ANNUAL REPORT 2017/18...Chairman’s Statement The GGDA Board of Directors is honoured to table the...

ANNUAL REPORT

2017/18

The GGDA’s key purpose is to maximise the effect of developing the economy of Gauteng, through support growth of the cooperatives economy, facilitation of trade and investment and the increased implementation of strategic economic infrastructure in the Province. It’s

subsidiary companies are the Automotive Industry Development Centre (AIDC), The Innovation Hub (TIH), Gauteng Industrial Development Zone (GIDZ), Constitution Hill (ConHill) and the Greater Newtown Development Company (GNDC).

Threading the fabric

for Growth and

Development in Gauteng

1

ANNUAL REPORT 2017/18

2

GAUTENG GROWTH AND DEVELOPMENT AGENCY

Table of Contents

Submission of the Gauteng Growth and Development Agency Annual Report

to the Executive Authority 4

PART A: General Information 7

Public Entity’s General Information 8

List of Abbreviations/Acronyms 9

MEC’s Foreword 10

Group Chairman’s Statement 12

Group CEO’s Strategic report 14

Board Members 18

Board Members 20

Executive Management 22

Statement of responsibility and confirmation of accuracy of the annual report 24

Strategic Overview 25

Legislative and other Mandates 26

PART B: Performance Information 29

Auditor’s Report: Predetermined Objectives 32

Situational Analysis 33

PROGRAMME 1: GGDA Holdings 40

PROGRAMME 2: Automotive Industry Development Centre (AIDC) 70

PROGRAMME 3: The Innovation Hub (TIH) 82

PROGRAMME 4: Gauteng Industrial Development Zone (GIDZ) 96

PROGRAMME 5: Constitution Hill (ConHill) 104

PROGRAMME 6: Greater Newtown Development Company (GNDC) 114

PART C: Governance 121

PART D: Human Resource Management 133

PART E: Annual Financial Statements 141

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Submission of the Gauteng Growth and Development Agency Annual Report to the Executive Authority

The accounting authority of the Gauteng Growth and Development Agency (GGDA) hereby presents in terms of Section 65 of the Public Finance Act, 1999, the GGDA Annual Report for the year ended 31 March 2018 to the Executive Authority.

Signed on 31 July 2018 by Mr Mogopodi Mokoena on behalf of the GGDA Group Board.

Mr Mogopodi MokoenaChairman of Group Board

Gauteng Growth and Development Agency

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5


General Information

PART A

7

Public Entity’s General Information

Registered Name: Gauteng Growth and Development Agency SOC Ltd

Registration Number: 2003/021743/30

Physical Address: 124 Main Street

MarshalltownJohannesburg2001

Postal Address: Po Box 10420Marshalltown2107

Telephone Number/s: +27 11 085 2400

Email Address: [email protected]

Website Address: www.ggda.co.za

External Auditors: Auditor-General of South Africa

Bankers: First National Bank

Group Company Secretary: MJ Mulaudzi

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List of Abbreviations/Acronyms

AGSA Auditor-General of South AfricaAIDC Automotive Industry Development CentreAPP Annual Performance PlanASP Auto Supplier ParkBBBEE Broad-Based Black Economic EmpowermentBID Business Improvement DistrictBPO Business Process OutsourcingCEO Chief Executive OfficerCiC Climate Innovation CentreCFO Chief Financial OfficerCoJ City of JohannesburgCoT City of TshwaneConHill Constitution Hill EHWP Employee Health and Wellness ProgrammeDBSA Development Bank of Southern AfricaDED Department of Economic DevelopmentDoH Department of HealthDoL Department of LabourDST Department of Science and TechnologyDTA Denel Training Academydti Department of Trade and Industry EIA Environmental Impact AssessmentEMC Ekurhuleni Metropolitan CouncilEMS Emergency Medical ServicesEPMO Enterprise Project Management OfficeESDA Employment Skills Development AgencyFDI Foreign Direct InvestmentFY Financial YearGALC Gauteng Automotive Learning CentreGBCF Gauteng Business Consultative ForumGDARD Gauteng Department of Agriculture and Rural DevelopmentGDED Gauteng Department of Economic DevelopmentGEDP Gauteng Economic Development PlanGDP Gross Domestic ProductGGDA Gauteng Growth and Development AgencyGIBS Gordon Institute of Business ScienceGIC Gauteng Investment CentreGIDZ Gauteng Industrial Development ZoneGIFA Gauteng Infrastructure Funding AgencyGNDC Greater Newtown Development CompanyGPG Gauteng Provincial GovernmentGRAP Generally Recognised Accounting Practices IA Internal AuditICAS Independent Counselling and Advisory ServicesICN Incubation Centre NissanIDC Industrial Development CorporationIPAP Industrial Policy Action PlanJDA Johannesburg Development Agency

JMP Jewellery Manufacturing PrecinctMEC Member of the Executive CouncilMMA Maxum Media AcceleratorMTEF Medium Term Expenditure FrameworkNAMB National Artisan Moderation BodyNEDP National Exporters Development PlanNEF National Empowerment FundNSA Nissan South AfricaNTIP National Tooling Initiative ProgrammeOEM Original Equipment ManufacturerOHSA Occupational Health and Safety ActOSS (National) One Stop ShopPIC Public Investment CorporationPERO Provincial Economic Review and OutlookPFMA Public Finance Management ActPGM Platinum Group MetalsPPI Producer Price IndexPPP Public Private Partnership PRT Professional Resource TeamPWD People with DisabilityQCTO Quality Council for Trade and OccupancyR&D Research and DevelopmentRIS Regional Innovation SystemRMB Rand Merchant BankSABPP SA Board for People PracticesSACEEC South African Capital Equipment Export CouncilSADC Southern African Development CommunitySADPMR South African Diamonds & Precious Metals Regulator SARB South African Reserve BankSARS South African Revenue ServicesSCM Supply Chain ManagementSCOPA Standing Committee on Public AccountsSDT State Diamond Trader Seda Small Enterprise Development AgencySEZ Special Economic ZoneSTIP Science, Technology and Innovation ParkSMME Small Medium and Micro EnterpriseTER Township Economic RevitalisationTIA Technology Innovation AgencyTIH The Innovation HubTIHMC The Innovation Hub Management CompanyTIRE Trade, Investment and Regulatory Enablement TMR Transformation, Modernisation and IndustrialisationTR Treasury RegulationsUNCTAD United Nations Conference on Trade and DevelopmentWEH Winterveldt Enterprise HubWIR World Investment ReportYTD Year To Date

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MEC’s Foreword

Governments across the globe acknowledge that foreign and domestic direct investment plays an important role in a country’s economy; and that it is desirable to undertake investment promotion efforts through organised, official agencies in order to achieve economic growth.

With the recently launched investment drive by President Ramaphosa, the core mission of the Gauteng Growth and Development Agency (GGDA) is now more relevant than ever, as we pursue the objective of shared and inclusive growth for our city region, through our programme of radical transformation, modernisation and re-industrialisation. This annual report showcases projects and initiatives that the GGDA has undertaken over the past year, to help the province maintain its position as the investment destination of choice within our country. The report articulates how the GGDA’s programmes connect local businesses with opportunities in outside markets, as we look to rebuild the productive capacity of our economy and achieve export-led growth.

The GGDA continues to contribute to deepening economic system reforms, improving the business and investment environment, as well as providing an enabling environment for domestic and foreign investors. An example of this, is the R4,6bn worth of investment projects facilitated during the past 12 months. This proves that in Gauteng, we are attractive to investors as we pursue sustainable economic growth. We are committed to investing in catalytic economic infrastructure, in order to stimulate and promote the growth of our economy.

With the USA, China, United Kingdom, Germany, France, Japan and India as sources of foreign direct investment, we are proud of the investment work that is being done, specifically through our investSA One Stop Shop (OSS) Gauteng.

This report highlights the increasing importance that investors attach to transparency; and continued efforts by all investment stakeholders to improve efficiency, reduce administrative constraints on normal economic activities and create opportunities for enterprises to thrive within our city region.

I would like to thank the GGDA staff and management for their commitment and continued hard work; and the Board of the GGDA, for their stewardship over the agency and for steering it towards another clean audit outcome.

Mr Lebogang Maile (MPL)Member of the Executive Council

Gauteng Economic Development, Environment, Agriculture and Rural

Development

Taking the investment pulse of the province

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‘We are committed to investing

in catalytic economic infrastructure, in order

to stimulate and promote the

growth of our economy. ’

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Chairman’s Statement

The GGDA Board of Directors is honoured to table the 2018 Gauteng Growth and Development Agency (GGDA) Annual Report to the Member of Executive Council (MEC) and reaffirm its continued commitment to providing sound stewardship to the GGDA group of companies. The 2018 annual report provides stakeholders with an account of the organisational performance, the issues faced and overcame, and the potential for the future. It has been a significant year, with notable successes and insightful challenges, including a 2, 2% decline in economic growth during the first quarter of the year. Where targets have not been met, lessons have been learned and relevant solutions implemented.

The GGDA mandate is to support the Gauteng Department of Economic Development through leadership and facilitation of investments that contributes to sustainable job creation. To this end, 3 652 jobs were facilitated. We are in addition, focussed on inclusive economic growth and development in the Gauteng City Region. To this end, we have focussed extensively on improving Gauteng Province’s ability to attract and retain investments. An amount of R4,6bn in investments was successfully facilitated which derived from 14 foreign direct investments and 46 domestic investments. It is important to acknowledge and to mention, that the number of domestic investments would not have been possible without the partnership with the private sector formations in the province, including members of the Gauteng Consultative Business Forum (GBCF). R1,1bn worth of trade value was generated against a planned target of R400m, again the target was exceeded, largely due to the partnerships mentioned.

The 2018 GGDA Annual report shows how the Group performed, despite the challenging operating environment as confirmed by UNACTD report, that FDI to South Africa declined by 41 per cent in 2017. We achieved 81% of our planned performance targets, a regression of 6% compared to the previous financial year. This was due to under-performance in the delivery of infrastructure projects and service delivery related protests, constraining delivery of township based projects.

The Gauteng Industrial Development Zone (Gauteng IDZ), the Automotive Industry Development Centre (AIDC), The Innovation Hub (TIH) and Constitution Hill (ConHill), are the four primary infrastructure projects that sit under the GGDA umbrella; and each one has delivered a measurable return on investment. It is note-worthy to state that the Group, together with all its subsidiaries, received an unqualified audit opinion from the Auditor-General.

I would like to extend my appreciation to the MEC, Mr Lebogang Maile, the Board of Directors and the former Group CEO, Mr Saki Zamxaka, for their hard work, visionary leadership and exceptional guidance over the past year.

In addition, heartfelt gratitude is due to the GGDA Group employees for their continued belief in the work we do and the goals we have set out to achieve. The commitment of the GGDA staff, the oversight of the Boards of the GGDA and its subsidiaries; and the focus of the former Group CEO who has led and provided his services until the last day of the financial year, is appreciated.

Congratulations to the Group for achieving and maintaining an unqualified audit opinion.

Mr Mogopodi MokoenaChairman of the Group Board

Gauteng Growth and Development Agency

GGDA was part of the Global Export Passport initiative to promote export and

investment facilitation as well as strategic partnerships

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We have focussed extensively on improving

Gauteng Province’s ability to attract and retain

investments

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Group CEO’s Strategic Report

Gauteng is a province brimming with opportunities for business; it is highly urbanized with a population of over 14,700,000 and a huge labour force. As the most populous province in South Africa, it boasts the fastest growing and largest population of any province, with increasing purchasing and consumption power.

In upholding our mission to act as the premier catalyst for innovation, sustainable growth and socio-economic development within Gauteng and the Southern African region, the Gauteng Growth and Development Agency (GGDA) is pleased to report on the progress made during the past financial year.

The GGDA, whose mandate is informed by the strategic positioning of the Gauteng Department of Economic Development and serves as the province’s major institutional driving force, has been hard at work to reaffirm the province’s status as a regional trade hub and a gateway to local, national and international markets.

The fifth Gauteng Provincial Government administration adopted, and is responsible for the programme for Transformation, Modernisation and Re-industrialisation (TMR), which stems from ten pillars. But how is this achieved in real terms?

In respect to the Township Economy, it is the cooperation and solidarity on which growth depends. It is the practice of township enterprises working together, for the benefit of gaining a competitive advantage

in the various economic geographical areas. The Township Enterprise Hub programme, is an intervention that addresses the objectives of the Township Economies Revitalisation Strategy. The proposed refurbishment programme, aims to enhance the effectiveness of the SMMEs role in stabilizing the Township Economy, through job creation and encouraging economic growth through entrepreneurship development. In this regard, a refurbishment was undertaken at identified industrial parks, namely, Pennyville Phase 2, Chamdor, Khutsong and Vosloorus Phase 2.

To accommodate a growing economy, infrastructure is required. At the inaugural Gauteng Infrastructure Investment Conference (GIIC) in July 2015, Gauteng Premier, David Makhura announced that the province needed an injection of about R1.8 trillion to invest in social and economic infrastructure. In July 2017, over 2 030 delegates, which included policy makers, fund and investment managers, private equity companies, development funding institutions and ICT specialists, converged once again to reflect on the progress made in the implementation of the Gauteng Infrastructure Master Plan. The two-day conference, hosted by the GGDA, was held under the theme: “Driving investment for inclusive growth and sustainability”. It provided detailed progress on the transformative partnerships which were created over the past three years.

Mandela Bridge

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Brimming with Investment Opportunities

In respect of Infrastructure Development, the GGDA’s Enterprise Project Management Office (EPMO), serves to provide transversal services in respect of centralized and coordinated management of capital infrastructure projects. This includes project management support functions along the project cycle, to develop and support special economic zones (SEZ)’s in Gauteng.

As the implementation arm of the Gauteng Department of Economic Development, the GGDA executes many of its projects through its subsidiary companies: Automotive Industry Development Centre (AIDC), The Innovation Hub (TIH), Constitution Hill (ConHill), Gauteng Industrial Development Zone (GIDZ) and Newtown. The subsidiary companies operate in various priority sectors to grow the economy and combat the issue of youth unemployment and the skills deficit in the province. A skills shortage, is the single greatest impediment that public and private investment programmes face. As a result, there is a requirement to develop a pipeline of scarce and critical skills across different industries.

The Automotive Industry Development Centre (AIDC), serves to develop the automotive manufacturing sector to globally competitive standards of excellence, through a world-class value proposition, which enables effective and sustainable socio-economic growth. The construction of a Trade Test Centre (TTC) was completed to serve as an accredited centre to conduct training and assessments for those qualifications and skills programmes. In the past year, the AIDC has trained 104 persons in panel beating and in spray painting, against the target of 50 and through the Winterveldt Enterprise Hub (WEH), the township automotive hub had 32 companies enrolled in its programme.

Training, skills development and incubation of companies, are not the only services the AIDC provides, and this year, the TPM (Total Productive Manufacturing/Maintenance) Excellence Award, one of the most globally coveted and recognized awards in manufacturing, was rolled out by the AIDC as an organisational intervention model. In this regard, the AIDC is the first South African company to acquire the “know-how” for support, training and implementation of TPM, to take companies to the level of Excellence Award status.

The Innovation Hub (TIH), was established to promote economic development and competitiveness of Gauteng, through fostering innovation and entrepreneurship. Enterprise development activities at TIH, include a range of business incubation focussed initiatives, across all the priority sectors. Through the eKasiLabs, TIH aims to address the problems of access to, and seek to re-industrialize communities and unemployed youth, so that employment is created in their area of residence through skills and enterprise development. Three additional eKasi Lab sites (Mabopane, Kathorus and Kagiso) were activated, bringing the total sites that are operational, from seven to ten.

In filling gaps for unemployed graduates who require experience to enhance their acquired knowledge, or wish to improve their current skills, a programme with a methodology rooted in over a decade of experience, was designed to deliver work-ready individuals who can support industry in providing high-quality exposure. I. To this end, a 198 youth were exposed to workplace development skills.

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Gauteng Industrial Development Zone (GIDZ) was founded to manage the development of the Industrial Development Zone (IDZ) at the OR Tambo International Airport and to facilitate the development of high value, low mass industries at the IDZ, which can be exported.The development is contributing to employment creation, as well as the necessary skills development of individuals from the Ekurhuleni Metropolitan Municipality.

The GIDZ is presently developing a High Value, Low Mass Precinct, formerly known as the Jewellery Manufacturing Precinct (JMP), on land identified for such purposes within the OR Tambo International IDZ. Bulk infrastructure construction for this green field development will be completed in the 2018/2019 Financial Year. The Northern Precinct development, is expected to provide an investment of over R2bn in the medium term and job opportunities of an approximate number of 5000.

Constitution Hill (ConHill) is strategically positioned and easily accessible, using various modes of improved public transport. To crowd-in more users, visitors and tourists, ConHill is working towards offering a compelling reason for Chapter 9 and other human rights focussed organisations to locate their offices and programming at the site. It has also embarked on delivering more appealing, unique and content rich visitor experiences. This required unlocking new developments and finding improved ways in which to manage, promote and activate ConHill; and deliver content-relevant programmes in new ways.

ConHill is also leveraging new opportunities that will arise from the opening of the Visitor Centre in 2019; and the management of ConHill is in the process of working towards elevating the heritage status to that of an UNESCO world heritage site. It is has recently been awarded the status of a national heritage site. The Commemoration of 21 years of the Constitution, was celebrated on Human Rights Day at Constitution Hill.

Trade remains an important factor in growing the economies of the world, especially in Gauteng, which serves as South Africa’s greatest economic hub. In 2017, exports of goods and services from Gauteng amounted to R650,5bn, accounting for 55% of total exports from South Africa. Over the same period, imports amounted to R723,7bn or 65% of total South African imports.

During the past financial year, the GGDA planned to facilitate twelve investment projects worth R4bn and it was surpassed by the facilitated amount of R 4,158bn, 3.9% above target, in over sixty investment projects. Fourteen of these were Foreign Direct Investments (FDI) and forty-six were Domestic Direct Investments (DDI).Of the FDI facilitated, 56% was directed to secondary sectors of the economy, while 32% was directed to tertiary services. The primary sector, consisting of mainly agro-based business and mining, accounted for 12% of FDI facilitated. The City of Johannesburg attracted R1,47bn or 56% of FDI. Additionally, the City of Ekurhuleni attracted R920m or 36% of total FDI projects facilitated. The West Rand and the City of Tshwane, cumulatively attracted R258,5m of FDI projects.

The GGDA firmly believes that broad-based, private and public sector-led growth is essential to achieving faster development progress; and to transform the economy from where it is today. The GGDA is well poised to work with the rest of government and the private sector, to realize President Cyril Ramaphosa’s call to host a major investment conference later this year, which would aim to raise over R1 trillion in new investments for South Africa over the next five years. We remain committed to finding opportunities for the Gauteng province for long term growth and sustainability.

The achievements of the 2017/2018 Financial Year would not have been possible without a committed workforce and we wish to take this opportunity to thank the GGDA Group for its hard work and for remaining resilient under difficult times. We would also like to thank the former Group Chief Executive Officer, Mr Saki Zamxaka, for his contribution to the successes of the GGDA under his tenure.

Our appreciation also goes to the Board of Directors and the Chairman, for their guidance and strategic leadership. To our MEC, we are thankful for keeping us on track, in delivering on the mandate of the Gauteng Provincial Government.

Mr Jameel Chand Acting Group Chief Executive Officer

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17


Board Members

Mr M. MokoenaChairman Appointed:01 June 2012

Qualifications: B Com Hons (UNISA)

Areas of Expertise: Public Management, Financial Management and Auditing, Infrastructure and Urban Development, Trade and Investment Promotion.

Board Directorships (Other):• Mokwena & Mokoena• Dipogo Investments• Clinix Health Group• Nareli Investments Holdings• Jazzro• Inca Portfolio Managers• Gauteng IDZ Development Company

Board Committees:• Remuneration Committee• Trade and Investment Committee

Mr Z. MaleleDeputy Chairman Appointed:25 September 2012

Qualifications:B.Sc (UoL), BAP, MAP (WBS) Areas of Expertise:ICT, Economic Development, Marketing, Financial Management, Sales Management, Human Resources, Operations Management, Strategic Management, Risk Management, Governance and Project Management

Board Directorships (Other):• Nomvete Nemakonde Aviation

Consultants International• Maverick Aviation• Technology Corporate Management• TCM Networks• Sandford Estates• Meadow Star Investments 28• Mandeville Aquatics Disability

Swimming Centre of Excellence

Board Committees:• Group Audit and Risk Committee

Mr N. BaltonNon-Executive Director

Appointed:01 June 2012 Qualifications:BA (Ed) DegreeBachelors’ Degree in Education Master’s Degree in Public Management and Finance

Areas of Expertise:Education, Public Policy, Management and Finance

Board Directorships (Other):• Ahmed Kathrada Foundation• NBPP Consolidated 3rd Tier Trading• Vishshan Developments• Karma Community Projects• Constitution Hill Development

Company• Chairman and Board member of

Greater Newtown Development Company

• Matla and Associates

Board Committees:• Group Audit and Risk Committee• Social and Ethics Committee


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Ms D. DondurNon-Executive Director Appointed:14 March 2013

Qualifications: B Acc, B Compt Honours, MBA, CA (SA),WITS and London Business School International Executive Development Programme, University of Nevada, Reno Executive Development Programme, Post Graduate Certificate in Labour Relations, Fellow member at the IoDSA

Areas of Expertise:Finance, Business Administration, Auditing, Accounting, IT, Governance, Enterprise Risk Management, Corporate Governance, Labour Relations and Human Resources.

Board Directorships (Other):• Doris Dondur Consulting• Die Afrikaanse Taal - en

Kultuurverenining (ATKV)• Basil Read Holdings• Professional Provident Society

Insurance Company• National Lotteries Commission

Board Committees:• Group Audit and Risk Committee• Social and Ethics Committee

Mr S. NicolaouNon-Executive Director Appointed:01 June 2012

Qualifications: B.Pharm (Wits), FPS (SA)

Areas of Expertise:Trade, Manufacturing, Pharmaceuticals

Board Directorships (Other):• Health Marketing Enterprises• No 11 Fillian Forest Props• Sifiso Nxasana Paediatrics Fund for Children • Public Health Enhancement Fund • Business Unity South Africa• South African Hellenic Foundation for

Development and Philanthropy• Pharmaceuticals Made in South Africa• GD Pharmaceuticals• Aspen Pharmacare International• Proudly South African• First Ready Development 895

Board Committees:• Trade and Investment Committee

Dr P. JourdanNon-Executive Director

Appointed:01 June 2012

Qualifications:B.Sc.; B.A; M.Sc. (Eng) x2; Ph.D. (Leeds University)

Areas of Expertise:Resource-based and Spatial Development

Board Directorships (Other):• Coega Development Corporation • Gauteng IDZ Development Company• Umtentwe River Properties• Mining Equipment Manufacturing of SA

Board Committees:• Social and Ethics Committee


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Board Members

Ms Q. GungubeleNon-Executive Director Appointed:01 February 2015

Qualifications:B.Iuris. LLM in Labour Law

Areas of Expertise:Labour Law, Corporate Governance

Board Directorships (Other):• Kumaka Board

Board Committees:• Remuneration Committee• Social and Ethics Committee

Mr T. SetiloaneNon-Executive Director Appointed:02 October 2015

QualificationsDip. Mash. Mech, B.Sc Mechanical Engineering

Areas of Expertise:Engineering, Marketing

Board Directorships (Other):• Research Software• Southern Storm Properties 124• Blackwood Power• Molehe Technologies and Associates• Seventy Thirty JV• TL Capital• Nuclear Fuels Corporation of SA• ETA Operations• Umfiki Investment Corporation• Oro Group (Pty) Ltd• Swisscham Southern Africa SA

Chapter• Board Chairman and member of the

Supplier Park Development Company t/a AIDC

Board Committees:• None

Dr N. MsomiNon-Executive Director

Appointed:02 October 2015

Qualifications:PhD, International Executive Development, Diploma in Finance

Areas of Expertise:Innovation, Corporate Finance, Entrepreneurship

Board Directorships (Other):• Board of Governors-ICGEB• Board Chairman and member of the

Innovation Hub Management Company• MSQ Health



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Mr P. MafojaneNon-Executive Director Appointed:02 October 2015

Qualifications:B.Proc, LLB

Area of Expertise:Law

Board Directorship (Other):• Chairman and Board Member of

the Constitution Hill Development Company

Board Committees:• GGDA Remuneration Committee

Mr S. ZamxakaExecutive Director

Appointed:01 March 2016

Qualifications:B. Admin, B.Econ Honours, Diploma programme in International Education

Areas of Expertise:Developmental Economics, Project Management

Board Directorships (Other):• Greater Newtown Development

Company• Constitution Hill Development

Company• IDZ Development Company• The Innovation Hub Management

Company• Supplier Park Development Company



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Executive Management

FROM LEFT TO RIGHTMr Saki Zamxaka (Group Chief Executive Officer), Mr Jameel Chand (Chief Operations Officer),Ms Mosa Tshabalala (Group Chief Financial Officer), Mr John Mpfariseni Mulaudzi (Group Executive: Legal Advisory and Company Secretary), Mr Itumeleng Mogorosi (Group Executive: Monitoring, Evaluation and Organisation Performance) and Mr Muziwethu Mathema (Group Executive: Trade and Investment, Regulatory Enablement).


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FROM LEFT TO RIGHTMr Sipho Mhlongo (Group Executive: Business Intelligence and Planning), Mr Stewart Molalabangwe

(Group Executive: Corporate Services), Ms Naledi Ndlovu (Group Executive: Marketing and Communication), Mr Ntsastsi Rapoo (Head: Internal Audit), Ms Priscila Mvana (Manager: Risk Management),

Ms Zanele Fakude (Head: Office of the CEO) and Mr Wisani Marhanele (Group Executive: Enterprise Project Management Office).


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To the best of my knowledge and belief, I confirm the following:

All information and financial figures disclosed in the annual report are consistent with the annual financial statements, as audited by the Auditor-General.

The annual report is complete, accurate and free from any omissions.

The annual report has been prepared in accordance with the guidelines on the annual report, as issued by the National Treasury.

The Annual Financial Statements (Part E) have been prepared in accordance with the GRAP standards applicable to the group.

The accounting authority is responsible for the preparation of the annual financial statements and for the judgements made in this information.

The accounting authority is responsible for establishing and implementing a system of internal control, to provide reasonable assurance as to the integrity and reliability of the performance information, the human resources information, and the annual financial statements.

The external auditors are engaged to express an independent opinion on the annual financial statements.

In our opinion, the annual report adequately reflect the operations, the performance information, the human resources information and the financial affairs of the public entity for the financial year ended 31 March 2018.

Yours faithfully

___________________ Acting Group Chief Executive OfficerMr Jameel Chand

___________________Chairperson of the Group BoardMogopodi Mokoena

Statement of responsibility and confirmation of accuracy for the annual report

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Strategic Overview

GGDA PEOPLE

VALUES

GGDA

PERFORMANCE

VALUES

Integrity We value each other’s opinion, regardless of rank and we respect one

another, across culture, religion, gender and race.

Transparency We share information and knowledge; and encourage a culture of

learning; and we provide an open, safe and responsive environment.

Empowerment We encourage and facilitate personal and professional development,

in order to promote an efficient and successful organisation.

CreativeExcellence

We strive for creative and continuous improvement, through an

innovative attitude to achieve high performance.

Goal Driven We deliver on clearly defined objectives, through a well

co-ordinated effort in an effective and efficient manner.

Professionalism We consistently perform with integrity and are accountable.

Vision

To be the premier catalyst of innovative and sustainable growth and socio-economic development within the southern African region.

Mission

To create an enabling environment for growth through targeted investment facilitation, strategic infrastructure development and social transformation, thus positioning Gauteng as a leading Global City Region.

Values

In working towards the achievement of the vision and mission, the GGDA subscribes to the following internal values, which are in line with the “Batho Pele” principles:

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Legislative and other Mandates

National and Provincial Legislative Mandates

GGDA was created through an amendment to the Blue IQ Investment Holdings Act No. 1 of 2012. The amendment enabled the change of name from Blue IQ, to Gauteng Growth and Development Agency (GGDA); and incorporated the mandate and objectives of the former Gauteng Economic Development Agency (GEDA).

Numerous other Acts, both National and Provincial, inform the work of the GGDA, including but not limited to:

National legislation

• Public Finance Management Act, No.1 of 1999• Companies Act, No.7 of 2008,• Promotion of Access to Information Act, No. 2 of 2000• Intergovernmental Relations Framework Act, No. 13 of 2005• Preferential Procurement Policy Framework Act, No. 5 of 2000 (as amended)• Employment Equity Act, No. 55 of 1998• Basic Conditions of Employment Act, No. 75 of 1997• Labour Relations Act, No. 66 of 1995• Occupational Health and Safety Act, No. 88 of 1995• Prevention and Combating of Corrupt Activities Act, No. 12 of 2004• Skills Development Act, N.o 98 of 1998• World Heritage Convention Act, No. 49 of 1999• Business Act, No. 71 of 1991• National Environmental Management Act, No. 107 of 1998• Township Planning and Township Ordinance Act, No. 15 of 1986• Development Facilitation Act, No. 67 of 1995• Broad-Based Black Economic Empowerment Act, No. 53 of 2003• Promotion of Investment Act, No. 22 of 2015

Provincial legislation

• Amendments to the Blue IQ Investment Holdings Act, No.1 of 2012• Gauteng Tourism Act, No.10 of 2001• Gauteng Unfair Business Practices Act, No. 7 of 1996

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Governance Structure

Organisational Structure

Gauteng Department ofEconomic Development

GGDA Group Board

AIDC Board

AIDC

TIH Board

TIH

GIDZ Board

GIDZ

GGDA Holdings

Conhill Board

Conhill

Greater Newtown Board

GNDC

Manager: Internal Audit

GE Legal advisory and company secretary

GGDA Board of Directors

Group Chief Executive Officer: GGDA

Group Chief Operations

officer

Office of the group CEO

Senior Manager: Strategic support

Senior Manager: Strategic

Partnerships

Manager: Enterprise Risk Management

Senior Manager Corporate strategy

GE: Macro Business

Intelligence & Design

GE: Corporate Services

• Human Resources• ICT• Office and Facilities Management

• Investment Facillitation• Business Retention, Expansion & After-care• Strategic Export Trade Development• Strategic Promotions

• Marketing• Communications

• SCM• Finance Operations

• Monitoring & Evaluation• Reporting

• Project Management• Project Management office

• Business Intelligence• Planning• Knowledge Management

GE: Marketing and

Communications

GE: M&E and reporting

Group Chief Financial officer

GE: Enterprise project

management office

GE: Trade, Investment & regulatory enablement

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Performance Information

PART B

29

Performance Information

Table 1: Group Performance

Number of KPIsdue for ReportingEntity

Number of KPIs Achieved

Number of KPIs Not AchievedNumber of KPIs

Not Achieved% Achieved

14 10 4 71%

9 6 3 67%

9 9 0 100%

4 2 2 50%

10 10 0 100%

1 1 0 100%

47 38 9 81%

AIDC

HOLDINGS

TIH

GIDZ

Conhill

GNDC

TOTAL

81%Group Achievement

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Table 2: Jobs Creation Report

Table 3: External Training Report

TargetEntity Actual Number of KPIs Not Achieved

Variance

153 57 -96

3200 2846 -354

120 119 -1

100 76 -24

305 380 +75

57 +57

3978 3652 -326

TIRE

Group HR

EPMO

AIDC

TIH

ConHill

100

0

117 +17GIDZ

TOTAL

TargetEntity Actual Number of KPIs Not Achieved

Variance

15 14 -1

2685 3026 +341

50 330 +280

AIDC

GIDZ

240 262 +22Holdings

TIH

2990 3632TOTAL +642

31


The Auditor-General of South Africa (AGSA) currently performs the necessary audit procedures on the performance information to provide reasonable assurance in the form of an audit conclusion. The audit conclusion on the performance against predetermined objectives is included in the report to management, with material findings being reported under the Predetermined Objectives heading in the Report on other legal and regulatory requirements section of the auditor’s report.

Refer to page 150 to 151 of the Report of the Auditors Report, published in Part E: Financial Information.

Auditor’s Report: Predetermined Objectives

32


China

2017 6.8%6.4%6.3%

6.7%7.3%7.5%

3.0%3.1%3.0%

2.4%3.2%3.5%

2.3%2.5%2.2%

2.3%2.2%1.9%

1.0%2.5%2.8%

1.0%2.0%2.3%

0.8%1.1%1.7%

20182019

India WorldSub-

SaharanAfrica

UnitedStates

AdvancedEconomics Nigeria Brazil

SouthAfrica

Economic Outlook

Global overview

According to the IMF’s January 2018 World Economic Output report, the global economy grew by 3.7 percent in 2017, a 0.1 percentage point higher than expected. Growth over the period represents a 0.5 percentage point increase from the previous year. Global output growth for 2018 and 2019 have been revised upwards by 0.2 percentage points, to 3.9 percent. In aggregate, increased optimism in global growth reflects output momentum from key economic regions, as well as the expected impact of fiscal policy changes in the United States.

Regional overview

The World Bank projects economic output in Sub-Saharan Africa to grow by 3.4 percent, in 2018. Output is expected to further accelerate to 3.8 percent in 2019. Growth in Nigeria, the largest economy in the region, is projected to accelerate from 0.7 percent in 2017, to 2.1 percent in 2018 and 2.3 percent in 2019. Forecasts for Nigeria for 2018 and 2019 were revised upward, reflecting expectations that oil production will continue to recover and reforms in the foreign exchange market, along with improved supply of electricity, will help lift growth in the non-oil sector. Growth in Angola, the third largest economy in the region, is projected to rise from 1.2 percent in 2017, to 1.6 percent in 2018, moderating to 1.5 percent in 2019.

The outlook for non-oil exporting countries, such as Kenya, Tanzania, Rwanda and Ethiopia, is generally brighter, with an average growth rate in excess of 5.5 percent over the two year forecast horizon of 2018-2019.

Domestic overview

Expectations of economic output in South Africa have improved recently, primarily driven by improved political sentiments, higher commodity prices and improved growth prospects from key trading partners. According to the African Development Bank (ADB), though medium-term growth prospects for the domestic economy remain subdued, relative to similar economies; economic growth is projected to reach 1.1% in 2018 and 1.6% in 2019. In its January 2018 economic outlook report, the International Monetary Fund (IMF) revised forecasts for South African economic output, to grow by 0.9 percent over a two year forecast horizon for 2018 and 2019. However, Figure 1 below shows that current and projected economic growth in South Africa significantly lags behind global growth, peer economies and competitors.

As improved growth outlook is expected in all major regions and domestically, TIRE should first and foremost focus more attention on Africa, to promote exports of manufactured goods; and by leveraging advantages of geography, history, culture and political affiliations. Europe and North America should be the next targets as export destinations and sources of FDI.

Situational Analysis

Figure 1: Economic Growth Forecasts (2017-2019)

Source: World Bank Global Economic Prospect, January 2018

33


Upward risks to the economic outlook

The year 2018, is on track to operate at, or near full capacity,since the financial crisis. The cyclical global economy recovery is under way, aided by a rebound in investment and trade against the backdrop of relaxed financing conditions, generally accommodative policies, improved confidence and improved commodity prices. Global growth is expected to be sustained over the two year forecast horizon of 2018-19 and even accelerate in emerging markets and developing economies. The World Bank further asserts that, stronger than-expected activity in the United States and the Euro region could push growth in Sub-Saharan Africa above the expected baseline, through higher exports and increased investment flows in mining and infrastructure.

Downside risks to the outlook

The risks to the outlook remains heavily on the downside and two policy pronouncements by the US President in the weeks leading up to concluding this report, could have serious economic setbacks for the country and the province. South Africa is one of the countries that have not benefited from tariffs exemption on steel and aluminium and this will have adverse effects on the fledgling steel industry that employs all skills sets of the South African labour force. The increase in the price of steel products which are exported to the USA, adversely affects the SA steel export companies, who will have no choice, but to lower the cost of exports by reducing employment numbers and resorting to further capitalisation of the industry, thus increasing the unemployment numbers in SA, which is already at high levels. The other policy stance from the US president, is his announcement that the USA will not conclude the nuclear deal with Iran. Iran is a major supplier of crude oil to the international market and renewed sanctions will but increase the price of petroleum products, increase Producer Price Index (PPI) and Consumer Price Index (CPI). This adds to the likelihood that the South African Reserve Bank (SARB) will increase the repo rate, thus contracting the economy which just emerged from a recession, which would result in further job losses.

Indicators of Domestic Economic Activity

The SARB leading business cycle indicator, a composite index, which measures expected business cycle conditions six months in advance, has marginally advanced from 106.1 in December 2017 to 106.8 in January 2018. The indicator has been in an upward phase since May 2017 after 42 months of showing decline, the longest downward phase recorded by the indicator since 1994. Over the same period the Rand Merchant Bank / Bureau for Economic Research (RMB/BER) Business Confidence Index (BCI), which measures business confidence in the domestic economy, remained pessimistic at 34 in the fourth quarter of 2017. Although business sentiment still remains depressed, there is an improvement on the seven and a half-year low of 29 in the second quarter. The indicator varies between 0 and 100, where 0 indicates an extreme lack of confidence, 50 neutrality and 100, extreme confidence. Any outcome below 50 indicates subdued business confidence.

Although the rand traded below 12 to the dollar in January 2018, it gained in the past three months, to 15 percent, the most out of 31 major currencies tracked by Bloomberg. The rand has been gaining in value against major currencies, on the back of increased political certainty in South Africa. Furthermore, on a trade weighted basis, the rand improved by 10.6 percentage points in December 2017, implying a broadly improving competitive position for South African manufacturers in international markets.

Additionally, in its January 2018 realisation, STATSA reports that headline consumer price inflation was 4.7 percent in December 2017, up from 4.6 percent in November 2017. Average headline consumer price inflation for 2017 was 5.3 percent, 1.1 percentage points lower than the corresponding average of 6.4 percent in 2016. The price of most food products decreased, following the end of the two-year drought in most parts of the country, particularly in the maize producing areas.

Most measures of producer price inflation have increased in recent months, mostly due to higher energy and metal prices. Producer price inflation for final manufactured goods accelerated from a recent low of 3.6 percent in July 2017 to 5.0 percent in October 2017, driven primarily by higher prices of coal and petroleum products, metal products and motor vehicles. Similarly, producer price inflation for intermediate manufactured goods quickened somewhat from 1.5 percent to 4.1 percent over the same period, mainly on account of higher basic iron and steel, as well as chemical prices.

In aggregate, Indicators of macro-economic and micro-economic activity, reflect subdued, but improving business conditions and sentiment.

General Decrease in Prices

Inflation rate

The consumer price index in South Africa increased 3.74 percent year-on-year in March 2018, easing from a 3.82 percent rise in January 2018 and below market expectations of a 4.2 percent gain. It was the lowest inflation rate since March of 2015, as prices continue to slow, mostly for food and transport. Meanwhile, cost advanced faster for housing and utilities.

The repo rate

The constant and consistent tempering of inflation, has prompted the SARB to lower the repo rate by 25 basis points, in March 2018. The predictable economic environment is conducive for investment for both DDI and FDI, given that finance cost will not increase. However the mood is still pensive in respect of business and consumer confidence being low.

34


2013

SA Exports year on year Growth

SA Imports year on year Growth

2014 2015 2016 2017

14 %

17 %

8 % 4 % 6 % 8 %

9 % 0 % 1 % 1 %

Exchange rate

The Rand, that strengthened considerably following the election of Cyril Ramaphosa as the ANC president in December 2017, is now on the retreat, owing to the strengthening USD and regional tensions. Having reached a low of 11.52 to the USD in January, it is trading at around 12.60 to the USD , a one USD depreciation (SARB 2018). Although a stronger Rand is favourable to manufacturers who depend on imported feedstock, e.g, auto, chemical, textile and dairy industries, it bears unfavourable on exporters of locally produced products such as commodities. Hence, the auto, textile, pharmaceutical and chemical industries will be negatively impacted by the weakening domestic currency.

Sectoral performance

The current growth rate of South Africa’s GDP, is 3.1 percent (for December 2017), according to the SARB (2018). Agriculture, mining and manufacturing were the main drivers of the expansion in the economy during the third quarter of the year, while there was a contraction in general government services. This was partly due to some of the measures applied to curb further credit rating downgrading. Increased demand for gold and platinum led to increased output in the mining sector, seeing it grow by 6.6 percent. While a 4.3 percent rise in manufacturing was spurred on by increased production of both petroleum and metal products, finance and business grew by 1.2 percent, which was helped along by increased activity in financial mediation, insurance and auxiliary services. Besides government services as highlighted earlier, other notable industries that saw a decline were trade and electricity, water and gas. Despite a rebound in retail trade sales, falling wholesale trade sales pulled the trade industry down by 0.4 percent. The energy sector experienced a 55 percent contraction as a result of decreased electricity generation and demand.

Trade Outlook

Global Overview

Data from the World Bank, shows that global imports in 2017 amounted to USD14.7 trillion. China, the USA, Germany, Japan and France cumulatively accounted for 38.4 percent of global imports. Global imports have decreased by 18.2 percent from the USD18.01 trillion in 2011. USA, China, Germany, Japan and France have dominated global trade in the last decade. Global export growth has contracted by 28 percent, since 2011. Global merchandise trade volumes grew by around 2.4 per cent in 2017, according to the World Trade Organisation (WTO) (2018), which represents a significant improvement from 2016. Trade growth in 2018 is expected to accelerate to at least 2.1 per cent. The main driver of this improved trading outlook is an unexpected rise in global growth, which is forecast to rise upwards, to a 3.0 per cent growth rate over the horizon. Global economic growth has been unbalanced since the financial crisis, but all regions of the world economy are expected to experience a synchronized upturn in 2018. In particular, a slowdown in emerging market economies was responsible for much of the sluggishness in 2016’s trade growth, but growth in emerging markets is expected to support export orders through the 2018 period.

Domestic trade overview

According to the Worlds Banks and the World Integrated Trade Solution database (WITS), South Africa is the 41st largest exporter in the world, accounting for 0.5 percent of global exports. In 2017, South Africa exported R1.19 trillion worth of goods and services to the world. Over the same period R 1.1 trillion worth of goods and services were imported into South Africa, resulting in a trade surplus of R80,1bn. Figure 2 below summarises growth trends in export and imports of goods services since 2013.

Figure 2: Growth in South African exports and imports of goods and services (2013-2017)

Source: Quantec 2018 Trade Data

35


Gauteng Trade Overview

In 2017, exports of goods and services from Gauteng amounted to R650,5bn, accounting for 55 percent of total exports from South Africa. Over the same period, imports amounted to R723,7bn or 65% of total SA imports. Figure 3 below summarises key imports and export regions for the Gauteng city region in 2017.

Figure 3: Gauteng exports and imports of goods and service by source and destination

Source: Quantec 2018

Although Asia leads as an export destination, exports from Gauteng to Africa, are a close second. The export basket from Gauteng to Africa comprises mainly of manufactured goods, such as steel and their products, chemicals, fertilisers, processed food and fruits, as well as cereals. Exports from the Gauteng province to Europe are mainly driven by intra-industry trade, indicating the importance of overseas investment in promoting exports. In 2017, Gauteng received 44 percent of its imported goods and services from Europe, closely followed by the Americas. Goods and services imported from Africa accounted for only 8 percent of total imports into Gauteng, indicating weak intra-trade in Africa and a significant trade surplus between Gauteng and the continent.

