordance with the mandatory functions of Coega
Development Corporation (Pty) Ltd, as determined
by law or otherwise, in terms of section 61(1) of the
Public Finance Management Act, 1999.
Without qualifying the audit opinion, attention is
drawn to the following matters:
Financial statement presentation
We draw attention to the fact that the company has
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The directors present their annual report which forms part of the
audited financial statements of the company for the year ended 31
March 2008.
General Review
The financial statements on pages 80 to 100 set out fully the financial
position, the results of operations and the cash flows of the company
for the year ended 31 March 2008.
During the year under review, the company continued to extend the
infrastructure of the Coega Industrial Development Zone and develop
systems to service investors.
No dividends were declared or recommended.
Legal Framework and Compliance
The Coega IDZ was designated by Government Gazette on 1 December
2001, and an Operators permit was issued on 7th August 2007.
The CDC has complied with all the laws of the country as well as with
all relevant legislation.
Nelson Mandela Bay Logistics Park
The company entered into an agreement with the Nelson Mandela
Metropolitan Municipality to acquire the Nelson Mandela Bay Logistics
Park (NMBLP), adjacent to the Volkswagen plant, on a 50 year lease at a
nominal rental. It is anticipated that synergies in property management
Directors’ Report For the Year Ended 31 March 2008
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will flow from this transaction as well as broadening the product offering that the IDZ has for investors. Currently
the NMBLP has four investors who are first tier suppliers to the automotive industry.
The lease has been valued by management at R30 million and forms part of the revaluation of investment
properties.
Property, Plant and Equipment
Property, plant and equipment increased during the year, due mainly to infrastructure and top structures amounting
to R314 million. This includes the cost of incomplete projects for the provision of access roads and utilities.
The CDC has entered into a contract with the Nelson Mandela Bay Municipality (NMBM) whereby bulk electrical
assets are transferred to the NMBM. The terms of this contract require the NMBM to maintain the electrical
infrastructure and to compensate the CDC over time for value, based on electricity usage within the IDZ.
Investment Property
The effect of the property revaluation has been an increase in the book value of investment properties amounting
to R1 720.5 million. In addition, deferred income of R569 million relating to these properties was released to
income. (2007 gain of R9.3 million)
Funding
Funding for the year under review was provided by the Department of Trade and Industry (DTI) and from Provincial
Treasury. Funds received totaled R658,9 million (2007 R256 million) including funding from Provincial Treasury
of R22,1million). The DTI has allocated further funding to the company for the next three financial years.
Going Concern
The financial statements are prepared on a going concern basis. This basis presumes that funds will be available
to finance future operations and that the realisation of assets and settlement of liabilities will occur in the ordinary
course of business. The ability of the company to continue as a going concern depends on the ability of the
company to obtain continued support from government agencies.
Multi-year Budgeting
Based on a multi-year expenditure framework, the CDC continues to maintain the detailed financial plans required
to ensure that the key elements of the project are fully delivered.