FDI Outlook

Global investment was projected to recover in 2017, as a result of improved economic growth expectations across major regions - a resumption of growth in trade and a recovery in corporate profits, all of which could support a small increase in foreign direct investment (FDI). Global FDI flows were forecast to increase to almost $1.8 trillion in 2017 and $1.85 trillion, in 2018. However, policy uncertainty and geopolitical risks could hamper the recovery, and tax policy changes could significantly affect cross-border investment.

In most regions, except Latin America and the Caribbean, there are positive FDI prospects. Developing economies as a group, are expected to gain about 10 percent of the inflows. This includes a sizeable increase in developing Asia, where an improved outlook in major economies is likely to boost investor confidence. In 2017, the USA was the largest recipient of FDI inflows worldwide (at USD161bn), followed by Switzerland (USD61bn) and China (USD55bn). After being a major recipient of FDI inflows in the second half of 2016, when Anheuser-Busch InBev acquired SAB Miller, the United Kingdom moved out of the top ten recipients in the first half of 2017. FDI to Africa is also expected to increase, owing to a modest projected rise in oil prices and advances in regional integration.

In contrast, prospects for FDI in Latin America and the Caribbean are muted, with an uncertain macro-economic and policy outlook. Flows to transition economies, are likely to recover further after their economies bottomed out in 2016. Flows to developed economies are expected to hold steady in 2017 (UNCTAD 2018; OECD 2018).

South Africa witnessed a notable rebound in FDI inflows, with offshore investment increasing by 43 percent in 2017, to USD3,2bn (R38,65bn) (UNCTAD 2018). South Africa’s growth in FDI inflows came amid nearly stagnating investment inflows across Africa, which fell 1 percent in 2017 to USD49bn.

Asia Africa Europe Americas Not Allocated Oceania

Exports of Goods and Service from Gauteng

36%44%

35%

8%

11%

30%

22%

8%

Imports of Goods and Services into Gauteng

36


South Africa will reap more FDI inflows, once the political risk factor is addressed and the Rand/USD premium is digested by investors. However, the FDI inflows into South Africa lagged behind that of Egypt, whose flows, albeit declining by 14 percent, was still a respectable USD6,9bn, while the resource-heavy Democratic Republic of Congo saw a 29 percent increase to USD1,6bn. FDI inflows into Nigeria declined by 24 percent to USD3,4bn, while flows to Angola were 20 percent down at USD3,3bn, indicating risks attached to a commodity price meltdown.

Gauteng Investment Performance

The following countries are important sources of FDI inflow that target manufacturing and retail sectors: USA, UK, Germany, France, Japan and India. China’s significance as an investment source seems to have declined overall, in the last three years. While there were major investments in Gauteng in the services and ICT sectors, investment in transport and automotive sectors was observed.

Improving economic conditions, is widespread globally in both advanced economies and emerging markets, as well as in developing countries. However, trade and investment missions should target countries that have an appetite for Gauteng manufactured goods and these countries are found in Africa (Ethiopia, Kenya, Rwanda, Southern Africa Development Community (SADC), Ghana and Nigeria). Manufacturing sectors such as processed foods, iron and steel, textiles, coal products, motor vehicles and parts, can be promoted in Africa. Therefore exports to these regions will support our auto OEMs, agro-processing and the struggling textile sectors. Another region to target, is the advanced economies of Europe and North America which through intra-company trade, have developed a niche for Gauteng manufactured products, such as motor vehicles, chemicals and steel and jewellery products. In emerging markets, China is increasingly diversifying its consumption, by moving away from mostly raw materials to high consumer manufactured goods, although the comparative advantage is against Gauteng. Therefore, mainly food products (agro-processed) goods, are promoted for export to china, as well as the products of home industries, such as curios and artefacts.

While Gauteng may currently not compete in the exports of finished manufactured products, it is recommended that it attracts investments from component suppliers of products that are used in the assembly of finished goods. In this regard, the AIDC is best positioned as the entity with auto suppliers and OEM manufacturers that include local manufacturers of car parts, such as leather, car upholstery and seat belts. In this way, Gauteng will benefit from the global product manufacturing value chain, just as countries in South East Asia, such as Indonesia, Malaysia, Thailand and Taiwan, have done.

The GGDA is of the opinion, that the Special Economic Zone (SEZ) value proposition, which has been adopted in the country, is the enabler to drive this strategy and Gauteng, through the Gauteng Industrial Development Zone (GIDZ) and Aerotropolis initiative. It has a competitive advantage over other provinces, to attract such component suppliers.

Organisational environment

The performance of the GGDA group, is directly aligned to the Gauteng Department of Economic Development (GDED)’s Programme 2, the Integrated Economic Development Services, Programme 3, the Trade and Sector Development; and the governance element of Programme 4, Business Regulation and Governance. In addition, the GGDA Group will collaborate with, and assist the GDED’s Programme 5, which is responsible for Economic Planning.

In terms of this model, the GDED is responsible for strategy, policy and oversight, and the Group GGDA, is responsible for the implementation of approved initiatives. This is done within a framework of control and governance that provides Gauteng with a mechanism with which to encourage the development of existing economic activity; as well as the creation of new opportunities, in order to grow the base of sustainable employers and employment opportunities; and the overall economy of Gauteng.

The GGDA programmes and its interventions are geared towards the achievement of the participation of the National Development Plan (NDP), the dti’s Industrial Policy Action Plan (IPAP), the GIBS Global Executive Development Plan and the Township Economic Revitalisation (TER), Transformation, Modernisation and Industrialisation (TMR) and all other South African government economic related imperatives.

37


Strategic outcome oriented goals

The performance delivery environment of the GGDA for the 2017/18 financial year is significantly informed by the strategic positioning of its sole shareholder, the Gauteng Department of Economic Development and its role within this positioning, which is to serve as Gauteng’s major institutional driving force of radically transforming, modernising and re-industrialising Gauteng’s economy. The GGDA’s Group strategic objectives, as it ties in with the GDED’s programmes, are outlined in the table below:

STRATEGIC OUTCOME ORIENTED GOALS

• Gauteng’s economy radically transformed • Gauteng’s economy re-industrialised and modernised and • GGDA capacitated to deliver and implement efficiently and effectively

PROGRAMME 1: GGDA HOLDINGS

The TIRE sub-programme works toward the following strategic objectives:• Facilitating investment that supports the modernisation and re-industrialisation of Gauteng’s economy and • Increasing global trade activities from Gauteng

The EPMO sub-programme works toward the following strategic objectives:• Revitalising and modernising of township economies, reflecting radical transformation and re-industrialisation of the Gauteng economy• Facilitating strategic economic infrastructure that supports and facilitates radical economic transformation and re-industrialisation of Gauteng

PROGRAMME 2: The Automotive Industry Development Centre (AIDC) works toward the following key strategic objectives:

• Revitalising and modernising of township economies, reflecting radical transformation and re-industrialisation of Gauteng’s economy• Ensuring appropriately skilled human resources and businesses, to radically transform and re-industrialise Gauteng economy• Revitalising and modernising of industries to reflect re-industrialisation of Gauteng’s economy• Infrastructure development to establish, maintain and manage strategic infrastructure

PROGRAMME 3: The Innovation Hub (TIH) works toward the following strategic objectives:

• Fostering business growth, through incubation of innovative companies and the creation of new business opportunities for mature companies in priority sectors

• Strengthening collaboration with the right entities, to foster innovation and leverage resources• Developing and nurturing human capital for a knowledge economy and for the benefit of a high performing innovation agency, such as TIHMC• Increasing visibility of TIH and enhancing its brand’s strategic positioning• Accelerating the full development of TIH’s Science Technology and Innovation Park’s (STIP) Strategic Infrastructure, to establish an

innovation corridor in the Gauteng City Region (GCR)

PROGRAMME 4: The Gauteng Industrial Development Zone (GIDZ) works toward the following strategic objectives:

• Stimulating employment led growth and development, through the facilitation of strategic economic infrastructure interventions • Facilitating the development of sector specific skills required, to meet the needs of the jewellery economic sector • Facilitating the development of high value, low mass industries at the IDZ, which can be exported• Capacitating the GIDZ to deliver and implement its programmes, efficiently and effectively

PROGRAMME 5: Constitution Hill (ConHill) works toward the following strategic objectives:

• Building a global destination for Human Rights and Constitutionalism • Implementing programmes for active citizenry participation• Developing an integrated Human Rights Precinct • Building a sustainable and resilient organisation

PROGRAMME 6: Greater Newtown works toward the following strategic objectives:

• Developing Newtown into a vibrant, mixed-use area with a unique character, based on existing cultural activities

38


PROGRAMME 1GGDA Holdings

40

Gauteng Growth and Development Agency (GGDA)

The purpose of the Gauteng Growth and Development Agency (GGDA) is to provide focussed strategic capability for the Gauteng Department of Economic Development (GDED) to implement its economic development strategies.

The GGDA’s mandate is to be the implementation arm of the Gauteng Department of Economic Development and to assist the department to lead, facilitate and manage sustainable job creation and inclusive economic growth and development in the Gauteng City Region. As an implementation arm of the GDED, the GGDA has positioned itself as a thought leader in all the areas of its functional responsibility and manage relations within its scope of operations.

It drives its programmes through supporting the development of key sectors of the economy, in line with the approved economic and industrial policies of the Province. Key to this, is the facilitation of trade and investment; export training as well as increased strategic economic infrastructure.

Mandate To be the implementation arm of the Gauteng Department of Economic Development and to assist the department to lead, facilitate and manage sustainable job creation and inclusive economic growth and development in the Gauteng City Region.

VisionTo be the premier catalyst of innovative and sustainable growth and socio-economic development within the southern African region.

MissionTo create an enabling environment for growth targeted investment facilitation, strategic infrastructure development and social transformation, thus positioning Gauteng as a leading Global City Region.

The GGDA Services include:• Project Appraisal: Working with development finance (DFI) partners to assess a

case for proceeding with a project or proposal• Site Identification and Evaluation: Undertaking the co-ordination, pre-planning

and evaluation of sites for clients and post-investment site visits• Sector Economic Data Provision: Providing and disseminating market intelligence

on sectoral and regional economic data• Business Permits (with the dti): Assisting with company registrations and work permits• Incentives: Facilitating access to national and local government incentives• Facilitating local & foreign business retention, expansion and after-care services• Inward and Outward Investment Promotion Missions: Hosting and coordinating

inbound foreign and local business delegations and undertaking outbound missions to promote Gauteng as a premier investment destination

41

Description of Programme 1:GGDA HoldingsProgramme 1, contributes directly to Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively; and supports delivery of Strategic Goal 1: Gauteng’s economy to be radically transformed; and Strategic Goal 2: Gauteng’s economy’s re-industrialisation.The GGDA’s purpose in respect of the province’s programmes, are outlined in the table below;

PURPOSE FUNCTIONS

Administration Programme

Provide strategic and operational leadership, support and transversal business solutions.

• Accounting Authority in terms of Section 51 of the PFMA;• The scope of authority includes:

◊ GGDA ◊ AIDC◊ TIH◊ GIDZ◊ CONHILL◊ NEWTOWN

• Strategic Management of the GGDA Group• Operational Management of the GGDA Group• Financial Management• Management Accounting• Supply Chain Management• Risk Management• Human Resource Management• Communication, Marketing and Destination Promotion• Auxiliary and Legal Services and• Information and Communication Technology

Business Intelligence and Planning (BIP)

Provide Business Intelligence Planning Support Services.

• Provide research-based information to support planning, decision making and optimal resource utilisation, in respect of radical economic transformation and re-industrialisation interventions

• Strategic projects that contribute to spatial economic transformation and• Knowledge management

Trade Investment and Regulatory Environment (TIRE)

Facilitate trade and investment towards radical transformation, modernisation and re-industrialisation of Gauteng’s economy.

To drive economic growth and job creation through value-added facilitation of targeted investment in strategic sectors and delivering trade linkages globally through:• Trade facilitation and export development• Investment attraction and facilitation and• Business expansion, retention and aftercare

Enterprise Project Management Office (EPMO)

Provide project management support for strategic economic infrastructure projects.

To provide a transversal, centralised and collaborative provincial strategic economic infrastructure projects delivery unit, that ensures:

• Partnership and collaborative project delivery mechanisms• Prudent appraisal and management of projects• Optimum deal structuring and minimisation of risks• Private sector crowd-in investment and• Effective stakeholder management

Programme 1: GGDA Holdings

42


The purpose of the GGDA Holdings Company is to provide strategic and operational leadership along with support and transversal business solutions. The programme is structured into the following sub-programmes:

1.1 Trade, Investment and Regulatory Enablement (TIRE)1.2 Business Intelligence and Planning (BI & P)1.3 Enterprise Project Management Office (EPMO) and 1.4 Administration

Trade, Investment and Regulatory Enablement (Tire)

The objectives of the sub-programme are to: 1. Facilitate investment that supports modernisation and re-industrialisation of Gauteng’s economy and2. Increase global trade activities from Gauteng

The sub-programme has the following functional areas: a) Investment attraction and facilitationb) Trade facilitation and export development andc) Business expansion, retention and aftercare

Investment Attraction and Facilitation

GGDA’s plans included the facilitation of 12 investment projects, worth R4,0bn over the 2017/18 period. However, the Agency facilitated R4,158bn, 3.9% above target, in over 60 investment projects. Fourteen (14) of these were foreign direct investments (FDI’s) and 46 were domestic direct investments (DDI’s).

Investment Projects By Country Source

China 31%

Ireland 13%

Mauritius 0%

United States 3%

India 8%

France 9%

South Africa

ChinaIrelandFranceIndiaUnited StatesMauritius

South Africa 36%

Investment projects by country source

The chart below summarises investments facilitated and attracted by the GGDA during 2017/18, by country source. Investment projects facilitated during the year under review, amounted to R4,158bn. By country source, domestic investments accounted for R1,50bn or 36% of total investment facilitation to South Africa. China our largest trading partner, accounted 31% for R1,22bn of investment projects facilitated during 2017/18.

43


Investment projects by sector

The chart summarises investments attracted and facilitated by the GGDA, over 2017/18, by sector. The R4,158bn worth projects that were facilitated, had R2,23bn or 54% directed to secondary sectors of the economy. Over the same period R1,25bn or 30%, was directed to tertiary services of the economy. The primary sector consisting of mainly agro-based business and mining, accounted for R 649m or 16% of investment projects facilitated.

Investment projects by corridor

The R4,16bn worth of projects facilitated by the GGDA had R2,18bn or 52% was invested in the City of Johannesburg. The City of Ekurhuleni accounted for R1,69bn or 41% of investment projects facilitated. The City of Ekurhuleni accounted for R1,69bn or 41% of investment projects facilitated. The West Rand and City of Tshwane, respectively accounted for R171,0m and R112,9m investment projects facilitated in 2017/18.


Investment Projects By Sector

Sect

or

Primary

Secondary

Tertiary

R’ million

2,262.10

1,247.30

648.90

Investment Projects By Corridor

Corridor

2 184.80

1 689.60

171.00112.90

2000

2500

R’ m

illio

n

1500

1000

500.

City Of Johannesburg City Of Ekurhuleni West Rand City Of Tshwane

44


Foreign Direct Investment (FDI)

The table below details the performance of FDI facilitation during 2017/18. In the period under review, a total of fourteen (14) FDI projects were facilitated, resulting in R2,65bn worth of investment against a target of R2,5bn, 6% higher than the targeted FDI into the Gauteng City Region.

NoCountry of origin

Description Sub Sector Location GGDA Role

1 ChinaAutomotive manufacturer with local operations

AutomotiveCity of Johannesburg

Resolving outstanding VISA issues, opening mechanisms for visa renewals

2 FranceEstablishment of an online DIY and home improvement store

Retail/ Furniture Manufacturing

City of Ekurhuleni

Resolving intra-company VISA issues, facilitating meetings with SABS and SARS

3 IndiaCall centre setup and operations

Business Process Outsourcing

City of Johannesburg

Following up on visa appeals, opening mechanism for visa renewals

4 China Distributor of trucks Automotive West Rand Introduction to IDC for funding, AIDC and the dti for incentives

5 USA Education facilitySkills development



6 India

Scrap metal processing and melting to produce angles, channels, beams, sections and flat bars

Steel fabricationCity of Ekurhuleni

Resolving outstanding VISA issues, opening mechanisms for visa renewals. Assisted with GEDARD issues

7 IrelandAgro-processing for retail industry

Agro-processingCity of Ekurhuleni

Site development. Bulk infrastructure services

8 China Auto-manufacturer AutomotiveCity of Johannesburg


9 ChinaAgriculture and animal husbandry

Agro-processingCity of Johannesburg

Resolving outstanding visa issues, opening mechanisms for visa renewals

10 ChinaA brick and tile manufacturing plant

Brick manufacturing

City of Tshwane


11 ChinaManufacturers of electrical tools

ToolmakingCity of Johannesburg


12 IrelandInformation Technology and Communications




13 China

South Africa-China Economic and Trade Association, representing Chinese investors in South Africa and collaborating with GGDA to address their regulatory and information needs as part of investment facilitation

Multi-SectoralCity of Johannesburg

Visa renewals, advice on immigration requirements and regulatory compliance. Strategic partnership facilitation

14 MauritiusEstablishment of an automobile paints manufacturing plant

Chemicals Manufacturer

City of Ekurhuleni

Facilitation of the application for Noxious Industry permit; site identification and introduction to the dti for incentives applications

45


Composition of FDI by source country

FDI projects facilitated during the year under review, amounted to R2,67bn. By country source, China accounted for 48% of FDI’s facilitated followed by Ireland, which accounted for 20%. France, India and the United States accounted for 15%, 12% and 5%, respectively of foreign direct investments from Mauritius, accounted for less than 1%. The chart below contains summarised information on FDI by source countries.

Composition of FDI by sector

From the R2,67bn worth FDI facilitated, 56% was directed to secondary sectors of the economy, while 32% was directed to tertiary services. The primary sector, consisting of mainly agro-based business and mining, accounted for 12% of FDI facilitated.


Composition Of FDI By Source Country

China

China 48%

Ireland

Ireland 20%

France

France 15%

United States 5%Mauritius 0%

India 12%

IndiaUnited StatesMauritius

Composition Of FDI By Sector

Secondary

Secondary 56%

Tertiary

Primary

Primary 12%

Tertiary 32%

46


Composition of FDI by corridor

From the R2,67bn worth FDI facilitated, The City of Johannesburg attracted R1,47bn or 56% of FDI. Additionally, the City of Ekurhuleni attracted R920m, or 36% of total FDI facilities projects. The West Rand and City of Tshwane cumulatively attracted R258.5m of FDI projects.

Investment Projects By Corridor

Corridor

2 184.80

1 689.60

171.00112.90

2000

2500R’

mill

ion

1500

1000

500.

City Of Johannesburg City Of Ekurhuleni West Rand City Of Tshwane

47



African - Asean Business Expo

48


Domestic Direct Investment (DDI)

The table below details the performance of DDI facilitation of a total R1,50bn worth of domestic investments (DDI), which was realised from 46 investment projects, facilitated during the 2017/18 financial year.

No. Description Sub Sector Location GGDA Role

1Installation of telecommunication towers


City of JohannesburgAssistance with work permits for engineers

2

Process raw fresh milk into pasteurised milk, Long Life Milk (UHT), Amasi and yoghurt

Agro-processing City of TshwaneAssistance with sourcing of finance and securing the first off-take agreement

3Poultry and dry goods supply to the retails market and franchising

Agro-processing City of Johannesburg Municipal approvals

4Residential Energy project

Energy City of TshwaneIntroduction to TIH and the dti for incentives, assistance with trade opportunities

5Cement and concrete production

Cement manufacturing West RandIntroduction to IDC for funding, GDARD and the dti for incentives

6Road infrastructure solutions

Infrastructure and construction

West Rand Access to funding

7 Mineral Beneficiation Mining City of JohannesburgImmigration services. Expansion to the new facility

8Continued expansion of Savannah City project

Infrastructure and construction

City of JohannesburgFacilitating water issues with the water board

9Business processing Enablement


City of Johannesburg Client Relationship Management

10Event management and television production

Film and media City of Johannesburg

Facilitated linkages between Rhythmic Entertainment and Sky Rink Studios. The company is now operating from Sky Rink studios with access to state of the art production facilities

11Investment into new premises

Capital equipment City of EkurhuleniMarket intelligence, export facilitation, skills development and training

12Upgrade of existing premises and purchase of new equipment


13Investment into new equipment






49




16Upgrade of existing premises and purchase of new equipment


















25 Investment into new equipment

Capital equipment City of Ekurhuleni Market intelligence, export facilitation, skills development and training













50








Capital equipment City of Ekurhuleni Market intelligence, export facilitation, skills development and training.

























51


Composition of DDI by corridor

The R1,5bn worth DDI projects facilitated was from the City of Ekurhuleni amounting to for R769m or 51% of facilitated DDI projects in the GCR. The City of Johannesburg, accounted for 47% or R 706.8m of DDI projects facilitated. The West Rand and City of Tshwane, respectively accounted for R12.5m and R12.9m of facilitated DDI.


Compisition Of DDI By Sector

Sect

or

Primary

Secondary

Tertiary

200 300 500 700100

R’ million

400 600

392.3

800 900

779

329.9

Composition of DDI by sector

The R1,5bn worth DDI projects facilitated had R779m or 52%, directed to secondary sectors of the economy, while R 392.3m or 26%, was directed to tertiary services. The primary sector consisting of mainly agro-based businesses and mining, accounted for R329m or 225 of facilitated DDI.

Composition Of DDI By Corridor

100

200

300

400

500

600

700

800

900

769

706.8

12.9

Corridor

12.5

R’ m

illio

n

City Of Johannesburg City Of Ekurhuleni City Of Tshwane West Rand

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Trade Facilitation and Export Development

The unit assists Gauteng companies by exposing them internationally, through trade and export activities. The objective is to abet companies with access into new markets and training, to be export-ready. In the financial year under review, R1bn worth of trade was achieved against the unit’s performance target of R400m. The target was realised through the provision of facilitation services to both established and emerging exporters, as a means to entrench development and transformation in the province.

No.Value of Trade deal

achieved (R millions)Product Country

1 3.0 Automotive components Singapore, Sri Lanka, Brazil and South Korea

2 149.2 Construction equipment,engineering services Angola, Mozambique and Brazil

3 1.1 Medical equipment Botswana and Namibia

4 3.0 Fleet management services Ghana and Nigeria

5 3.0 Building material Nigeria and Kenya

6 21.0 Rail components Zambia

7 150.0 Opencast buckets Zambia

8 4.0 Hydraulic valves Zambia

9 100.0 Rail components DRC and Botswana

10 470.0 Electronic components Throughout Africa

11 15.0 Electric pumps USA

12 15.0 Turbines DRC and Ghana.

13 200.0 Heavy-duty construction equipment Zambia

TOTAL= R1,134bn. versus Annual Target of R400m.

The unit identifies five platforms through which it achieves its targets:• Local exhibitions• Local buyer’s programmes• International trade shows and outward trade missions• Company specific projects, seeking GGDA interventions and• Expansions into Africa by Gauteng based companies

The exporter development programme provided training to 262 companies, against a planned target of 240. The target was achieved due to a closer collaboration with the dti and municipalities, who are implementing the National Exporters Development Plan (NEDP).

Training sessions were hosted in various locations throughout provincial districts, forming part of the NEDP that focusses on various phases in the following areas:

Phase Name of Participants Name of the course

Phase 1 Explorer Export Awareness

Phase 2 Export-aware Introduction to Exports

Phase 3 Export-ready Planning for Export

Phase 4 Startup Exporter Succeeding in Exporting

Phase 5 Global Exporter Global Exporting

The GGDA formed part of the NEDP initiative, which was initially introduced by the dti, called the Global Export Passport. The initiative was developed as a training programme that forms part of the critical components of the NEDP; and which focusses on export capacity-building and training of emerging and experienced exporters, to ensure their export-readiness and sustainability in the international market. The programme aims to build on existing activities and capacities of the dti, provincial economic development departments, provincial trade and investment agencies, the Small Enterprise Development Agency (Seda); and other international and local stakeholders, to ensure the delivery of key interventions to emerging and experienced exporters.

The Passport Initiative, enhances the market competitiveness of emerging and experienced exporters. It also creates an enabling export platform, by addressing the significant aspects of market entry; and to grow employment with an ultimate contribution to economic growth. This is achieved through the five phases of the Global Export Passport Initiative noted above.

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Business Retention, Expansion and After-care

TIRE developed a visitation programme, to ensure that the GGDA have a better understanding of challenges that Gauteng businesses face; and developed an engagement programme with other intermediaries in assisting the unit to reach more prospects.

These intermediaries include, business chambers of commerce and industry in the different municipalities and foreign chambers. The portfolio of companies that were assisted, are diversified and includes several manufacturing sub-sectors, as well as the services sector.

Business Visitation Programme

This programme aims to stimulate local economic development and create employment opportunities, by retaining and expanding existing business. The objectives of this programme are as follows:

Objectives

• To identify the concepts, concerns and priorities of local business and obstacles that prevent them from expanding

• To respond immediately to urgent matters• To develop an action plan to assist businesses, to improve

performance, provide solutions and explore opportunities• To enhance the relationship between local businesses and all

spheres of government• To establish a partnership of local role-players, to implement

strategic actions for sustained economic development and• To inform provincial and national business development

policies and programmes, where possible.

The programme was surpassed by a total of 117 visitations, against a planned target of 110.

Gauteng Investment Centre

The Gauteng Investment Centre (GIC) has entered into its fourth year of operation and the need for a business investor One Stop Shop in the Gauteng Province, is as strong today, as it was at its inception. The GIC is considered to be the province’s key differentiator in the service offering to potential investors and exporters. The GIC is strategically positioned in the heart of Gauteng’s business and embassy hub, Sandton, to provide investment and export facilitation, through partnerships with provincial government departments, national departments, state-owned agencies; and companies in the private sector.

Key services of the GIC

The GIC’s services remain efficient through varied activities and support services designed to promote export and investment facilitation. These services include:

• Business retention• Export development• Environmental licenses• Taxation and business permits and visa applications• Economic data research• Provision of financial and non-financial support for Gauteng’s

SMMEs and• Support services relating to investments in municipalities.

Strategic partners

The Gauteng Investment Centre continues to align itself with strategic partnerships that bring synergy in the promotion of the province as a preferred investment destination. These partnerships have elevated the profile of the agency, which has allowed it to expand its services. The GIC’s strategic partners are:

• The Department of Trade and Industry (the dti)• The Department of Home Affairs (DoHA)• Gauteng Department of Agriculture and Rural Development

(GDARD)• Gauteng Enterprise Propeller (GEP)• Brand South Africa (Brand SA)• South African Revenue Services (SARS)• Mercantile Bank of Portugal• Visa and Permit Facilitation Centre (VFS Global)• Municipalities in Gauteng and• EY, a multinational professional services company, which offers

assurance, tax advice, consulting, financial and legal advice

Highlights

The GIC, has created an enabling platform for local businesses to interact with their international counterparts. The unit’s services has expanded to inform the Gauteng business community of the support services offered by Trade Invest Africa (TIA), an initiative of the dti, in facilitating trade and investment with the rest of Africa.

In 2016, the Presidency announced that the dti would lead and coordinate the establishment of the National One Stop Shop (OSS) for investors, as an integrated approach towards addressing key issues facing investors. The Gauteng OSS, an initiative which was formally launched in Gauteng during March 2018, remains the focal point of contact in government for all investors, coordinating and facilitating relevant government departments involved in regulatory roles, registration, permits and licensing.

During the year under review, the GIC received 3 856 clients (an average of 321 clients a month) and assisted to resolve 2 571 queries (an average of 214 queries a month). In addition, 336 (12 per month) foreign businesses and 61 (5 per month) international delegations visited the Centre to seek the assistance and support of the GIC in their endeavours.


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Sector support

The Gauteng Growth and Development Agency (GGDA) was tasked with the role of delivering the Gauteng Business Consultative Forum (GBCF), which was launched by the Premier of Gauteng in 2016. It is intended to be a mechanism through which dialogue can be entered into, between the private sector, government and academia; the purpose of which is to build a working relationship, that is aimed at increasing trust and confidence amongst all its stakeholders.

During the year under review, the GBCF met on a quarterly basis, its representatives came from the sectors that have been identified as being of high priority, by the Gauteng Economic Development Plan.

The GBCF’s sectoral approach, allowed for opportunities to address sector specific issues, develop close working relationships between government and business at a sector level; and allowed the provincial government to appoint a sector champion, who will use the opportunity to further enhance sector engagement.

a. Country Engagements / Inbound Missions

i. United Kingdom (UK) - May 2017

Foreign investors from the United Kingdom (UK) were hosted by the province, in May 2017 and comprised leaders in the public and private sector, including the Gauteng MEC for Economic Development, Environment, Agriculture and Rural Development, Mr Lebogang Maile; representatives from the British Chamber of Business; the Department of Trade and Industry (dti) and officials from the Gauteng Growth and Development Agency (GGDA).

Concerns raised by delegates included:

• The cost of doing business in South Africa, more especially data costs and slow internet bandwidth

• Skills shortages• Foreign ownership of land and businesses; and B-BBEE codes• An uncertain political and economic landscape and• Visa issues

The key issues which participants of the task teams dealt with, include:

• Closer government and business partnerships• Decoding the language of government• Driving growth, through economic delivery and• Government to be more visible to the public about their work

and initiatives.

ii. Germany engagement – 20 October 2017

The German forum was the second country engagement of the GBCF series. Germany is South Africa’s second-largest trading partner and the two countries have a long history of collaboration, dating back to 1860.

Today 620 German companies operate in South Africa and collectively employ more than 100 000 people (mostly in the automotive sector). In 2016, South African German exports and imports, were valued at US$5,26bn and US$8,82bn respectively.

The two main issues that were discussed, included the protection of investment and the new Broad-Based Black Economic Empowerment (B-BBEE) codes and the impact it has on business.

Six risk factors for investment into South Africa emerged: 1. Political uncertainty and non political risk, as uncertainty

means investors have no clear idea of how the political situation will develop over the long term, making Gauteng and South Africa a risk for trade and investment

2. Faltering credit ratings 3. South Africa’s lack of competitiveness as a country, which is

believed by the investor community to decrease further in the forthcoming years.

4. The lack of an investment protection agreement 5. Weak local legislation for foreign investment 6. No access to international mediation/arbitration, in terms of

protection of investment

Discussion points, however proved fruitful and included subjects that could be agreed within certain frameworks, including;

• The new B-BBEE codes • Capacity of South African Foundries• Advantages for companies, by providing training outside the

SETA framework • Skills development mismatch; and the retention of skilled and

experienced employees • Training and education, in the context of B-BBEE • Political perceptions abroad and negative publicity of South

Africa abroad • The lack of investment by South African companies and why

foreign companies should risk investment • Enterprise development and support of local companies • Gauteng actively attracting investment into the province• Issues around safety and security • Repatriation of financial profits • Policy predictability • Competitiveness • Investment climate and the protection of investors• Recognition of foreign qualifications

A number of these issues, fall under the purview of the national government and could no be directly addressed by the provincial government. However, the Gauteng Provincial Government, has committed itself to engage national government on behalf of businesses, to address these areas of concern.

55


iii. India country engagement – 2 November 2017

The India Country Engagement was an important forum for the province, in so much as it highlighted the significance of Indian investment and business in South Africa. An additional focus of the forum, was on bilateral trade between India and South Africa. The Indian High Commissioner and the Consul General, gave voice to India’s growth and the reason the country has become a leading emerging market, with GDP growth of 7.1% in 2016. The benefits of greater cooperation and bilateral trade between India and South Africa were highlighted and India’s strengths in sectors such as education, healthcare, agriculture and infrastructure, among others, were discussed as possible goods and services that could be imported to South Africa. Similarly and reciprocally, South Africa’s strengths in, and its expertise in building infrastructure, financial services (especially insurance), mining equipment, agriculture and agro-processing, formed part of the trade discussions.

Some of the issues raised that were preventing greater trade between the two countries, included no direct air links between the two countries, onerous visa restrictions; and steep duties and tariffs. The new B-BBEE codes, especially around ownership quotas for empowerment partners, bureaucracy and red tape, as well as the length of time it takes to get approvals from government, were further issues of discussion. Restrictive visa conditions, which prevents the importation of Indian skills, were also raised, as was the current de-industrialisation which is taking place in the South African economy.

In order to progress beyond the challenges, delegates were called to form a task team, which would comprise both government officials and Indian investors. The aim of the task team would be to discuss the challenges and bottlenecks occurring within the Gauteng business ecosystem and to find workable solutions.

iv. NORDIC countries engagement – 21 November 2017

ICT, engineering and innovative technology, are key drivers in South Africa’s economy. Spearheading these sectors, are foreign investors, especially those from the Nordic countries (Denmark, Finland, Iceland, Norway and Sweden). Such is the value of Nordic foreign direct investment into South Africa, that the Gauteng Provincial Government, who through its Gauteng Business Collaborative Forum (GBCF), included the region among an essential group of investors that need to be nurtured and developed, in order to ensure their continued investment into Gauteng and South Africa, well into the future.

The Gauteng Provincial Government, in partnership with the University of Pretoria’s Gordon Institute of Business Science (GIBS), hosted the province’s Nordic investors at the GBCF Nordic Country Engagement held in Sandton on 21 November 2017.

A key theme to this forum, was the issue of cooperation and collaboration, finding solutions and knowledge sharing.

The forum essentially highlighted a deep willingness by Nordic countries, to proactively engage with the provincial government and embrace the economic culture of South Africa. The two discussion sessions also highlighted the issues that the task team still need to address, which included:

• The need for government to interrogate its Small, Medium and Micro Enterprise (SMME) programmes and evaluate whether they are working as intended.

• Government to look towards its economic programmes and evaluate the efficacy of it.

• South Africa to develop an understanding of what it can learn from Nordic countries, and actively engage on these points.


Indian High Commissioner, Ms Ruchira Kamboj and GGDA Group Executive:TIRE, Mr Muzi Mathema at the India SA Business Summit Media round table.

56


• Task teams to engage in government investment assessment criteria and whether they are still relevant.

• The task to team to hold a discussion on legislation and its impact on various sectors, with a specific view on the B-BBEE Codes.

• The South African government to look at improving efficiencies across sectors, such as healthcare.

• To hold a discussion on increasing the research and development (R&D) including its financial requirements in South Africa.

• In short, government support for business needs to look at the following:

◊ Visas◊ Procurement processes◊ B-BBEE Codes◊ Skills shortages, specifically specialised skills◊ Retention of staff and◊ SMME identification/database.

Steel and Associated Industries

South Africa’s steel industry is undeniably in a state of turmoil after the debilitating global recession of 2008, wherein to date, 50 000 jobs were lost. The sector is now fighting against South Africa’s stagnant economy, increasing steel imports and a lack of export competitiveness.

In an attempt to develop and sustain the industry in Gauteng, the Gauteng Provincial Government actively works to drive a provincial economic development agenda, known as the Gauteng Development Plan (GDP). Within this broader strategy, the role of the steel industry is crucial.

To this end, the GIBS, series of consultative processes between government and business, called the Gauteng Business Collaborative Forums (GBCFs), also discussed the steel value-chain. Stakeholders included CEO’s from a number of top steel organisations, key industry players such, the South African Bureau of Standards (SABS), the dti, Gauteng Provincial Government, Capital Equipment and Allied Services, Southern African Institute of Steel Construction (SAISC); and Senior Economists for the Steel and Engineering Industries Federation Southern Africa (SEIFSA). The task team will look at addressing the following issues;

• Building a bridge between policy and process• Enhancing local procurement • Establishing how to reduce input costs • The provision of research and evidence-based data• Reviving the long-term focus for the industry• Working through incentives, inhibitors and bottlenecks within

the industry

ICT Sector Session

The ICT sector, is one of the most dynamic and fastest growing sectors globally, it is a vital cog in any economy’s engine. In this context, this sector has been identified by the Gauteng Provincial Government as one of importance for the province.

Senior leaders and officials from industry and the provincial government met to discuss the challenges and opportunities facing ICT in Gauteng. Although the sector is seeing strong growth and has a positive outlook, the last five years have seen significant changes to the ICT and technology landscape in South Africa. Initiatives, such as he roll-out of fibre to businesses and households, is however making good progress. Despite this, some of the key challenges in the sector include: • A lack of education and skills development• Slow digital transformation • Lack of growth in the industry• Challenges in infrastructure, including the cost and speed of data• A shortage of demand driven solutions

Issues that were identified as the basis on which the ICT sector should focus, are noted herewith, while the task team are in the process of developing an implementation plan.

• A method to accelerate public-private partnerships• Identifying the challenges facing ICT companies• Establishing means, to identify sector specific partnerships and

what they constitute • How to position Gauteng as a player in fourth industrial

revolution Members for the task team are in the process of developing an implementation plan.

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b. Sector Engagements / Outbound Missions

i. Capital Equipment (GGDA-SACEEC Partnership)

The GGDA-South African Capital Equipment Export Council (SACEEC) project team, was established and is implementing the Gauteng Capital Equipment Transformation Partnership. Some of the key activities that were undertaken, include; meetings with municipalities regarding the local procurement plan, the launch of a schools programme and skills training, the recruitment of 40 Black Industrialists; and visits to Zambia to secure potential markets for Gauteng companies in the Zambian Copperbelt.

Ten (10) micro enterprises were referred to SACEEC, by the GGDA for mentoring, of which four (4) micro enterprises who had established businesses, qualified for mentoring. The mentoring of these enterprises, were incorporated into Pillar 4, which is defined under the banner,Transformation and Black Industrialists.

The project team also achieved improved export activity and infrastructure engagement, through Government to Government relations, opening up Business to Business in Southern African Development Community (SADC) and the rest of continent.

Enterprise Project Management Office (EPMO)

The purpose of this unit, is to provide transversal services in respect of centralised and coordinated management of capital infrastructure projects. This includes, project management support functions along the project cycle, to develop and support SEZ’s in Gauteng.

Special Economic Zone (SEZ)

The Special Economic Zones PMU, is an important vehicle for accelerating the implementation of government’s industrial development programme, as reflected in, amongst others, the Industrial Action Policy Plan (IPAP).

The planned target of to obtaining the SEZ’s designation license was obtained from the City of Tshwane, in which a preferred site was identified. This forms part of the Department of Science and Technology’s (DST) Regional Innovation System (RIS) Enablement Business Case, the aspect of which was integrated as a knowledge complex (Science, Technology and Innovation Park - STIP). This is complementary to the broader industrial complex, which is the Gauteng Science and High-Tech SEZ. The need for a additional business case was required, a study of which will be concluded and delivered in the new financial year.


South African Capital Equipment Export Council Meeting

58


Township Industrial Parks Refurbishment

The Township Enterprise Hub programme is an intervention that addresses the objectives of the Township Economies Revitalisation Strategy.

To this end, the unit has implemented a refurbishment programme, which aims to enhance the effectiveness of SMMEs role in stabilising the township economy, through job creation and encouraging economic growth through entrepreneurship development. At present four (4) industrial parks attianed practical completion.

Total visual progress for the sites are recorded as follows:

Pennyville: Project reached practical completion

Vosloorus: Project reached practical completion

Khutsong: Project reached practical completion

Chamdor: Project reached practical completion

Before

Before

Before

Before

After

After

After

After

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Marketing and Communications Overview

The GGDA is an agency of the Gauteng Provincial Government (GPG), that carries the mandate of the Gauteng Department of Economic Development (GDED), as a whole, these departments serve to drive job creation, skills development and firm creation for economic growth and development within the province and South Africa. It is imperative that the GGDA is perceived in a positive manner by the public and that the good work of the agency, is profiled through constant communication and platforms that create visibility of; and for the organisation.

Various marketing and communication platforms were utilised to build, and create awareness of the GGDA brand, alongside its subsidiary companies.

In creating an ‘independent’ identity for the agency, the marketing and communications efforts of the company have evolved into the following areas:

1. Creating brand awareness2. Effectively implementing integrated marketing and communications campaigns; above-the-line, below-the-line

and through-the-line (via digital platforms)3. Enhancing the brand architecture between GGDA Holdings and

its subsidiary companies4. Repurposing content effectively onto multiple channels, for

consistency and reiteration of the GGDA’s key messages5. Improving the synergy on all marketing facets, across GGDA

Holdings and its subsidiary companies.

Brand awareness is crucial for the GGDA and its subsidiary companies, however in serving a purpose with these efforts, generating business leads is a core focus.

In selecting mediums of engagement in the 2017/2018 Financial Year, the marketing and communications efforts were focused on continuing to build the GGDA brand and to create demand, through the provision of relevant content. This approach allows for profiling Gauteng as the ultimate investment destination, subsequently positioning the GGDA alongside its subsidiary companies.

In so far, the Marketing and Communications focus was based on the appetite which was identified in various platforms, such as the various countries who visit the GGDA’s website and the pages of interest. In terms of social media, the demographics of the GGDA’s followers take precendence and these statistics are collected from the various social media platforms, such as Twitter, Facebook, Linked-In, Instagram and YouTube.

The GGDA Group does not have a homogeneous target audience, as each are unique to the services provided. However, there are opportunities for leveraging where the target audiences intersect. The Marketing and Communications department therefore identify those intersection points and utilise them specifically for group branding, events and other brand building initiatives.

The GGDA Group Marketing and Communications Division is responsible for both the group based horizontal branding and the GGDA services specific deliverables, whilst the subsidiary companies are responsible for their service specific marketing and communications deliverables. The overall approach for the GGDA Group Marketing and Communications is on a horizontal brand building structure, which covers the GGDA Group and a vertical targeted focus for the Agency’s core areas of focus.

Print Media894 Articles(R 27 926 272)

Online Media1 246 Articles

(R 17 479 291)

Broadcast Media139 Clippings(R 9 052 282)

Total reach on socialmedia at 119 098 157(AVE - R 523 819 631.4021 912 Mentions)

SOCIAL MEDIA

SOCIAL MEDIA BREAKDOWN

The Infographic provides detail on the traditional media coverage, as well as the social media total reach.

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Some of the key interventions in building and promoting the Gauteng Growth and Development Agency (GGDA brand during the reporting period included the planning and execution of the following events and marketing campaigns, externally and internally;

• CNBC Africa Panel Discussions at the Intra-Africa Trade and Investment Indaba and the Ghana and Nigeria Outward Investment Mission

• Gauteng Business Consultative Forums (GBCF) in collaboration with the Gauteng Department of Economic Development (GDED) and the Gordon Institute of Business Science (GIBS)

• Inward Trade and Investment Missions at the Gauteng Investment Centre (GIC)

• Gauteng Infrastructure Investment Conference (GIIC)• GETTING TO KNOW US CAMPAIGN: Doing Business in Gauteng:

Highly Urbanised City• Tshepo 1 Million Initiative (Gauteng Youth Expo, NASREC EXPO

CENTRE)• TIH Investment Summit• eKasi Summit• Gauteng Accelerator Programme & Gauteng Accelerator

Township Entrepreneurship Programme) Awards Ceremony and Gala Dinner

• Nigerian benchmark visit to Automotive Supplier Park • Human Resource Development Council (HRDC) visits chaired by

then Deputy President, Cyril Ramaphosa at the AIDC Learning Centre

• ConHill South African Museums Association award for its interactive and informative website

• ConHill visibly profiled within the Gautrain stations high traffic station display areas

• 21st Anniversary of the signing of the Constitution• Botswana Investment Centre visit to AIDC• Constitution Hill Human Rights Festival• Proudly South African Buy Local Summit• Power and Electricity World• Skill Development Summit & Annual Achiever Awards• Manufacturer’s Network for Capital City Business chamber (CCBC)• Centurion Aerospace Village and• DHL Tomorrow’s Leaders Convention

Social Media Quarter 1 to Quarter 4

“GGDA” OR “#businessgauteng” OR “#GautengAccra” OR “#KZNBusiness” OR “@TheGGDA” OR “Innovhubza” OR “#ConstitutionHill” OR “@AIDCSA” OR“The Innovation Hub” OR “#VisitConHill” OR “@VisitConill” - GGDA_ORG”

Ggda - Coverage South Africa

Search Keywords

21912 MentionsOver the last 364 days

60033 MentionsOver the last 364 days

119.098.157 FollowersOver the last 364 days

ZAR 23,819,631.40Over the last 364 days

Total Mentions Daily Average Reach AVE Channels

Twitter an Instagram

GGDA Staff members at the Exporters Breakfast Session

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Gauteng Infrastructure Investment Conference 2017

The conference was attended by over 2 030 people and enjoyed the participation of delegates, which included policy makers, fund and investment managers, private equity companies , development funding institutions and ICT specialists, who all converged at Gallagher Convention Centre, to reflect on the progress made in the implementation of the Gauteng Infrastructure Master Plan.

The two-day conference, held under the theme: “Driving investment for inclusive growth and sustainability”, provided detailed progress on the transformative partnerships created over the past three years, as part of realising the provincial government’s vision of transforming, modernising and re-industrialising the Gauteng City Region.

Premier Makhura and MEC Maile officially opening the Gauteng Infrastructure Investment conference 2017

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Performance Information by Administrative Programme Programme 1: GGDA Holdings

Programme 1, contributes directly to Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively. It also supports delivery of Strategic goal 1: Gauteng’s economy radically transformed and Strategic Goal 2: Gauteng’s economy re-industrialised.

Strategic objectives, performance indicators, planned targets and actual achievements

Strategic objectives

Actual Achievement2016//2017

Planned Target 2017/18

Actual Achievement

2017/18

Deviation from Planned Target to

Actual Achievement

Comment on deviations

Facilitate investments that support modernisation and the re-industrialisation of Gauteng’s economy

R2bn FDI R1bn DDI

R2,5bn FDI R1,5bn DDI

R2,645 500 000 FDI R1,512 869 767

DDI

+R145 500 000

+R12 869 767

Aggressive pipeline investments follow through and sterling service provision by the GIC partners

26 GIC investments facilitated



+50

Aggressive pipeline investments follow through and sterling service provision by the GIC partners

Developed GCR incentives framework noted for approval by the Executive Team

- - - -

New KPI110 business visitations undertaken

117 business visitations undertaken

+7

Meeting with intermediaries, e.g. Chambers of commerce, industry associations and other bodies who assisted the unit to reach more prospective companies


63





Actual Achievement

2017/18


Actual Achievement


Increased global trade activities from Gauteng.

R325m trade values facilitated

R400m trade values facilitated

R1, 184m trade values facilitated

+R784m

Partnership with SACEEC assisted affiliated companies to increase their export orders

247 enterprises assisted through export readiness programmes



+ 22

Partnership with the dti and municipalities assisted to recruit more companies into the programme

33 trade deals for Gauteng-based companies facilitated

- - - -

12 Gauteng-based firms expanded operations into Africa

14 Gauteng-based companies expanded operations into Africa

17 Gauteng-based companies expanded operations into Africa

+3

Hosting and forging partnerships with African agencies, enabled the identification of opportunities

6 infrastructure opportunities in the continent identified for Gauteng suppliers



- -

To revitalize and modernise township industries reflecting, reindustrialisation of Gauteng’s economy

3 5 4 -1

The tender for the Alexandra site was cancelled, due to community resistance to the project


64




Actual Achievement

2017/18


Actual Achievement


Strategic economic infrastructure that supports and facilitates, radical economic transformation and reindustrialisation of Gauteng’s economy

-2 sites 100% upgraded

Conceptual & detailed designs completed

-2

Unresponsive bids received on two occasions and tenders could only be awarded 6 months into the financial year

-SEZ operating designation license attained

New business case study in SCM Process

Designation application could not be submitted

SEZ designation license application can only be done once site is obtained

-Hosting of GIIC event and partnerships concluded

GIIC hosted in Quarter 2

- -

Professional team and architects appointed

75% completion of level 3 conference centre

0% -75%

Technical difficulties with procurement, led to the cancellation of the tender

70% of bulk construction completed

20% Northern precinct top structure completed

20% completed - -



65

Key performance indicators, planned targets and actual achievements

Programme/activity/objective:

Performance Indicator

Actual Achievement 2014/2015



Planned Target

2017/2018

Actual Achievement2017/2018

Deviation from Planned Target

to Actual Achievement


Rand value of FDI facilitated

R1,3bn R1bn R2bn R2,5bn R2,6bn +R145 500 000

Aggressive pipeline investments follow through and service provision by the GIC partners

Rand value of DDI facilitated

R76,5m R567m R1bn R1,5bn R1,5bn +R12 869 767


Number of GIC investments facilitated

13 14 12 12 62 +50


Number of visitations undertaken to all Gauteng municipalities

- - - 110 117 +7

Meeting with intermediaries, e.g. Chambers of Commerce, Industry associations and; other industry bodies who assisted the unit to reach out to more prospective companies

Number of enterprises assisted through export readiness programme

163 242 247

240 enterprises assisted through export readiness programme

262 enterprises assisted through export readiness programme

+22

Partnerships with municipalities and the dti enabled the target to be exceeded

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Planned Target

2017/2018





Total value of Trade deals facilitated

- R335m R325m R400m R1 184m +R 784m

Partnership with SACEEC assisted affiliated companies to increase their export orders

Number of infrastructure opportunities in the continent, identified for Gauteng suppliers

- New KPI 6 8 8 - -

Number of Gauteng-based firms expanding operations in Africa

- - 12 14 17 +3

Hosting and forging partnerships with African agencies, enabled the identification of opportunities

Gauteng Science and Hi-Tech SEZ operating company

50% business case completed

Land earmarked for SEZ unavailable

-

SEZ operating designation license attained

New business case study in SCM Process

Designation application could not be submitted

SEZ designation license application can only be done once site is obtained

Number of Tourism infrastructure upgraded

- - -2 sites 100% upgraded

Conceptual and detailed designs completed

-2

Unresponsive bids received on two occasions and tenders could only be awarded 6 months into the financial year

Gauteng Infrastructure investment conference (GIIC) hosted

- - -

Hosting of GIIC event and partnership concluded

GIIC hosted - -


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Planned Target

2017/2018





Percentage of visitor centre completed

Identified artworks and budget requirements

-

Professional team and architects appointed

75% completion of level 3 conference centre

0% -75%

Technical difficulties with procurement led to the cancellation of the tender

Development of the IDZ ORTIA precinct development

Procurement process initiated

Construction of bulk earthworks, attenuation dam and setting of platforms

70% of bulk construction completed

20% Northern precinct top structure completed

20% completed

- -

Number of industrial parks refurbished in Townships

9 township enterprise hubs for which concepts and business plans developed

-3 industrial parks refurbished

Refurbishment of 5 industrial

parks com-pleted

Refurbishment of 4 sites

-1

The tender for the Alexander site was cancelled, due to community resistance to the project

Gauteng Infrastructure Investment Conference 2017 delegates

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GGDA staff posing for the 2017 Nelson Mandela day charity drive

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PROGRAMME 2Automotive Industry Development Centre (AIDC)

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Automotive Industry Development Centre (AIDC)

The Automotive Industry Development Company (AIDC), serves to develop the automotive manufacturing sector to globally competitive standards of excellence, through a world-class value proposition which enables effective and sustainable socio-economic growth.

The organisation was established as a government support centre, to increase the local automotive industry’s global competitiveness and to promote Gauteng as the automotive industry investment destination of choice.

It has developed into a world-class organisation, which specialises in skills development and training, enterprise development, incubation programmes, management of incentive programmes and offers state-of-the-art manufacturing support facilities.

The organisation has expedited economic growth within the automotive sector by partnering with key stakeholders, such as industry leaders, government, and non-government agencies and others.

The AIDC also manages the Automotive Supplier Park (ASP), an automotive hub based in Rosslyn, housing various automotive component manufacturers, suppliers and service providers to (Original Equipment Manufacturers (OEM’s).

The AIDC’s partnership with various OEM’s and local government, has resulted in the establishment of two Incubation Hubs in the province and the organisation has evolved into a leading implementation arm within government, having pioneered numerous world-first automotive projects, which includes the fundamental function, in the roll-out of Total Productive Maintenance (TPM) within South Africa. Furthermore, the AIDC’s Gauteng Automotive Learning Centre caters for the needs of industry in skills development and training.

A key drive for the AIDC is to promote Gauteng as an attractive automotive destination. Gauteng, although landlocked, is close to the northern borders of South Africa, making it an ideal gateway to sub-Saharan Africa.

Chief Executive Officer, Dr David Masondo resigned in June 2018

Mr Alfred TauAIDC Acting Chief Executive Officer

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Programme 2: Automotive Industry Development Centre (AIDC) Programme 2, contributes directly to Strategic Goal 1: Gauteng’s economy radically transformed and Strategic Goal 2: Gauteng’s economy re-industrialised; and supports delivery of Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively.

The table below depicts the purpose of Programme 2, its sub-programmes and their functions.

PURPOSE SUB-PROGRAMMES FUNCTIONS

To develop the automotive manufacturing sector to globally competitive standards of excellence through a world-class value proposition which enables effective and sustainable socio-economic growth.

Industry Development

• Supplier and enterprise development • Township Enterprise Development• Incubator programmes • SD&T (Skills, Development and Training) and ESDA• Learning Centre with two simulator facilities• Special programmes, including Tshwane Automotive City• Industrial policy development support to key stakeholders• Automotive export support into SADC/Africa

Operations

• Facilities maintenance• Construction projects• ICT Management - also responsible for Business Continuity

Management • SHEQMAN - Safety, Health, Environmental Quality Management

System at all AIDC sites• Soft services – AIDC office support• Business Support Services• Conference venue and lapa at ASP• Contact centre and help desk - facilities support, ICT and SHEQ

M&E and Risk

• Strategic and operational planning coordination• Business plan coordination • Enterprise risk management and risk registers• Operations risk management– across all projects and all sites• Reporting – performance tracking• Projects monitoring• Jobs Fund reporting (e-portal)• Overseeing M&E of operational and performance effectiveness• Performance audit evidence collection

Business Development

• New business sourcing – business intelligence • Alternative funding • Enterprise business analysis – including township concept

development• Marketing, corporate identity and events • Tenant leases, relationships, and tenant pipeline

Finance

• Operations• Projects• Procurement• Payroll

Human Resources• Recruitment and administration• Employee wellness and relations• Training Development and Performance Management

Programme 2: AIDC

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Winterveld Enterprise Hub

The Winterveld Enterprise Hub (WEH), is aimed at the implementation of the Township Economy Revitalisation programme. Its business model is to provide a facility, which enables Winterveld’s panel beating and spray painting SMMEs with much needed technical support. SMMEs use the Hub as a technical centre of excellence, to develop their own technical and business management abilities.

The intended impact of this Hub is to transfer knowledge to the SMMEs of the Winterveld Township, which will enable them to grow their businesses, as well as create much needed employment opportunities within the area.

A total of 104 persons were trained in Panel Beating and in Spray Painting, against the target of 50. Five (5) SMMEs commenced operations and managed to process 16 vehicles, of which 13 were private vehicles and three (3), government vehicles.

The Hub Management have engaged with the Steering Committee and the Local Ward 19 councillor, to allow SMMEs from surrounding townships to participate in the WEH Hub Programme. This will allow for the programme to reach more beneficiaries/SMMEs in the rural Northern Corridor and for the targetted group, to utilise the Hub.

Supplier and Enterprise Development Department (SEDD) The supplier efficiency programme, is aimed at enhancing the manufacturing competitiveness of Gauteng’s automotive supplier base. This programme is made up of various sub-categories of intervention at component suppliers, which is tailored to address the largest barriers to their growth and global competitiveness. All the interventions are based on ‘lean’ manufacturing principles, which is unique to the engineering industry. The interventions at companies, range from a two (2) month duration to a three (3) year programme, depending on the nature of the assistance needed.

Thirty two (32) companies enrolled in the programme and a total of 301 people were trained during the year, against a planned target of 170.

Name Programme Product

1 Xuba Polymer Industries Lean Polymer formulations

2 Angelo Kater Lean Conversion of vehicles

3 Auto industrial Machining TPM Brake drums, brake discs and wheel carriers

4 AutoLiv TPM Airbags, seatbelts and steering wheels

5 Baires Plastics JICA Plastics

6 Directech QMS AMT - Torque tools for the automotive industry

7 Eagle spring Cleaner production Springs and suspension parts

8 Feltex trim Cleaner production Main Floor Carpets

9 Frys metals TPMPurchasing and recycling scrap automotive batteries and other lead-bearing hazardous materials

10 Supreme spring JICA Springs, leaf springs, torsion bars, stabilizer bars

11 Vikings foundry RPIW Various

12 Batyi automotive QMS Supplier to FMCSA

13 Durrans RPIW Foundry Consumables

14 Duvha Foundry RPIW Steel and Stainless steel

15 Ikukeng automotive QMS Supplier to FMCSA

16 Jannock RPIW Plastic parts for automotive and general industry

17 Rely intra-cast Cleaner production Stainless steels, speciality heat and wear resistant alloys and non-ferrous alloys

18 Right corrugated RPIW Corrugated packaging.

19 Tipuworx Cleaner production Plastics

20 Wadeville precision Efficiency improvement

Fabrication, Machine Maintenance, General Engineering, Drilling, CNC-milling, CNC-turning

21 Auto industrial foundry TPM Brake drums, brake discs, wheel carriers

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Name Programme Product

22 Hulamin TPM Aluminium Rolled Products

23 Letago Lean Bumpers

24 Sodecia QMS Supplier to FMCSA

25 Zealous JICA Aluminium castings, machines and sub-assemblies

26 Autoneum feltex RPIW LFT under Shields

27 Feltex Fehrer RPIW Seat foams for BMW and Ford

28Mothibi innovation solutions

RPIW Logistics

29 Quantum automotive RPIW Pulleys

30 Tata Motors SA RPIW Heavy commercial vehicles and trucks

31 UJ metal casting RPIW Metal casting

32 WIE component supplies RPIW Bed frames, zed springs and WIE

TPM (Total Productive Manufacturing/Maintenance) Excellence Award, is one of the organisational intervention models rolled out by the AIDC. It is one of the most globally coveted and recognised awards in manufacturing. Autoliv SA, with the support of the AIDC, is the first automotive and second local company in South Africa’s history to receive the award, while the AIDC, is the first South African company to acquire the “know-how”, for support, training and implementation of TPM, to take companies to the level of Excellence Award status.

Skills Development

During the financial year under review, 3,026 people were trained across the various training programmes, against a planned target of 2,685.

Gauteng Automotive Learning Centre (GALC)

The learning centre was established in 2014, as a critical delivery pillar of the partnership between the AIDC and Nissan SA. The learning centre acts as the conduit for the development of scarce and critical skills, for the automotive and allied industries. The facility has two key delivery focus areas i.e. the implementation of training on scarce and critical skills and the provision of facilities for utilisation by industry, for the achievement of their training and development targets. Since its inception, the learning centre has implemented three accredited qualifications, with most of its activities forming part of the utilisation focus area.

The mandate of the learning centre focuses on training and development, with the following anticipated impact:

• To establish a one-stop-shop for all industry skills requirements, through internal Learning Centre programmes and partner programmes• To establish collaborative partnerships with the industry, for the coordination and delivery on Work Integrated Learning Programmes • To address the scarce and critical skills challenges for the automotive and manufacturing industry, as highlighted in the SETA Sector Skills

Plans (SSP) and• Formalised skills for a sector which is littered with skilled, but unqualified labour

The number of people that were trained at the learning centre during the financial year, is 1,548.

The Learning Centre has successfully concluded the extension of its accreditation scope; and subsequently BMW requested the Learning Centre to implement a skills programme (short course) for the Automotive Components and Assembly qualification. This entailed, the implementation of an accredited training course for 509 BMW operators. The implementation of work is in progress with the German Chamber of Commerce, to manage their Mechatronics Training Programmes. This will be a first of its kind project, where the AIDC, together with the German Chamber, Festo and various stakeholders, embark on a process of getting a dual accreditation (MerSETA and German ETQA) for Mechatronics and to implement a pilot project for school leavers.

Programme 2: AIDC

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The Learning Centre scope of accreditation has been extended with MerSETA and QCTO, who is currently accredited for;

• Autotronics level 2-3• Mechatronics level 2-4• Automotive spray painting level 3-4• Automotive body report level 2-4• Welding level 2-4• Automotive components manufacturing and assembly level 2• Automotive sales and support NQF 4• Automotive body repairer• Automotive electrician and• Welder

The Learning Centre, is also in the process of extending its scope of accreditation for its technical labs, in order to secure additional external revenue generating training projects.

This process entails obtaining learning materials and contracting Facilitators, Assessors and Moderators.

SD&T (Skills Development and Training division)

A skills shortage is the single greatest impediment that public and private investment programmes face. As a result, there is a requirement to develop a pipeline of scarce and critical skills across different industries. The Skills Development and Training Department, performs this role by managing Skills Development and Training Projects, for and on behalf of the Automotive and Advanced Manufacturing Industry.

The Skills Development and Training department seeks to:

• Enhance the practical understanding of vehicle assembly, for students studying in the engineering/automotive fields

• Enable lecturers to develop value-adding research projects for students

• Encourage strong technically-minded individuals into the auto sector

• Emphasise the importance of Mathematics and Science, as required subjects for further education and/or careers in the automotive sector; and the manufacturing industry as a whole and thereby reigniting declining interest in technical (specially automotive and advanced manufacturing) fields

• Upskill current OEM employees, in the latest best-practice methodologies available in vehicle assembly; and upskill informal SMMEs with technical and business management skills, to allow them to access the automotive economy.

The SD&T division trained 894 people. In addition, 154 persons were trained at Ford and 25 at Nissan.

HRDC Chairman visit to AIDC during the tour of the facility

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Trade Test Centre (TTC)

The Trade Test Centre (TTC), was established with the purpose of facilitating trade assessments and offers the following;

• Centralised training and assessment for the automotive and allied sectors, through the establishment of the Trade Test Centre

• Greater throughput of qualified artisans for the automotive and allied sectors

• Shorter waiting list for trade testing• Support of the Decade of the Artisan Strategy, from the

Department of Higher Education and Training and National Skills Development Plan imperatives

• The reduction in the atrophy trend with artisans almost immediately post apprenticeship and training, ensuring that the required skills become readily available in the labour market

Through the facility, the TTC can conduct trade test preparations and ultimately Trade Testing for the merSeta listed trades.

Construction

The construction of the TTC is 100% complete.

Artisans

Fifty (50) assessments were concluded. The assessors and moderators appointed by the Trade Test Centre, had their first accreditation auditing session with merSETA and NAMB in November 2017.

A recommendation for accreditation was granted for the following trades: Fitter, Turner , Welding, Automotive, Electrician and Automotive Body Repairer.

Programme 2: AIDC

Automobile Technology

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Incubation Centre at Ford motor company

The Incubator at Ford is currently in its sixth year of operation. This programme, was specifically developed to address the lack of transformation within the automotive supplier base. To this end AIDC developed the automotive incubation centre, designed to incubate new black entrepreneur entrants into the automotive supply chain. To date, the programme has graduated four (4) incubates into opportunities outside the incubator, with a replenished group of Incubates entering the facility; and Operations are maintained at the Incubation Centre at Ford, with six (6) incubates.

The QMS (Quality Management System) project, is in progress for the new incubate companies. These new incubate companies can in the meantime continue to supply components to Ford, due to implementation plans which are in place for the ISO standards. At the end of the financial year, 154 operators were trained against a planned target of 150.

Nissan Incubation Centre - South Africa

Based on the success of AIDC’s first Incubator at Ford, and in partnership with the Jobs Fund, a second Incubator was established at Nissan SA. The facility is currently being operationalised. In this regard, six (6) companies have been registered on behalf of incubates and all six (6) companies have been operationalised and commenced production.

Infrastructure

Expansion of building A7 at the Automotive Supplier Park (ASP)

The ASP, accommodates different types of tenants, ranging from manufacturing to logistics. Building A7 at the ASP, was developed to accommodate tenants that may require additional manufacturing space for their operation, within the Park.

Building (A7) is currently occupied by a manufacturing company, which has a total production area of 3,200m². This tenant wishes to expand their production space by 2,520m2,which is prompted by their increased production requirements. The expansion will add 2,500m2 of production space, which translates to an additionalR1m, to AIDC’s rental revenue. The facility will also afford the tenant an opportunity to expand their production capabilities and consolidate their operations.

The construction of the facility, with regard to the additional space, is 100% complete.

Human Resource Development Council Chairman visit to AIDC surrounded by staff members.

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PERFORMANCE INFORMATION BY PROGRAMME (AUTOMOTIVE INDUSTRY DEVELOPMENT PROGRAMME)

Strategic objectives, performance indicators, planned targets and actual achievements:

Strategic objectives Actual Achievement 2016/2017

Planned Target Actual Achievement

2017/18

Deviation from Planned

Target to Actual Achievement


Revitalised and modernised township economies, reflecting radical transformation and re-industrialisation of Gauteng’s economy

129 vehicles repaired

100 vehicles repaired

16 vehicles repaired -84

Community disruptions resulted in the 3 month closure of the hub

36% independence ratio



-50%


Develop and support automotive SMMEs, township enterprises and cooperatives participation in the value chain of the automotive economic sector

42 SMMEs participated in the efficiency programme



+2

Partnership with the National Foundry Technology Network, who invited their members to join the programme

10% efficiency improvement in companies intervened



+32

Companies commitment to fully implement interventions throughout the year

Programme 2: AIDC

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Planned Target Actual Achievement

2017/18


Target to Actual Achievement


Appropriately skilled human resources and businesses to radically transform and re-industrialise the Gauteng economy

3,591 people skilled 2 685 people skilled 3026 people skilled +341

LC awarded BMW contract to implement a skills programme for 1010 line operators

New KPI50 trade centre artisans certified

50 trade centre artisans pre-assessed

-50 artisans certified

Certification is an external function at NAMB and QCTO and does not fall within the purview of the trade test centre

New KPI10% independence ratio


+19%

2 sources of funding – MTEF and external funding from the jobs fund. Ratio calculated based on allocations to the TTC

80% ICF independence ratio



+2%

Increased shared services resulted in higher income generated

Infrastructure development to establish, maintain and manage strategic infrastructure

N/A100% factory facility expansion completed

100% factory facility expansion completed

None -

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Key performance indicators, planned targets and actual achievements:





Planned Target

2017/2018



Target to Actual

Achievement for 2017/2018


Number of vehicles at the WEH repaired

WEH fully operational

New KPI 129 100 16 -84


WEH % independence ratio

- - 36% 50% 0% -50%


Automotive SMMEs participating in efficiency programmes

26 22 42 30 32 +2

Partnership with the National Foundry Technology Network who invited their members to join the programme

% improvement

- - 10% 20% 52% +32

Companies commitment to fully implement interventions throughout the year

% independence ratio of the ICF

- 78% 80% 80% 82% +2%

Increased shared services resulted in higher income generated

Number of people under training in learning centre and labs (excluding simulators)

914 2 285 3 591 2 685 3 026 +341

LC awarded BMW contract to implement a skills programme for 1010 line operators

Programme 2: AIDC

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Planned Target

2017/2018



Target to Actual

Achievement for 2017/2018


Number of Trade Test Centre Artisans Certified

- - - 50 0 -50

Certification is an external function at NAMB and QCTO and; does not fall within the purview of the trade test centre

% independence ratio of the Trade Test Centre

- - - 10% 29% +19%

2 sources of funding – MTEF and external funding from the jobs fund. Ratio calculated based on allocations to the TTC

Expansion of the factory facility at ASP

- -50% physical construction completed

100% 100% Nil

Strategy to overcome areas of under-performance:

Winterveld Economic Hub (WEH)

Efforts to secure off-taker agreements with respect to the utilisation of the Hub, will continue to be pursued in the coming financial year.

Trade Test Centre (TTC)

The deliverables of the Centre is articulated in such a way, that it reflects the outputs that are within the control of the company and which does not have dependencies on external parties.

Changes to planned targets

The KPI’s were re-articulated, to be aligned to what was expressed in the Group Consolidated Annual Performance Plan (APP).

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PROGRAMME 3The Innovation Hub

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The Innovation Hub (TIH)

The Innovation Hub, is a wholly owned subsidiary of the Gauteng Growth and Development Agency. It was established by the Gauteng Provincial Government, through its Department of Economic Development, to promote economic development and competitiveness of Gauteng, through fostering innovation and entrepreneurship.

The Innovation Hub offers a number of incubation programmes in the Bio-economy (agro-processing and pharmaceutical), Smart Industries (ICT and advanced manufacturing) and Green Economy (water purification, waste management and renewable energy). In addition, The Innovation Hub operates a range of enterprise developments, skills development and innovation enabling programmes, both in the science park and throughout the Gauteng region

In working towards the achievement of the mandate and vision set out above, TIH subscribes to the following values, aligned to the GGDA Group Values.• Integrity• Transparency• Empowerment• Creative Excellence• Goal Driven• Professionalism

Chief Executive Officer, Mr McLean Sibanda resigned in June 2018

Advocate Pieter Holl

TIH Acting Chief Executive Officer

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PROGRAMME 3: The Innovation Hub (TIH)Programme 3, contributes directly to Strategic Goal 1: Gauteng’s economy radically transformed and Strategic Goal 2: Gauteng’s economy re-industrialised; and supports delivery of Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively.The table below depicts the purpose of Programme 3, its sub-programmes and their functions.

Purpose Sub-Programmes Functions

The Innovation Hub’s mission is to promote the socio-economic development and competitiveness of Gauteng, in targeted sectors, through innovation, by:• Creating new business

opportunities and adding value to mature companies in technology and knowledge based sectors

• Fostering entrepreneurship and incubating new innovative companies

• Providing attractive spaces for emerging knowledge companies

• Ensuring human capacity development of critical skills, matched to industry needs in priority sectors

• Enhancing the synergy between industry, government; and academic and research institutions.

Maxum

A business incubation programme that accelerates the growth of technology start-up companies by providing business mentorship and life cycle business development support to start- up companies.

CoachLab™

Post-graduate leadership and business skills development programme whose aim is to instil business principles and the value of innovative and entrepreneurial thinking amongst the participants through mentorship by project sponsors.

mLab including Code Tribe Academy

A programme to support mobile technology entrepreneurs by providing them with physical space where they can access the tools, platforms, laboratory expertise and support networks necessary to develop solutions and build new businesses as well as receive technical support.

Climate Innovation CentreA centre to support and develop entrepreneurs in the climate innovation space.

GAP-Green, GAP-Smart Industries

The purpose of this programme is to stimulate innovations in mobile applications, green technologies, health innovations and in bio-economy.

Open Innovation Solutions Exchange (OpenIX)

The purpose of the project is to create a mechanism that will connect innovation seekers (municipalities, government departments etc.) to innovation providers so that government can find innovative solutions to its service delivery challenges.

Biosciences Park Facility

The Biosciences Park aims to provide a nurturing environment for biotechnology start-ups to develop, thrive, and eventually become important commercial players that contribute to economic growth.

Programme 3: The Innovation Hub

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Programme 3: Strategic Objectives

The Innovation Hub Programme Area works towards the following strategic objectives:

1. Fostering Business Growth through incubation of innovative companies and the creation of new business opportunities, for mature companies, in priority sectors

2. Strengthening collaboration, to foster innovation and leverage resources3. Developing and nurturing human capital for a knowledge economy and a high performance innovation agency4. Increasing visibility of The Innovation Hub (TIH) and to enhance its brand strategic positioning5. Accelerating the full development of the TIH STP Strategic Infrastructure, to establish an innovation corridor in the Gauteng City Region (GCR)

Focus Sectors

The priority sectors of The Innovation Hub (TIH), are aligned with the Provincial 10 Pillar Programme Priority Sectors, which are: • Smart Industries (ICT and Advanced Manufacturing) • Bio-economy (Health and Agro-processing) and• Green Economy (Energy, Water and Waste)

Business Incubations

TIH recognises the importance of entrepreneurship to address unemployment, as well as the commercialisation of innovations. TIH’s enterprise development activities include a range of incubation focussed initiatives, across all the priority sectors.

Maxum business incubation (includes Maxum Smart, Maxum Digital, Maxum Media and mLab), BioPark, Climate Innovation Centre (CIC) Business Incubators, and the eKasiLabs Business Incubator, in response to Township Economy Revitalisation (TER).

There are two phases within TIH’s business incubator model to assist start-ups, across the start-up life cycle from pre-revenue, to acceleration. These include the Factory, which is a 12 month pre-revenue/commercialisation programme, that focusses on assisting startup companies with product development and market access. The focus is getting the technology ready for market testing, with further emphasis on supporting the startup to generate revenue.

The company is required to present evidence of sales as criteria to graduation into the next phase which is, a three-year post revenue/commercialisation aimed at assisting companies to scale up and grow. The focus is on market growth, both local and international, investment attraction and business linkages.

Once the company has demonstrated profitability and sustainability based on scaled up operational capacity and sales , such as being able to sustain the company for at least six months, the start-up is graduated out of the Core Programme.

Maxum Business Incubator

TIHMC’s technology business incubator, the Maxum Business Incubator, focusses on early stage and startup SMMEs with a view to maximising opportunities for high-tech entrepreneurs. It provides an enabling environment whereby startup companies operating in TIHMC’s priority sectors are fast-tracked to compete globally. The programme seeks to increase companies operating within the knowledge sectors in Gauteng so that they contribute towards growing Gauteng’s economy, thereby reducing poverty and increasing employment opportunities.

BioPark Business Incubator

Provides business development support to start-up businesses, operating in the health (biopharmaceuticals, medical devices and diagnostics, indigenous knowledge-based neutraceuticals, cosmeceuticals, cosmetics) and agriculture (agro-/food-processing, bioprocessing, smart agriculture) sectors. The support is provided in collaboration with Gauteng Department of Agriculture and Rural Development (GDARD) and eGoliBio Life Sciences Incubator.

Climate Innovation Centre (CIC) Business Incubator

Provides business development support to start-ups in the green economy sector (energy, water and waste), in collaboration with the World Bank’s InfoDev, and the Development Bank of Southern Africa (DBSA).

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Graduation

In the period under review, eleven (11) companies were graduated out of the incubation programmes. Graduation out of incubation implies that the company has consistently shown profitability and will be sustainable in the long-term. This also entails that the company has bigger teams, requires larger office space, and hence may have outgrown the support services available from TIHMC incubation. Therefore, the annual target of ten (10) was exceeded by one (1). Detail of which is provided in the table below.

Name of company Company or Product description Success Story/Impact

Tour2.0 (Pty) Ltd

An online platform that promotes community tourism within Africa, by packaging community tours and tour packages as stories that are told by community members, within the context of their community.

The company has grown from one (1) employee to creating seven (7) jobs and from a zero turnover, to a R120,000 per month turnover. Their partners and clients include South Africa Tourism, Tour Vest Group, Wilderness Safaris and Thompsons Africa.

Pulego Communications (Pty) Ltd

An application called Co-Safety, which enables citizens to report or provide anonymous tip-offs of incidents of crime, corruption, by-law infringements and traffic to the police. Co-Safety also enables the Metro police to engage with citizens on community safety issues and offers data analytics capabilities, thus helping management make informed decisions.

The company has grown from one (1) employee to creating five (5) jobs and from a turnover of R10,000 per month, to R180 000 per month. Their partners and clients include but is not limited to the City of Tshwane, EOH, Microsoft, Parsec, the Department of Trade and Industry, Gauteng e-Government and Mosedi IT. They have currently secured a contract with the Department of Public Service and Administration, valued at R2m for the use of their innovation. On 20 March 2018, they launched the second phase of their application; Tshwane Safety App pilot.

Makhamisa FoodsMakhamisa Foods produces flavouring condiments of all natural ingredients. The products are distributed to restaurants and retail shops.

Makhamisa Foods has secured the business of the Aha Hotel Group, and supply one of the Group’s hotels in Kathu, Northern Cape. They have secured off-take agreements with a number of retailers, but require new manufacturing facilities, in order to meet these prospect’s requirements for Food Safety System Certification (FSSC 22000).The company has applied to the IDC, dti and GDARD, to jointly fund the new manufacturing facility, that is required to enable them to sell their products to large retail groups.

TUT Synbo

SynBo beverage, is a ready-to-drink fermented corn-based sweet-sour symbiotic product, containing selected functional pre-biotic oligosaccharides and probiotic strains with several potential health benefits for the consumer. The prebiotics and probiotics, are functional ingredients that offer benefits to the human body, which is beyond basic nutrition. The product range includes, SynBo cultures in sachets for on-premise beverage preparation and ready-to-drink SynBo beverage, which is the flagship product, with flavours such as banana, litchi, strawberry and vanilla.

The company has finalised the formulation and packaging of one of their products, LaAfrica Soother and will launch it in the year under review. They are also in an advanced stage with their funding application to Technology Innovation Agency (TIA), to fund the clinical trials on the bone regeneration product.


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NCA Productions (Pty) LtdThe company offers theatre, television and film production. They also offer training in acting and theatre Ekurhuleni, in the sector.

The company has grown from twelve (12) employees, to creating an additional fifty-five (55) jobs. Turnover grew from R5,000 to R61,000 per month. Their partners and clients include, but is not limited to, City of Ekurhuleni, Urban Brew Studios, Maxum Media Accelerator, The Innovation Hub, Gauteng Enterprise Propeller, Gauteng Film Commission and the SABC. They have received funding from Gauteng Film Commission, to the value of R 105,000.00 and have secured a contract with the SABC, valued at R5,401,499 for a 13-part Drama series, called Uselwa.

Wagienience (WHC)

WHC have created a leak-less valve, that helps save water from a leaking toilet cistern. The main business operation of WHC, is to introduce novel water-saving technologies that are complementary to conventional water faucets and related services that are beneficial to the environment.

The company grew their annual turnover to R1.6m in the 2016/17 financial year. They created employment for 30 people. Their clients include, City of Tshwane and the Gauteng Department of Infrastructure and Development, where over 5000 units were installed.

Unconventional Media

Unconventional Media has created waste trolleys that also double-up as mobile billboards, where companies can sponsor branded messages and use them as a marketing platform. The trolleys are called Abomakgereza, a Venda word meaning ‘light.’ They also train and equip local informal waste collectors, with basic business and entrepreneurial skills needed to take their waste trade to the next level

The business grew their annual turnover to R1m. In March 2017, they partnered with the Gauteng Department of Agriculture and Rural Development (GDARD), to impact informal waste pickers in local communities. This includes, providing branded waste trolleys to small scale recyclers in impoverished Communities, around the Gauteng Province. Some of their clients include, SAB, Anglo-American and Nedbank. They have created employment for 6 people and enabled livelihood for 106 Abomakgereza (indirect employment).

Carbon Reduction Technologies (CRT) Lighting

The company designs, manufactures and supplies high performance, high efficiency LED lighting solutions. They provide alternative lighting solutions, which significantly reduces energy and carbon consumption. Their products include, streetlight poles, mid-hinge poles, floodlight masts, highlight masts, scissor masts and disguised tree masts

They grew their annual turnover to R2m income in the 2016/17 financial year. They have also secured contracts with Bidvest worth R1.4m (6 months), Saldanha Bay Municipality for R3m (for a year) and ACSA worth R2.9m (6 months) to supply, deliver and install LED lights. They currently employ 8 people.

Modular Innobox

Modular Innobox designs and pilots turn-key upliftment opportunity in a box for micro economies. These ‘boxes’ range from packages containing the hardware, software and educational content all the way to solar-powered, remotely-managed shipping containers modules (Modular Innoboxes) required to run a successful business in a micro economy.

The company broke even in the first year of incubation and went to Canada Ryerson Fellowship in 2015, where they presented their product and won.They Successfully launched their product at the beginning of 2017 and has received good traction. They continue to collaborate with various companies, which assists them in further rolling out their initiatives. They were linked with the Bring Change Africa, and were selected the Pretoria winner. They are currently fulfilling sales and growing their impact and form part of the Maxum Alumni programme.

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BioLotion Cosmetics (Pty) Ltd.

Bio Lotion Cosmetics, is a cosmetics company which specialises in personal care products, such as Bio Lotion for stretch marks and uneven skin tone; and Bio Baby.

This company has grown their product line to five (5) baby products (petroleum jelly, powder, aqueous cream, oil and shampoo). A total amount of R2, 8m funding from the idc was secured by them for up-scaling and rebranding. The products are currently being sold at large retailers,Pick n Pay, Shoprite, Checkers, Dischem and Makro. The company owns the intellectual property (IP), own their formulation, and employs seven (7) people.

Kusile Labs and technologies (Pty) Ltd.

Kusile Labs manufactures exclusive mobile science laboratories, for rural schools to enable disadvantaged learners to carry out experiments and tests.

This company is now based in KwaZulu-Natal. They have received further funding from TIA (R1m), in partnership with the Durban University of technology and SAB (R250 000), to remodel their labs. They still maintain talks with the City of Tshwane for rollout of their labs in Gauteng.

Companies commercialised

TIH, offered commercialisation support to sixty four (64) incubated start-up companies. These companies were offered support that is not limited to; training, mentorship, pitching training, market analysis, access to funding and to making their first sales. The annual target of forty-five (45) start-ups, have been exceeded by nineteen (19).


eKasilabs

eKasilabs 28 %

Innovation FactoryMMAMaxum DigitalCiCBiopark

Innovation Factory 11%

MMA 9%

Maxum Digital 6%

CiC 5%

Biopark 5%

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Exported technologies

The annual target of two (2), was exceeded by two. Simplus, developed a software that was exported to inVhestia, a company based in Kenya for USD10 000, Livestock Wealth exported to Kuwait, Germany, Australia and eMoyo exported to the United States, New Zealand and Hong Kong. In addition, a BioPark company Makhamisa exported its products to the Lesotho market.

The over-achievement, is attributed to the enabling platform offered by the Maxum Business incubator.

Coachlab

CoachLab® is TIH’s flagship leadership and skills development programme that aims to develop human capability in engineering, information and communication technology (ICT) post-graduate students. The programme is sponsored by industry partners, as well as the Media, Information and Communication Technologies Sector Education and Training Authority (MICT SETA).

Fifteen (15) graduates, secured employment after participation in the programme. The companies where they were placed, include Memeza Shout, PortiaM, SANSA (South African National Space Agency), Filpro – GUD Holdings, Tshwane IDC, DataCentrix, Standard Bank and other technology-related industries. These employment opportunities, range from System Developers, Facilitator/ Trainer in Information Management and other entry level job prospects.

After participation in the CoachLab programme, which commenced in March 2017, ten (10) postgraduate students successfully completed the programme on 31 January 2018. These students were based at CoachLab@Hub and is sponsored by SITA.

During the 2017 calendar year, eight (8) of the nineteen (19) programme participant candidates from CoachLab@Hub, secured employment at the South African Breweries and Transnet.

Four (04) candidates from CoachLab@JCSE secured employment at First National Bank, as well as Falcon respectively and a further three (03) candidates from Coachlab@Vaal, were successfully placed into employment.

Skills Programmes

The programmes are aimed at unemployed graduates, who require experience to enhance their acquired knowledge or wish to improve their current skills. These programmes are based on a methodology, rooted in over a decade of experience and designed to deliver work-ready individuals who can support industry in providing high-quality exposure, while affording graduates meaningful experience to make the graduates more marketable and employable. The internship programmes are offered over a 12-month duration; and designed to deliver work-ready individuals who can support host employers, in providing high-quality exposure.

During the financial year, the Skills Programme successfully recruited seventy-nine (79) youth into the CoachLab Programme, Green Learnership and also Internship Programme. Moreover, Code Tribe Academy upped the skills of unemployed graduates and youth in Android coding and SCRUM agile methodologies and provided a digital start-up support through its business accelerator programme. Furthermore, CodeTribe’ Academy successfully trained one hundred nineteen (119) youth in coding skills. Thus, annual target of one hundred and fifty (150) was exceeded by forty eight (48).

GAP graduation ceremony

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eKasi Labs

The goal of the eKasiLab programme is to take innovation to the people by establishing co-creation and innovation spaces in the townships where the community can access the services and facilities on offer at The Innovation Hub.

TIHMC, through the eKasiLabs, aims to address the problems of access and seeks to re-industrialise the community and unemployed youth so that employment is created in their area of residence through skills and enterprise development.

The eKasiLabs is TIHMC flagship programme in the townships sought to reach and incubate 140 companies through start-up weekend and boot-camp initiatives. Due to its popularity a total of 148 companies were provided with assistance and recruited into the programme.

Three (3) additional eKasi Labs sites (Mabopane, Kathorus and Kagiso) were activated during the reporting period bringing the total sites that are operational to ten (10).

Open Innovation Solution exchange

The Open Innovation Solutions Exchange (OISE) platform is a TIHMC initiative aimed at finding solutions to overcome the challenges posed by regional innovation seekers (government, academia, large and small business and community), while also providing a window for innovations looking for markets.

In this context, eleven (11) community-based challenges were matched with solutions due to the availability of funds and the strategic partnerships with industry and universities.

The programme exceeded its plan to pilot, develop and assess the feasibility to implement nine projects by two (2).

The following is a selection of some of the challenges, which are matched with solutions.

Client Company Project Description

SANSA/AIRBUS KL Analytical Services

The purpose of this pilot project, is to develop Analytical Maps into a commercially viable product. Analytical Maps is an unbiased, powerful and cost-effective tool to assess overall farm health at a glance with layers of increasingly detailed data available for in-depth analysis and further assessment, down to specific nutrient levels per land.

Chris Hani Baragwanath Hospital

Wouldn’t It Be Cool (WIBC)

The purpose of the pilot project, is to scope the development of an integrated Maternal Health Patient Referral System for Chris Hani Baragwanath Hospital.

ICAS Southern Africa

Simplus Innovation

ICAS is looking to develop a digital wellness platform, connecting clients directly to their data through an online portal. The Phase 1-POC has two stages, the initial stage is focussed around the detailed design document, acting as the three primary sections and deliverables-platform design and mock-ups, product features, functionality and technical solution design. The second stage is the application assembly, the output of the detailed design stage, where the features and functions of the solution are assembled to ensure a functional POC.

Johannesburg City Parks and Zoo (JCPZ)

Neo GrowThe purpose of the project, is to utilise bio-combustible alien invasive plants to produce high quality green premium and activated charcoal.

JCPZ BiosynThe project serves to maximise the usage of existing park space in the Braamfontein Spruit region, by creating multi-use facilities that promote frequent usage for unique and regular experiences.

Gauteng Department of Infrastructure Development (GDID)

NuLeafThe purpose of this project, is to create water-efficient school environments that enables sustainable water conservation, bringing both water savings and a reduction in water and sewage costs.


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Other project initiatives that were effected on behalf of private companies and government are noted herewith:

• The Innovation Hub Management Company (TIHMC) contracted with the CSIR in March 2017 for a pilot project entitled “ColiSpot Early Warning System”, a low cost, user-friendly, early warning system for E. coli and faecal coliforms in water/effluent sources. The pilot project was executed in collaboration with the City of Tshwane and piloted at the Daspoort Waste Water Treatment Works. The primary objective of the pilot project was to illustrate that the ColiSpot system addresses the shortcomings of conventional methods and the more recent Colilert method. In addition, the follow up study on preliminary techno-economic Coli Spot system carried by CSIR emanated from the pilot project that was initiated in the 4th Quarter of 2016/17 Financial Year on ColiSpot Early Warning System.

• Green energy, water, sanitation and building technologies for the Gauteng Department of Infrastructure Development.• Novel approaches for the analysis of the composition of spent foundry sand for potential regeneration for the Department of Science and

Technology & National Foundry Technology Network

Investment funds leveraged

In the period under review, TIHMC met and exceeded the target of leveraging R40M. The target was exceeded by R28M and that led to a financial year end actual of R68M. In addition, funds leveraged are geared towards assisting incubated companies and implementing TIH’s skills programmes. Funds leveraged by incubation programmesThe current lack of high risk start-up funding/capital in South Africa could be considered a ‘missing cog in the wheel’ of innovation and economic growth. Start-up business typically fail due to lack of funding support as traditional funding institutions find this stage of development very risky to fund or invest in for a reasonable return. Therefore, early stage capital and support is crucial to the success of new enterprises in what is often seen as a high-risk section of the investment spectrum. Through the Start Up Support Programme (SSP), which is a funding instrument that ensures that funds leveraged are utilized to reach defined milestones that enable the incubated companies to progress to the next stage of business development such as:• piloting new innovations;• new product testing for commercial purposes;• Commercialization and;• Accessing/ attracting further investment uptake. Funds leveraged by TIHMC skills development programmesThe programmes are sponsored by industry partners as well as the Media, Information and Communication Technologies Sector Education and Training Authority (MICT Seta), as well as State Information Technology Agency (SITA). TIH skills development programmes, are aimed at innovation generation and innovation enabling skills (entrepreneurial), coupled with the establishment of a culture of innovation and entrepreneurship; to ensure a shift towards a knowledge-based economy. The TIH skills programmes, rely on external funding to implement skills development programmes.

Infrastructure Development

The completion of BioPark 2 led to the TIH reaching a 27% planned site development milestone.

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Planned Target2017/2018



Target to Actual Achievement for

2017/2018


Foster Business Growth through incubation of innovative companies and creation of new business opportunities for mature companies in priority sectors

27 innovations commercialised by incubated start ups

45 64 +19

Resources made available enabled the start-ups to make their first sales

New KPI2 technologies produced at TIH exported

4 +2

The enabling platform offered by the TIH Business incubators that open up market access outside South Africa

6 companies graduating from incubation

10 11 +1

Platform offered by the TIH Business incubators and committed start-ups

New KPI140 companies incubated at ekasi labs

148 +8

Solid pipeline that was provided by successful pitching sessions and recruitment activities such as: Bootcamps, Start-up weekends.

New KPI3 eKasi lab programmes launched

3 - -

Strengthen collaboration to foster innovation and leverage resources

- R40M R 68M +R28M

Strong partnerships formed with the following institutions: DBSA, The dti, DPSA, GDARD, MICT SETA and also TIA

Develop and nurture human capital for a knowledge economy and high performance innovation agency

468 Youth programmes implemented

150 198 +48

Additional funding received from sponsors and partners

Accelerate the full development of the TIH STP Strategic Infrastructure to establish innovation corridor in GCR

83% level of construction of Bio Park phase II



- -


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Planned Target

2017/2018



Target to Actual

Achievement for

2017/2018


Number of companies with sustainable business graduating from incubation

4 6 7 10 11 +1

Platform offered by the TIH Business incubators and committed start-ups

Number of innovations commercialised by incubated start-ups

23 18 27 45 64 +19

Resources made available, enabled the start-ups to make their first sales

Number of technologies produced at TIHMC exported

- - - 2 4 +2

The enabling platform offered by the TIH Business incubators that open up market access outside South Africa

Number of companies incubated at eKasi Labs

- - 153 140 148 +8

Solid pipeline that was provided by successful pitching sessions and recruitment activities, such as: Bootcamps, Start-up weekends

Number of eKasi Labs programmes launched in the various Gauteng City region

2 5 3 3 - -

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Planned Target

2017/2018



Target to Actual

Achievement for

2017/2018


Number of open innovation pilot projects contracted to government and industry.

- - 9 9 11 +2

Strong partnerships with the public service and creative solutions proposed by solution providers

Amount (R’ m) of external investment facilitated for TIHMC programmes and companies

- R40M R 68M +R28M

Strong partnerships formed with the following institutions: DBSA, The dti, DPSA, GDARD, MICT SETA and also TIA

Number of youth exposed to TIHMC workplace skills development interventions

361 118 120 150 198 +48

Additional funding received from sponsors and partners.

Percentage (%) TIHMC site developed by 2019/2020

- - - 27% 27% -

Strategy to overcome areas of under performance

Not applicable.

Changes to planned targets

Not applicable.



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GAP graduation Ceremony


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PROGRAMME 4Gauteng Industrial Development Zone (GIDZ)

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Gauteng Industrial Development Zone (GIDZ)

The Gauteng Industrial Development Zone Company (‘Gauteng IDZ’) is a subsidiary of the Gauteng Growth and Development Agency (GGDA), that was established to develop and operate the designated Industrial Development Zone (‘IDZ’) at OR Tambo International Airport (‘ORTIA’), Africa’s largest and busiest international airport located in Johannesburg, South Africa.

The vision of the Gauteng IDZ is to identify, design, package and enable focussed export driven manufacturing and beneficiation programmes, for location at the OR Tambo International Airport IDZ.

The mission is to identify, design and enable focussed manufacturing and beneficiation programmes, that will increase Industrialisation and manufacturing capability in targeted, export-driven sectors in the region. In addition, stimulate skills development, promoting job creation and investment opportunities, through public/private partnerships and diversifying the province’s economy.

Ms Seipati Mangadi

GIDZ Chief Executive Officer

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Programme 4: GIDZProgramme 4, contributes directly to Strategic Goal 1: Gauteng’s economy radically transformed and Strategic Goal 2: Gauteng’s economy re-industrialised; and supports delivery of Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively.The table below depicts the purpose of Programme 4, its sub-programmes and their functions.

Budget Programme Purpose Sub-Programmes Functions

Gauteng Industrial Development Zone (GIDZ)

To manage the development of the Industrial Development Zone at the OR Tambo International Airport

Skills development • Increased sector skills

Infrastructure development

• Development of master plans

• Spatial development plans• Construction plans• Construction monitoring • Facilities and operations

management

Investor attraction and stakeholder management

• Development concept and model

• Investor attraction value proposition and strategy

• Investor contract negotiation and close

• Investor retention • Stakeholder liaison and

management• Programme monitoring and

evaluation

Mineral beneficiation

• Beneficiation Concept identification and feasibility

• Beneficiation development planning and implementation

Programme 4: GIDZ

GIDZ staff member at a stand for GIDZ

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Strategic Objectives

The GIDZ programme works towards the following strategic objectives:

1. To stimulate employment led growth and development, through the facilitation of strategic economic infrastructure interventions

2. To facilitate the development of sector specific skills required, to meet the needs of the jewellery economic sector

3. To facilitate the development of high value low mass industries at the IDZ, which can be exported

Infrastructure Development

The Gauteng IDZ is presently developing, a High Value Low Mass Precinct, formerly known as the Jewellery Manufacturing Precinct (JMP), on land identified for such purposes within the OR Tambo International IDZ. Bulk infrastructure construction for this green field development is already underway and will be completed in the next financial year.

During the FY 2018/19, the infrastructure development programme will result in the availability of basic infrastructure required to facilitate the rollout of top structure development, at the IDZ. The development will contribute to employment creation, as well as necessary skills development of individuals residing within the Ekurhuleni Metropolitan Municipality.

Overall progress remains at 97%. The bulk of the work has been finalised with the remainder being the In2Food platform, screening room fit out, water tank (pump house), electricity and security. The delays experienced is due to the contracter, Liviero, terminating constructions operation. The team is in the meantime, measuring the works and finalising the contact of Liviero, that includes a variation order for piling.

In addressing the current challenge, ongoing discussions are continuing regarding the finalisation of the outstanding work. The In2food platform, including the foundation work, has been handed over to Enza, as the appointed contractor to develop the factory. The GIDZ posted a public tender, to appoint a contractor to finalise the remainder of the works.

Liviero has since been served with a letter of demand, and their response was outstanding at the end of the financial year.

Development of the Northern Precinct

An investor In2Food, was recruited with a requirement for a 15,000m2 factory, with 3ha land from the 7.5ha of the Gauteng IDZ phase1 development. The development will take place on the Northern area of the site, referred to as the Northern Precinct. The total development cost of the factory building, is estimated at R142m and it is anticipated that the dti’s SEZ will be the source of funds. The tenant fit-out cost will be carried out by the investor, at a value of approximately R220m.

The Northern Precinct development, is expected to have the following impact:

• Investment over R2bn in the medium term and job opportunities of an approximate number of 5000,

• Enhancement of the Gauteng agriculture value chain and associated knock on effects

• Export opportunity of R1bn by 2025 and revenue inflows

In2food, appointed Crowie Consultants as the principal agent in January 2018. A site handover was conducted that enabled the finalisation of the implementation plan and the contract. Construction is at 20% completion, in accordance with the implementation plan.

Investor Attraction

The investment attraction programme of the Gauteng IDZ, is aimed at securing tenants that will take up space for operations at OR Tambo IDZ. In support of activities already undertaken in 2016/17, the Gauteng IDZ is working to finalise contractual understandings with companies who expressed interest (by way of letters of intent), to setup operations at the Zone.

The envisaged impact of these efforts is confirmed tenancy, by companies manufacturing in the high value low mass sector; these include, light manufacturing, mineral beneficiation and agro-processing companies.

Negotiations with companies forming part of the tenant pipeline to conclude Sub-Lease Agreements, were initiated. The total number of leases negotiated and concluded for the entire OR Tambo IDZ development in the 2017/2018 financial year, is four (4), namely;

• In2Food Pty Limited, concluded in May 2017;• Diacore South Africa Limited, concluded in March 2018;• S T Diamonds (Pty) Limited, concluded in March 2018;• Julius Klein South Africa (Pty) Limited, concluded in March 2018

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In addition, confirmation was also secured of the Tenants’ investment into the Zone, the investment of which will be in respect of Tenant equipment and fixtures.

Based on the above, the target of four (4) signed lease agreements and confirmed investment to the amount of R300m for the 2017/18 financial year, was met.

In support of targets defined for the 2018/19 financial year, engagements with other tenants forming part of the tenant pipeline, are in process. It is envisaged that all necessary agreements for the remainder of the manufacturing space available at the Southern Precinct, will be finalised during 2018/19. Specific to the latter however, the development of the Superblock remains an area of concern for management, given that the lack of the development impacts on the value proposition of ensuring that a value chain of services supporting mineral beneficiation, is available at the Zone.

Correspondence confirming budget allocation in support of the development of the remainder of the Southern Precinct (excluding the Superblock), was received from the dti.

Expansion Phase

The Expansion Phase programme of Gauteng IDZ, is aimed at identifying and packaging land parcels and corresponding programmes for inclusion in the OR Tambo IDZ programme.

In support of the SEZ Act operationalised during 2016, as well as the transition plan approved by the dti pursuant to February 2017 the focus of this programme is specifically on the strategic repositioning and expansion of the OR Tambo SEZ programme. This, is – in terms of the approved transition plan, is proposed for location at multi-site Precincts in the eastern corridor of the Province.

The enhanced beneficiation of products for export, is resulting in increased contributions of the Gauteng IDZ, to Gauteng’s economy and the GDP of South Africa.

During February 2018, correspondence was recieved from the Department of Infrastructure Development, approving the allocation of provincial land which is located at the Airport for development of the OR Tambo IDZ.

In support of the SEZ Act operationalised, during 2016 as well as the transition plan approved by the dti, the focus of this programme is specifically on the strategic repositioning and expansion of the OR Tambo SEZ programme. This is, in terms of the approved transition plan, proposed for location at multi-site Precincts in the eastern corridor of the Province.

The dti has confirmed an allocation of R140 632 020, in support of the development of the remainder of the Southern Precinct (excluding the Superblock).

Furthermore the Department of Infrastructure Development approved the allocation of provincial land, located at the Airport for development of the OR Tambo IDZ.

Jewellery Sector Skills Development

The JMP programme is aimed at ensuring the availability of appropriate skills, to ensure the effective implementation of the Zone. In this regard, a skills development studio viz. Design @50 has been established, with the aim of increasing the technical proficiency of skilled jewellery designers. In conjunction with manufacturers. This will contribute to developing the South African jewellery market, by producing high-quality products that will allow SA to compete locally in the global market. The anticipated impact is to increase skills in the jewellery manufacturing sector, specifically in respect of commercial jewellery design.

At the end of the reporting period, 14 students (of the initial 15) completed the Commercial Jewellery Design training, following the resignation of one (1) student.

Programme 4: GIDZ

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PERFORMANCE INFORMATION BY PROGRAMME 4 (GAUTENG INDUSTRIAL DEVELOPMENT ZONE)




Planned Target2017//2018




2017//2018


To stimulate employment-led growth and development through the facilitation of strategic economic infrastructure interventions

70% of the bulk infrastructureconstruction completed

100% of Phase 2 bulk infrastructure at Airport City IDZ constructed

97% of the bulk infrastructureconstruction completed

-3%

Delays due to contractor having repudiated the contract during quarter 3 of the financial year

To facilitate the development of sector-specific skills required to meet the needs of the jewellery economic sector

15 jewellery manufacturing and design students trained

15 jewellery manufacturing and design students trained

14 jewellery manufacturing and design students trained.

-1Resignation of 1 student during Quarter 2

To facilitate the development of high value low mass industries at the IDZ which can be exported

- R300M R 323,7M + R23, 7M

Increased appetite due to tax and incentive benefits of locating in the zone

-4 investments secured

4 investments secured

- -

Jewellery designed by students

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Key performance indicators, planned targets and actual achievements:




Actual Achievement

Planned Target

2017/2018



Target to Actual

Achievement for

2017/2018


Bulk infrastructure construction at ORTIA IDZ

Procurement process initiated

Construction ofbulk earthworks,attenuation damand setting ofplatforms

Bulk infrastructure 70% completed



-3% Bulk infrastructure

Delays due to contractor having repudiated the contract during quarter 3 of the financial year

Number of jewellery manufacturing and design students trained

14 students trained

15 students 15 students 15 students 14 students -1

Resignation of 1 student during Quarter 2

Number of investments secured

- - - 4 4 - -

Value of investments secured

- - - R300m R323, 7m R23, 7m

Increased interest due to tax and incentive benefits of locating in the zone

Strategy to overcome areas of under performance:

A new construction schedule to be developed once a replacement bulk contractor is appointed.

Programme 4: GIDZ

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Some of the products, designed by the Design@50 students

Design@50 student graduation ceromony

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PROGRAMME 5Constitution Hill (ConHill)

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The Constitution Hill Development Company (ConHill)

Constitution Hill, is a living museum that tells the story of South Africa’s journey to democracy. The site is a former prison and military fort that bears testament to South Africa’s turbulent past and today it is home to the country’s Constitutional Court, which endorses the rights of all citizens.

There is perhaps no other site of incarceration in South Africa that imprisoned the sheer number of world-renowned men and women as those held within the walls of the Old Fort, the Women’s Jail and Number Four. Nelson Mandela, Mahatma Gandhi, Joe Slovo, Albertina Sisulu, Winnie Madikizela-Mandela, Fatima Meer, among others, all served time. But the precinct also confined tens of thousands of ordinary people during its 100-year history: men and women of all races, creeds, ages and political agendas; the indigenous and the immigrant; the everyman and the elite. In this way, the history of every South African, lives here.

Constitution Hill is also a place of contrasts, of injustice and justice, of oppression and liberation. The precinct is testament to the importance of preserving sites of atrocity for posterity, and also to recreating them so that they can serve the purposes of the present and serve to mould the future. Tours of the precinct are offered daily as well as hosting of regular public events, enabling visitors from every walk of life to interact with the space.

Ms Dawn Robertson

ConHill Chief Executive Officer

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PROGRAMME 5: Constitution Hill (ConHill)Programme 5, contributes directly to Strategic Goal 1: Gauteng’s economy radically transformed and Strategic Goal 2: Gauteng’s economy re-industrialised; and supports delivery of Strategic Goal 3: GGDA capacitated to deliver and implement efficiently and effectively.The table below depicts the purpose of Programme 5, its sub-programmes and their functions.

Purpose Sub-Programmes Functions

Constitution Hill is strategically positioned and easily accessible, using various modes of improved public transport. However, the challange remains In terms of crowding more users, visitors and tourists, by offering a compelling reason for Chapter 9 and other human rights focussed organisations to locate their offices and programming at ConHill. As well delivering more appealing, unique and content rich visitor experiences. This entails not only unlocking new developments, but also finding improved ways in which to manage, promote and activate the site. The Visitor Centre which is due to open in 2019 will elevate the heritage status to a UNESCO world heritage site. ConHill was recently awarded heritage status.

In line with the province’s catalytic urban regeneration mandate, Constitution Hill also holds development opportunities for its neighbours in Hillbrow, Parktown and Braamfontein. In particular, unlocking substantial investment in Gauteng’s densest community, that still experiences the hardships of urban life. As ConHill consolidates its position over the coming years, as one of Gauteng’s most visited heritage attractions, the need to unlock opportunities for its sister sites, based elsewhere in the province, is also a priority.

ConHill’s economic impacts are therefore local and regional in line with its mandate, while the content of the site and its programming, have global reach.

Education and Public Programmes

• Deliver programmes to further constitutional education and to provide a platform for relevant public dialogue, which impacts on Social Cohesion and Nation Building

• Stakeholder liaison and management• Planning and implementation of projects

Exhibitions

• Develop cutting edge, educational and informative exhibitions, that are relevant to the issues of constitutionalism, human rights and democracy

• Provide a space for the creative industry, to showcase works that engage citizens on issues relevant to the site’s mandate

• Exhibitions development and maintenance

Facilities Management

• Develop the Constitution Hill precinct, to contribute to creating a Globally Competitive City Region, through heritage tourism and inner city revitalisation

• The primary role of Facilities Management, is to determine the most effective programme of providing the organisation with appropriate physical resources for its present and future, planned operations

• Facilities, manages the physical resources of the precinct which embraces the planning and development of major projects, precinct development plan, repairs, maintenance and refurbishments, space allocation, risk management, property portfolio, grounds, telephone communications, security, cleaning and asset management

• The principal objective of facilities is to plan, provide, operate and maintain Constitution Hill facilities and other resources within the limits of allocated funds whilst at all times maintaining a client focussed service

Venue Hire

• Use of the space through the preservation and maintainance of the site, in its historical and contemporary context

• Conferencing

Tourism (Visitors)• Tourism offerings development and management• World Heritage status declaration process management

ConHill’s Purpose:

• Urban regeneration: As a multimedia, mixed-use heritage precinct, one of Constitution Hill’s fundamental missions, is to engage with its environment and contribute to the Gauteng City Region; and the Johannesburg inner city regeneration.

• Civic growth through historical perspective – physically animating the values of the Constitution within the heritage precinct, it is expected that Constitution Hill allows visitors to draw on; and engage with lessons learnt from the past, to fulfil dreams for the future.

The Constitution Hill Programme will work towards the following strategic objective:

1. To be a global destination for Human Rights and Constitutionalism 2. To provide programmes for active citizenry3. To serve as an Integrated Human Rights Precinct 4. To provide a sustainable and resilient organisation

Programme 5: ConHill

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Exhibitions

Exhibitions are the core of the museum, as they are opportunities where the public comes into contact with the material culture of the preserved artifacts. These exhibition spaces, are where the past becomes tangible and the experience, an unforgettable one. They are an essential element of the site, as they provide a platform for Constitution Hill to showcase its ideals to the public. A total of ten (10) exhibitions were hosted during the financial year, against a target of six (6). These included;

1. We the Children Exhibition2. Hidden Shadows and Silent Voices3. Basha Uhuru – Expressions of Freedom4. On Visual Activism5. We live in Silence6. Looking Back; Moving Forward7. Memories of the Struggle8. A new Black9. UNIFEM Exhibition10. Children’s Rights Exhibition

The Fatima Meer permanent exhibition was refurbished during the period under review. The exhibition titled, Prison Diaries, is based on her book by the same name. The exhibition showcases anti-apartheid activist Fatima Meer’s artwork, completed during her incarceration in the Women’s Jail in 1976. This exhibition represents the significant role played by women in South Africa’s political history and its struggle against apartheid. It captures some of the day-to-day stories and private moments of women who were detained and imprisoned during the liberation struggle of South Africa.

Educational Programmes

Over 15,000 learners attended the various educational programmes. The skills that the learners would have obtained through workshops are integral to their participation in South Africa’s democracy. The workshops place emphasis on rights that are likely to be directly relevant to the learner. These include, but are not limited to, the right to freedom and security of the person, the right to education, the right to equality and the right to life. To advance constitutional awareness, ConHill further hosted a Debating Tournament which featured 75 schools from in and around Gauteng. The learners from grade 8 to 12 were trained in oratory and research skills, while learning about constitutionalism, to deepen their arguments. The ConHill Debating Tournament continues to be a contender in the debating arena as participating learners during the 17/18 financial year, proceeded to national and international debating competitions. In total, nine (9) programmes were hosted against a target of six (6). These included;

1. Constitutional Awareness – Educators Workshop2. Family Play Day 3. Human Rights Educators Seminar4. Women’s Rights Schools Workshop5. Schools Debating Tournament6. Time Travel Tour7. Debating Tournament8. Curriculum Specialists Workshop9. Youth Dialogue

Exhibitors at ConHill promoting their products

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A booklet has been developed that is aligned to the Curriculum Policy Statements (CAPS) curriculum and focusses on teaching methods. The booklet is designed to assist learners in developing skills that will allow them to exercise their rights. This includes, allowing the learners the freedom to debate and assert their rights through numerous small group discussion sessions and by highlighting rights violations in practical examples, provided by the facilitator.

Signature Programmes

In total, over 30,000 people attended the five signature events that were implemented during the year. These events are linked to commemorative days in South Africa’s calendar. The signature events celebrate South Africa’s heritage by engaging communities, imparting much needed skills and resources; and so impacting on social transformation and the tourism economy.

The five activities implemented during this period were;

1. Basha Uhuru Freedom Festival

This Festival provided a space for youth to engage on issues of interest to them, through dialogues, exhibitions, music, poetry, film and various other creative expressions. The Basha Uhuru Youth Festival 2017, commemorated the coming of age of our Constitution in its 21st anniversary. This Festival also recognises and celebrates the youth of 1976, in their fight for freedom and equality. Basha Uhuru 2017, attracted over 13,000 young people.

2. Women’s Month Programme

The Women’s Month programme brought together stakeholders from civil society, business and academia, to engage on issues of women’s rights, using the Constitution as the point of reference. This programme saw various activities take place including a dialogue hosted in partnership with the Thuli Madonsela Foundation, an intergenerational Imbawula Dialogue, featuring the Women’s Jail ex-prisoners and the CEO-Sleep Out, the Fatima Meer book launch and workshops which were coordinated in collaboration with civil society partners.

3. Children’s Rights Festival

To commemorate International Children’s Day, Constitution Hill collaborated with UNICEF, the Toy Movement, Play Africa and the Canadian High Commission to launch a Toy Movement Campaign of 1,441 toys being distributed to 24 safe parks across six (6) regions in the Gauteng province. This event, marked the right to play, as a significant right, in children’s development. Play Africa was an implementing partner for this project.

4. Commemoration of the 21 years of the Constitution

Hailed as one of the most progressive constitutions globally, the South African Constitution celebrated its 21st anniversary on 10 December 2017, a date that coincides with International Human Rights Day. To mark this day, ConHill hosted various activities, all leading up to the main event, which unpacked the gains made and the challenges experienced in the context of constitutionalism,.The dialogue, titled “Looking back to look Forward”, honoured Archbishop Emeritus Desmond Tutu, a South African that has played an immense role in securing and honouring South Africa’s world-renowned constitution. A sculpture, appropriately named the Arch, made up of 14 arches, representing each chapter of the Constitution and each line of the Constitution’s Preamble, was unveiled outside the Constitutional Court.

5. Human Rights Festival

To commemorate Human Rights Day, the inaugural Human Rights Festival was held at ConHill in March. The site played host to civil society organisations, government and various other stakeholders. The precinct was transformed into a vibrant, engaging space, with partners exhibiting their works and interacting with the citizens. People demonstrated their support for human rights, by joining the ‘We the People Walk’ by walking for a cause. The festival was filled with poetry and music, dialogues and networking, a book fair, a film festival and a food market. This being the inaugural Human Rights Festival, much attention was paid to bringing in multi-stakeholders that are active in the social justice space, funders, business and government, so as to ensure that issues of constitutionalism, human rights and democracy were dealt with genially.

Foot-fall - Number of Visitors to the Museum per Annum

Footfall is the total number of people that visited the site, for all activities hosted on-site. This number, includes visitors of guided tours, exhibitions, signature and educational programmes and venue hire.

During the period under review, ConHill attracted 52 452 visitors to the museum, against the target of 45 00 visitors.

Number of School Bookings for Educational Programmes

This programme exposes learners to constitutional workshops, the Bill of Rights and the political history of South Africa.

The site hosted 106 schools during this period, against the planned 100 for the year.


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Revenue generated from tours

Sustainable revenue streams are needed to deliver the diverse, dynamic and awe-inspiring experiences visitors expect to find at ConHill. R2, 1m was generated through admissions for tours during the period under review against a target of R1,500,000, representing a value that is 44% above target.

Revenue generated from venue hire

A total of R4,8m was generated through meetings, incentives, conferencing and events, against a planned target of R4m.

Marketing

Strengthening ConHill’s brand through an integrate communications approach, led to the site being rated one of the top 10 landmarks in South Africa, by Trip Advisor. This makes it one of the leading tourism attractions globally; and it is consistently listed in the top three things to do when in Johannesburg. Constitution Hill has consistently positioned its brand through an innovative and creative mix of a strong social and digital footprint, high media presence and strategic above the line (outdoor, print and broadcast) profiling of its products, and ground-breaking Signature Events and public programmes.

Improving on service offerings, ConHill has engaged with it’s audiences on all its digital platforms, to monitor feedback and comment. Customer satisfaction was recorded at an average of 94% during the 2017/18 financial year, which is 18% above the target of 80%.

Constitution Hill Development

The intention of the project is to develop the available portions as iconic infrastructure, in such a way that it is sensitive to the context, the architecture and the overall ambition of the stakeholders. The programme is driven by its unique position, as a place where both the difficulties of the past and the possibilities of the future, can be experienced.

The development seeks to provide space for a Visitors Centre, exhibitions, office accommodation, a conference centre and shared facilities. The unit has embarked on a two-pronged approach to securing professional services for the construction of the Visitors Centre and issued a request for information (RFI), for the development of the remainder of the ConHill land parcels.

Visitors Centre

A professional team of heritage experts have been appointed and the review of the designs for the Visitors Centre have been completed. The scope for the team includes, obtaining all relevant municipal and heritage approvals.

School children visiting ConHill for the school’s educational programme

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Performance Information by Programme 5 (Constitution Hill)

Strategic objectives, performance indicators planned targets and actual achievements:




Planned Target2017//2018




2017//2018


Global destination for human rights and constitutionalism

-80% customer satisfaction

94% +14%

Continued monitoring and responding to the Customer satisfaction survey platform

Programming for active citizenry

8 exhibitors per year.

6 temporary exhibitions hosted per annum

10 exhibitions hosted

+4

Partnerships for the commemoration of various activities linked to Human Rights, Constitutionalism and Democracy

-1 permanent exhibition refurbished

1 permanent exhibition refurbished

- -

-5 key Signature programmes hosted per annum

5 key Signature programmes hosted per annum

- -

12 educational programmes

6 educational workshops hosted

9 educational workshops hosted

+3

Partnerships for the commemoration various activities linked to Human Rights, Constitutionalism and Democracy

-1 Educational Material developed

1 Educational Material developed

- -

Sustainable and resilient organisation

R1, 5 M R 2 153 831 +R 653 831Increase in the number of tourists visiting the site

R4 M R 4 820 602 +R 820 602 Repeat users and the positive marketing spin-offs

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Actual Achievement

Planned Target

2017/2018



Target to Actual

Achievement 2017/2018


Number of people visiting the museum

127 939 143 657 185 404 45 000 52 452 +7 452

Focussed marketing has positively positioned the site and the increase in the flow of visitors

Maintain customer satisfaction levels at 80% and above

- - - 80% 94% +14%

Continued monitoring and responding to the Customer satisfaction survey platform

Number of schools bookings for educational programmes

83 103 6 100 106 +6Alignment of the educational programme to school calendar

Number of educationalmaterial developed per annum

- - - 1 1 - -

Number of educational workshops hosted

- - - 6 9 +3


Number of exhibitions hosted per annum

20 21 8 6 10 +4


Number of permanent exhibitions refurbished per annum

- - - 1 1 - -

Number of signature programmes hosted

- - - 5 5 - -

Revenues generated from tours

- - - R1, 5 M R 2 153 831 +R 653 831Increase in the number of tourists visiting the site

Revenues generated from venue hire

- - - R 4 M R 4 820 602 +R 820 602 Repeat users and the positive marketing spin-offs

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KPI Consolidation Rationale

In reviewing the 2016/17 Annual Performance Plan, targets for the delivery of programmes were consolidated to achieve higher impact and have a wider reach. The educational and public programmes have been themed to align to the mandate, to raise constitutional awareness and promote social cohesion and nation building. The number of exhibitions tie in to the identified themes and their content is also aligned to that of public programmes. The consolidation of programmes, further allows tracking of impact and spend.


A detailed supply chain management plan has been established to ensure that all critical project milestones are met. An inclusive Project Steering Committee is in place, with an oversight role to monitor all performance related to the project implementation plan.

Changes to planned targets:

Delays in the procurement of the services of a construction company has had an impact on the development of the Visitors centre, resulting in this KPI not being fulfilled.

Visitors at ConHill during a historical tour of the facility

Entreprenuers at ConHill’s market

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Children participating in extra-mural activities at ConHill

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PROGRAMME 6Greater Newtown Development Company (GNDC)

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Greater Newtown Development Company (GNDC)

Newtown is one of five tourism developments aimed at inner-city regeneration. In partnership with Gauteng Growth and Development Agency, the Johannesburg City Council - through the Johannesburg Development Agency the original intention of this project was to transform Newtown into a safe and attractive place to work, live and visit.

The objective of the original plans was to develop Newtown into a vibrant, mixed-use area with a unique character based on existing cultural facilities. This entailed several improvements including housing developments, the construction of the Nelson Mandela Bridge and associated M1/Carr Street interchange.

The current core functions of the Newtown are facilities management in respect of its commercial developments (mainly No. 1 Central Place and other buildings) and the management of Central Improvements District (“CID”). The day to day operations of the GNDC and the precinct is managed by the Johannesburg Development Agency.

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Programme 6: Greater Newtown Development Company (GNDC)

Budget Programme Purpose Sub Programmes Functions

Greater Newtown Development Company

• The attraction of new private sector (and other) investment to complement and enhance the facilities and programmes already available in the cultural quarter. A destination centre and desired location for the creative industries It is supported by three others

• The provision of a guaranteed, developing and focused cultural programmes

• The creation of a supportive spatial framework, creating urban amenity and identity

• The provision of high quality management of the Cultural Quarter and certainty in plans for management and programming in the future

Not Applicable Not Applicable

Programme 6: GNDC

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The objectives for the Newtown Development Company were formulated into three primary strategies for implementation:

• Strategy 1 Commercial development and new investment: The aim of Strategy 1, is to facilitate private and public investment for the supply of commercially viable retail, hospitality, business, housing uses; and associated social facilities to support the attainment of the vision which was set out for the Newtown

Cultural Quarter. • Strategy 2 Cultural Programme and the Creative Industries:

The aim of Strategy 2, is to create a sustainable critical mass of mixed cultural programmes to support Strategy 1 and to stimulate demand for the Newtown Cultural Quarter, as a destination centre and as a location for the Creative Industries.

• Strategy 3 Spatial framework: The aim of Strategy 3, is to establish a spatial framework that guides and supports development by enhancing urban amenity and identity, ensuring the provision of appropriate infrastructure, adding value and pre-assembling development.

• The GGDA will support the initiatives of the City of Johannesburg and entities like the Johannesburg Development Agency, with regard to the above strategies.

Key deliverables

The Greater Newtown Development Company (GNDC), is in the process of being transferred from the City of Johannesburg to a subsidiary of GGDA, called the Supplier Park Development Company SOC Limited (SPDC). Upon registration of transfer into the name of SPDC, the winding down process will unfold, through de-registration.

The milestones for the transfer of the property include:

• The signing of the transfer agreement • Obtaining the regulation 38 certificate • Registering the subdivided portion with the Deeds Office• Obtaining the rate clearance certificate • Lodging the documents at the Deeds Office • Transfer of the subdivided portion from the City of

Johannesburg (CoJ) to Supplier Park Development Company (SPDC)

The milestones for the de-registration of the company include:

• Passing of the special shareholders resolution to de-register GNDC by GGDA and the City;

• Settling of all liabilities, transferring of all accounts, such as municipality and rates, from Greater Newtown to the Johannesburg Development Agency (JDA)

• Lodging the documents to de-register GNDC at Companies and Intellectual Property Commission (CIPC)

• Registration of the de-registration of GNDC by CIPC.

Progress

As matters currently stand, the subdivided portion of the land on which the building, named Number 1 Central Place, has been registered at the Deeds Office and the rate clearance certificate has been issued by the CoJ, in respect of the said subdivided portion. The documents for the registration of transfer of the subdivided portion from the CoJ to SPDC, have been lodged.

The GNDC Board met on 22 February 2017 and resolved that, given the high liquidation fee estimated to be R2m, an alternative to liquidation should be found to the winding down of GNDC.

A legal opinion obtained indicated that a less expensive alternative to liquidation would be de-registration of the company. The Board of GNDC resolved, that GNDC be wound down through a de-registration process.

GNDC board resolution to give effect to the winding down, was obtained in the period under review. Following the passing of the special shareholders resolution to the deregistration of Greater Newtown, engagement has been had with the shareholder representative of the City of Johannesburg, Johannesburg Development Agency for the purposes of enabling the City to take control of their assets and liabilities as per deregistration resolution. Subsequent to the said process the winding down process will unfold at the Companies and Intellectual Property Commission.

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Planned Target2017/2018




2017/2018


Winding down of the GNDC

The sub-divided portion of the land on which No 1. Central Place is situated was registered at the deeds office

Liquidation of No. 1 Central Place finalised

Shareholder resolution to liquidate the DevCo

- -






Planned Target

2017/2018



Target to Actual

Achievement for

2016/2017


Completion of winding down process

Regulation 38 certificate obtained from CoJ

Rates clearance certificate obtained from CoJ

The sub divided portion of the land on which No 1 Central Place is situated, was registered at the deeds office

Liquidation of 1 Central Place finalised

Shareholder resolution to liquidate the DevCo

- -


A decision to pursue the company de-registration, was taken in view of the costs involved in a liquidation process.

Changes to planned targets:

Not applicable.

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Newtown, Johannesburg

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GovernanceGovernanceReport

PART C

121

Introduction

Corporate governance embodies processes and systems by which public entities are directed, controlled and held to account. In addition to legislative requirements based on a public entity’s enabling legislation and the Companies Act, corporate governance with regard to public entities is applied through the precepts of the Public Finance Management Act (PFMA) and run in tandem with the principles contained in the King’s Report on Corporate Governance. The Board of GGDA is ultimately responsible for ensuring high governance standards, assisted by management, and aims to instil a culture of compliance and good governance. The GGDA Group remains fully committed to business integrity, fairness, transparency and accountability in all its activities.

Executive Authority

On a quarterly basis, the GGDA reports to the Department of Economic Development on progress made towards the achievement of the predetermined objectives and implementations of the business plan. These matters are detailed in Part B of this annual report.

Standing Committee on Public Accounts (SCOPA)

The role of SCOPA is to exercise oversight over Provincial and Local Government on behalf of the Gauteng Provincial Legislature, to ensure accountable utilisation of resources and prudent financial management; and to make recommendations to the Legislature. The Committee considered the Annual Report, including the Auditor-General’s Report on GGDA for the year ended 31 March 2018. The Committee notes that the GGDA obtained an unqualified audit opinion with no findings under Annual Financial Statements, predetermined objectives and compliance with laws and regulations.

Board

The GGDA is an entity established in terms of the Amendment to the Blue IQ Investment Holdings Act No. 1 of 2012 by the Gauteng Provincial Government in its Department of Economic Development.

The Role of the Board

In terms of the PFMA, the Board is the accounting authority of the GGDA and has a fiduciary duty to act in good faith, with due diligence and care, and in the best interest of the Company and all its stakeholders. It is the guardian of the values and ethics of the Company and is accountable to the shareholder. The Board has full and effective control over the GGDA. The Board and its committee charters set out the roles, duties and responsibilities of the Board, as well as salient corporate governance principles. The Board and committee charters are revised annually to ensure effectiveness and relevance. The role of the Board is described by the following activities:

• Providing strategic direction and leadership• Determining the goals and objectives of the Company• Approving key policies, including investment and risk

management

• Reviewing the Company’s goals and strategies for achieving its objectives

• Approving and monitoring compliance with corporate plans, financial plans and budgets

• Reviewing and approving the Company’s financial objectives, plans and expenditure

• Considering and approving the Annual Financial Statements, interim statements and notices; to the shareholder

• Ensuring good corporate governance and ethics• Monitoring and reviewing performance and effectiveness of

controls• Ensuring effective communication with relevant stakeholders• Liaising with, and reporting to, the shareholder• Guiding key initiatives• Approving transactions beyond the authority of management• Considering and adopting, if appropriate, operating budgets

and business plans proposed by management for the achievement of its strategic direction

• Delegating authority for capital expenditure• Ensuring ethical behaviour and compliance with relevant laws

and regulations, audit and accounting principles and the GGDA’s internal governing documents and codes of conduct and

• Acting responsibly towards the GGDA’s relevant stakeholders.

The Board regularly reviews its annual plan to ensure that sufficient time is allocated towards the review of its strategy, which involves the analysis and choice of such strategy and the ongoing review of progress against the approved plans.

Board Charter

The Board Charter sets out the roles, duties and responsibilities of the Board, as well as salient corporate governance principles. The Board and committee charters are revised annually to ensure effectiveness and relevance. In line with the Charter, the Board met a minimum of four times this year to discharge its duties as set out in the PFMA and the King Code of Corporate Governance. Proceedings at meetings are directed by a formal agenda. The proposed agenda is circulated prior to the meeting to allow Board members sufficient opportunity to request additional agenda items. In addition, a comprehensive Board pack is distributed to all members in advance of meetings, to ensure that they are properly informed and to enable them to undertake meaningful discussions and effectively discharge their duties. These packs typically include:

• Agenda• Previous meeting minutes• Copies of any resolutions passed since the last Board meeting• Minutes of all Board Committee meetings which have taken

place since the last Board meeting and• Governance update to assist Board members in keeping

abreast with relevant legislation.

All Board members have unrestricted access to the Company Secretary and all Board records, as well as to independent professional advice in appropriate circumstances.

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Composition of the Board

The members of the entity during the year and to the date of this report are as follows:

Name Appointed Resigned

M Mokoena (Chairman) 01 June 2012

Z Malele (Deputy Chairman) 25 September 2012

N Balton 01 June 2012

D Dondur 14 March 2013

Dr P Jourdan 01 June 2012

S Nicolaou 31 March 2012

Q Gungubele 1 February 2015

P Mafojane 1 October 2015

Dr N Msomi 2 October 2015

S Zamxaka (Executive Director) 1 March 2016 31 March 2018

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M Mokoena Chairman01 June 2012

B Com Hons (UNISA)

Public management; Financial management and auditing; Infrastructure and urban development; Trade and Investment Promotion

• Mokwena & Mokoena• Dipogo Investments• Clinix Health Group• Nareli Investments Holdings• Jazzro• Inca Portfolio Managers• Gauteng IDZ Development Company

Remuneration CommitteeTrade and Investment Committee

Z MaleleDeputy Chairman

25 September 2012

B.Sc(UoL), BAP, MAP(WBS)

ICTEconomic developmentMarketingFinancial managementSales managementHR, Operations managementStrategic ManagementRisk ManagementGovernance and Project management

• Nomvete Nemakonde Aviation Consultants International• Maverick Aviation• Technology Corporate Management• TCM Networks• Sandford Estates• Meadow Star Investments 28• Mandeville Aquatics Disability Swimming Centr of Excellence

GGDA Group Audit and Risk Committee

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N BaltonNon-Executive Director

01 June 2012

Bachelor’s Degree in Education,Masters Degree in Public Management and Finance

EducationPublic Management and Finance

• Ahmed Kathrada Foundation• NBPP Consolidated 3rd Tier Trading• Vishshan Developments• Karma Community Projects• Constitution Hill Development Company• Greater Newtown Development Company• Matla and Associates

Group Audit and Risk CommitteeSocial and Ethics Committee

D DondurNon-Executive Director

14 March 2013

B Acc, B Compt Honours, MBA, CA (SA), WITS and London Business School, International Executive Development Programme, University of Nevada, Reno Executive Development Programme, Post Graduate Certificate in Labour Relations, Fellow member at the IoDSA, Member of the Institute of Internal Auditors South Africa and Member of the SA Institute of Chartered Accountants

FinanceBusiness AdministrationAuditingAccountingIT GovernanceEnterprise Risk ManagementCorporate GovernanceLabour relations and HR

• Doris Dondur Consulting• Die Afrikaanse Taal- en Kultuurverenining (ATKV)• Basil Read Holdings• Professional Provident Society Insurance Company

GGDA Group Audit and Risk Committee Social and Ethics Committee

Dr P Jourdan

Non-Executive Director

01 June 2012

B.Sc.; B.A; M.Sc.(Eng) x2; Ph.D. (Leeds University)

Resource-based and spatial development

• Coega Development Corporation • Gauteng IDZ Development Company• Umtentwe River Properties• Mining Equipment Manufacturing of SA

Social and Ethics Committee

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S NicolaouNon-Executive Director

01 June 2012

B. Pharm(WIT)FPS(SA)

Trade- Manufacturing- Pharmaceuticals

• Health Marketing Enterprises• No 11 Fillian Forest Props• Sifiso Nxasana Paediatrics Fund for Children • Public Health Enhancement Fund • Business Unity South Africa• South African Hellenic Foundation for Development and Philanthropy• Pharmaceuticals Made in South Africa• GD Pharmaceuticals• Aspen Pharmacare International• Proudly South African• First Ready Development 895

GGDA Group Audit and Risk Committee, Trade and Investment Committee

Q Gungubele


1 February 2015

B.Luris. LLM in Labour Law

-Labour Law-Corporate Governance

• Kumaka Board

Remuneration CommitteeSocial and Ethics Committee

Dr N Msomi


2 October 2015

PhDInternational Executive DevelopmentDiploma in Finance

InnovationCorporate Finance Entrepreneurship

• Board of Governors-ICGEB• The Innovation Hub Management Company• MSQ Health

P MafojaneNon-Executive Director

2 October 2015

B. Proc LLB Law

• Constitution Hill Development Company

Remuneration Committee

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T SetiloaneNon-Executive Director

2 October 2015

Dip. Mash. MechBSc Mechanical Engineering

EngineeringMarketing

• Research Software• Southern Storm Properties 124• Blackwood Power• Molehe Technologies and Associates• Seventy Thirty JV• TL Capital• K2018254380 (South Africa)• Nuclear Fuels Corporation of SA• ETA Operations• Umfiki Investment Corporation• Oro Group (Pty) Ltd• Swisscham Southern Africa SA Chapter• Supplier Park Development Company

S ZamxakaExecutive Director

1 March 2016

31 March 2018

B. AdminB. Econ HonoursDiploma programme in International Education

Developmental EconomicsProject Management

• Greater Newtown Development Company• Constitution Hill Development Company• Gauteng Industrial Development Zone • Innovation Hub Management Company and • Supplier Park Development Company

Board Committees

The Board may establish committees to assist it in the execution of its duties, powers and authorities. The committees established by the Board are the Audit and Risk Committee, Social and Ethics Committee, Nomination, Human Resource and Remuneration Committee and the Trade and Investment Committee. The roles of these committees are set out in their respective charters.

Non-executive directors receive fees for their contribution to the Board and the committees on which they serve. The shareholder determines this rate in terms of a policy. Non-executive directors are also reimbursed for out-of-pocket expenses incurred on the Company’s behalf. Further information on directors ‘remuneration appears on page 219 to 220.

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CommitteeNo. of meetings held

No. of members Name of members

GGDA Group Audit and Risk Committee 19 6 Ms D Dondur

Mr Z Malele

Mr O Mogale

Mr N Balton

Mr S Mahlalela

Ms M Tshabalala

GGDA Group Nomination, Human Resource and Remuneration Committee

6 3 Ms Q Gungubele

Mr M Mokoena

Mr P Mafojane

GGDA Group Social and Ethics Committee 4 4 Mr N Balton

Dr P Jourdan

Ms D Dondur

Ms Q Gungubele

GGDA Group Trade and Investment Committee 4 3 Mr S Nicolaou

Mr M Mokoena

Mr T Setiloane

Details of the attendance of Board members appear on pages 160 and 161.

Directors’ Remuneration

Non-executive directors receive fees for their contribution to the Board and the committees on which they serve. The shareholder determines this rate in terms of a policy. Non-executive directors are also reimbursed for out-of-pocket expenses incurred on the Company’s behalf. Further information on directors ‘remuneration appears on 218.

Risk Management

GGDA seeks to minimise risk by ensuring that the appropriate infrastructure, personnel, systems and controls are in place throughout the organisation, and risk management is integrated into management processes. Group Risk control strategies and policies have been put in place to ensure that risks are managed in an integrated manner throughout the group. The Board is responsible for ensuring that the risk management process is in place and is integrated into the day-to-day business activities of the Group. Significant risks that could hinder the achievement of GGDA’s strategic objectives are identified, assessed and prioritised annually and reviewed regularly, through a risk assessment in line with the Strategic Risk Management Framework, and control mechanisms are implemented to manage and monitor these risks.

GGDA has an Audit and Risk Committee that advises management on the overall system of risk management and independently monitors the effectiveness of the system of risk management through the Internal Audit Unit. The Risk Management process continues to mature with increasing support from management and the Board.

Internal Audit

The Internal Audit (IA) function of the GGDA is an independent appraisal activity of the various operations and systems of control to determine whether acceptable policies and procedures are followed, legislative requirements and established standards are met, resources are used efficiently and economically, and planned missions are accomplished effectively.

IA’s primary purpose is to provide its stakeholders with assurance regarding the adequacy and effectiveness of the GGDA’s internal control systems and, where appropriate, the quality of performance of its business operations as evaluated against agreed performance standards. Such assurance has been based on objective information, in the form of internal audit conclusions.

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IA has had no direct operational responsibility or authority over any of the activities audited. Accordingly, it has not implemented internal controls, developed procedures, installed systems, prepared records or engaged in any other activity that may have impaired IA’s judgement, objectivity and/or independence. The controls subject to evaluation encompassed the following:

• The information systems environment• The reliability and integrity of financial and operational information• The effectiveness of operations• Safeguarding of assets and• Compliance with laws and regulations.

Compliance with Laws and Regulations

In line with the PFMA and Treasury Regulations, the Internal Audit has provided the Audit and Risk Committee and management with assurance that controls are adequate and effective. This has been achieved by means of appropriate and effective risk based internal audit process.

Audit and Risk Committee

The GGDA has a shared Group Audit and Risk Committee for the Holdings company and all its subsidiaries. The Board has delegated the oversight of risk management to the Audit and Risk Committee. The purpose of the Audit and Risk Committee is to assist the Board discharging its duties relating to:

• The safeguarding of assets• The operation of adequate systems and control processes• The operation of adequate risk management processes, and • The review of the preparation of accurate and timely financial reports and statements by management.

The committee provides a platform for discussing business risk and control issues and for developing relevant recommendations for consideration by the Board. The Committee acts as a channel of communication between GGDA management and the internal and external auditors

The Committee acts primarily in an advisory capacity and does not have executive responsibilities except in relation to:

• The approval of non-audit services performed by internal and external auditors• The approval of terms of engagement, and fees to be paid to the external auditors • Approval of the appointment of internal auditors if the function is outsourced, and the head of internal audit and • Whether an in-house internal audit function is established.

The identification and management of risk is central to achieving the GGDA’s mandate in terms of the Act. Each year the Board reviews and considers the risk profile of the whole business. The risk profile covers both operational and strategic risks.

In addition, the Board specifically requires management to implement a system of control for identifying and managing risk. The Board, through the Audit and Risk Committee, regularly reviews the effectiveness of the system.

In this regard the role of the Audit and Risk Committee is to ensure that:

• Appropriate risk and control policies are in place and are communicated throughout the organisation• The process of risk management and the system of internal control are regularly reviewed for effectiveness• There is an ongoing process of identifying, evaluating and managing the significant risks faced by the GGDA (including compliance and

IT-related risks) and that this is in place throughout the year• A formal risk assessment is undertaken annually• The is an adequate and effective system of internal control in place to manage the more significant risks faced by the Group to an

acceptable level

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GGDA Group Audit And Risk Committee

Nam

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Qual

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If in

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Date

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Ms D Dondur B Acc, B Compt Honours, MBA, CA (SA),WITS and London Business School International Executive Development Programme, University of Nevada, Reno Executive Development Programme, Post Graduate Certificate in Labour Relations, Fellow member at the IoDSA

External N/A 2 October 2015

N/A 14 of 19

Mr N Balton BA (Ed) DegreeBachelors’ Degree in Education Master’s Degree in Public Management and Finance

External N/A 2 October 2015

N/A 16 of 19

Mr Z Malele B.Sc (UoL), BAP, MAP (WBS) External N/A 2 October 2015

N/A 18 of 19

Mr S Mahlalela Chartered Accountant, MBA Finance External N/A 24 May 2016 19 November 2017

6 of 15

Mr O Mogale Masters in Information Technology, University of PretoriaResearch Topic: Developing a generic approach for improving customer experience by enhancing knowledge sharingBSc (Information Technology), Vista University

External N/A 24 May 2016 19 November 2017

13 of 15

Ms T Zondi Bachelor of Commerce (Accounting, Higher Diploma in Accounting;International Fellow of the Government Accountability Office (USA);Leadership and Self Deception: Arbinger Institute;Imbokodo Programme (Women’s Leadership Programme);Nexus Programme (Leadership Programme) – Gordon’s Institute of Business Science;SA Venture Capital and Private Equity Association (SAVCA) – Foundation programme in venture capital and Private equity – Gordon’s Institute of Business Science;South African Chartered Accountant CA (SA)

External N/A 15 March 2018

N/A 0 of 0 as she was only appointed on 15 March 2018.

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Social and Ethics Committee

GGDA has a Social and Ethics Committee. The role of the Committee is to assist the Board with the oversight of social and ethical matters relating to the GGDA.

Members of the Committee

The members of the Committee and the meetings attended are set out in pages 161.

Responsibilities

The objectives and responsibilities of the Committee are recorded in its charter and are aligned with the Committee’s statutory functions as set out in the Companies Regulations of 2011. The Committee’s duties are summarised below:

1. Monitor GGDA’s activities with regard to any relevant legislation, other legal requirements or prevailing codes of best practice pertaining to matters relating to social and economic development; and good corporate citizenship, including the GGDA’s:

• Promotion of equality, prevention of unfair discrimination, and reduction of corruption;

• Contribution to development of the communities in which its activities are predominantly conducted or within which its products or services are predominantly marketed and

• Record of sponsorship, donations and charitable giving.

2. The environment, health and public safety, including the impact of the GGDA’s activities and of its products or services.

3. Stakeholder relationships.

4. Labour and employment, including drawing matters within its mandate to the attention of the Board as required. During the year under review, the Committee has considered presentations and reports on the following:

• Gift registers;• Financial disclosures;• Quarterly reports on legislative updates;• Quarterly reports on employment equity;• Quarterly reports on ethics performance and management;• Quarterly reports on environment, health and public safety;• Whistle blowing reports and• Risk management reports.

Compliance with Laws and Regulations

Management of the organisation is responsible for the day-to-day management of the activities of the institution, and Board members embrace their responsibilities imposed by the Blue IQ Amendment Act, the PFMA and other relevant laws and regulations. In addition, each individual manager undertakes to maintain a working understanding of the laws, rules, codes and standards applicable to the GGDA’s operations.

The individual managers are supported by the Legal Advisory and Company Secretary Department which provides the following services:

• Identifying and advising on existing, new or amended legislation that is applicable to the GGDA’s business, including giving recommendations on applicable rules; Facilitating legal compliance with relevant laws and rules and assigning responsibility for areas of compliance;

• Facilitating legal compliance with internal policies, rules, guidelines and procedures and

• Facilitating and reviewing management’s monitoring of compliance.

Accordingly, the entire management team is responsible for the implementation of effective compliance and processes.

Fraud and corruption

The government of South Africa identified fraud and corruption as a serious concern that affects the quality of service delivery. By remaining silent about fraud, corruption and other malpractices, an employee contributes to, and becomes part of, a culture of fostering such improprieties. To address this concern the GGDA has adopted a fraud prevention policy, as well as a policy on whistle blowing which emphasises the GGDA’s commitment to ensure that its exposure to corrupt activity is constrained, mitigated, regularly monitored and subject to periodic risk assessments.

These policies provide the means by which employees and other stakeholders are able to raise concerns with appropriate line management or via the Tip-Offs Anonymous Hotline, where they have reasonable grounds to believe that there are irregular activities involving the GGDA. The whistle-blowing policy that was adopted provides the means for informing the GGDA of any suspected reportable conduct or any other inappropriate activity.

The GGDA commits to doing everything practically possible within its powers and reach to protect a whistle-blower that has made a protected disclosure in terms of this policy. In support of the expectation for employees and all stakeholders to report incidents, the GGDA has established the Tip-Offs Anonymous Hotline. This hotline can be used to report known or suspected incidents without fear or occupational detriment and/ or victimisation. In the year under review, there were five tip-offs received of which all have been investigated, reviewed, and the final reports have been presented to the respective boards with recommendations being duly implemented.

Minimising Conflict of Interest

The Board and staff members are required to declare any conflict of interest in matters that are considered by the Board. In addition Board members are required to provide an annual declaration of conflict of interest. At every meeting there is a second stage of declaration of potential conflict of interest for matters on the agenda for the meeting. A related party policy was drafted that provides guidance and details of disclosures to be made. Where conflict of interest was identified, an evaluation was made on its materiality and corrective measures taken to address the matter.

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The Board of the GGDA is committed to ensuring a safe and healthy workplace for all its employees, visitors and invitees. The GGDA complies with all relevant legislation, in particular, the Occupational Health and Safety (OHS) Act of 1993. This includes monitoring risks in the workplace, addressing reported incidents and raising awareness and responsibility among employees around serious diseases.

Code of Conduct

GGDA confirms and acknowledges its responsibility to comply with the Public Finance Management Act (PFMA), Act 1 of 1999 and Treasury Regulations, and where applicable and practical, with the Code of Corporate Practices and Conduct (“the Code”) laid out in the King III Report and the latest King IV report on Corporate Governance for South Africa 2009. The Board discusses the responsibilities of management in this respect at Board meetings and monitors the entity’s compliance with the Code on a quarterly basis.

Company Secretary

The Company Secretary is appointed by, and is accountable to, the Board. This person is the corporate governance knowledge manager and information officer of the GGDA and its subsidiaries, and is responsible for the execution of all statutory requirements applicable to the GGDA and its subsidiaries. In relation to their fiduciary duties and how to discharge such duties, the directors have unrestricted access to the advice and guidance of the Company Secretary as well as the Secretariat Department. The directors are entitled to obtain independent professional advice at GGDA’s expense, should they deem this necessary. In addition to the performance of other assurance functions, the Company Secretary monitors the GGDA’s compliance with the requirements of good corporate governance, the Amendment to the Blue IQ Act, No.1 of 2012 Public Finance Management Act, No.1 of 1999, Companies Act of 2008 and other relevant legislation.

In terms of Section 88(2) (e) of the Companies Act 71 of 2008, as amended, I certify that the company has lodged with the Companies and Intellectual Property Commissioner all such returns as are required of a public company in terms of the Companies Act and that all such returns are true, correct and up to date.

The Constitutional Court of South Africa

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Human Resource Management

PART D

133

Introduction

The HR function is responsible for managing and delivering strategic, tactical and HR Operations to the GGDA Group. At a strategic level, HR partners with the business, participate in formulating and defining the strategy of the organisation. In so doing, HR is able to interpret the organisation’s strategic thrusts into relevant and value-adding HR objectives and in turn deliver outcomes that support the organisation’s objectives. Furthermore, HR plays advisory and influencing roles at the leadership level, in shaping the human resources ethos.

At a tactical level, HR facilitates the implementation of the HR strategy, through structured approaches and processes. The implementation of the strategy is guided by the priorities of the business and is translated into initiatives and interventions. The implementation of HR initiatives and interventions are primarily designed to optimise the organisation’s human resources performance at all times. Over and above HR interventions, the department is responsible for the maintenance of human resources policies and procedures, to ensure compliance with legislation and consistency in the way things are done. HR does not work in isolation from the business, it is an integral part of ensuring human resources management. Therefore, in everything that HR does, management involvement and ownership is key.

Key Achievements

In the 2017/18 financial year, numerous key milestones were reached by the Group HR, which enhanced positive culture and a good reputation amongst its people. The GGDA Group conducted the organisational culture and climate survey which is currently being reviewed given the matters raised by staff in the report. Below are key milestones reached by the Group in the year under review;

Recruitment

GGDA Group is a relatively young organisation which puts the company in a favourable position in terms of further developmental opportunities and business continuity planning. The organisation has attracted a diverse workforce with woman making up a total of 53% in the workforce. In the year under review the GGDA Group managed to recruit 57 new employees. It is also important to note that the Gauteng Industrial Development Zone is fully capacitated as per its approved organisational structure.

Training and Development

The learning and development policy has been reviewed to ensure that it complies with the stipulations of the Skills Development Act, No 97 of 1998 (amended) and to ensure that the skills of the GGDA group employees are continuously improved. The policy also acknowledges the need to provide opportunities for leaning and development that instil a culture of service excellence and innovation. The Workplace Skills Plan (WSP) and the Annual Training report (ATR) were successfully submitted to various SETA’s by respective Human Capital training divisions. Given that the submissions were done on time, there is an expectation of a refund from the respective SETAs which will further bolsters the training budget for the year 2018/19.

Performance Management

GGDA Group has put in place a Performance Management Policy which seeks to regulates and set rules for the design, development, management, implementation and review of the employee focussed performance management system within the organisation. The organisation has continued to ensure that it instil a culture of performance throughout the GGDA Group workforce and that the system is implemented and applied consistently, equitably and fairly to all employees.

In the year under review 96% of employees fully meet their annual set targets and standards. We will continue to ensure that the system promote joint responsibility and accountability by managers/supervisors and employees as a result inculcating a culture of on-going performance monitoring and feedback.

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Employee Wellness

GGDA Group acknowledges that the management of employees’ wellbeing is a priority due to increasing recognition that the health and wellness of employees directly impacts on the productivity of the entire organisation. As employees are fundamental to the success of GGDA Group, it is essential to help them to be productive at their optimal levels. To that end the Group sourced the professional services of Careways to provide necessary professional service to employees. We managed to host 7 wellness day events throughout the Group. In 2017/18 Financial year the Group implemented employee-wellness programmes with special focusses amongst others on:

• Health Assessment services, • Counselling services;• Healthy Lifestyle Management; and• Health and disease management.

Employee Relations

The employee relations during the year under review, conducted many disciplinary cases including grievances lodged by the employees. In the period under review, three (3) employees were dismissed during internal disciplinary hearing which wa confirmed by the CCMA and Two (2) cases were taken for review at the Labour Court. Two (2) employees resigned immediately after they were presented with letters of intention to charge them.

Personnel Cost by Programme / Activity / Objective

The information below presents 2016/17 performance rewards paid out to employees. The 2017/18 performance rewards have not been paid pending finalisation of internal processes of approval.

Programme/activity/objective

Total expenditure for the entity

(R’000)

Personnel expenditure (R’000)

Personnel expenditure as a % of total expenditure

(R’000)

No. of employeeAverage personnel cost per employee

(R’000)

AIDC 213 579 89 976 42% 135 666

ConHill 60 455 16 523 27% 33 500

GGDA (Holdings) 280 473 94 986 34% 101 940

TIH 149 910 39 865 27% 92 433

GIDZ 91 932 11 000 12% 10 1 100

TOTAL 796 349 252 350 32% 371 680

Personnel Cost by Salary Band

Level Personnel expenditure

(R’000)

% of personnel expenditure to total

personnel cost (R’000)No. of employees

Average personnel cost per employee (R’000)

Top management 27 196 11% 8 3 400

Senior management 99 871 40% 27 3 698

Professional qualified 66 294 26% 145 457

Skilled 38 887 15% 116 335

Semi-skilled 20 102 8% 79 254

Unskilled 0 0% 0 0

TOTAL 252 350 100% 371 680

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Performance Rewards

Programme//activity/objectivePerformance rewards

(R’000)Personnel Expenditure (R’000)

% of performance rewards to total personnel cost (R’000)

Top management 2 393 27 196 9%

Senior management 2 959 99 871 3%

Professional qualified 8 075 66 294 12%

Skilled 3 292 38 887 8%

Semi-skilled 1 352 20 102 7%

Unskilled 0 0 0%

Total 18 071 252 350 7%

Training Costs

The training budget for the group ranged between 1% - 2% of personnel cost, which is in line with the Skills Development Act, No: 31 of 2003 (as amended) and Skills Development Levies Act, No: 09 of 1999 (as amended).

Programme/activity/ objective

Personnel expenditure (R’000)

Training budget(R’000)

Training expenditure as a % of personnel cost

No. of employees trained

Average training cost per employee

AIDC 89 976 739 1% 110 7

ConHill 16 523 281 2% 30 9

GGDA (Holdings) 94 986 1 040 1% 57 18

TIH 39 865 602 2% 36 17

GIDZ 11 000 101 1% 5 20

Total 252 350 2 763 1% 238 11

Employment and Vacancies

During the year under review, vacant positions were filled across the Group with the view of strengthening capacity of the GGDA Group to deliver on its mandate.


2016/2017 No. of employees

2016/2017 Approved posts


2017/2018 Vacancies

% of vacancies

AIDC 122 96 135 72 53%

ConHill 35 11 33 11 33%

GGDA (Holdings) 105 27 101 27 27%

TIH 79 0 92 17 18%

IDZ 10 6 10 0 0%

Total 351 140 371 127 34%

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2016/2017 Approved posts


2017/2018 Vacancies

% of vacancies

Top management 7 0 7 0 0%

Senior management 28 33 27 6 22%

Professional qualified 131 37 150 26 17%

Skilled 119 36 116 43 37%

Semi-skilled 62 34 67 52 78%

Unskilled 4 0 4 0 0%

Total 351 140 371 127 34%

Employment Changes

Salary BandEmployment at

beginning of periodAppointments Terminations

Employment at end of the period

Top management 7 1 1 7

Senior management 28 10 11 27

Professional qualified 131 35 16 150

Skilled 119 10 13 116

Semi-skilled 62 15 10 67

Unskilled 4 0 0 4

Total 351 71 51 371

Reasons for Staff Leaving

Majority of employees that exited GGDA Group employment in 2017/18 financial year were due to resignations, this was followed by employees whose contract of employment expired. The remaining vacant positions will be filled as part of the approved Recruitment Programme.

Reason Number % of total no. of staff leaving

Death 2 4%

Resignation 37 73%

Dismissal (Incapacity) 3 6%

Retirement 1 1.5%

Ill health 0 0%

Expiry of contract 7 14%

Other 1 1.5%

Total 51 100%

Labour Relations: Misconduct and Disciplinary Action

Nature of disciplinary Action Number

Verbal warning 2

Written warning 2

Final written warning 1

Grievances 5

Dismissals 3

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Equity Target and Employment Equity Status

Levels

Male

African Coloured Indian White

Current Target Current Target Current Target Current Target

Top management 3 1 0 0 1 0 0 0

Senior management 12 3 0 0 1 1 2 1

Professional qualified 59 20 3 3 9 4 10 5

Skilled 34 32 1 3 0 1 2 2

Semi-skilled 28 22 0 1 0 1 0 1

Unskilled 9 0 0 0 0 0 0 0

Total 145 78 4 7 11 7 14 9

Levels

Female

African Coloured Indian White

Current Target Current Target Current Target Current Target

Top management 2 0 1 0 0 0 1 0

Senior management 11 2 0 0 1 0 0 0

Professional qualified 62 14 3 2 5 1 9 5

Skilled 49 20 1 2 1 1 4 6

Semi-skilled 30 20 1 1 0 1 1 1

Unskilled 15 0 0 0 0 0 0 0

TOTAL 169 56 6 5 7 3 15 12

Levels

People with Disabilities

Male Female

Current Target Current Target

Top management 0 0 0 0

Senior management 0 0 0 0

Professional qualified 0 1 0 0

Skilled 1 2 0 1

Semi-skilled 1 1 1 1

Unskilled 0 0 0 0

TOTAL 2 4 1 2

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GGDA staff member with a fellow delegate at the 2017 GIIC Conference

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AnnualFinancial Statements

PART E

141

142


143


General Information

Country of incorporation and domicile South Africa

Nature of business and principal activities Facilitates economic development in the Gauteng Province

Members Mr M Mokoena (Chairman)Z Malele (Deputy Chairman) N BaltonD DondurQ Gungubele Dr P Jourdan P Mafojane Dr M Msomi S NicolaouT SetiloaneS Zamxaka (Group CEO)

Registered office 124 Main StreetCnr Main and Kruis StreetsMarshaltown Johannesburg2001

Business address 124 Main StreetCnr Main and Kruis Streets Marshaltown Johannesburg2001

Postal address Private Bag 10420

Johannesburg

2000

Controlling entity Gauteng Growth and Development Agency SOC Ltd incorporated in the Republic

of South Africa

Bankers First National Bank – a division of First Rand Bank Limited

Auditors Auditor-General of South Africa

Secretary M Mulaudzi

Company registration number 2003/021743/30

Website www.ggda.co.za

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The reports and statements set out below comprise the Group Annual Financial Statements presented to the Provincial Legislature:

Directors’ Responsibilities and Approval 145

Audit and Risk Committee Report 146

Report of the Auditor-General 149

Directors’ Report 154

Company Secretary’s Certification 162

Statement of Financial Position 163

Statement of Financial Performance 165

Statement of Changes in Net Assets 166

Cash Flow Statement 167

Accounting Policies 168

Notes to the Group Annual Financial Statements 194

The following supplementary information does not form part of the Group Annual Financial Statements and unaudited:Detailed Statement of Financial Performance

Contents

145


Directors’ Responsibilities and Approval

The directors are required by the Public Finance Management Act 1 of 1999 as amended, and the Companies Act 71 of 2008, to maintain adequate accounting records and are responsible for the content and integrity of the financial statements and related financial information included in this report. It is our responsibility to ensure that the financial statements fairly present the state of affairs of the company and group, the results of its operations and cash flows for the year ended 31 March 2018, in conformity with the Standards of Generally Recognised Accounting Practice (GRAP). The external auditors are engaged to express an independent opinion of the Annual Financial Statements and were given unrestricted access to financial records and related data.

The group annual financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board, in accordance with the Public Finance Management Act of 1999, as prescribed by National Treasury and the Companies Act 71 of 2008.

The group annual financial statements are based upon appropriate accounting policies, consistently applied and supported by reasonable and prudent judgement and estimates.

The directors acknowledge, that they are ultimately responsible for the system of internal financial control established by the company and group, and place considerable importance in maintaining a strong control environment. To enable the directors to meet these responsibilities, the directors set standards for internal control, aimed at reducing the risk of error or loss in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties, to ensure an acceptable level of risk. These controls are monitored throughout the company and group; and all employees are required to maintain the highest ethical standards in ensuring the company and group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the company and group, is on identifying, assessing, managing and monitoring all known forms of risk across the company and group. While operating risk cannot be fully eliminated, the company endeavours to minimise it by ensuring that appropriate controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management and internal audit, that the system of internal control provides reasonable assurance, that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial controls can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the company and group’s ability to continue as a going concern for the year to 31 March 2019 and, in the light of this review and the current financial position, they are satisfied that the company has or has access to adequate resources to continue in operational existence for the foreseeable future. The company is wholly dependent on the receipt of grant funding from the Gauteng Provincial Government of R443 million, for continued funding of operations for the 2018/19 financial year. This funding has been approved as per the Medium Term Expenditure Framework of the Gauteng Provincial Government.

The Annual Financial Statements of the company and group as set out, were prepared on a going concern basis. The directors have reviewed current and future plans of the company and group and are satisfied with the appropriateness of the basis.

The external auditors are responsible for auditing and reporting on the company and group annual financial statements. The group annual financial statements have been examined by the company and group external auditors and their report is presented on page .

Approval of Company Annual Financial Statements

The Annual Financial Statements of Gauteng Growth and Development Agency SOC Limited, set out on pages 163 to 230 were approved by the Board of Directors on 31 July 2018 and signed on their behalf by:

Mr Mogopodi MokoenaChairman

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Audit And Risk Committee Report

1. Legislative requirements

The audit committee herewith presents its report for the financial year ended 31 March 2018, as required by section 77 of the Public Finance Management Act, 1999 (Act No. 1 of 1999, as amended by Act No. 29 of 1999) (PFMA) read with treasury regulation 27.1.10.

2. Audit and risk committee members and attendance

The audit committee was established in accordance with sections 51(1)(a)(ii)) and 77 of the PFMA. The audit committee terms of reference requires that the audit committee comprises a minimum of three members.

The Committee consists of four Independent Non-Executive Members and is chaired by Ms Doris Dondur. The Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Internal and External Auditors have a standing invitation to all meetings of the Committee. A brief profile of each of the Committee Members, as well as their qualifications can be viewed in the Governance section of the Group Annual report, under Members of the Board.

The Chairman of the Committee reports to the Board quarterly, with regard to the Committee’s deliberations, decisions and recommendations.

In terms of section 77(b) of the PFMA, the audit committee must meet at least twice a year. During the financial year ended 31 March 2018, the audit committee met on 11 occasions. The table below shows the attendance of these meetings:

Audit and risk committee members and meeting attendance

NAME OF MEMBER TOTAL MEETINGS MEETINGS ATTENDED

D Dondur (Chairman) 11 8

N Balton 11 9

Z Malele 11 10

S Mahlalela (resigned 19 November 2017) 9 3

O Mogale (resigned 19 November 2017) 9 7

T Zondi (appointed 15 March 2018) 0 0

3. Audit committee’s responsibility

During the period under review, the Committee fulfilled its statutory duties as required by the PFMA (section 51(1)(a)(ii)) and Treasury Regulations (regulation 27.1.8), as well as various additional responsibilities assigned to it by the Board. The Committee’s activities are also guided by its Terms of Reference which are approved by the Board.

4. Effectiveness of the internal control and risk management

Section 51(1) (a) (i) of the PFMA states that the Board must ensure that a public entity has and maintains effective, efficient and transparent systems of financial, risk management and internal control.

The Committee is responsible for overseeing risk management and reviewing the internal controls. Reviews on the effectiveness of the internal controls were conducted and they covered financial, operational, compliance and risk assessment.

Based on the results of Internal Audit reviews for the 2017/18 financial year, except for;• ICT General Controls and IT Vulnerability assessments and• Contract Management

The overall control environment across the GGDA Group is considered to be ‘‘satisfactorily effective’’ in providing reasonable assurance that the inherent risks are appropriately managed and that the business objectives will be attained, and has remained effective throughout the 2017/18 financial year.

The areas of weakness that have been identified are being addressed by management and remain subject of follow-up reviews by internal audit as required by International Standards for the Professional Practice of Internal Auditing (2500).

The Board conducted a risk assessment during April 2017. An overview of risks management for the 2017/18 financial year is discussed under the Governance section of the GGDA Group Annual report.

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5. Internal audit function

The Internal Audit Unit is responsible for reviewing and providing assurance on the adequacy and effectiveness of the internal control environment across all of the significant areas of the group’s operations. The internal audit function is currently capacitated through a co-sourced model.

The Committee is responsible for ensuring that the group’s internal audit function is independent and has the necessary resources, skills, standing and authority within the organisation to enable it to discharge its responsibilities effectively. The Internal Auditors have unrestricted access to the Committee.

The Committee reviews and approves the Internal Audit Plan annually. Internal audit’s activities are measured against the approved internal audit plan and the Head: Internal Audit tables progress reports in this regard to the Committee.

During the reporting period the Committee conducted the following activities:

REVIEWED AND RECOMMENDED THE FOLLOWING MATTERS TO BOARD FOR APPROVAL

REVIEWED THE FOLLOWING MATTERS

• Internal Audit Charter for the 2017/2018 financial year

• Fraud Prevention Plan;• Whistle blowing policy

• Annual Risk Plan• Annual Internal Audit Plan (Approved)• Capacity within the Internal Audit Unit;• Internal Audit’s quarterly reports in line with the approved internal

Audit Plan;• Whistle blowing reports.

The committee has formed an opinion that adequate, objective internal audit policies and procedures exist within the group and that the group’s Internal

Audit Unit has complied with the internal audit standards, the required legal, regulatory and other responsibilities as detailed in its terms of reference during

the period under review.

The committee is satisfied that the internal audit function is operating effectively and that it has addressed the risks pertinent to the group.

6. Risk management function

The audit committee is responsible for the oversight of the risk management function. The committee has reviewed the risk register and the reports from management and is generally satisfied with the maturity of the risk management process.

7. Evaluation of the finance function

The audit committee is satisfied with group’s finance function during the year under review.

8. Performance management

Part of the responsibilities of the audit committee includes the review of performance management.

• Review and comment on compliance with statutory requirements and performance management best practices and standards.

• Review and comment on the alignment of the annual performance plan, budget, strategic plan, corporate plan and performance agreements.

• Review and comment on the relevance of indicators to ensure that they are measurable and relate to services performed by the department public

entity.

• Review of reported noncompliance with legislation

• Review of compliance with in year reporting requirements

• Review of the quarterly performance reports submitted by the internal audit function• Review and comment on the department’s/public entity’s performance management system and making recommendations for its improvement.

The audit committee is satisfied that the performance report has been prepared in terms of the PFMA, the Treasury Regulations and any other related regulatory requirements for reporting performance.

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9. Evaluation of the group annual financial statements

During the reporting period, the Committee reviewed the Group Annual Financial Statements of the group and is comfortable that the annual financial

statements have been prepared in terms of GRAP and the PFMA. The Annual Financial Statements were reviewed with the following focus:

• Significant financial reporting judgements and estimates contained in the Group Annual Financial Statements;

• Clarity and completeness of disclosure and whether disclosures made have been set properly in context;

• Changes in the Accounting Policies and Practices;

• Significant adjustments resulting from the External Audit process;

• Compliance with accounting standards and legal requirements;

• Explanation for the accounting treatments adopted;

• Reasons for year-on-year fluctuations;

• Asset valuations; and

• The basis for the going concern assumption.

The review of the Group Annual Financial Statements and the Draft Annual Report for the 2017/18 financial year was done at the Committee’s meeting held on 25 May 2018 and recommended them to the Board for approval on 31 May 2018.

10. The quality of monthly and quarterly reports submitted in terms of the PFMA

The audit committee is satisfied with the content and quality of management and quarterly reports prepared and issued during the year under review in compliance with the statutory framework. During the period under review, quarterly reports were presented by management to enable the Committee to:

• Monitor the integrity, accuracy and reliability of the financial position of the group;• Review the management accounts of the company and group and provide the Board with an authoritative and credible view of the financial position

of the group;• Review the group’s internal financial and operational controls, as well as the risk management systems,• Review the disclosure in the financial reports of the group and the context in which statements on the financial health of the group are made; and• Review all material information presented together with the management accounts.

The Committee reviewed the quarterly and annual reports on the group’s performance against predetermined objectives.

11. External auditor’s report

The Committee, in consultation with the company and group’s management, agreed to the terms of the Auditor-General South Africa’s engagement letter, audit strategy and audit fees in respect of the 2017/18 financial year.

The Audit and Risk Committee also monitored the implementation of the action plan to address matters arising from the Management Report issued by the Auditor-General South Africa for the 2016/17 financial year. All the action items were closed during the Financial Year.

12. Conclusion

The Audit and Risk Committee has executed on its roles and responsibilities in terms of its Board approved terms of reference.

The Audit and Risk Committee concurs with and accepts the conclusions together with the audit opinion of the Auditor-General on the annual financial statements. The Audit and Risk Committee is of the view that the audited annual financial statements be accepted and read together with the report of the Auditor-General.

Ms D DondurChairman of the GGDA Group Audit and Risk Committee

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Report of the Auditor-General

Opinion

1. I have audited the consolidated financial statements of the Gauteng Growth and Development Agency and its subsidiaries (the group) set out on pages 163 to 230, which comprise the consolidated statement of financial position as at 31 March 2018, the consolidated statement of financial performance and other comprehensive income, statement of changes in net assets, and cash flow statement for the year then ended, as well as the notes to the consolidated financial statements, including a summary of significant accounting policies.

2. In my opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Gauteng Growth and Development Agency SOC Limited as at 31 March 2018, and its financial performance and cash flows for the year then ended in accordance with South African Standards of Generally Recognised Accounting Practice (SA Standards of GRAP) and the requirements of the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA) and the Companies Act of South Africa, 2008 (Act No. 71 of 2008) (Companies Act).

Basis for opinion

3. I conducted my audit in accordance with the International Standards on Auditing (ISAs). My responsibilities under those standards are further described in the auditor-general’s responsibilities for the audit of the consolidated financial statements section of this auditor’s report.

4. I am independent of the group in accordance with the International Ethics Standards Board for Accountants’ Code of ethics for professional accountants (IESBA code) and the ethical requirements that are relevant to my audit in South Africa. I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA code.

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

Emphasis of matter

6. I draw attention to the matters below. My opinion is not modified in respect of this matter.

Significant uncertainties

7. As disclosed in notes 44 and 46 of the consolidated financial statements, the group is a defendant in various lawsuits against suppliers. The ultimate outcome of the matters cannot presently be determined and no provision for a liability that may arise has been made in the consolidated financial statements.

Restatement of corresponding figures

8. As disclosed in note 45 to the consolidated financial statements, the corresponding figures for 31 March 2017 have been restated as a result of errors in the consolidated financial statements of the Gauteng Growth and Development Agency Group at, and for the year ended 31 March 2018.

Responsibilities of the accounting authority for the financial statements

9. The board of directors, which constitutes the accounting authority is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with SA Standards of GRAP, the requirements of the PFMA and the Companies Act and for such internal control as the accounting authority determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

10. In preparing the consolidated financial statements, the accounting authority is responsible for assessing the group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the accounting authority either intends to liquidate the group or to cease operations, or has no realistic alternative but to do so.

Auditor-general’s responsibilities for the audit of the consolidated financial statements

11. My objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

12. A further description of my responsibilities for the audit of the consolidated financial statements is included in the annexure to this auditor’s report.

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Report on the Audit of the Annual Performance Report

Introduction and scope

13. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general notice issued in terms thereof, I have a responsibility to report material findings on the reported performance information against predetermined objectives for selected objectives presented in the annual performance report. I performed procedures to identify findings but not to gather evidence to

express assurance.14. My procedures address the reported performance information, which must be based on the approved performance planning documents of the

group. I have not evaluated the completeness and appropriateness of the performance indicators included in the planning documents. My procedures also did not extend to any disclosures or assertions relating to planned performance strategies and information in respect of future periods that may be included as part of the reported performance information. Accordingly, my findings do not extend to

these matters. 15. I evaluated the usefulness and reliability of the reported performance information in accordance with the criteria developed from the performance

management and reporting framework, as defined in the general notice, for the following selected objectives presented in the annual performance report of the group for the year ended 31 March 2018:

PROGRAMME SELECTED OBJECTIVEPAGES IN THE ANNUAL

PERFORMANCE REPORT


Strategic objective 1:Objective 1: Trade Investment and Regulatory Environment (TIRE)

40 - 69

Strategic objective 2:Enterprise Project Management Office (EPMO)

Programme 2: Automotive Industry Development Centre (AIDC)

Strategic Objective 1: Gauteng’s economically radically transformed. Revitalised and modernised township economies reflecting radical transformation and re-industrialisation of Gauteng’s economy

70 - 81Strategic objective 3:

Skills Development and

Training

Strategic objective 4:

Infrastructure development.

To establish, maintain

and manage strategic

infrastructure

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PROGRAMME SELECTED OBJECTIVEPAGES IN THE ANNUAL

PERFORMANCE REPORT

Programme 3: The Innovation Hub (TIH)

Strategic objective 1:Foster Business Growth through incubation of innovative companies and creation of new business opportunities for mature companies in priority sectors.

82 to 95


Strengthen collaboration

to foster innovation and

leverage resources.

Programme 4: Gauteng Industrial Development Zone (GIDZ)

Strategic objective 1:To stimulate employment led growth and development through the facilitation of strategic economic infrastructure interventions

96 to 103


To facilitate the

development of sector

specific skills required to

meet the needs of the

jewellery economic sector


To facilitate the

manufacturing of high value

low mass products at the

IDZ that can air freighted

Programme 5: Constitution Hill (Con Hill)

Strategic objective 1:Global destination for human rights and constitutionalism 104 to 113

Strategic objective 2:Programming for Active citizenry

Programme 6

Greater Newtown

Decelopment Company


To develop Newtown into a

vibrant mixed-use area with

unique character based on

existing cultural activities

114 to 119

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17. I performed procedures to determine whether the reported performance information was properly presented and whether performance was consistent with the approved performance planning documents. I performed further procedures to determine whether the indicators and related targets were measurable and relevant, and assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

Other matters

18. I draw attention to the matte below.

Achievement of Planned Targets

19. Refer to the annual performance report on pages 29 to 120 for information on the achievement of planned targets for the year and explanations provided for the under and over -achievement of certain targets.

Report on the Audit of Compliance with Legislation

Introduction and scope

20. In accordance with the PAA and the general notice issued in terms thereof, I have a responsibility to report material findings on the compliance of the group with specific matters in key legislation. I performed procedures to identify findings but not to gather evidence to express assurance.

21. I did not raise material findings on compliance with the specific matters in key legislation set out in the general notice issued in terms of the PAA.

Other information

22. The accounting authority is responsible for the other information. The other information comprises the information included in the annual report, which includes the directors’ report, the audit committee’s report and the company secretary’s certificate as required by the Companies Act of South Africa, 2008 (Act No. 71 of 2008) (Companies Act). The other information does not include the consolidated financial statements, the auditor’s report and those selected objectives presented in the annual performance report that have been specifically reported in this auditor’s report.

23. My opinion on the financial statements and findings on the reported performance information and compliance with legislation do not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon.

24. In connection with my audit, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated statements and the selected objectives presented in the annual performance report, or my knowledge obtained in the audit, or otherwise appears to be materially misstated.

25. If, based on the work I have performed, I conclude that there is a material misstatement in this other information, I am required to report that fact. I have nothing to report in this regard.

Internal Control Deficiencies

26. I considered internal control relevant to my audit of the consolidated financial statements, reported performance information and compliance with applicable legislation; however, my objective was not to express any form of assurance on it. I did not identify any significant deficiencies in internal control.

Johannesburg31 July 2018

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Annexure – Auditor-General’s Responsibility for the Audit

1. As part of an audit in accordance with the ISAs, I exercise professional judgement and maintain professional scepticism throughout my audit of the consolidated financial statements, and the procedures performed on reported performance information for selected objectives and on the group’s compliance with respect to the selected subject matters.

Financial statements

2. In addition to my responsibility for the audit of the consolidated financial statements as described in this auditor’s report, I also: • identify and assess the risks of material misstatement of the consolidated financial statements whether due to fraud or error, design and perform

audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control

• obtain an understanding of internal control relevant to the audit 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 group’s internal control

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of directors, which constitutes the accounting authority.

• conclude on the appropriateness of the board of directors, which constitutes the accounting authority’s use of the going concern basis of accounting in the preparation of the financial statements. I also conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Gauteng Growth and Development Agency and its subsidiaries’ ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements about the material uncertainty or, if such disclosures are inadequate, to modify the opinion on the financial statements. My conclusions are based on the information available to me at the date of this auditor’s report. However, future events or conditions may cause a group to cease continuing as a going concern.

• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation

• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. I am responsible for the direction, supervision and performance of the group audit. I remain solely responsible for my audit opinion.

Communication with those charged with governance

3. I communicate with the accounting authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit.

4. I also confirm to the accounting authority that I have complied with relevant ethical requirements regarding independence, and communicate all relationships and other matters that may reasonably be thought to have a bearing on my independence and, where applicable, related safeguards.

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Directors’ Report

The Board of directors submits its report for the year ended 31 March 2018.

1. Incorporation

The Gauteng Growth and Development Agency SOC Limited (GGDA) is legally constituted by the Blue IQ Act 5 of 2003 (as amended). The entity is classified as a Schedule 3C entity in terms of the Public Finance Management Act 1 of 1999 as amended.

2. Review of activities

Main business and operations

a) GGDA Holdings

The overarching aim of the GGDA, is to provide specialised and focussed competence for the Gauteng Province, to implement its economic development goals. As the implementation arm of GDED’s economic growth and development strategy, the GGDA works towards the achievement of the following outcomes:

• Promotion and application of smart and green development, technologies and processes• Creation of decent work and reduced levels of unemployment• Contribution to increased Gross Domestic Product (GDP)• Demographic inclusion in the mainstream economy and big business• The marginalised sectors of women, youth and persons with disabilities participating in mainstream economic activities• An appropriately skilled work force and private sector (SMME, Co-operatives and emerging businesses) to meet and grow the economy and the needs

of key sectors

To contribute to the attainment above the outcomes, the GGDA focusses on the optimization of efficiency as a ‘single strategically coherent and integrated institution’ (Business Case, 2011); and has established the following subsidiaries and business units to deliver on same.

b) IDZ Development Company

The Gauteng IDZ Development Company, was established to develop and operate the Industrial Development Zone (IDZ), designated in and around the OR Tambo International Airport (ORTIA).

The Gauteng IDZ will identify, design and enable focussed export-driven manufacturing and beneficiation programmes within the OR Tambo International Airport. These programmes will serve to increase industrialisation and manufacturing capability in targeted, export-driven sectors in the region, whilst promoting foreign direct investment and stimulating skills development, job creation and technological advancement, diversifying the province’s economy.

Phase I of the IDZ programme, aims to deliver the development of a High Value Low Mass Precinct at ORTIA. The expansion phase on the other hand, explores other export-driven subsectors of the economy that are considered to have a catalytic impact.

c) SPDC T/A SPDC

The SPDC T/A AIDC, was established to support the automotive industry in Gauteng. This is achieved by providing enabling economic infrastructure and sector development interventions. The Automotive Supplier Park (ASP), the Winterveldt Enterprise Hub and the Incubation Centres in Silverton and Rosslyn, are examples of such economic infrastructure.

d) The Innovation Hub (TIH)

The Innovation Hub (TIH), is the first Science and Technology Park in Africa that was accredited by the International Association of Science Parks (IASP). TIH, managed by The Innovation Hub Management Company (SOC) Ltd (TIHMC) a subsidiary of the GGDA and was established by the Gauteng Provincial Government with a view to spur the development of smart industries (high technology sectors) in Gauteng.

TIH’s role in the provincial innovation ecosystem, is to catalyse innovation and to be a key knowledge economy driver, in line with the Gauteng Growth and Development Strategy. The primary priority sectors for TIH, are information and communications technology, biosciences and green economy (renewable energies and low carbon economy technologies).

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e) Constitution Hill Precinct

The purpose of the Constitution Hill (Conhill) Project,is to preserve historically significant buildings from the Old Fort, in a manner which makes them publicly and commercially useful and catalyse the regeneration of the Braamfontein and Hillbrow Precincts. Historic buildings have been upgraded over the past year and Conhill has extended its education programmes and exhibitions to increase public participation and attendance to the precinct.

f) Trade, Investment and Regulatory Enablement

The trade, investment and regulatory enablement functions of the organisation, contributes towards the achievement of the provincial outcomes on economic development. The attraction of investments in targeted sectors, contribute to the development of the province’s priority sectors. Both domestic and export trade, needs to be developed and stimulate to increase the GDP contribution, leading to growth of the Gauteng economy. These are critical ingredients for the creation of jobs, which are vital for turning the tide on poverty and inequality in the province and the country.

The level of effort, targets the focus on the input activities that must be undertaken, especially in relation to promotion and attraction of trade and investment. These would be on the number of missions abroad, events undertaken, delegations hosted and businesses supported in the province. The output focussed, targets speak to the outcome of investments attracted, value of trade generated, investments facilitated and jobs created.

g) Greater Newtown Development Company

The Greater Newtown Development Company, aims to develop and promote the Newtown district as the creative capital of Johannesburg and South Africa. It advances a city that is dynamic, vibrant, sophisticated and cosmopolitan, boasting the best cultural offerings in Africa. One of its primary goals, is to assist in the rejuvenation of the inner city of Johannesburg. The original vision, was framed within a long-term perspective – 2030.

The GGDA’s Group performance is represented by the following core focus areas, to which subsidiaries and business units at Holdings all contribute:

• Identify and facilitate strategic economic infrastructure• Skills Development• Sector Development• Enterprise Development (Pre-incubation and Incubation and Mentorship)• Direct job creation in Gauteng• Facilitation of Investments and Trade

i) Identify and facilitate strategic economic infrastructure Bio Park Phase 2

As at the end of the reporting period, practical completion of the original scope of work, including tenant fit out attained in the 3rd quarter. Project 100% completed.

Expansion of building A7

Building A7 was constructed to accommodate tenants that may require manufacturing space for their operation within the Automotive Supplier Park. The building (A7) is currently occupied by a manufacturing company which has a total production area of 3 200 and required to expand their production space by 2 520 m² which will translate to an additional R1 million to AIDC’s rental revenue. The construction reached practical completion in quarter 3 of the financial year.

JMP

Construction of the bulk infrastructure and enablement works, is proceeding with the focus in the period under review, being on the bulk earthworks viz. completion of the platform earthworks and attenuation dams. Progress to-date, is reported to be 97%. The bulk infrastructure contractor repudiated the contract and the remaining scope of works, will be going out on tender while the claim against the contractor, is being pursued.

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Meanwhile, the site handover was granted to the developer for the IN2Food factory construction and works, commenced in December 2017. By the end of the financial year, construction of the IN2Food factory was 20% completed.

Constitution Hill Visitor Centre

The intention of the project, is to develop the available portions as iconic infrastructure, in such a way that it is sensitive to the context, the architecture, as well as the overall ambition of the stakeholders. The programme seeks to create optimal facilities to promote and facilitate dialogue around critical social issues within communities, and between communities, business, policy makers and the media.

The development seeks to provide space for a Visitors Centre, exhibitions, office accommodation, conference centre and shared facilities.

Progress

The tender was issued twice (March and July 2017) and on both occasions it was cancelled, due to technical inconsistencies that no longer provide the tender process with adequate opportunity to be fully compliant with administrative and procurement law prescripts, that ensure that the procurement process is fair, equitable, transparent , competitive and cost-effective.

Special Economic Zone

The Special Economic Zones PMU, is an important vehicle for accelerating the implementation of government’s industrial development programme as reflected in, amongst others, the IPAP.

Progress to date

The planned target, was to initiate the establishment of the SEZ. At the end of the reporting period, a comparative site study was concluded and its recommendations were submitted for review by the relevant authorities, for approval.

The Department of Science and Technology’s (DST) Regional Innovation System (RIS) Enablement Business Case, was integrated as a knowledge complex (Science, Technology and Innovation Park – STIP), complementary to the broader industrial complex, being the Gauteng Science and High-Tech SEZ. This further neccessitated a business case, a study which will be concluded and delivered in the new financial year.

Township Industrial Hubs

The Township Enterprise Hub programme, is an intervention to address the objectives of the Township Economies Revitalization Strategy.

The proposed refurbishment programme, aims to enhance the effectiveness of the SMMEs role in stabilising the township economy, through creating jobs and encouraging economic growth, through entrepreneurship development.

Progress

Contractors were appointed during the third quarter, to undertake refurbishment at the identified eight industrial parks. As at the end of the reporting period, progress per site, is reported to be• Pennyville Phase 2 – practical completion achieved• Vosloorus Phase 2 – practical completion achieved• Chamdor – practical completion achieved• Khutsong – practical completion achieved

With regard to the fifth site, the Alexander site, the community rejected the project and the appropriated funds were reallocated towards the development of a Toekomsrus Mega Hub feasibility study.

Tourism Infrastructure Upgrades

Picnic sites and Ablution facilities at Roodeplaat DamThe project scope entails the upgrade and refurbishment of existing picnic sites and ablution facilities at Roodeplaat Dam. The conceptual designs have been approved by both, the client (CoH) and GGDA. Preliminary construction estimates have been concluded and handed over to the client (COH). The final report was submitted and approved by end March 2018.

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River Boat Cruise operation at Roodeplaat, Dinokeng, TshwaneThe project entails the upgrade/refurbishment of River Boat Cruise at Roodeplaat; and a qualified service provider has been appointed. The tender was awarded in March 2018, with the inception meeting scheduled for the 1st week in April. The programme which is yet to be developed by the service provider, will inform the life cycle of the project.

Gateways at CullinanThe project entails the designs for Gateways at Cullinan. The conceptual report was submitted by the service provider and it is anticipated that the same will be approved by the end April 2018.

ii) Skills Development

As at the end of the reporting period, a total of 3 632 people (Holdings 262, AIDC 3 026, TIH 330, GIDZ 14) underwent various Skills Development Programmes, which was delivered by the GGDA group. The training programmes spanned export development, targeting export ready companies, training of young people aimed at those that wish to become welders, boiler makers, fitters, diesel mechanics, qualified artisans and master jewellers. Other programmes, included the Leadership and Skills Development Programme aimed at human capability development in respect of engineering, information and communication technology (ICT) post-graduate students. In addition, there were programmes targeting young people in the green technologies and ICT fields.

iii) Sector Development

The sector development interventions, are aimed at improving the competitiveness and efficiencies of Gauteng based companies and improving the value offering of the GGDA Group. This includes development interventions in the sectors of focus, including the automotive industry, green industries, ICT, bio-sciences, medical. At the Holdings company level, sector engagements took place with the capital equipment industry, tourism industry, mining and mineral beneficiation industry, the creative industry and the automotive industry.

iv) Enterprise Development (Pre-incubation, Incubation and Mentorship)

The GGDA Group contributes to enterprise development, by providing various incubation platforms and mentorship programmes. These platforms, are offered through the AIDC and TIH.

v) Job creation and facilitation

By the end of the reporting period, 3 652 jobs were facilitated by the group as follows; AIDC 76, TIH 380, ConHill 57, construction jobs at GIDZ 117 and Township Industrial Hubs 119, TIRE 2 846, Human Resources 57.

vi) Investments and Trade

Domestic investments to the value of R1,5bn across targeted sectors, were successfully facilitated by the GGDA, whilst FDIs to the value of R2,65bn, were claimed as successful. Overall 60 investments were successfully facilitated, which that led to the planned targets being over achieved.

a) Export DevelopmentA total of 262 companies were trained to be export ready, against a planned target of 240.

b) Export facilitationTrade deals to the value of R1,1bn were recorded against a target of R400 million. Various companies were assisted through exposure to new markets, as participants in when trade delegations were hosted, to showcase their products and wares at trade shows and international pavilions.

Strategic Promotions and Marketing

The mandate of the division is to profile the organisation in a positive way, using various tools and platforms. It also serves to build the brand of the company and manage perceptions of it.

Media Coverage

A public company’s reputation is largely driven by the manner in which its work is reported on by the media. Through tracking media sentiments, GGDA can obtain a broad status quo of the Group’s positioning and engage corrective strategies and future brand positioning. Media monitoring, consists of on-going collation and tracking of the GGDA and its subsidiaries media coverage. Coverage is reported internally on a weekly basis.

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The media report for 2017/18, shows the media coverage received in print, broadcast and online had increased compared to previous years. The increase is most noticeable in online coverage largely due to the agencies social media intervention strategy. Power FM, SA FM and SABC News were the providers of the highest radio coverage. Seventy five (75%) percent of the coverage for the GGDA group, was rated as positive and twenty five (25%) percent as neutral.

Financial Results

Net surplus of the group is R3.5 million (2017: surplus R144.7 million).

3. Going concern

The group annual financial statements, as set out on pages 163 to 230, were prepared on a going concern basis. This basis, presumes that funds will be available to finance future operations; and that the realisation of assets and settlement of liabilities, contingent obligations and commitments, will occur in the ordinary course of business.

The directors have reviewed the company’s ability to continue as a going concern for the year to 31 March 2019 and, in the light of this review and the current financial position, they are satisfied that the group has or has access to adequate resources to continue in operational existence for the foreseeable future. The group is wholly dependent on the receipt of grant funding from the Gauteng Provincial Government of R443 million for continued funding of operations for the 2018/19 financial year. This funding has been approved as per the Medium Term Expenditure Framework of the Gauteng Provincial Government.

4. Post reporting date events

The directors are not aware of any other matter or circumstance arising, since the end of the financial year beside the matter above.

5. Directors’ interest in contracts

None of the directors at the date of this report have interests in contracts entered into, by the company and group.

6. Accounting policies

The group annual financial statements have been prepared in accordance with the effective Standards of Generally Recognised Accounting Practices (GRAP), including any interpretations, guidelines and directives issued by the Accounting Standards Board, in accordance with the Public Finance Management Act of 1999, as prescribed by the Nationaly Treasury and the Companies Act 71 of 2008.

7. Share capital/contributed capital

Authorised share capital

The authorised share capital of the company is 4 000 shares.

There were no changes in the authorised share capital of the company during the 2017/18 financial year.

Issued share capital

At 31 March 2018, the issued share capital comprised of 100 ordinary shares, issued at R1 each.

There were no shares issued during the financial year.

8. Distributions to owners

No dividends were paid or declared during the year. In terms of the Dividend policy, the directors have discretionary power to determine the timing and amount payable, at any given financial year. However, in terms of Section 53(3) of the PFMA, the company and group is not allowed to retain surpluses without Treasury approval.

159


9. Borrowing limitations

In terms of the PFMA, the company and group is prohibited from borrowing. During the year under review, the company and group did not enter into any borrowing activities. The entity had to capitalise copier rental agreements, which gave rise to a small interest bearing debt in terms of GRAP 13.

10. Board

The board of directors of the entity during the year and to the date of this report are as follows:

Name Appointed Resigned

M Mokoena (Chairman) 01 June 2012

Z Malele (Deputy Chairman) 25 September 2012

N Balton 01 June 2012

D Dondur 14 March 2013

Dr P Jourdan 01 June 2012

S Nicolaou 31 March 2012

Dr N Msomi 01 October 2015

Q Gungubele 01 February 2015

P Mafojane 01 October 2015

T Setiloane 01 October 2015

S Zamxaka (Group CEO) 04 May 2016 31 March 2018

11. Secretary The secretary of the company as at 31 March 2018 and up to the date of this report is: M Mulaudzi

Physical address 124 Main StreetMarshalltown Johannesburg 2001

Postal address Private Bag 10420Johannesburg 2000

12. Corporate governance

General

Gauteng Growth and Development Agency SOC Ltd confirms and acknowledges its responsibility to comply with the Public Finance Management Act (PFMA), Act 1 of 1999, Treasury Regulations and where applicable and practical, with the Code of Corporate Practices and Conduct (“the Code”) laid out in the King IV Report on Corporate Governance for South Africa 2016. The Board discusses the responsibilities of management in this respect at Board meetings and monitors the company’s compliance with the Code on a quarterly basis.

The salient features of the economic entity’s adoption of the Code is outlined below:

Board of directors

The Board:• retains full control over the entity, its plans and strategy;• acknowledges its responsibilities as to strategy, compliance with internal policies, external laws and regulations, effective risk management and

performance measurement, transparency and effective communication both internally and externally by the entity;• is of a unitary structure comprising: – non-executive directors, all of whom are independent directors as defined in the Code, and – executive directors.

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Chairman and Chief Executive Officer

The Chairman is a non-executive and independent director (as defined by the King IV Report on Corporate Governance).

The roles of Chairman and Chief Executive are separate, with responsibilities divided between them, so that no individual has unfettered powers of discretion.

Board meetings

The directors have met in line with the requirements of the King IV Report on Corporate Governance.

During the current year 12 meetings were held.

Name Total meetings Meetings attended

M Mokoena (Chairman) 12 12

Z Malele (Deputy Chairman) 12 11

N Balton 12 9

D Dondur 12 9

Dr P Jourdan 12 9

S Nicolaou 12 8

Dr N Msomi 12 5

Q Gungubele 12 12

S Zamxaka (resigned 31 March 2018) 12 11

P Mafojane 12 10

T Setiloane 12 12

Audit and risk committee

For the current financial year, the chairman of the Group Audit and Risk Committee was Ms D Dondur (non-executive director). The committee met in line with the requirements of the code to review matters necessary to fullfil its role.

Meetings held in the year:



N Balton 11 9

Z Malele 11 10

S Mahlalela (resigned 19 Novemebr 2017) 9 3

O Mogale (resigned 19 November 2017) 9 7

Nomination, Human Resource and Remuneration Committee

For the current financial year, the chairman of the remuneration committee was Ms Q Gungubele (non-executive director).The committee met in line with the requirements of the King IV Report on Corporate Governance to review matters necessary to fulfil its role.

Meetings held during the year.


Q Gungubele (Chairman) 6 6

M Mokoena 6 6

P Mafojane 6 5

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Social and Ethics committee

For the current financial year, the chairman of the social and ethics committee was Mr N Balton (non executive director). The committee met in line with the requirements of the King IV Report on Corporate Governance to review matters necessary to fulfil its role.

Meetings held during the year.


N Balton (Chairman) 4 4

Dr P Jourdan 4 4

D Dondur 4 2

Q Gungubele 4 4

13. Internal Audit

Gauteng Growth and Development Agency SOC Ltd has co-sourced its internal audit function and complies with the Public Finance Management Act 1, 1999 (PFMA).

14. Auditors

The Auditor-General of South Africa will continue in office in accordance with Public Audit Act No.25 of 2004 and Section 90 of the Companies Act 71 of 2008.

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Group Company Secretary’s Certification

Declaration by the group company secretary in respect of Section 88(2)(e) of the Companies Act

In terms of Section 88(2)(e) of the Companies Act 71 of 2008, as amended, I certify that the company has lodged with the Commissioner all such returns as are required of a public company in terms of the Companies Act and that all such returns are true, correct and up to date.

M MulaudziGroup Company Secretary

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Statement of Financial Position as at 31 March 2018

GROUP CONTROLLING ENTITY

NOTE(S)2018

R’000

2017 RESTATED*

R’0002018

R’000

2017 RESTATED*

R’000

Assets

Current Assets

Cash and cash equivalents 3 451 205 321 210 73 685 95 987

Receivables from exchange transactions 4 39 856 42 991 190 2 465

Receivables from non-exchange transactions 5 – 17 789 – 17 789

Other financial assets 6 – – – 35 000

Prepayments 7 7 639 19 791 3 965 15 648

Deposits paid 8 1 760 2 119 – –

Current tax receivable 9 3 531 283 866 –

VAT receivable 10 4 718 9 954 – –

Operating lease asset 12 1 291 985 – 14

Total current assets 510 000 415 122 78 706 166 903

Non-Current Assets

Investment property 13 897 762 869 551 – –

Property, plant and equipment 14 456 918 429 789 13 528 9 692

Intangible assets 15 3 621 3 367 1 520 1 248

Heritage assets 16 188 515 177 708 – –

Investments in subsidiaries 17 – – 259 084 259 084

Deferred tax 18 32 674 28 954 4 147 2 604

Operating lease asset 12 15 193 12 966 – –

Total non-current assets 1 594 683 1 522 335 278 279 272 628

Total Assets 2 104 683 1 937 457 356 985 439 531

* See Note 45

164


Statement of Financial Position as at 31 March 2018(Continued)


NOTE(S)2018

R’000

2017 RESTATED*

R’0002018

R’000

2017 RESTATED*

R’000

Liabilities

Current Liabilities

Payables from exchange transactions 19 75 769 53 846 11 529 6 859

Payables from non-exchange transactions 20 – 7 700 – –

Finance lease obligation 21 637 200 385 46

Current tax payable 9 – 1 101 – 1 101

VAT payable 11 1 183 3 953 – –

Operating lease liability 12 2 605 556 2 605 508

Unutilised conditional government grants 22 72 592 125 769 39 219 86 239

Unutilised conditional grants (other) 22 322 242 144 943 – –

Deferred income 23 – 113 – 113

Provisions 24 35 472 42 867 10 355 9 350

Deposits received 25 7 096 6 571 – –

Total current liabilities 517 596 387 619 64 093 104 216

Non-Current Liabilities

Finance lease obligation 21 754 – 326 –

Operating lease liability 12 92 974 60 044 7 586 10 151

Provisions 24 3 007 3 007 – –

Total non-current liabilities 96 735 63 051 7 912 10 151

Total Liabilities 614 331 450 670 72 005 114 367

Net Assets 1 490 352 1 486 787 284 980 325 164

Net Assets Attributable Controlling Entity

Accumulated surplus 1 452 822 1 460 392 284 980 325 164

1 452 822 1 460 392 284 980 325 164

Non-controlling interest 37 530 26 395 – –

Total Net Assets 1 490 352 1 486 787 284 980 325 164

* See Note 45

165



NOTE(S)2018

R’000

2017 RESTATED*

R’0002018

R’000

2017 RESTATED*

R’000

Revenue from exchange transactions 27 174 470 167 216 – –

Revenue from non-exchange transactions – grants 28 570 885 580 676 510 454 453 939

Other income 29 6 155 5 020 2 140 2 659

Grants transfered and expensed 30 – – (280 562) (274 840)

Administrative expenses (23 879) (30 855) (11 864) (19 051)

Other operating expenses (485 133) (380 180) (173 623) (75 401)

Employee costs (252 350) (224 535) (94 986) (86 390)

Operating (deficit) surplus 31 (9 852) 117 342 (48 441) 916

Finance Income 32 16 589 18 188 9 767 9 186

Finance costs 33 (69) (6 906) (20) (9)

Surplus (deficit) before taxation 6 668 128 624 (38 694) 10 093

Taxation 34 (3 103) 16 096 (1 490) (2 193)

Surplus (deficit) for the year 3 565 144 720 (40 184) 7 900

Attributable to:

Net asset holders of the company (7 570) 141 095 (40 184) 7 900

Non-controlling interest 11 135 3 625 – –

3 565 144 720 (40 184) 7 900

* See Note 45

Statement of Financial Performancefor the year ended 31 March 2018

166


ACCUMULATED SURPLUS

R’000

TOTAL ATTRIBUTABLE

TO OWNERS OF THE

GROUP/ CONTROLLING

ENTITYR’000

NON–CONTROLLING

INTERESTR’000

TOTAL NET

ASSETSR’000

Group

Opening balance as previously reported 1 317 617 1 317 617 22 770 1 340 387

Prior year adjustments 1 680 1 680 – 1 680

Balance at 01 April 2016 as restated* 1 319 297 1 319 297 22 770 1 342 067

Changes in net assets

Surplus for the year 141 095 141 095 3 625 144 720

Total changes 141 095 141 095 3 625 144 720

Restated* Balance at 01 April 2017 1 460 392 1 460 392 26 395 1 486 787

Changes in net assets Surplus for the year (7 570) (7 570) 11 135 3 565

Total changes (7 570) (7 570) 11 135 3 565

Balance at 31 March 2018 1 452 822 1 452 822 37 530 1 490 352

Controlling entity

Opening balance as previously reported 316 714 316 714 – 316 714

Prior year error 550 550 – 550

Balance at 01 April 2016 as restated* 317 264 317 264 – 317 264

Surplus for the year 7 900 7 900 – 7 900

Total changes 7 900 7 900 – 7 900

Restated* Balance at 01 April 2017 325 164 325 164 – 325 164

Surplus for the year (40 184) (40 184) – (40 184)

Total changes (40 184) (40 184) – (40 184)

Balance at 31 March 2018 284 980 284 980 – 284 980

* See Note 45

Statement of Changes in Net Assetsfor the year ended 31 March 2018

167



NOTE(S)2018

R’000

2017 RESTATED*

R’0002018

R’000

2017 RESTATED*

R’000

Cash flows from operating activities

ReceiptsVAT refund 810 12 199 – –Receipts from customers 167 830 149 329 – –Government grants – MTEF 521 427 473 065 521 427 473 065Finance income 17 441 18 694 12 077 8 696TIH Project – – 20 000 –Conditional grants – non-MTEF 236 118 170 416 2 000 12 977Other income 55 316 35 088 26 514 13 747Total receipts from operating activities 998 942 858 791 582 018 508 485

PaymentsEmployee costs (254 148) (230 249) (105 884) (94 429)Payments suppliers (449 423) (340 579) (154 138) (76 106)Finance expense (59) (6 864) (20) (9)Surrender of accumulated surplus – (37 312) – (37 312)VAT payments (1 102) (579) – –Taxation 36 (12 185) (1 520) (6 012) (1 366)Surrender of projects (56 675) – (56 675) –Government grants to subsidiaries – – (273 562) (274 840)Total payments from operating activities (773 592) (617 103) (596 291) (484 062)Net cash flows from operating activities 35 225 350 241 688 (14 273) 24 423

Cash flows from investing activitiesAcquisition of property, plant and equipment 14 (45 461) (85 911) (7 375) (2 014)Proceeds from sale of property, plant and equipment 14 52 63 – –Acquisition of investment property 13 (37 917) (103 673) – –Proceeds from sale of investment property 13 13 – – –Acquisition of intangible assets 15 (832) (215) (526) (90)Purchases of heritage assets 16 (10 807) – – –Net cash flows from investing activities (94 952) (189 736) (7 901) (2 104)

Cash flows from financing activitiesFinance lease payments (403) (589) (128) (127)

Net increase/(decrease) in cash and cash equivalents 129 995 51 363 (22 302) 22 192Cash and cash equivalents at the beginning of the year 321 210 269 847 95 987 73 795Cash and cash equivalents at the end of the year 3 451 205 321 210 73 685 95 987

* See Note 45

Cash Flow Statement as at 31 March 2017

168


1. Presentation of Group Annual Financial Statements

The group annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board in accordance with Section 91(1) of the Public Finance Management Act (Act 1 of 1999) and Companies Act of 2008.

Basis of preparationThese group annual financial statements have been prepared on an accrual basis of accounting and are in accordance with historical cost convention as the basis of measurement, unless specified otherwise.

A summary of the significant accounting policies, which have been consistently applied in the preparation of these group annual financial statements, are disclosed below.

Basis of measurementThese Group Annual Financial Statements are presented in South African Rand which is the Group’s functional currency. All financial information presented in Rand has been rounded to the nearest thousand.

1.1 Going concern assumption

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

1.2 Consolidation

Basis of consolidationSubsidiaries are entities controlled by the group. Control exists when the Group has the power to govern financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The annual financial statements of subsidiaries are included in the consolidated annual financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.

Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated annual financial statements.

1.3 Transfer of functions between entities under common control

DefinitionsAn acquirer is the company that obtains control of the acquiree or transferor.

Carrying amount of an asset or liability is the amount at which an asset or liability is recognised in the Statement of Financial Position.

Control is the power to govern the financial and operating policies of another company so as to benefit from its activities.

A function is an integrated set of activities that is capable of being conducted and managed for purposes of achieving a company’s objectives, either by providing economic benefits or service potential.

Transfer date is the date on which the acquirer obtains control of the function and the transferor loses control of that function.

A transfer of functions is the reorganisation and/or the re-allocation of functions between entities by transferring functions between entities or into another company.

Accounting Policies

169


Accounting Policies (continued)

1.3 Transfer of functions between entities under common control (continued)

A transferor is the company that relinquishes control of a function.

Common control – for a transaction or event to occur between entities under common control, the transaction or event needs to be undertaken between entities within the same sphere of government or between entities that are part of the same economic company. Entities that are ultimately controlled by the same company before and after the transfer of functions are within the same economic company.

Accounting by the company as acquirer

Initial recognition and measurementAs of the transfer date, the group recognises the purchase consideration, if any, paid to the transferor and all the assets acquired and liabilities assumed in a transfer of functions. The assets acquired and liabilities assumed are measured at their carrying amounts.

The consideration, if any paid, by the group can be in the form of cash, cash equivalents or other assets. If the consideration paid is in the form of other assets, the Company de-recognises such assets on the transfer date at their carrying amounts.

The difference between the carrying amounts of the assets acquired, the liabilities assumed and the consideration paid to the transferor, is recognised in accumulated surplus or deficit.

Subsequent measurement

The Company subsequently measures any assets acquired and any liabilities assumed in a transfer of functions in accordance with the applicable Standards of GRAP.

At the transfer date, the group classifies or designates the assets acquired and liabilities assumed as necessary to apply other Standards of GRAP subsequently. The group makes those classifications or designations on the basis of the terms of the binding arrangement, economic conditions, its operating or accounting policies and other relevant conditions that exist at the transfer date. An exception is that the group classifies the following contracts on the basis of the contractual terms and other factors at the inception of the contract (or, if the terms of the contract have been modified in a manner that would change its classification, at the date of that modification, which might be the transfer date):

• classification of a lease contract as either an operating lease or a finance lease in accordance with the Standard of GRAP on Leases; and• classification of a contract as an insurance contract in accordance with the International Financial Reporting Standard on Insurance Contracts.

1.4 Mergers

DefinitionsCarrying amount of an asset or liability is the amount at which an asset or liability is recognised in the statement of financial position.

Combined group is a new reporting company formed from the combination of two or more entities.

Combining entities are the entities that are combined for the mutual sharing of risks and benefits in a merger.

Control is the power to govern the financial and operating policies of another group so as to benefit from its activities.

A merger is the establishment of a new combined group in which none of the former entities obtains control over any other and no acquirer can be identified. As no acquirer can be identified, a merger does not result in an group having or obtaining control over any of the entities that are involved in the transaction or event, as the combining entities are not controlled entities of each other, either before or after the merger.

Identifying the combined company and combining entitiesFor each merger a combined group and combining entities are identified. All relevant facts and circumstances are considered in identifying the combined group and combining group.

The binding arrangement usually sets out which entities are to be combined as a result of the merger, and identifies the new reporting group after the merger.

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1.4 Mergers (continued)

Determining the merger dateThe combined group and the combining entities identify the merger date, which is the date on which the new reporting group obtains control of the assets and liabilities and the combining entities loses control of their assets and liabilities.

All relevant facts and circumstances are considered in identifying the merger date.

Assets acquired [transferred] and liabilities assumed [derecognised]The recognition of assets and liabilities by the company as combined company are subject to the following conditions:

The assets and liabilities that qualify for recognition in a merger are part of what had been agreed in terms of the binding arrangement, rather than the result of separate transactions.

Other criteria for the company (as the combined entity)The assets and liabilities that quality for recognition as set out in the binding arrangement meets the definitions of assets and liabilities in the Framework for the Preparation and Presentation of Financial Statements and the recognition criteria in the applicable Standards of GRAP at the merger date.

Costs that the company expects but which the group is not obliged to incur in the future to effect its plan to exit an activity of the combining entities or to terminate the employment of, or relocate the combining entities’ employees, is not be accounted for as part of the liabilities at the merger date. the company does not recognise those costs as part of a merger. Instead, the group recognises these costs in its group annual financial statements after the merger has occurred, in accordance with the applicable Standards of GRAP.

Accounting by the company as the combined company

Initial recognition and measurementAs of the merger date, the group recognises all the assets acquired and liabilities assumed. The assets acquired and liabilities assumed are measured at their carrying amounts.

If, prior to the merger, a combining group was not applying the accrual basis of accounting, that combining group changes its basis of accounting to the accrual basis of accounting prior to the merger.

The difference between the carrying amounts of the assets acquired and the liabilities assumed is recognised in accumulated surplus or deficit.

Measurement periodIf the initial accounting for a merger is incomplete by the end of the reporting period in which the merger occurs, the group reports in its group annual financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, the group retrospectively adjust the provisional amounts recognised at the merger date to reflect new information obtained about facts and circumstances that existed as of the merger date and, if known, would have affected the measurement of the amounts recognised as of that date. The measurement period ends as soon as the group receives the information it was seeking about facts and circumstances that existed as of the merger date or learns that more information is not obtainable. However, the measurement period does not exceed two years from the merger date.

The group considers all relevant factors in determining whether information obtained after the merger date should result in an adjustment to the provisional amounts recognised or whether that information results from events that occurred after the merger date. Relevant factors include the date when additional information is obtained and whether the group can identify a reason for a change to provisional amounts.

The group recognises an increase (decrease) in the provisional amount recognised for an asset (liability) by means of decreasing (increasing) the excess of the purchase consideration paid over the carrying amount of the assets acquired and liabilities assumed previously recognised in accumulated surplus or deficit.

During the measurement period, the group recognises adjustments to the provisional amounts as if the accounting for the merger had been completed at the merger date. Thus, the group revises comparative information for prior periods presented in group annual financial statements as needed, including making any change in depreciation, amortisation or other income effects recognised in completing the initial accounting.


171


1.4 Mergers (continued)

After the measurement period ends, the group revises the accounting for a merger only to correct an error in accordance with the Standard of GRAP on Accounting Policies, Changes in Accounting Estimates and Errors.

Expenditure incurred in relation to the mergerExpenditures incurred in relation to the merger are costs that the company incurs to effect the merger. These costs include advisory, legal, accounting and other professional or consulting fees, general administrative costs, costs to furnish information to owners of the combining entities, and salaries and other expenses related to services of employees involved in achieving the merger. It also includes costs or losses incurred in combining the assets and liabilities of the combining entities. The group accounts for such expenditure as expenses in the period in which the costs are incurred.

Subsequent measurementThe group subsequently measures any assets acquired and any liabilities assumed in a merger in accordance with the applicable Standards of GRAP.

At the merger date, the group classifies or designates the assets acquired and liabilities assumed as necessary to apply other Standards of GRAP subsequently. The group makes those classifications or designations on the basis of the terms of the binding arrangement, economic conditions, the operating or accounting policies and other relevant conditions as these exist at the merger date. An exception is that the group classifies the following contracts on the basis of the contractual terms and other factors at the inception of the contract (or, if the terms of the contract have been modified in a manner that would change its classification, at the date of that modification, which might be the merger date):

• classification of a lease contract as either an operating lease or a finance lease in accordance with the Standard of GRAP on Leases; and• classification of a contract as an insurance contract in accordance with the International Financial Reporting Standard on Insurance Contracts

The group annual financial statements of the group are prepared using uniform accounting policies for similar transactions and other events or similar circumstances.

Accounting by company as the combining company

Assets transferred and liabilities de-recognisedAs of the merger date, the group as the combining company transfer and de-recognise from its group annual financial statements, all the assets and liabilities de-recognised at their carrying amounts.

Until the merger date, the group continues to measure these assets and liabilities in accordance with applicable Standards of GRAP.

The difference between the carrying amounts of the assets transferred and the liabilities de-recognised are recognised in accumulated surplus or deficit.

1.5 Significant judgements and source of estimation uncertainty

In preparing the Group Annual Financial Statements, management is required to make estimates and assumptions that affect the amounts represented in the Group Annual Financial Statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the Group Annual Financial Statements. Significant judgements include:

Receivables from exchange and non-exchange, loans and/or other receivablesThe Group assesses its trade receivables, loans and receivables for impairment at each statement of financial position date individually. In determining whether an impairment loss should be recorded in the Statement of Financial Performance, the Group makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

Property, equipment and intangible assetsThe Group’s management determines the estimated useful lives and residual values of property and equipment and intangible assets. These assessments are made on an annual basis and use historical evidence and current economic factors to estimate the values. Administrative computer equipment, office furniture and equipment, exhibits and motor vehicles are not componentised. These assets do not have significant parts that are considered to have an estimated useful life different to the estimated useful life of the asset as a whole.


172


1.5 Significant judgements and source of estimation uncertainty (continued)

Fair value estimationThe carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the group for similar financial instruments. The carrying amount of cash and cash equivalents, trade and other receivables and trade and other payables approximated their fair values due to the short-term maturities of these assets and liabilities.

Impairment testingThe recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations and fair values less costs to sell. These calculations require the use of estimates and assumptions.

The group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets.

Expected future cash flows used to determine the value in use of tangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number of factors, including supply demand, together with economic factors such as interest.

ProvisionsProvisions are recognised when the group has a present obligation (legal or constructive) as a result of a past event, it is probable that the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably. The provisions raised by the group are limited to performance bonus and leave pay provisions. For performance bonuses, the provision raised estimates the amount of the provision based on the anticipated performance of employeesemployees, performance of the group and affordability.

This anticipated performance is based on experience with the employees of the group, taking into account performance trends in the prior periods. For the provision for leave pay, the amount is based on the accumulated leave days balances at the end of the financial year after taking into account the forfeited leave days.

Furthermore, the amount of the performance bonus and the provision for leave pay is determined with reference to the salary scales as at end of the financial year.

Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 24.

Effective interest rateThe group used the prime interest rate to discount future cash flows.

Impairment of receivablesOn receivables an impairment loss is recognised in surplus and deficit when there is objective evidence that it is impaired. The impairment is measured as the difference between the receivables carrying amount and the present value of estimated future cash flows discounted at the effective interest rate, computed at initial recognition.


173


1.6 Investment property

Investment property is property (land or a building – or part of a building – or both) held to earn rentals or for capital appreciation or both, rather than for:• use in the production or supply of goods or services or for• administrative purposes, or• sale in the ordinary course of operations.

Investment property is recognised as an asset when, it is probable that the future economic benefits or service potential that are associated with the investment property will flow to the group, and the cost or fair value of the investment property can be measured reliably.

Investment property is initially recognised at cost. Transaction costs are included in the initial measurement. Where investment property is acquired through a non-exchange transaction, its cost is its fair value as at the date of acquisition.

Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of, or service a property. If a replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised.

Cost modelInvestment property is carried at cost less depreciation less any accumulated impairment losses.

Depreciation is provided to write down the cost, less estimated residual value over the useful life of the property, which is as follows:

Item Useful lifeProperty – land indefiniteProperty – buildings 20-50 years

Investment property is derecognised on disposal or when the investment property is permanently withdrawn from use and no future economic benefits or service potential are expected from its disposal.

Gains or losses arising from the retirement or disposal of investment property is the difference between the net disposal proceeds and the carrying amount of the asset and is recognised in surplus or deficit in the period of retirement or disposal.

1.7 Property, plant and equipment

Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one period.

The cost of an item of property, plant and equipment is recognised as an asset when it is probable that future economic benefits or service potential associated with the item will flow to the group the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.

Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.

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

When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.


174


1.7 Property, plant and equipment (continued)

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

The initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located is also included in the cost of property, plant and equipment, where the group is obligated to incur such expenditure, and where the obligation arises as a result of acquiring the asset or using it for purposes other than the production of inventories.

Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.

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

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

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

Item Depreciation method Average useful life

Land indefinite

Buildings Straight line 20 – 50 years

Facilities equipment Straight line 3 – 20 years

Furniture and fixtures Straight line 3 – 25 years

Motor vehicles Straight line 5 – 15 years

Office equipment Straight line 3 – 15 years

IT equipment Straight line 3 – 15 years

Training equipment Straight line 3 – 20 years

Communication equipment Straight line 5 – 20 years

Infrastructure Straight line 3 – 25 years

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

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset.

Construction work in progress is not depreciated until it is utilised.

Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits or service potential expected from the use of the asset.

The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

Assets which the group holds for rentals to others and subsequently routinely sell as part of the ordinary course of activities, are transferred to inventories when the rentals end and the assets are available-for-sale. Proceeds from sales of these assets are recognised as revenue. All cash flows on these assets are included in cash flows from operating activities in the cash flow statement.


175


1.8 Intangible assets

An asset is identified as an intangible asset when it:• is capable of being separated or divided from an company and sold, transferred, licensed, rented or exchanged, either individually or together with a

related contract, assets or liability; or• arises from contractual rights or other legal rights, regardless whether those rights are transferable or separate from the group or from other rights and

obligations.

An intangible asset is recognised when:• it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the group; and• the cost or fair value of the asset can be measured reliably

Intangible assets are initially recognised at cost.

Should an intangible asset be acquired at no or nominal cost, the cost shall be its fair value as at the date of acquisition.

Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding is recognised in the Statement of Financial Performance as an expense in the period incurred.

Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised if the development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group has sufficient resources to complete development, and to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads.

Capitalised development expenditure is stated at cost less accumulated amortisation and impairment losses.

An intangible asset arising from development (or from the development phase of an internal project) is recognised when:• it is technically feasible to complete the asset so that it will be available for use or sale.• there is an intention to complete and use or sell it.• there is an ability to use or sell it.• it will generate probable future economic benefits or service potential.• there are available technical, financial and other resources to complete the development and to use or sell the asset.• the expenditure attributable to the asset during its development can be measured reliably

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.

Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful lives to their estimated useful life.

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

Internally generated goodwill is not recognised as an intangible asset.

Computer softwareAcquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.

Subsequent expenditureSubsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is recognised in the Statement of Financial Performance as an expense when incurred.


176


1.8 Intangible assets (continued)

AmortisationThe amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.

Reassessing the useful life of an intangible asset with a finite useful life after it was classified as indefinite is an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life to its estimated residual value.

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

Item Useful life

Computer software 3-10 years

Intangible assets are derecognised on disposal; or when no future economic benefits or service potential are expected from its use or disposal.

The gain or loss is the difference between the net disposal proceeds, if any, and the carrying amount. It is recognised in surplus or deficit when the asset is derecognised.

1.9 Heritage assets

Heritage assets are assets that have a cultural, environmental, historical, natural, scientific, technological or artistic significance and are held indefinitely for the benefit of present and future generations.

RecognitionThe group recognises a heritage asset as an asset if it is probable that future economic benefits or service potential associated with the asset will flow to the group, and the cost or fair value of the asset can be measured reliably.

Initial measurementHeritage assets are measured at cost.

The cost of an item of heritage assets is the purchase price and other costs attributable bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the group. The cost of an item of heritage assets acquired in exchange for non-monetary assets or monetary assets, or a combination of monetary and non-monetary assets is measured at the fair value of the asset given up, unless the fair value of the asset received is more clearly evident. If the acquired item could not be measured at its fair value, its cost is measured at the carrying amount of the asset given up.

Subsequent measurementAfter recognition as an asset, a class of heritage assets is carried at its cost less any accumulated impairment losses.

Costs incurred to enhance or restore the heritage asset to preserve its indefinite useful life should be capitalised as part of the carrying amount of the heritage asset. These costs should be recognised only if the recognition criteria are met.

The group does not recognise in the carrying amount of heritage assets the costs of the day-to-day servicing of such assets. Rather, these costs are recognised in surplus or deficit when incurred.

Costs of day-to-day servicing are primarily the cost of inspecting the heritage assets, cost of labour and consumables, and may include the cost of parts or repairs.

ImpairmentThe group assess at each reporting date whether there is an indication that a heritage asset may be impaired. If any such indication exists, the group estimates the recoverable amount or the recoverable service amount of the heritage asset.


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1.9 Heritage assets (continued)

TransfersTransfers from heritage assets are only made when the particular asset no longer meets the definition of a heritage asset. Transfers to heritage assets are only made when the asset meets the definition of a heritage asset.

DerecognitionThe group derecognises heritage asset on disposal, or when no future economic benefits or service potential are expected from its use or disposal.

The gain or loss arising from the derecognition of a heritage asset is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the heritage asset. Such difference is recognised in surplus or deficit when the heritage asset is derecognised.

1.10 Investments in controlled entities, group annual financial statements

Group annual financial statementsThe group annual financial statements include those of the holding company and its subsidiaries. The results of the subsidiaries are included from the effective date of acquisition.

Controlling entity annual financial statementsIn the entity’s separate Annual Financial Statements, investments in controlled entities are carried at cost less any accumulated impairment.

The cost of an investment in a subsidiary is the aggregate of the fair value, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the entity; plus any costs directly attributable to the purchase of the subsidiary.

An adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is probable and can be measured reliably.

1.11 Financial instruments

ClassificationThe group has the following types of financial assets (classes and category) as reflected on the face of the statement of financial position or in the notes thereto:

Financial assets: Category

Receivables from exchange transactions Financial asset measured at amortised cost

Cash and cash equivalents Financial asset measured at amortised cost

The group has the following types of financial liabilities (classes and category) as reflected on the face of the statement of financial position or in the notes thereto:

Financial liabilities: Category

Payables from exchange transactions Financial liability measured at amortised cost

Finance lease obligation Financial liability measured at amortised cost

Initial recognitionThe group recognises a financial asset or a financial liability in its statement of financial position when the group becomes a party to the contractual provisions of the instrument.


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1.11 Financial instruments (continued)

Initial measurementThe group measures a financial asset and financial liability initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

The group measures a financial asset and financial liability initially at its fair value [if subsequently measured at fair value].

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

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

Fair value measurement considerationsThe best evidence of fair value is quoted prices in an active market. If the market for a financial instrument is not active, the group establishes fair value by using a valuation technique. The objective of using a valuation technique is to establish what the transaction price would have been on the measurement date in an arm’s length exchange motivated by normal operating considerations. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the company uses that technique. The chosen valuation technique makes maximum use of market inputs and relies as little as possible on entity-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing financial instruments. Periodically, an group calibrates the valuation technique and tests it for validity using prices from any observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on any available observable market data.

The fair value of a financial liability with a demand feature (e.g. a demand deposit) is not less than the amount payable on demand, discounted from the first date that the amount could be required to be paid.

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

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

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

If a reliable measure becomes available for an investment in a residual interest for which a measure was previously not available, and the instrument would have been required to be measured at fair value, the company reclassifies the instrument from cost to fair value.

Gains and lossesA gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair value is recognised in surplus or deficit.

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


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

Financial assets measured at amortised cost:If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset‘s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset‘s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through the use of an allowance account. The amount of the loss is recognised in surplus or deficit.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor‘s credit rating), the previously recognised impairment loss shall be reversed either directly or by adjusting an allowance account. The reversal shall not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in surplus or deficit.

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

DerecognitionFinancial assetsThe group derecognises financial assets using trade date accounting.

The group derecognises a financial asset only when:• the contractual rights to the cash flows from the financial asset expire, are settled or waived;• the group transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or• the group, despite having retained some significant risks and rewards of ownership of the financial asset, has transferred control of the asset to another

party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the group:

– derecognise the asset; and – recognise separately any rights and obligations created or retained in the transfer.

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

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

If, as a result of a transfer, a financial asset is derecognised in its entirety but the transfer results in the company obtaining a new financial asset or assuming a new financial liability, or a servicing liability, the company recognise the new financial asset, financial liability or servicing liability at fair value.

On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in surplus or deficit.


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

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

Financial liabilitiesA financial liability is derecognised when the obligation is extinguished. Exchanges of debt instruments between a borrower and a lender are treated as the extinguishment of an existing liability and the recognition of a new financial liability. Where the terms of an existing financial liability are modified, it is also treated as the extinguishment of an existing liability and the recognition of a new liability.

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

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

PresentationInterest relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.

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

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

Distributions to holders of residual interests are recognised by the entity directly in net assets. Transaction costs incurred on residual interests are accounted for as a deduction from net assets. Income tax [where applicable] relating to distributions to holders of residual interests and to transaction costs incurred on residual interests are accounted for in accordance with the International Accounting Standard on Income Taxes.

A financial asset and a financial liability are only offset and the net amount presented in the statement of financial position when the entity currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

In accounting for a transfer of a financial asset that does not qualify for derecognition, the entity does not offset the transferred asset and the associated liability.

1.12 Tax

Current tax assets and liabilitiesCurrent tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the Statement of Financial Position date.


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1.12 Tax (continued)

Deferred tax assets and liabilitiesA deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting surplus nor taxable profit (tax loss).

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable surplus will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises from the initial recognition of an asset or liability in a transaction at the time of the transaction, affects neither accounting surplus nor taxable profit (tax loss).

A deferred tax asset is recognised for the carry forward of unused tax losses to the extent that it is probable that future taxable surplus will be available against which the unused tax losses.

Deferred tax is provided using the balance sheet method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting surplus nor taxable surplus or deficit.

In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable surplus will be available to allow all or part of the deferred tax asset to be utilised.

Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable surplus will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable company and the same taxation authority.

Value added taxValued Added Tax- The Group accounts for Value Added Tax on invoice basis in accordance with section 15(2)(a) of the Value Added Tax (Act No. 89 of 1991)”.

1.13 Financial Risk Management

Overview• Credit risk;• Liquidity risk;• Market risk; and• Interest rate risk.

This note presents information about the company’s exposure to each of the above risks, the company’s objectives, policies and processes for measuring and managing risk, and the company’s management of capital. Further quantitative disclosures are included throughout these annual financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board has established the Audit and Risk Management Committee, which is responsible for developing and monitoring the Group’s risk management policies. The Committee reports regularly to the Board of Directors on its activities.


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1.13 Financial Risk Management

The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.

The Group aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

Credit riskCredit risk is the risk of financial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the company’s receivables from customers and investment securities.

Receivables from exchange transactions

The company’s exposure to credit risk is influenced mainly by debtors.

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables and investments.

The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for company of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets. The Group collects three months rentals from tenants and does upfront invoicing to manage the credit risk.

DepositsThe company limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have a credit rating of at least A+. Given these high credit ratings, management does not expect any counterparty to fail to meet its obligations.

InvestmentsThe company limits its exposure by ensuring that vigorous due diligence processes are performed prior to investing in ventures. Performance of the investments is continuously monitored.

Liquidity riskLiquidity risk is the risk that the company will not be able to meet its financial obligations as they fall due. The company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the company’s reputation. The company is wholly dependent on MTEF and Provincial budget vote.

Market riskMarket risk is the risk that changes in market prices, such as interest rates and equity prices will affect the company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.The company ensures that it reviews its cash management strategies to ensure interest income is maximised.

Interest rate riskThe company has neither significant interest bearing assets nor liabilities. Accordingly the company’s income and expenses are substantially independent of changes in markets rates of interest. As a result, changes in the market rate of interest have a negligible impact on the financial performance of the company.

Capital managementThe Board’s policy is to maintain a strong capital base so as to maintain creditor and market confidence and to sustain future development of the business.

1.14 Leases

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

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


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1.14 Leases (continued)

Finance leases – lesseeFinance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease, if this is practicable to determine; if not, the lessee’s incremental borrowing rate shall be used. Any initial direct costs of the lessee are added to the amount recognised as an asset.

The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. The same distinction is made for the presentation of the lease liabilities on the face of the statement of financial position between current and non-current liabilities as other liabilities.

The minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of return on the remaining balance of the liability.

A finance lease gives rise to a depreciation expense for depreciable assets as well as finance expense for each accounting period.

Operating leases – lessorOperating lease income is recognised as an income on a straight-line basis over the lease term. The difference between the amounts recognised as revenue and the contractual receipts are recognised as an operating lease asset or liability.

Initial direct costs incurred in negotiating and arranging operating leases are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the lease income.

Income for leases is disclosed under revenue in the statement of financial performance.

Operating leases – lesseeOperating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability. This operating lease asset or liability is not discounted.

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

1.15 Commitments

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

Commitments are not recognised in the statement of financial position as a liability, but are included in the disclosure notes in the following cases:• approved and contracted commitments;• where the expenditure has been approved and the contract has been awarded at the reporting date; and• where disclosure is required by a specific standard of GRAP

1.16 Impairment of cash-generating assets

Cash-generating assets are those assets held by the Group with the primary objective of generating a commercial return. When an asset is deployed in a manner consistent with that adopted by a profit-orientated entity, it generates a commercial return.

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation/ amortisation.

Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses thereon.


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1.16 Impairment of cash-generating assets (continued)

A cash-generating unit is the smallest identifiable group of assets managed with the objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.

Recoverable amount of an asset or a cash-generating unit is the higher its fair value less costs to sell and its value in use. Useful life is either:(a) the period of time over which an asset is expected to be used by the group; or(b) the number of production or similar units expected to be obtained from the asset by the group.

IdentificationWhen the carrying amount of a cash-generating asset exceeds its recoverable amount, it is impaired.

The group assesses at each reporting date whether there is any indication that a cash-generating asset may be impaired. If any such indication exists, the group estimates the recoverable amount of the asset.

Irrespective of whether there is any indication of impairment, the group also test a cash-generating intangible asset with an indefinite useful life or a cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current reporting period, that intangible asset was tested for impairment before the end of the current reporting period.

Value in useValue in use of a cash-generating asset is the present value of the estimated future cash flows expected to be derived from the continuing use of an asset and from its disposal at the end of its useful life.

When estimating the value in use of an asset, the group estimates the future cash inflows and outflows to be derived from continuing use of the asset and from its ultimate disposal and the group applies the appropriate discount rate to those future cash flows.

Basis for estimates of future cash flowsIn measuring value in use the group:• base cash flow projections on reasonable and supportable assumptions that represent management’s best estimate of the range of economic

conditions that will exist over the remaining useful life of the asset. Greater weight is given to external evidence;• base cash flow projections on the most recent approved financial budgets/forecasts, but excludes any estimated future cash inflows or outflows

expected to arise from future restructuring’s or from improving or enhancing the asset’s performance. Projections based on these budgets/forecasts covers a maximum period of five years, unless a longer period can be justified; and

• estimate cash flow projections beyond the period covered by the most recent budgets/forecasts by extrapolating the projections based on the budgets/forecasts using a steady or declining growth rate for subsequent years, unless an increasing rate can be justified. This growth rate does not exceed the long-term average growth rate for the products, industries, or country or countries in which the company operates, or for the market in which the asset is used, unless a higher rate can be justified.

Composition of estimates of future cash flowsEstimates of future cash flows include:• projections of cash inflows from the continuing use of the asset;• projections of cash outflows that are necessarily incurred to generate the cash inflows from continuing use of the asset (including cash outflows to

prepare the asset for use) and can be directly attributed, or allocated on a reasonable and consistent basis, to the asset; and• net cash flows, if any, to be received (or paid) for the disposal of the asset at the end of its useful life.


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Estimates of future cash flows exclude cash inflows or outflows from financing activities.

The estimate of net cash flows to be received (or paid) for the disposal of an asset at the end of its useful life is the amount that the group expects to obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the estimated costs of disposal.

Foreign currency future cash flowsFuture cash flows are estimated in the currency in which they will be generated and then discounted using a discount rate appropriate for that currency. The group translates the present value using the spot exchange rate at the date of the value in use calculation.

Discount rateThe discount rate is a pre-tax rate that reflects current market assessments of the time value of money, represented by the current risk-free rate of interest and the risks specific to the asset for which the future cash flow estimates have not been adjusted.

Recognition and measurement (individual asset)If the recoverable amount of a cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. This reduction is an impairment loss.

An impairment loss is recognised immediately in surplus or deficit.

Any impairment loss of a revalued cash-generating asset is treated as a revaluation decrease.

When the amount estimated for an impairment loss is greater than the carrying amount of the cash-generating asset to which it relates, the group recognises a liability only to the extent that is a requirement in the Standard of GRAP.

After the recognition of an impairment loss, the depreciation (amortisation) charge for the cash-generating asset is adjusted in future periods to allocate the cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

Cash-generating unitsIf there is any indication that an asset may be impaired, the recoverable amount is estimated for the individual asset. If it is not possible to estimate the recoverable amount of the individual asset, the group determines the recoverable amount of the cash- generating unit to which the asset belongs (the asset’s cash-generating unit).

If an active market exists for the output produced by an asset or group of assets, that asset or group of assets is identified as a cash-generating unit, even if some or all of the output is used internally. If the cash inflows generated by any asset or cash- generating unit are affected by internal transfer pricing, the group use management’s best estimate of future price(s) that could be achieved in arm’s length transactions in estimating:• the future cash inflows used to determine the asset’s or cash-generating unit’s value in use; and• the future cash outflows used to determine the value in use of any other assets or cash-generating units that are affected by the internal transfer pricing.

Cash-generating units are identified consistently from period to period for the same asset or types of assets, unless a change is justified.

The carrying amount of a cash-generating unit is determined on a basis consistent with the way the recoverable amount of the cash-generating unit is determined.

An impairment loss is recognised for a cash-generating unit if the recoverable amount of the unit is less than the carrying amount of the unit. The impairment is allocated to reduce the carrying amount of the cash-generating assets of the unit on a pro rata basis, based on the carrying amount of each asset in the unit. These reductions in carrying amounts are treated as impairment losses on individual assets..In allocating an impairment loss, the company does not reduce the carrying amount of an asset below the highest of:• its fair value less costs to sell (if determinable);• its value in use (if determinable); and• zero.


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The amount of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other cash-generating assets of the unit.

Where a non-cash-generating asset contributes to a cash-generating unit, a proportion of the carrying amount of that non- cash-generating asset is allocated to the carrying amount of the cash-generating unit prior to estimation of the recoverable amount of the cash-generating unit. The group reports segment information in accordance with the standard of GRAP on Segment Reporting shall disclose the following for each for each reportable segment based on Group’s primary reporting format:• the amount of impairment losses recognized in surplus or deficit and directly in net assets during the period; and• the amount of reversals of impairment losses recognised in surplus deficit and directly in net assets during the period.

Reversal of impairment lossThe group assess at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a cash-generating asset may no longer exist or may have decreased. If any such indication exists, the company estimates the recoverable amount of that asset.

An impairment loss recognised in prior periods for a cash-generating asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss for a cash-generating asset is recognised immediately in surplus or deficit.

Any reversal of an impairment loss of a revalued cash-generating asset is treated as a revaluation increase.

For cash-generating asset:• the nature of the asset; and• if the Group reports segment information in accordance with standard of GRAP on Segment Reporting, the reportable segment to which the asset

belongs.

After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the cash-generating asset is adjusted in future periods to allocate the cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

A reversal of an impairment loss for a cash-generating unit is allocated to the cash-generating assets of the unit pro rata with the carrying amounts of those assets. These increases in carrying amounts are treated as reversals of impairment losses for individual assets. No part of the amount of such a reversal is allocated to a non-cash-generating asset contributing service potential to a cash-generating unit.

In allocating a reversal of an impairment loss for a cash-generating unit, the carrying amount of an asset is not increased above the lower of:• its recoverable amount (if determinable); and• the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in

prior periods.

The amount of the reversal of the impairment loss that would otherwise have been allocated to the asset is allocated pro rata to the other assets of the unit.

RedesignationThe redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-cash-generating asset to a cash-generating asset only occur when there is clear evidence that such a redesignation is appropriate.

1.17 Impairment of non-cash-generating assets

Cash-generating assets are assets managed with the objective of generating a commercial return. An asset generates a commercial return when it is deployed in a manner consistent with that adopted by a profit-oriented entity.

Non-cash-generating assets are assets other than cash-generating assets.


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1.17 Impairment of non-cash-generating assets (continued)

Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation / amortisation.

Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulated depreciation and accumulated impairment losses thereon.

A cash-generating unit is the smallest identifiable group of assets held with the primary objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.

Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.

Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal.Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and its value in use. Useful life is either:(a) the period of time over which an asset is expected to be used by the group; or(b) the number of production or similar units expected to be obtained from the asset by the group.

IdentificationWhen the carrying amount of a non-cash-generating asset exceeds its recoverable service amount, it is impaired.

The group assesses at each reporting date whether there is any indication that a non-cash-generating asset may be impaired. If any such indication exists, the group estimates the recoverable service amount of the asset.

Irrespective of whether there is any indication of impairment, the company also test a non-cash-generating intangible asset with an indefinite useful life or a non-cash-generating intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable service amount. This impairment test is performed at the same time every year. If an intangible asset was initially recognised during the current reporting period, that intangible asset was tested for impairment before the end of the current reporting period.

Value in useValue in use of non-cash-generating assets is the present value of the non-cash-generating assets remaining service potential.

The present value of the remaining service potential of a non-cash-generating assets is determined using the following approach:

Depreciated replacement cost approachThe present value of the remaining service potential of a non-cash-generating asset is determined as the depreciated replacement cost of the asset. The replacement cost of an asset is the cost to replace the asset’s gross service potential. This cost is depreciated to reflect the asset in its used condition. An asset may be replaced either through reproduction (replication) of the existing asset or through replacement of its gross service potential. The depreciated replacement cost is measured as the reproduction or replacement cost of the asset, whichever is lower, less accumulated depreciation calculated on the basis of such cost, to reflect the already consumed or expired service potential of the asset.

The replacement cost and reproduction cost of an asset is determined on an “optimised” basis. The rationale is that the group would not replace or reproduce the asset with a like asset if the asset to be replaced or reproduced is an overdesigned or overcapacity asset. Overdesigned assets contain features which are unnecessary for the goods or services the asset provides. Overcapacity assets are assets that have a greater capacity than is necessary to meet the demand for goods or services the asset provides. The determination of the replacement cost or reproduction cost of an asset on an optimised basis thus reflects the service potential required of the asset.

Recognition and measurementIf the recoverable service amount of a non-cash-generating asset is less than its carrying amount, the carrying amount of the asset is reduced to its recoverable service amount. This reduction is an impairment loss.

An impairment loss is recognised immediately in surplus or deficit.


188


1.17 Impairment of non-cash-generating assets (continued)

Any impairment loss of a revalued non-cash-generating asset is treated as a revaluation decrease.

When the amount estimated for an impairment loss is greater than the carrying amount of the non-cash-generating asset to which it relates, the group recognises a liability only to the extent that is a requirement in the Standards of GRAP.

After the recognition of an impairment loss, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

Reversal of an impairment lossThe group assess at each reporting date whether there is any indication that an impairment loss recognised in prior periods for a non-cash-generating asset may no longer exist or may have decreased. If any such indication exists, the group estimates the recoverable service amount of that asset.

An impairment loss recognised in prior periods for a non-cash-generating asset is reversed if there has been a change in the estimates used to determine the asset’s recoverable service amount since the last impairment loss was recognised. The carrying amount of the asset is increased to its recoverable service amount. The increase is a reversal of an impairment loss. The increased carrying amount of an asset attributable to a reversal of an impairment loss does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised for the asset in prior periods.

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

After a reversal of an impairment loss is recognised, the depreciation (amortisation) charge for the non-cash-generating asset is adjusted in future periods to allocate the non-cash-generating asset’s revised carrying amount, less its residual value (if any), on a systematic basis over its remaining useful life.

RedesignationThe redesignation of assets from a cash-generating asset to a non-cash-generating asset or from a non-cash-generating asset to a cash-generating asset only occur when there is clear evidence that such a redesignation is appropriate.

1.18 Share capital / contributed capital

Ordinary sharesOrdinary shares are classified as net assets in the books of the subsidiary. Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from net assets, net of any tax effects.

1.19 Employee benefits

Short-term employee benefitsEmployee benefits are all forms of consideration given by an entity in exchange for services rendered by employees

Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within twelve months after the end of the period in which the employees render the related service.

Short-term employee benefits include items such as:• wages, salaries and social security contributions;• short-term compensated absences (such as paid annual leave and paid sick leave) where the compensation for the absences is due to be settled within

twelve months after the end of the reporting period in which the employees render the related employee service;• bonus, incentive and performance related payments payable within twelve months after the end of the reporting period in which the employees render

the related service; and• non-monetary benefits (for example, medical care, and free or subsidised goods or services such as housing, cars and cellphones) for current

employees.


189


1.19 Employee benefits (continued)

When an employee has rendered service to the group during a reporting period, the company recognise the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:• as a liability (accrued expense), after deducting any amount already paid. If the amount already paid exceeds the undiscounted amount of the benefits,

the group recognise that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and

• as an expense, unless another Standard requires or permits the inclusion of the benefits in the cost of an asset.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs. The group measure the expected cost of accumulating compensated absences as the additional amount that the company expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The group recognise the expected cost of bonus, incentive and performance related payments when the group has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when the company has no realistic alternative but to make the payments.

Defined contribution plansA defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts.

Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

Payments made to industry-managed (or state plans) retirement benefit schemes are dealt with as defined contribution plans where the group’s obligation under the schemes is equivalent to those arising in a defined contribution retirement benefit plan

Obligations for contributions to defined contribution pension plans are recognised as an employee benefit expense in surplus or deficit when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.

1.20 Provisions and Contingencies

Provisions are recognised when the group has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation, and a reliable estimate can be made of the obligation.

The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation.

Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.

The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if the economic entity settles the obligation.

The reimbursement is treated as a separate asset. The amount recognised for the reimbursement does not exceed the amount of the provision.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required, to settle the obligation.

Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as an interest expense.


190


1.20 Provisions and Contingencies (continued)

A provision is used only for expenditures for which the provision was originally recognised. Provisions are not recognised for future operating deficits.

If an entity has a contract that is onerous, the present obligation (net of recoveries) under the contract is recognised and measured as a provision.

A constructive obligation to restructure arises only when a entity:

• has a detailed formal plan for the restructuring, identifying at least:

– the activity/operating unit or part of a activity/operating unit concerned;

– the principal locations affected;

– the location, function, and approximate number of employees who will be compensated for services being terminated;

– the expenditures that will be undertaken; and

– when the plan will be implemented; and

• has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features

to those affected by it.

No obligation arises as a consequence of the sale or transfer of an operation until the group is committed to the sale or transfer, that is, there is a binding

arrangement.

After their initial recognition contingent liabilities recognised in business combinations that are recognised separately are subsequently measured at the

higher of the amount that would be recognised as a provision; and the amount initially recognised less cumulative amortisation.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 44.

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

Determining whether an outflow of resources is probable in relation to financial guarantees requires judgement. Indications that an outflow of resources

may be probable are:

• financial difficulty of the debtor;

• defaults or delinquencies in interest and capital repayments by the debtor;

• breaches of the terms of the debt instrument that result in it being payable earlier than the agreed term and the ability of the debtor to settle its obligation

on the amended terms; and

• a decline in prevailing economic circumstances (e.g. high interest rates, inflation and unemployment) that impact on the ability of entities to repay their

obligations.

Where a fee is received by the group for issuing a financial guarantee and/or where a fee is charged on loan commitments, it is considered in determining

the best estimate of the amount required to settle the obligation at reporting date. Where a fee is charged and the group considers that an outflow of

economic resources is probable, an group recognises the obligation at the higher of:

• the amount determined using in the Standard of GRAP on Provisions, Contingent Liabilities and Contingent Assets; and

• the amount of the fee initially recognised less, where appropriate, cumulative amortisation recognised in accordance with the Standard of GRAP on Revenue from Exchange Transactions.

1.21 Revenue from exchange transactions

Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners. An exchange transaction is one in which the company receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange.


191


1.21 Revenue from exchange transactions (continued)

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

MeasurementRevenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.

Rental incomeRental income from investment property is recognised in the Statement of Financial Performance on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income over the term of the lease.

Rendering of servicesWhen the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction is recognised by reference to the stage of completion of the transaction at the reporting date. The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:• the amount of revenue can be measured reliably;• it is probable that the economic benefits or service potential associated with the transaction will flow to the group;• the stage of completion of the transaction at the reporting date can be measured reliably; and• the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.

When services are performed by an indeterminate number of acts over a specified time frame, revenue is recognised on a straight line basis over the specified time frame unless there is evidence that some other method better represents the stage of completion. When a specific act is much more significant than any other acts, the recognition of revenue is postponed until the significant act is executed.

When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue is recognised only to the extent of the expenses recognised that are recoverable.

Service revenue is recognised by reference to the stage of completion of the transaction at the reporting date. Stage of completion is determined by reference to reviews of work performed.

1.22 Revenue from non-exchange transactions

Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, the company either receives value from another company without directly giving approximately equal value in exchange, or gives value to another company without directly receiving approximately equal value in exchange.

RecognitionAn inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to the extent that a liability is also recognised in respect of the same inflow.

As the entity satisfies a present obligation recognised as a liability in respect of an inflow of resources from a non-exchange transaction recognised as an asset, it reduces the carrying amount of the liability recognised and recognises an amount of revenue equal to that reduction.

MeasurementRevenue from a non-exchange transaction is measured at the amount of the increase in net assets recognised by the group.

When, as a result of a non-exchange transaction, the group recognises an asset, it also recognises revenue equivalent to the amount of the asset measured at its fair value as at the date of acquisition, unless it is also required to recognise a liability. Where a liability is required to be recognised it will be measured as the best estimate of the amount required to settle the obligation at the reporting date, and the amount of the increase in net assets, if any, recognised as revenue. When a liability is subsequently reduced, because the taxable event occurs or a condition is satisfied, the amount of the reduction in the liability is recognised as revenue.


192


1.23 Finance Income

Finance income comprises interest income on funds invested. Interest income is recognised as it accrues in the Statement of Financial Performance, using the effective interest method.

1.24 Comparative figures

Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year.

1.25 Irregular, Fruitless and wasteful expenditure

Irregular expenditure as defined in section 1 of the PFMA is expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation, including this Act.

All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the Statement of Financial Performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, the corresponding revenue and debtor is also recognised when the expense is incurred.

Any irregular, fruitless and wasteful expenditure is charged against income in the period in which it is incurred and details thereof disclosed in the note.

Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

1.26 Segment information

A segment is an activity of an entity:• that generates economic benefits or service potential (including economic benefits or service potential relating to transactions between activities of the

same entity);• whose results are regularly reviewed by management to make decisions about resources to be allocated to that activity and in assessing its performance;

and• for which separate financial information is available.

Reportable segments are the actual segments which are reported on in the segment report. They are the segments identified above or alternatively an aggregation of two or more of those segments where the aggregation criteria are met.

MeasurementThe amount of each segment item reported is the measure reported to management for the purposes of making decisions about allocating resources to the segment and assessing its performance. Adjustments and eliminations made in preparing the entity’s financial statements and allocations of revenues and expenses are included in determining reported segment surplus or deficit only if they are included in the measure of the segment’s surplus or deficit that is used by management. Similarly, only those assets and liabilities that are included in the measures of the segment’s assets and segment’s liabilities that are used by management are reported for that segment. If amounts are allocated to reported segment surplus or deficit, assets or liabilities, those amounts are allocated on a reasonable basis.

If management uses only one measure of a segment’s surplus or deficit, the segment’s assets or the segment’s liabilities in assessing segment performance and deciding how to allocate resources, segment surplus or deficit, assets and liabilities are reported in terms of that measure. If management uses more than one measure of a segment’s surplus or deficit, the segment’s assets or the segment’s liabilities, the reported measures are those that management believes are determined in accordance with the measurement principles most consistent with those used in measuring the corresponding amounts in the entity’s financial statements.

1.27 Related parties

The group operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only parties under the executive authority of the MEC Department of Economic Development, Environment Agriculture and Rural Development will be considered to be related parties.


193


1.27 Related parties (continued)

Key management is defined as individuals with the authority and responsibility for planning, directing and controlling the activities of the entity. All individuals from the level of Corporate Executives up to the Board of Directors are regarded as key management.

Close family members of key management are considered to be those family members who may be expected to influence, or be influenced by key management individuals or other parties related to the entity.

Other related party transactions are also disclosed in terms of the requirements of the standard. The objective of the standard and the Annual Financial Statements is to provide relevant and reliable information and therefore materiality is considered in the disclosure of these transactions.

1.28 Events after reporting date

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

The group will adjust the amount recognised in the financial statements to reflect adjusting events after the reporting date once the event occurred.

The group will disclose the nature of the event and an estimate of its financial effect or a statement that such estimate cannot be made in respect of all material non-adjusting events, where non-disclosure could influence the economic decisions of users taken on the basis of the financial statements.

1.29 Finance expenses

The finance expense relates to deemed interest on finance lease and interest on late payment for SARS. The finance charge on finance lease is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.


194


Notes to the Group Annual Financial Statements

2. New standards and interpretations

2.1 Standards and interpretations issued, but not yet effective

The group has not applied the following standards and interpretations, which have been published and are mandatory for the group’s accounting periods beginning on or after 01 April 2018 or later periods:

Standard/Interpretation:

Effective date: Years

beginning on or after Expected impact:

• GRAP 34: Separate Financial Statements No effective date Unlikely there will be a material impact

• GRAP 35: Consolidated Financial Statements No effective date Unlikely there will be a material impact

• GRAP 20: Related parties 01 April 2019 Unlikely there will be a material impact

• GRAP 32: Service Concession Arrangements: Grantor 01 April 2019 Unlikely there will be a material impact

• GRAP 108: Statutory Receivables 01 April 2019 Unlikely there will be a material impact

• GRAP 109: Accounting by Principals and Agents 01 April 2019 Unlikely there will be a material impact

• IGRAP 17: Service Concession Arrangements where a Grantor Controls a Significant Residual Interest in an Asset 01 April 2019 Unlikely there will be a material impact

• IGRAP 18: Interpretation of the Standard of GRAP on Recognition and Derecognition of Land

01 April 2019 Unlikely there will be a material impact

• IGRAP 19: Liabilities to Pay Levies 01 April 2019 Unlikely there will be a material impact

• GRAP 21 (as amended 2016): Impairment of non-cash-generating assets 01 April 2018 Unlikely there will be a material impact

• GRAP 26 (as amended 2016): Impairment of cash-generating assets 01 April 2018 Unlikely there will be a material impact

2.2 Standards and interpretations not yet effective or relevant

The following standards and interpretations have been published and are mandatory for the group’s accounting periods beginning on or after 01 April 2018 or later periods but are not relevant to its operations:

Standard/Interpretation:

Effective date: Years

beginning on or after Expected impact:

• GRAP 36: Investments in Associates and Joint Ventures No effective date Not applicable

• GRAP 37: Joint Arrangements No effective date Not applicable

• GRAP 38: Disclosure of Interests in Other Entities No effective date Not applicable

• GRAP 110: Living and Non-living Resources 01 April 2020 Not applicable

3. Cash and cash equivalents


2018R’000

2017R’000

2018R’000

2017 R’000

Cash and cash equivalents consist of:

Cash on hand 39 41 8 8

Current Account 353 435 178 369 7 677 21 004

Call accounts 97 731 142 800 66 000 74 975

451 205 321 210 73 685 95 987

195


4. Receivables from exchange transactions


2018R’000

2017R’000

2018R’000

2017 R’000

Trade receivables 39 829 32 490 – –

Deposits 48 48 – –

Property trust account 589 2 160 – –

Other receivables 803 3 686 190 3 278

Gauteng Motorsport Company SOC Limited 4 382 4 382 4 382 4 382

Guaranteed trust fund 10 621 9 974 – –

Less: Impairment of trade and other receivables (16 416) (9 749) (4 382) (5 195)

39 856 42 991 190 2 465

Ageing of trade receivablesThe ageing of amounts are as follows:Current 15 955 16 086 – –

31 – 60 days 8 167 11 350 – –

61 – 90 days 3 480 560 – –

Older than 90 days 12 227 4 494 – –

39 829 32 490 – –

Reconciliation of provision for impairment of trade and other receivablesBalance at the beginning of year (9 749) (9 222) (5 195) (5 383)

Provision for impairment (11 055) (1 003) – –

Amounts written off as uncollectible 4 227 476 813 188

Unused amount reversed 161 – – –

Balance at the end of the year (16 416) (9 749) (4 382) (5 195)

5. Receivables from non-exchange transactions

Government grants – DED - 17 789 - 17 789

6. Other financial assets


2018R’000

2017R’000

2018R’000

2017 R’000

At amortised cost

Greater Newtown Development Company – – – 35 000

Notes to the Group Annual Financial Statements (continued)

196



7. Prepayments

GGDA entered into an agreement with Department of Information and communication system to provide branding and promotional services with regard to marketing.

SPDC prepayment consists mainly of insurance and software licenses.

TIH share the electricity bill with its tenant in terms of which TIH buys bulk prepaid electricity from City of Tshwane and internally bills its tenant as per their consumption.

Group prepayments include further amounts under IDZ attributable to the investor attraction project – GIFA, and the land lease.


2018R’000

2017R’000

2018R’000

2017 R’000

Prepayments – Current Portion 7 639 19 791 3 965 15 648

8. Deposits paid

Deposits paid – Current portion 1 760 2 119 – –

Deposits paid are mainly rental deposits held by leasing agent and deposits paid for electricity.

9. Current tax (payable)/receivable

Current tax (payable)/receivable represents amounts liable to and receivable from South African Revenue Services.

Current tax receivable 3 531 283 866 –

Current tax payable – (1 101) – (1 101)

3 531 (818) 866 (1 101)

Refer to note 45, prior period error.

10. VAT receivable

VAT 4 718 9 954 – –

11. VAT payable

Vat payable 1 183 3 953 – –


197


12. Operating lease asset/liability


2018R’000

2017R’000

2018R’000

2017 R’000

Non-current assets 15 193 12 966 – –

Current assets 1 291 985 – 14

Non-current liabilities (92 974) (60 044) (7 586) (10 151)

Current liabilities (2 605) (556) (2 605) (508)

(79 095) (46 649) (10 191) (10 645)

The above future minimum lease rentals represent rental payable under non-cancellable operating leases in the aggregate and for each period.

The above represents the lease rentals for operating leases of Gauteng Investment Centre (GIC) and the offices at 124 Main street, which are amortised on a straight line basis over the period of the lease.

Minimum lease commitments – as lessee:

– within one year 32 597 30 142 27 893 25 684

– in second to fifth year 68 870 91 586 45 980 72 829

– later than five years 1 403 419 1 247 737 – –

1 504 886 1 369 465 73 873 98 513

Minimum lease payments due – as lessor:

– Within one year (61 781) (66 702) – –

– In second to fifth year (155 377) (167 738) – –

– later than five years (50 141) (91 528) – –

(267 299) (325 968) – –


13. Investment property

GROUP 2018 2017

FIGURES IN RAND THOUSANDCOST/

VALUATION

ACCUMULATED DEPRECIATION

AND ACCUMULATED

IMPAIRMENTCARRYING

VALUECOST/

VALUATION

ACCUMULATED DEPRECIATION

AND ACCUMULATED

IMPAIRMENTCARRYING

ALUE

Investment property – Non current 1 176 389 (278 627) 897 762 1 131 521 (261 970) 869 551

Reconciliation of investment property – Group – 2018

FIGURES IN RAND THOUSANDOPENING

BALANCE ADDITIONS

ADDITIONS THROUGH

GRANT DISPOSALSIMPAIR-MENTS

DEPRE-CIATION TOTAL

Investment property 869 551 70 746 7 000 (13) (32 866) (16 656) 897 762

Reconciliation of investment property – Group – 2017

Investment property 766 136 109 169 (586) 10 638 (15 806) 869 551


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13. Investment property (continued)


2018R’000

2017R’000

2018R’000

2017 R’000

Details of group entity carry values

The Innovation Hub Management Company 205 231 207 095 – –

Supplier Park Development Company 398 602 347 874 – –

Constitution Hill Development Company 98 823 102 353 – –

Greater Newtown Development Company – 32 375 – –

Gauteng IDZ Development Company 195 106 179 854 – –

897 762 869 551 – –

Investment property comprises a number of commercial properties that are leased to third parties. Each of the leases contains an initial non-cancellable period which varies between three and 12 years. Subsequent renewals are negotiated with the lessee. No contingent rent is charged.

The entity subsequently accounts for investment property on the cost model. The carrying amount of the investment property is the cost less the accumulated depreciation and any impairment losses.

None of the above investment properties have been pledged as security.

In terms of the PFMA, investment properties can only be sold with the approval of the Executive Authority.

Amounts recognised in surplus or deficit

Rental revenue from Investment property 86 650 68 407 – –

From Investment property that generated rental revenue

Direct operating expenses (excluding repairs and maintenance) (25 175) (28 863) – –

Direct operating expenses from non-rental generating property (4 636) (5 564) – –

(29 811) (34 427) – –

Expenditure incurred to repair and maintain Investment property

Repairs and Maintenance expenditure 8 611 10 901 – –



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14. Property, plant and equipment

GROUP 2018 2017

FIGURES IN RAND THOUSAND

COST/VALUATION

ACCUMULATEDDEPRECIATION

ANDACCUMULATED

IMPAIRMENTCARRYING

VALUECOST/

VALUATION


ANDACCUMULATED

IMPAIRMENTCARRYING

VALUE

Land 2 304 – 2 304 2 304 – 2 304

Buildings 292 041 (34 978) 257 063 269 592 (29 116) 240 476

Furniture and fixtures 28 260 (11 497) 16 763 24 961 (10 317) 14 644

Furniture – WIP 2 020 – 2 020 – – –

Motor vehicles 3 624 (1 337) 2 287 3 403 (1 142) 2 261

Office equipment 19 219 (9 328) 9 891 18 083 (8 748) 9 335

IT equipment 46 065 (18 941) 27 124 43 989 (15 666) 28 323

Leasehold improvements 7 103 (3 228) 3 875 1 262 (834) 428

Infrastructure 101 989 (39 557) 62 432 96 863 (34 712) 62 151

Facilities equipment 6 299 (1 950) 4 349 4 304 (1 716) 2 588

Training equipment 71 820 (5 114) 66 706 67 358 (2 529) 64 829

Communication equipment 3 235 (1 131) 2 104 5 163 (2 713) 2 450

Total 583 979 (127 061) 456 918 537 282 (107 493) 429 789

CONTROLLING ENTITY 2018 2017


COST/VALUATION


ANDACCUMULATED

IMPAIRMENTCARRYING

VALUECOST/

VALUATION


ANDACCUMULATED

IMPAIRMENTCARRYING

VALUE

Furniture and fixtures 6 662 (2 302) 4 360 5 954 (2 384) 3 570

Motor vehicles 345 (215) 130 345 (181) 164

IT equipment 7 829 (2 666) 5 163 8 181 (2 651) 5 530

Leasehold improvements 7 103 (3 228) 3 875 1 262 (834) 428

Total 21 939 (8 411) 13 528 15 742 (6 050) 9 692


200


14. Property, plant and equipment (continued)

Reconciliation of property, plant and equipment – Group – 2018


OPENING BALANCE ADDITIONS

ADDITIONS THROUGH ACCRUAL DISPOSALS

FINANCE LEASE

CAPITALI–SATION

DEPRE–CIATION

IMPAIR–MENT LOSS

WRITE OFFS TOTAL

Land 2 304 – – – – – – – 2 304

Buildings 240 476 17 962 4 488 – – (5 863) – – 257 063

Furniture and fixtures 14 644 4 398 262 (91) – (2 020) (18) (412) 16 763

Furniture – WIP – 2 020 – – – – – – 2 020

Motor vehicles 2 261 396 – – – (369) (1) – 2 287

Office equipment 9 335 2 197 – (3) – (1 502) (56) (80) 9 891

IT equipment 28 323 3 455 797 (331) 794 (5 024) (137) (753) 27 124

Leasehold improvements 428 5 697 144 – – (2 394) – – 3 875

Infrastructure 62 151 5 126 – – – (4 845) – – 62 432

Facilities equipment 2 588 2 153 – – – (323) (12) (57) 4 349

Training Equipment 64 829 4 462 – – – (2 585) – – 66 706

Communication equipment 2 450 – – (70) – (276) – – 2 104

429 789 47 866 5 691 (495) 794 (25 201) (224) (1 302) 456 918

Reconciliation of property, plant and equipment – Group – 2017


OPENING BALANCE ADDITIONS

ADDITIONS THROUGH ACCRUAL DISPOSALS TRANSFERS

DEPRE–CIATION

IMPAIRMENT LOSS TOTAL

Land 2 304 – – – – – – 2 304

Buildings 157 709 56 361 1 057 – 30 016 (4 667) – 240 476

Furniture and fixtures 13 188 3 083 253 (71) – (1 792) (17) 14 644

Motor vehicles 2 130 423 – – – (292) – 2 261

Office equipment 7 035 3 587 37 (16) – (1 203) (105) 9 335

IT equipment 24 676 8 959 – (526) – (4 590) (196) 28 323

Leasehold improvements 699 – – – – (271) – 428

Infrastructure 63 075 3 773 – – – (4 697) – 62 151

Facilities equipment 2 584 444 – – – (287) (153) 2 588

Training equipment 59 523 7 390 128 – – (2 212) – 64 829

Building under construction 30 016 – – – (30 016) – – –

Communication equipment 1 323 1 667 – (233) – (307) – 2 450

364 262 85 687 1 475 (846) – (20 318) (471) 429 789


201


14. Property, plant and equipment (continued)

Reconciliation of property, plant and equipment – Controlling entity – 2018

FIGURES IN RAND THOUSANDOPENING

BALANCE ADDITIONS

ADDITIONS THROUGH ACCRUAL

FINANCE LEASE

CAPITALI–SATION

DEPRE–CIATION

WRITE OFFS TOTAL

Furniture and fixtures 3 570 1 530 – – (328) (412) 4 360

Motor vehicles 164 – – – (34) – 130

IT equipment 5 530 148 – 793 (600) (708) 5 163

Leasehold improvements 428 5 697 144 – (2 394) – 3 875

9 692 7 375 144 793 (3 356) (1 120) 13 528

Reconciliation of property, plant and equipment – Controlling entity – 2017

FIGURES IN RAND THOUSANDOPENING BALANCE ADDITIONS

DEPRE–CIATION

WRITE OFFS TOTAL

Furniture and fixtures 3 783 105 (293) (25) 3 570

Motor vehicles 199 – (35) – 164

IT equipment 4 544 1 707 (545) (176) 5 530

Leasehold improvements 699 – (271) – 428

9 225 1 812 (1 144) (201) 9 692

Assets subject to finance lease (Net carrying amount)


2018R’000

2017R’000

2018R’000

2017 R’000

IT equipment 1 431 262 703 43

Leasehold improvements 3 875 428 3 875 428

5 306 690 4 578 471

Reconciliation of work-in-progress group – 2018


INCLUDED WITHIN INFRA–

STRUCTURE

INCLUDED WITHIN

OTHER PPE (FURNITURE

WIP) TOTAL

Additions/capital expenditure 5 101 2 020 7 121

Transferred to completed items – – –

5 101 2 020 7 121


2018R’000

2017R’000

2018R’000

2017 R’000

Expenditure incurred to repair and maintain property, plant and equipment

Expenditure incurred to repair and maintain property, plant and equipment included in Statement of Financial Performance

Office equipment 2 524 2 137 – –

Leasehold improvements 11 26 11 26

Facilities equipment 18 2 067 – –

Buildings 1 685 – – –

4 238 4 230 11 26



202


15. Intangible assets

GROUP 2018 2017


VALUATION

ACCUMULATED AMORTISATION

AND ACCUMULATED

IMPAIRMENTCARRYING

VALUECOST/

VALUATION


AND ACCUMULATED

IMPAIRMENTCARRYING

VALUE

Computer software 7 153 (3 532) 3 621 6 482 (3 115) 3 367

CONTROLLING ENTITY 2018 2017


VALUATION


AND ACCUMULATED

IMPAIRMENTCARRYING

VALUECOST/V

ALUATION


AND ACCUMULATED

IMPAIRMENTCARRYING

VALUE

Computer software 2 806 (1 286) 1 520 2 280 (1 032) 1 248

Reconciliation of intangible assets – Group – 2018

FIGURES IN RAND THOUSANDOPENING BALANCE ADDITIONS AMORTISATION TOTAL

Computer software 3 367 832 (578) 3 621

Reconciliation of intangible assets – Group – 2017

FIGURES IN RAND THOUSANDOPENING BALANCE ADDITIONS AMORTISATION


Computer software 3 848 215 (691) (5) 3 367

Reconciliation of intangible assets – Controlling entity – 2018

FIGURES IN RAND THOUSANDOPENING BALANCE ADDITIONS AMORTISATION TOTAL

Computer software 1 248 526 (254) 1 520

Reconciliation of intangible assets – Controlling entity – 2017

FIGURES IN RAND THOUSANDOPENING BALANCE ADDITIONS AMORTISATION


Computer software 1 404 90 (241) (5) 1 248



203


16. Heritage assets

GROUP 2018 2017


VALUATION

ACCUMULATED IMPAIRMENT

LOSSESCARRYING

VALUECOST/

VALUATION

ACCUMULATED IMPAIRMENT

LOSSESCARRYING

VALUE

Art Collections, antiquities and exhibits 121 – 121 121 – 121

Historical buildings 177 587 – 177 587 177 587 – 177 587

Artefects and exhibitions – WIP 10 807 – 10 807 – – –

Total 188 515 – 188 515 177 708 – 177 708

Reconciliation of heritage assets Group – 2018

FIGURES IN RAND THOUSANDOPENING BALANCE ADDITIONS TOTAL

Art Collections, antiquities and

exhibits 121 – 121

Historical buildings 177 587 – 177 587

Artefects and exhibitions – WIP – 10 807 10 807

177 708 10 807 188 515

Reconciliation of heritage assets Group – 2017

FIGURES IN RAND THOUSANDOPENING BALANCE TOTAL

Art Collections, antiquities and exhibits 121 121

Historical buildings 177 587 177 587

177 708 177 708

Alternative use of Heritage AssetHistoric buildings identified as the Heritage Asset are also used for other activities in addition to a purpose of holding indefinately for the benefits of present and future generation.

The value of these buildings is R 177,5m and use for the following activities:• Occupied by Conhill staff personnel as offices for administrative purposes• Rented out to tenants for office space• Made available for Venue Hire activities including conferences, film shooting and events


204


16. Heritage assets (continued)

Heritage assets in the process of being constructed or developed


2018R’000

2017R’000

2018R’000

2017 R’000

Cumulative expenditure recognised in the carryingvalue of Heritage assets

Artefects and exhibitions 10 807 – – –

The above work in progress relates to the project of developing and constructing permanent exhibitions in the Constitution hill Precinct. These exhibitions consisting of steel and wood made artwork as well as digital display of historical contents.

Expenditure incurred to repair and maintain heritage assets

Expenditure incurred to repair and maintain heritage assets included in Statement of Financial Performance

Art effects 1 825 35

Historic building 5 075 3 195 – –

6 900 3 230 – –

17. Investments in controlled entities

NAME OF COMPANY% HOLDING

2018 % HOLDING

2017

CARRYING AMOUNT

2018

CARRYING AMOUNT

2017

Supplier Park Development Company 100% 100% 27 27

Greater Newtown Development Company 77% 77% – –

The Innovation Hub Management Company 100% 100% – –

Gauteng IDZ Development company 100% 100% – –

Constitution Hill Development Company 87% 87% 384 380 384 380

Total cost amount 384 407 384 407

Accumulated impairment of investment in controlled entities (125 323) (125 323)

Total carrying amount 259 084 259 084

The net asset values of investments in subsidiaries is shown below:

– The Innovation Hub Management Company – R327m (2017: R317m)

– Supplier Park Development Company – R708m (2017: R666m)

– Constitution Hill Development Company – R298m (2017: R291m)

– Gauteng IDZ Development Company – R122m (2017: R143m)

The investment in Constitution Hill Development Company (ConHill) is made up of shareholder loans which have no repayment terms and are interest free. The primary factor that was consideresup supd when impairing the loan account to Conhill was the accumulated loss posted by Conhill. The only impaired investment is the Conhill loan.


205


17. Investments in controlled entities (continued)

The carrying amounts of subsidiaries are shown net of impairment which are as follows.

Reconciliation of provision for impairment of investments in controlled entities

CONTROLLING ENTITY

2018R’000

2017 R’000

Balance at the beginning of the year (125 323) (125 323)

18. Deferred tax


2018R’000

2017R’000

2018R’000

2017 R’000

Deferred tax (liability)/asset

Deferred tax asset 32 674 28 954 4 147 2 604

Reconciliation of deferred tax asset/(liability)

At beginning of year 28 954 9 565 2 604 1 505

Increases (decrease) in tax loss available for set off (7 909) 12 467 – –

Taxable/(deductible) temporary difference movement on tangible fixed assets (141) 94 – –

Originating temporary difference on tangible fixed assets – – – –

Other movements – originating temporary differences 11 770 6 828 1 543 1 099

Balance at the end of year 32 674 28 954 4 147 2 604


19. Payables from exchange transactions

Trade payables 18 315 6 062 1 417 353

Other payables 16 979 13 327 – –

Accrued expenses 40 475 34 457 10 112 6 506

75 769 53 846 11 529 6 859


20. Payables from non-exchange transactions

Advance receipts – conditional grants – 7 700 – –


206


21. Finance lease obligation


2018R’000

2017R’000

2018R’000

2017 R’000

Minimum lease payments due

– within one year 751 207 441 48

– in second to fifth year inclusive 805 – 340 –

1 556 207 781 48

less: future finance charges (165) (7) (70) (2)

Present value of minimum lease payments 1 391 200 711 46

Present value of minimum lease payments due

– within one year 637 200 385 46

– in second to fifth year inclusive 754 – 326 –

1 391 200 711 46

Non-current liabilities 754 – 326 –

Current liabilities 637 200 385 46

1 391 200 711 46

The Group holds certain IT equipment under finance lease obligations.

22. Unutilised conditional government grants

Reconciliation of unutilised government grant

Restated balance at the beginning of the year 270 712 219 400 86 239 73 308

Receipts from TIH – – 20 000 –

Surrender of Projects (56 675) – (56 675) –

Receipts – Grant 746 448 618 792 503 638 469 865

Receipts – DED (GIDZ grant) – 3 402 – –

dti receipts 2 000 – 2 000 –

Receipts from GIDZ – – – 10 030

Transfers to projects – – (273 562) (274 840)

Operating and capital expenditures (549 823) (569 367) (242 421) (167 789)

Receipts and conditional grant receivable – 33 426 – 12 977

Surrender of accumulated surplus – (37 312) – (37 312)

Strategic project expenses (24 180) – – –

GIDZ capitalisation of interest 6 352 2 371 – –

Balance at the end of year 394 834 270 712 39 219 86 239

Current liabilities 394 834 270 712 39 219 86 239


207


22. Unutilised conditional government grants (continued)

Unutilised government grants represent the amount of grant funding that was received for specific GGDA projects and/or operational expenditure in relation

to projects, which had not been utilised (i.e. transferred/deferred/ expensed/committed) at year end.

At group level unutilised grants comprise MTEF grants of R72 592 (prior year: R125 769), and Non-MTEF grants of R322 242 (prior year: R144 943).

Controlling entityIncluded in unutilised grants are third-party funds relating to the Special Economic Zone (SEZ) and the Department of Trade and Industry (dti) for conditional

grants:


2018R’000

2017R’000

2018R’000

2017 R’000

Unutilised grants MTEF

Balance at the beginning of the year 64 839 60 682

Receipts – grant 503 638 469 865

Receipts from TIH 20 000 –

Surrender of Projects (56 675) –

Receipts from GIDZ – 10 030

Transfers to projects (273 562) (274 840)

Operating and capital expenditures (232 168) (163 586)

Surrender of accumulated surplus – (37 312)

26 072 64 839

Unutilised grant Non-MTEF

Balance at the beginning of the year 21 400 12 626

Additions during the year 2 000 12 977

Income recognition during the year (10 253) (4 203)

13 147 21 400

Total unutilised government grant 39 219 86 239


23. Deferred income

Deferred income comprises:

Unspent conditional grants and receipts

Current – GGDA – 113 – 113

GGDA entered into a contract with GCIS for the provision of strategic marketing and branding activities.


208


24. Provisions

Reconciliation of provisions – Group – 2018

FIGURES IN RAND THOUSANDOPENING BALANCE ADDITIONS

UTILISED DURING

THE YEAR

REVERSED DURING

THE YEAR TOTAL

Bonus 19 587 22 607 (18 047) (1 665) 22 482

Leave pay 5 239 1 486 (851) (118) 5 756

External bulk infrastructure – road 21 048 – (10 807) – 10 241

45 874 24 093 (29 705) (1 783) 38 479

Reconciliation of provisions – Group – 2017

Bonus 18 405 19 472 (15 410) (2 880) 19 587

Leave pay 3 465 3 632 (1 807) (51) 5 239

External bulk infrastructure – road – 21 048 – – 21 048

Other provisions – PMSA 7 989 – (7 989) – –

29 859 44 152 (25 206) (2 931) 45 874

Reconciliation of provisions – Controlling entity – 2018

Provision for bonus 7 537 8 421 (6 698) (839) 8 421

Provision for leave pay 1 813 239 – (118) 1 934

9 350 8 660 (6 698) (957) 10 355

Reconciliation of provisions – Controlling entity – 2017

Provision for bonus 7 421 7 537 (5 514) (1 907) 7 537

Provision for leave pay 1 326 1 813 (1 316) (10) 1 813

8 747 9 350 (6 830) (1 917) 9 350


2018R’000

2017R’000

2018R’000

2017 R’000

Non-current liabilities 3 007 3 007 – –

Current liabilities 35 472 42 867 10 355 9 350

38 479 45 874 10 355 9 350

Employee benefits represent management’s best estimate of the company liability for staff bonuses and leave pay.

The provisions raised by the company are limited to performance bonus and leave pay provisions. For the performance bonuses, the provision raised estimates the amount of the provision based on the anticipated performance of employees.

This anticipated performance is based on experience with the employees of the company, taking into account performance trends in the prior periods. For the provision for leave pay, the amount is based on accumulated leave days balances at the end of the financial year after taking into account the forfeited leave days.

Furthermore, the amount of the performance bonus and the provision for leave pay is determined with reference to the salary scales as at the end of the financial year.


209


24. Provisions (continued)

External bulk infrastructure – road (TIH)Provision for external bulk infrastructure cost is for the residual obligation in terms of site development for road works as required by the City of Tshwane. TIHMC was granted 121 000sqm of development rights (bulk gross floor area) however, the current Service Level Agreement has placed a cap or limitation on the TIHMC bulk uptake to 40 000 sqm. TIHMC may not exercise its total development rights (allowable bulk) of 121 000sqm until it has discharged its residual obligations in terms of such agreement. It is therefore required from the entity to construct the agreed upon external road infrastructure in line with the Service Level Agreement to be able to utilise the full development rights. Provision has been made for this cost based on the estimated present value of future cash flows arising from the road construction cost expected as at 31 March 2018. The discount rate used for the present value calculation was based on prime rate and amounts to 10.00%.

25. Deposits received


2018R’000

2017R’000

2018R’000

2017 R’000

Deposits received – Current portion 7 096 6 571 – –

Deposit received as at 31 March 2018 relates to the deposit charged on all tenants accounts’ upon signature of the lease. The deposit is required as a security to cover amongst others, possible damages to rental property, non payment of rental, earlier termination of lease, etc. The deposit is refundable on expiry of the lease term and vacation of occupied space by tenant.

26. Share capital/contributed capital


2018R’000

2017R’000

2018R’000

2017 R’000

Authorised

4 000 Ordinary shares – – –

Issued

100 Ordinary shares issued at R1 each – – – –

27. Revenue from exchange transactions

Rental income 10 423 7 144 – –

Rental of facilities and equipment 75 119 66 788 – –

Recoveries 2 369 1 246 – –

Project income 20 521 28 412 – –

Rendering of services 63 813 61 929 – –

Admissions fee 2 225 1 697 – –

174 470 167 216 – –



210


28. Revenue from non-exchange transactions/government grants


2018R’000

2017R’000

2018R’000

2017 R’000

Operating expenses 498 046 414 826 246 632 177 197

Related to assets 49 582 162 448 8 045 1 902

Projects and transfers 23 257 3 402 255 777 274 840

570 885 580 676 510 454 453 939

29. Other income

Sundry income 6 155 5 020 2 140 2 659

30. Grant transferred and expensed


2018R’000

2017R’000

2018R’000

2017 R’000

Supplier Park Development Company SOC Ltd – – 86 546 76 000

The Innovation Hub Management Company SOC Ltd – – 113 711 120 700

Constitution Hill Development Company SOC Ltd – – 30 405 59 857

Gauteng IDZ Development Company SOC Ltd – – 42 900 18 283

Greater Newtown Development Company SOC Ltd – – 7 000 –

– – 280 562 274 840

31. Operating (deficit) surplus

Operating surplus/(deficit) for the year is stated after accounting for the following:

Operating lease charges

Premises

• Contractual amounts 28 230 27 558 28 230 27 558

Equipment

• Contractual amounts 224 118 – –

28 454 27 676 28 230 27 558

Loss on sale of property, plant and equipment (443) (1 177) – –

Impairment on property, plant and equipment 224 462 – –

Impairment on investment property 32 866 – – –

Gain on exchange differences – 21 – –

Amortisation on intangible assets 578 691 254 241

Depreciation on property, plant and equipment 25 201 20 318 3 537 1 144

Depreciation on investment property 16 656 15 806 – –

Employee costs 252 350 224 535 94 986 86 390



211


32. Finance Income


2018R’000

2017R’000

2018R’000

2017 R’000

Finance income

Cash and Cash equivalent 14 912 16 267 9 532 8 696

Interest charged on trade and other receivables 1 030 1 078 235 490

Other finance income 647 843 – –

16 589 18 188 9 767 9 186


33. Finance costs

Deemed finance lease 57 11 20 9

Finance leases 6 52 – –

Other interest paid 6 6 843 – –

69 6 906 20 9

34. Taxation

Major components of the tax expense (income)

Current

Local income tax – current period 7 686 (4 523) 3 033 3 444

Local income tax – recognised in current tax for prior periods – – – (152)

7 686 (4 523) 3 033 3 292

Deferred

Originating and reversing temporary differences (9 971) (8 354) (1 543) (1 099)

Other deferred tax 5 388 (3 219) – –

(4 583) (11 573) (1 543) (1 099)

3 103 (16 096) 1 490 2 193


212


34. Taxation (continued)


2018R’000

2017R’000

2018R’000

2017 R’000

Reconciliation of the tax expense

Reconciliation between accounting surplus and tax expense.

Accounting (deficit) surplus 4 281 132 248 (38 694) 10 093

Tax at the applicable tax rate of 28% (2017: 28%) 1 199 37 029 (10 834) 2 828

Tax effect of adjustments on taxable income

Deferred tax effect and non-temporary differences 2 479 (25 281) – –

Non deductible expenses 32 450 715 12 324 715

Non taxable income (18 274) (27 110) – (1 198)

Donation of capital assets (12 713) – – –

Deferred tax under provision – (147) – –

Utilisation of assessed loss (2 038) (1 150) – –

– (152) – (152)

3 103 (16 096) 1 490 2 193

Greater Newtown Development Company SOC Limited No provision has been made for the 2018 income tax as the company has no taxable income. The estimated tax loss available for set off against future taxable income is R30m (2017: Restated assessed loss R34m).

No provision has been made for the 2018 deferred tax due to uncertainty of future income to be off-set against.

Constitution Hill Development Company SOC LimitedNo provision has been made for 2018 tax year as the company is in an assessed loss position. The estimated tax loss available for set off against future taxable income for 2018 is R189m (2017:R170m). No deferred taxation asset has been recognised as the company will not have taxable income in the future.



213


35. Cash generated from (used in) operations


2018R’000

2017R’000

2018R’000

2017 R’000

Surplus (deficit) 3 565 144 720 (40 184) 7 900

Adjustments for:Depreciation and amortisation 42 432 36 814 3 610 1 384

Gain on sale of assets and liabilities 443 1 177 – –

Finance costs – Finance leases (31) 50 – –

Impairment deficit 33 273 463 – –

Bad debts written off 3 – 35 003 –

Movements in operating lease assets and accruals 32 447 23 104 (454) 1 611

Movements in provisions (8 400) 15 409 – –

Employee benefits 1 005 603 1 005 603

Movement in tax receivable and payable (4 349) 5 791 (1 967) 2 340

Annual charge for deferred tax (3 721) (19 387) (1 543) (1 099)

Other non-cash items – interest accrual, straight lining (8 396) (222) – 9

lease, donations investment property Assets write off – 206 1 120 206

Assets write offReceivables from exchange transactions 3 149 (12 754) 2 272 1 530

Other receivables from non-exchange transactions 17 789 3 200 17 789 3 200

Prepayments 12 152 6 321 11 683 4 271

Other receivables – 2 317 – –

Payables from exchange transactions (16 389) (7 472) 4 526 848

VAT 2 466 7 841 – –

Taxes and transfers payable (non exchange) (7 700) (5 205) – –

Deferred income (113) (13 011) (113) (11 311)

Unspent conditional grants and receipts 124 841 51 311 (47 020) 12 931

Deposits Paid 359 209 – –

Deposits received 525 203 – –

225 350 241 688 (14 273) 24 423

36. Tax paid

Balance at beginning of the year (818) 1 162 (1 101) 1 239

Current tax for the year recognised in surplus or deficit (6 824) (3 293) (3 033) (3 292)

Refund from SARS (1 012) (414) (1 012) (414)

Prior year adjustment – 225 – –

SARS interest – (18) – –

Balance at end of the year (3 531) 818 (866) 1 101

(12 185) (1 520) (6 012) (1 366)


214


37. Auditors’ remuneration


2018R’000

2017R’000

2018R’000

2017 R’000

Auditor’s remuneration – External 5 615 3 837 2 171 1 244

Auditor’s remuneration – Internal 1 810 1 627 1 165 679

7 425 5 464 3 336 1 923

38. Debt impairment

Debt impairment 3 282 484 – –

Contributions to debt impairment provision 1 437 126 – –

Bad debts written off 244 22 – –

4 963 632 – –

39. Commitments

Authorised capital expenditure

Already contracted for but not provided for

• Property, plant and equipment 9 769 69 365 – 4

• Investment property 136 608 33 438 – –

146 377 102 803 – 4

Total capital commitments

Already contracted for but not provided for 146 377 102 803 –

Authorised operational expenditure

Already contracted for but not provided for

• Operational and other commitments 96 368 40 364 13 924 6 356

• Projects 1 444 171 1 198 152 13 158 25 351

1 540 539 1 238 516 27 082 31 707

Total operational commitments

Already contracted for but not provided for 1 540 539 1 238 516 27 082 31 707


215


40. Fruitless and wasteful expenditure


2018R’000

2017R’000

2018R’000

2017 R’000

Fruitless and wasteful expenditure 255 18 – –

Interest and penalties paid to PMSA – 15 185 – –

Condoned (255) (15 203) – –

– – – –

2018 GIDZ GIDZ suffered a loss of R255K in the 2018 financial year, through a scam in which a fraudulent party changed banking information of a GIDZ supplier, which costs were due. Money was paid into the wrong bank account.

2017

SPDCThe PMSA / SPDC matter commenced in 2008 when a project management agreement entered into between SPDC and PMSA was terminated allegedly for poor performance. The final appeal outcome of the arbitrator ordered that SPDC is liable to PMSA based on projects commenced even though such projects were not completed as well as interest and penalties thereon which in total amounted to R15,185m.

GIDZThe prior year fruitless and wasteful expenditure relates to interest on Income tax related to the 2015 Tax year has occured in the 2016/17 financial year, upon assessment of the 2015 tax return. This was due to late registration of the company for income tax.


216


41. Irregular expenditure


2018R’000

2017R’000

2018R’000

2017 R’000

Opening balance 2 000 630 2 000 –

Add: Irregular expenditure – current year – 4 138 – 2 000

Less: Amounts condoned (2 000) (2 768) (2 000) –

Closing balance – 2 000 – 2 000

Details of irregular expenditure condoned

South African Capital Equipment Export Council of South Africa (SACEEC) A three-year strategy (2016-2019) was formulated in 2016 by SACEEC in conjunction with the GDED focussing on specific aspects of the Machinery and Equipment Sector Strategy developed by the Gauteng Provincial Government. GGDA was then asked to implement the project together with SACEEC guided by the provincial work comprising a localisation thrust, creation of new projects and growing exports into Africa.

The transgression occured in the payment process which arose from signing the MoU between SACEEC and GGDA, without taking it to the ARC and Board first. The procurement nature of this this transaction is that of a single source. A payment of R2m was made towards this ‘unapproved’ project on 31 March 2017.

This amount was not disclosed in the previous year.

42. Related parties

Relationships

Controlling company Gauteng Department of Economic Development

Subsidiaries The Innovation Hub Management CompanySupplier Park Development CompanyConstitution Hill Development CompanyGreater Newtown Development CompanyGauteng IDZ Development Company

Gauteng Department of Economic Development Agencies

Gauteng Gambling BoardGauteng Tourism AuthorityGauteng Enterprise Propeller Cradle of Human KindDinokeng

Executive management and non-executive directors

Refer to note 43 for executive management and nonexecutive directors emoluments


217


42. Related parties (continued)

Related party balances

CONTROLLING ENTITY

2018R’000

2017 R’000

Amounts included in Trade and other payables regarding related parties

Constitutional Hill Development Company SOC Limited (45) –

The Innovation Hub Management Company SOC Limited (5) (5)

Amounts included in Trade Receivables (Payables) regarding related parties

Supplier Park Development Company SOC Limited 16 –

Greater Newtown Development Company SOC Limited 28 –

Constitutional Hill Development Company SOC Limited – 10

The Innovation Hub Management Company SOC Limited 12 –

Gauteng IDZ Development Company SOC Limited 27 –

Loans and other receivables

Greater Newtown Development Company SOC Limited – 35 000

Department of Economic Development – 17 789

Related party transactions

Grants received from related parties

Gauteng Department of Economic Development 503 638 461 949

Cradle of Human Kind – 6 566

Dinokeng – 1 350

Grants paid to related parties

Supplier Park Development Company SOC Limited 86 546 76 000

The Innovation Hub Management Company SOC Limited 93 711 120 700

Gauteng IDZ Development Company SOC Limited 42 900 18 283

Constitution Hill Development Company SOC Limited 30 405 59 857

Rent and other expenses paid to related parties

The Innovation Hub Management Company SOC Limited 154 –

Constitution Hill Development Company SOC Limited 65 85

Gauteng Department of Economic Development 27 710 23 119


218


43. Executive management and directors emoluments

Executive

FIGURES IN RAND THOUSAND EMOLUMENTS BONUSOTHER

BENEFITS TOTAL

2018

S Zamxaka (Group CEO) 3 335 286 195 3 816

M Tshabalala (Acting Group CFO) 1 871 – 84 1 955

J Chand 2 251 316 466 3 033

HD Chegwidden 1 177 149 327 1 653

N Madlala (Group CFO) 326 234 70 630

WC Marhanele 1 803 – 71 1 874

S Masina 154 – 123 277

M Mathema 550 – 16 566

S Mhlongo 2 130 219 64 2 413

I Mogorosi 1 577 147 412 2 136

S Molalabangwe 1 756 177 69 2 002

SM Molobi 442 – 13 455

M Mulaudzi 1 881 264 70 2 215

N Ndlovu 1 499 – 65 1 564

20 752 1 792 2 045 24 589

2017

S Zamxaka (GCEO) 3 165 – 123 3 288

N Madlala (GCFO) 1 982 – 77 2 059

J Chand 2 469 238 95 2 802

HD Chegwidden 1 491 – 51 1 542

WC Marhanele 133 – 22 155

E Matshele 1 626 – 103 1 729

S Mhlongo 1 969 – 80 2 049

I Mogorosi 1 458 139 62 1 659

S Molalabangwe 1 771 195 66 2 032

SM Molobi 1 088 – 55 1 143

J Morulane 160 – 5 165

M Mosehla 196 – 5 201

M Mulaudzi 1 742 182 75 1 999

N Ndlovu 905 – 105 1 010

S van der Merwe 25 – – 25

20 180 754 924 21 858


219


43. Executive management and directors emoluments (continued)

Non-executive

2018 – Board of Directors

FEESR’000

TOTALR’000

Mr M Mokoena (Chairman) 198 198

Z Malele (Deputy Chairman) 92 92

N Balton 89 89

D Dondur 82 82

Q Gungubele 190 190

Dr P Jourdan 114 114

P Mafojane 118 118

Dr N Msomi 34 34

S Nicolaou 100 100

T Setiloane 119 119

1 136 1 136

2018 – Members of audit and risk committee


N Balton 89 89

Z Malele 146 146

O Mogale 93 93

481 481


220


43. Executive management and directors emoluments (continued)

Non-executive

2017 – Board of Directors

TOTALR’000

FEESR’000

M Mokeona 224 224

Z Malele 119 119

N Balton 131 131

D Dondur 184 184

Q Gungubele 198 198

Dr P Jourdan 114 114

P Mafojane 95 95

Dr N Msomi 55 55

S Nicolaou 144 144

T Setiloane 133 133

1 397 1 397

2017 – Members of audit and risk committee


N Balton 106 106

S Mahlalela 5 5

Z Malele 137 137

O Mogale 132 132

S Nicolaou 40 40

T Setiloane 32 32

M Tshabalala 149 149

766 766


221


44. Contingencies Contingent liabilities GGDA Advisory services Gauteng Growth and Development Agency SOC Ltd (GGDA) has a contract with a service provider whereby the service provider is contracted to provide Infrastructure Technical Advisory Services. The service provider have initiated a mediation process against the GGDA to claim additional professional fees amounting to R 3,7m. This service provider alleges that the claimed additional fees relate to work done by them at the Constitution Hill Visitors Centre, which falls outside the scope of work for which they were appointed and contracted by GGDA. GGDA is disputing the amount claimed by them alleging that the work done by them is not additional work but work that is within the ambit and scope of the contracted fee amount of R9,12m.

SPDCGardening servicesThe company has a contractual dispute with the gardening service provider. The service provider has defaulted on the contract of maintaining the garden of the AIDC, as a result the contract has been terminated. However in February 2017 the service provider instituted a claim against AIDC to the sum of R2,7 million for damages.

Construction servicesThe company has another contractual dispute with a construction contractor. The dispute is with regards to the outstanding contract amount of R1.5 million for the construction of factory F4 and F5.

Contingent assets

GIDZGIDZ has a contingent asset of R45 million with regard to an amount that is owed to them by a construction company, who terminated their construction early, and who has also simmultaneously returned security material which was on site, to their own supplier.

SPDCConstruction contractorThe company has a contractual dispute with a construction contractor. The contractor has defaulted on the contract time frame and penalties are leviable of R 10.4 million, which the AIDC has claimed from the Insurance underwriter of the contractor. The settlement proposal from the contractor is R2.5 million. The matter is now referred for arbitration.

45. Prior period errors

SPDCIn the prior year property plant and equipment to the value of R161 thousand was incorrectly transfered to assets under R1000. This error has now been corrected.

GIDZDuring the years prior to 2014/15, there was overrecognition of grant income and their accompanying tax adjustments.

GGDADuring the year under review it was discovered that classes of assets were incorrectly categorised, the following classifications were affected:

Furniture and Fittings

IT equipment

During the year under review it was discovered that an item of intangible assets was incorrectly classified as furniture and fixtures.


222


45. Prior period errors (continued)

In the prior year an expense for training amounting to R6000 was ommitted from the accruals list, the invoice was date March 2017, which related to prior

year.

In the year 2014/15 an accrual was raised for a sponsorship, the sponsorship was for Africa Fashion House which raised and subsequently paid for an

amount of R550 000, and in the same year, an accrual was raised incorrectly for the same amount.

GNDCOperating lease assetRevenue from exchange was understated in the prior year on the statement of financial performance. The rental income was understated as a result of the

operating lease asset that was errenously calculated on incorrect lease agreements.

Operating lease asset was understated in the prior year on the statement of financial position. This was as a result of rental income that was errenously

calculated on incorrect lease agreements.

AccrualsOperating expenditure was overstated in the prior period on the statement of financial performance. The expenditure was incured by GGDA Holdings and

erreneously captured by GNDC.

Liabilities were overstated in the prior period on the statement of financial position. This was as a result of an expenditure that was incured by GGDA Holdings

and erreneously captured by GNDC.Vat payable was understated in the prior period on the statement of financial performance. The expenditure was incured

by GGDA Holdings and erreneously captured by GNDC.

Receivables from exchange transactionsReceivables from exchange trannsactions in the prior year was overstated on the Stattement of Financial Position. Tenant accounts were incorrectly billed for.

Revenue from exchange transactions and finance income were overstated on the Statement of Financial Performance due to incorrect billing to tenant

accounts.

Vat payable was overstated as a result of the incorrect billing.


223


45. Prior period errors (continued)

The correction of the errors results in adjustments as follows:


2018R’000

2017R’000

2018R’000

2017 R’000

Statement of financial position

Increase/(decrease) receivables from exchange transactions – (1 138) – –

Increase/(decrease) in property, plant and equipment – (175 362) – (13)

Increase/(decrease) in invesment property – 179 854 – –

Increase/(decrease) in intangible asset – 13 – 13

Increase/(decrease) of operating lease asset – 801 – –

Increase/(decrease) in deferred tax – 519 – –

(Increase)/decrease Payables from exchange transactions – 563 – 544

(Increase)/decrease unutilised government grants – (6 817) – –

(Increase)/decrease Current tax payable – 1 691 – –

(Increase)/decrease VAT Payable – 73 – –

Statement of Financial Performance

Increase/(decrease) Depreciation expense – 186 – –

Increase/(decrease) Employee costs – 6 – 6

Increase/(decrease) Income tax – deferred tax – (965) – –

Increase/(decrease) Other operating expenses – (376) – –

(Increase)/decrease Revenue from exchange transactions – 260 – –

(Increase)/decrease Finance income – 2 372 – –

Statement of Changes in Net Assets

(Increase)/decrease Net assets – (1 680) – (550)

46. Events after the reporting date

The only subsequent event that exists within the group is that of the AIDC which was able to recover R5.914 million that was provided for.


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47. Financial Instruments

Fair value versus carrying amountsThe fair values together with the carrying amounts shown in the Statement of financial position are as follows:


FAIR VALUE

2018

CARRYING AMOUNT

2018

FAIR VALUE

2017

CARRYING AMOUNT

2017

Total Financial Assets – Group

Receivables from exchange transactions 39 856 39 856 42 991 42 991

Cash and cash equivalents 451 205 451 205 321 210 321 210

491 061 491 061 364 201 364 201

Total Financial Liabilities – Group

Payables from exchange transactions 75 769 75 769 53 846 53 846

Payables from non-exchange transactions – – 7 700 7 700

75 769 75 769 61 546 61 546

Total Financial Assets – Company

Other financial assets – – 35 000 35 000

Receivables from exchange transactions 190 190 2 465 2 465

Receivables from non-exchange transactions – – 17 789 17 789

Cash and cash equivalents 73 685 73 685 95 987 95 987

73 875 73 875 151 241 151 241

Total Financial Liabilities – Company

Payables from exchange transactions 11 529 11 529 6 859 6 859

Finance lease obligation 385 385 46 46

11 914 11 914 6 905 6 905

Liquidity risk The group’s risk to liquidity is a result of the funds available to cover future commitments. The group manages liquidity risk through an ongoing review of future commitments and credit facilities.


225


48. Segment information

General information Identification of segmentsThe group is organised and reports to management on the basis of six major functional areas (Programmes): Gauteng Growth and Development Agency Holdings (GGDA), Supplier Park Development Company (SPDC) t/a Automotive Industry Development Centre (AIDC), The Innovation Hub (TIH), Gauteng IDZ Development Company (IDZ), Constitution Hill (Conhill) and Greater Newtown Development Company (GNDC). Management uses these same programmes for determining strategic objectives.

Information reported about these segments is used by management as a basis for evaluating the segments’ performances and for making decisions about the allocation of resources. The disclosure of information about these segments is also considered appropriate for external reporting purposes.

Types of goods and/or services by segment

Automotive SectorThe Automotive Industry Development Centre (AIDC) is a project-driven organisation which focusses on excellence in technical project implementation and service delivery. The SPDC manages the Automotive Supplier Park, an automotive supplier logistics node in Rosslyn, Pretoria which provides a unique value proposition to suppliers of original equipment manufacturers (OEMs) in Gauteng.

The purpose of the AIDC is to develop the automotive manufacturing sector to globally competitive standards of excellence through a world-class value proposition which enables effective and sustainable socio-economic growth.

Innovation SectorThe Innovation Hub Management Company (TIHMC) manages The Innovation Hub, which is southern Africa’s first Science and Technology Park. TIH serves as a catalyst for innovation and entrepreneurship. It is an important driver of the knowledge and green economies in Gauteng.

The purpose of TIH is to establish and manage an enabling environment and initiatives that support innovation, enterprise development and skills development in targeted sectors, in order to contribute towards the growth of Gauteng’s economy, creation of decent jobs and poverty alleviation.

Industrial Development ZoneThe Gauteng IDZ (GIDZ) Development Company was formed to develop and operate the Industrial Development Zone (IDZ) at OR Tambo International Airport (ORTIA).

Heritage Tourism SectorConstitution Hill (Conhill) is a multi-million rand inner city regeneration project that has rejuvenated the site and uplifted the adjoining localities. The intention is to develop the available portions as iconic infrastructure in such a way that it is sensitive to the context, the architecture as well as the overall ambition of the stakeholders.

Greater Newtown DevelopmentNewtown, in the western quadrant of the Johannesburg CBD, is a Special Economic Zone. It aims to become the creative capital of the city and South Africa. A dynamic, vibrant, sophisticated and cosmopolitan space is being created, boasting the best cultural offerings in Africa.

The day to day management of the precinct is carried out by the Johannesburg Development Agency. The intervention works towards inner-city regeneration in partnership with the GGDA and the Johannesburg City Council. Originally, the intention was to transform Newtown into a safe and attractive place to work, live and visit.

The GNDC is in the process of being wound down and this will happen parallel to the transfer of Number 1 Central Place to the GGDA through the sale agreement between the GGDA and City of Joburg.


226


48. Segment information (continued)

Segment surplus or deficit, assets and liabilities

Controlling entity – 2018

FIGURES IN RAND THOUSANDAUTOMOTIVE

SECTORINNOVATION

SECTOR

INDUSTRIAL DEVELOPMENT

ZONE

HERITAGE TOURISM

SECTOR

GREATER NEWTOWN

DEVELOPMENT TOTAL

Revenue

Revenue from non-exchange transactions 138 445 127 717 65 159 45 673 48 406 425 400

Revenue from exchange transactions 117 171 34 078 – 16 674 13 198 181 121

Other Income 122 644 – 3 249 – 4 015

Finance income 776 3 456 605 1 330 655 6 822

Total segment revenue 256 514 165 895 65 764 66 926 62 259 617 358

Entity’s revenue 617 358

Expenditure

Employee costs 89 976 39 865 11 000 16 523 – 157 364

Administrative expenses 5 198 1 921 451 3 833 612 12 015

Other operating expenses 118 405 108 124 80 481 40 099 51 377 398 486

Finance expense 10 37 – 2 – 49

Taxation 862 5 388 (4 637) – – 1 613

Total segment expenditure 214 451 155 335 87 295 60 457 51 989 569 527

Total segmental surplus/(deficit) 42 063 10 560 (21 531) 6 469 10 270 47 831


227




SECTORINNOVATION

SECTOR


ZONE

HERITAGE TOURISM

SECTOR

GREATER NEWTOWN

DEVELOPMENT TOTAL

Assets

Current Assets

Receivables from exchange transactions 15 484 16 088 – 2 964 5 288 39 824

Cash and cash equivalents 6 467 19 159 321 143 24 494 6 258 377 521

Current tax receivable – – 2 665 – – 2 665

VAT receivable 4 360 – – – 358 4 718

Prepayments 2 167 668 501 199 11 3 546

Deposits paid 301 1 459 – – – 1 760

Operating lease asset 559 338 – 380 14 1 291

Non-Current Assets Investment property 402 684 205 231 195 106 98 823 – 901 844

Property, plant and equipment 296 130 133 275 513 13 473 – 443 391

Intangible assets 1 760 340 – – – 2 100

Heritage assets – – – 188 515 – 188 515

Deferred tax 1 199 4 565 22 763 – – 28 527

Operating lease asset 11 901 642 – – 2 650 15 193

Total segment assets 743 012 381 765 542 691 328 848 14 579 2 010 895

Total assets as per Statement of financial Position 2 010 895


228




SECTORINNOVATION

SECTOR


ZONE

HERITAGE TOURISM

SECTOR

GREATER NEWTOWN

DEVELOPMENT TOTAL

Equity and liabilities Current liabilities

Current tax payable – – 252 – – 252

Payables from exchange transactions 14 573 17 969 24 870 6 862 110 64 384

Provisions 9 038 12 805 1 259 2 015 – 25 117

Unutilised government grants 4 870 2 900 4 642 20 961 – 33 373

Unutilised conditional grants (other) 2 728 14 610 304 905 – – 322 243

VAT payable – – – 1 183 – 1 183

Deposits received 3 727 2 532 – 258 579 7 096

Non-Current Liabilities Finance lease obligation – 428 – – – 428

Operating lease liability – – 85 388 – – 85 388

Provisions – 3 007 – – – 3 007

Equity

Contribution from owners 27 – – 424 980 12 315 437 322

Accumulated surplus 708 049 327 262 121 628 (127 411) 1 575 1 031 103

Total segment equity and liabilities 743 012 381 513 542 944 328 848 14 579 2 010 896

Total liabilities as per Statement of financial Position 2 010 896


229



Controlling entity – 2017


SECTORINNOVATION

HUB


ZONE

HERITAGE TOURISM

SECTOR

GREATER NEWTOWN

DEVELOPMENT TOTAL

Revenue

Revenue from non-exchange transactions 118 588 142 981 115 624 24 384 – 401 577

Revenue from exchange transactions 108 120 36 148 – 14 415 8 873 167 556

Other Income 170 1 586 – 605 – 2 361

Finance income 3 224 4 121 681 451 524 9 001

Total segment revenue 230 102 184 836 116 305 39 855 9 397 580 495

Entity’s revenue 580 495

Expenditure

Employee costs 79 547 37 835 7 619 13 144 – 138 145

Administrative expenses 5 366 2 372 455 3 326 285 11 804

Other operating expenses 109 774 121 777 41 585 26 976 5 004 305 116

Finance expense 6 853 2 18 24 – 6 897

Taxation (7 815) (3 219) (7 255) – – (18 289)

Total segment expenditure 193 725 158 767 42 422 43 470 5 289 443 673

Total segmental surplus/(deficit) 36 377 26 069 73 883 (3 615) 4 108 136 822


SECTORINNOVATION

SECTOR


ZONE

HERITAGE TOURISM

SECTOR

GREATER NEWTOWN

DEVELOPMENT TOTAL

Assets

Current assets

Receivables from exchange transactions 12 491 18 414 – 3 358 6 280 40 543

Cash and cash equivalents 7 269 52 754 126 782 38 109 308 225 222

Current tax receivable – – 283 – – 283

Operating lease asset 772 12 – 137 50 971

VAT receivable 9 954 – – – – 9 954

Prepayments 2 316 760 251 683 5 4 015

Deposits paid 258 1 861 – – – 2 119

Non-current assets

Investment property 347 874 207 095 179 854 102 353 32 375 869 551

Property, plant and equipment 303 943 110 373 668 5 113 – 420 097

Intangible assets 2 015 103 – – – 2 118

Heritage assets – – – 177 708 – 177 708

Deferred tax 2 061 9 953 14 336 – – 26 350

Operating lease asset 10 926 1 074 – – 966 12 966

Total segment assets 699 879 402 399 322 174 327 461 39 984 1 791 897

Total assets as per Statement of financial Position 1 791 897


230




SECTORINNOVATION

SECTOR


ZONE

HERITAGE TOURISM

SECTOR

GREATER NEWTOWN

DEVELOPMENT TOTAL

Equity and liabilities

Current liabilities

Finance lease obligation 110 7 – 37 – 154

Payables from exchange transactions 17 621 19 589 8 456 1 059 263 46 988

Payables from non-exchang transactions – 7 700 – – – 7 700

Provisions 7 628 23 279 937 1 673 – 33 517

Unutilised government grants 907 5 543 3 644 29 436 – 39 530

Unutilised conditional grants (other) 4 620 24 285 116 038 – – 144 943

Operating lease liability – – 48 – – 48

VAT payable – – – 3 945 8 3 953

Deposits received 2 980 2 287 – 211 1 093 6 571

Non-current Liabilities Loans from shareholders – – – – 35 000 35 000

Provisions – 3 007 – – – 3 007

Operating lease liability – – 49 893 – – 49 893

Equity

Contributions from owners 27 – – 424 980 12 315 437 322

Accumulated surplus 665 986 316 702 143 158 (133 880) (8 695) 983 271

Total segment equity and liabilities 699 879 402 399 322 174 327 461 39 984 1 791 897

Total liabilities as per Statement of financial Position 1 791 897


231


Detailed Statement of Financial Performance


NOTE(S)2018

R’000

2017 RESTATED*

R’0002018

R’000

2017 RESTATED*

R’000

RevenueRevenue from exchange transactionsRendering of services 63 813 61 929 – –

Recoveries 2 369 1 246 – –

Rental of facilities and equipment 75 119 66 788 – –

Project income 20 521 28 412 – –

Admission fee 2 225 1 697 – –

Rental income 10 423 7 144 – –

Other income 5 445 3 434 2 140 2 659

Revenue from non-exchange transactions 570 885 580 676 510 454 453 939

Sundry income 710 1 586 – –

Finance income 32 16 589 18 188 9 767 9 186

Total revenue from exchange transactions 768 099 771 100 522 361 465 784

ExpenditureEmployee related costs (252 350) (224 535) (94 986) (86 390)

Administration (23 734) (30 855) (11 864) (19 051)

Depreciation and amortisation (42 435) (36 815) (3 610) (1 384)

Impairment loss (33 090) (462) – –

Finance costs 33 (69) (6 906) (20) (9)

Lease rentals on operating lease (28 454) (27 676) (28 230) (27 558)

Debt Impairment 38 (4 963) (632) – –

Bad debts written off (3) – (35 003) –

Repairs and maintenance (16 114) (12 595) (451) (615)

Projects (45 058) (38 565) – –

Grants paid – – (280 562) (274 840)

Loss on disposal of assets and liabilities (443) (1 177) – –

Loss on foreign exchange – (21) – –

General Expenses (314 718) (262 237) (106 329) (45 844)

Total expenditure (761 431) (642 476) (561 055) (455 691)Surplus (deficit) before taxation 6 668 128 624 (38 694) 10 093Taxation 34 (3 103) 16 096 (1 490) (2 193)

Surplus (deficit) for the year 3 565 144 720 (40 184) 7 900

* See Note 45


The supplementary information presented does not form part of the group annual financial statements and is unaudited

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REGISTRATION NUMBER 2003/201743/30124 Main Street, Marshalltown,

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Tel: (011) 085 2400

www.ggda.co.za

9 780621 466218

ISBN 978-0-621-46621-8RP311/2018

ANNUAL REPORT 2017/18...Chairman’s Statement The GGDA Board of Directors is honoured to table the...

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